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EXHIBIT 10.9
EXECUTION COPY
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STOCKHOLDERS AGREEMENT
AMONG
MS ACQUISITION CORP
AND
ITS STOCKHOLDERS
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STOCKHOLDERS AGREEMENT (this "Agreement") dated as of August 13, 1996, by
and among MS Acquisition Corp., a Delaware corporation ("Holding"), Aetna
Holdings, Inc., a Delaware corporation ("Aetna Holdings"), Citicorp Venture
Capital, Ltd., a New York corporation ("CVC"), The Berkshire Fund, a
Massachusetts limited partnership ("Berkshire"), each of the Persons whose names
appear under the heading "Berkshire Group" on the signature pages hereto
(individually, a "Berkshire Group Member" and collectively, the "Berkshire
Group"), The Prudential Insurance Company of America, a New Jersey mutual
insurance company ("Prudential"), Pruco Life Insurance Company, an Arizona
corporation ("Pruco"), and the entities comprising the various retirement
systems listed on the signature pages hereto (the "State of Michigan"; and
together with Berkshire, the Berkshire Group, Prudential and Pruco, the
"Institutional Investors"), each of the individuals whose names appear under the
heading "Former Management Group" on the signature pages hereto (individually, a
"Former Management Group Member" and collectively, the "Former Management
Group"), and each of the individuals whose names appear under the heading
"Management Group" on the signature pages hereto (individually, a "Management
Group Member" and collectively, the "Management Group"). Capitalized terms used
and not otherwise defined herein have the respective meanings ascribed thereto
in Article I.
RECITALS
WHEREAS, Holding, Aetna Holdings, CVC and the Institutional Investors, have
entered into that certain Recapitalization and Stock Purchase Agreement and that
certain Stock Purchase Agreement, each dated as of August 13, 1996
(collectively, the "Recapitalization and Stock Purchase Agreements"), pursuant
to which all of the issued and outstanding capital stock of Holding shall be
owned as set forth in Annex I hereto;
WHEREAS, each of the Stockholders and Holding desires to enter into this
Agreement to regulate certain aspects of their relationship and to provide for,
among other things, restrictions on the transfer or other disposition of
securities of Holding and matters relating to the corporate governance of
Holding and its Subsidiaries.
NOW, THEREFORE, the parties hereto hereby agree as follows:
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ARTICLE I
CERTAIN DEFINITIONS
1.1 DEFINED TERMS.
(a) The following capitalized terms, when used in this Agreement,
have the respective meanings set forth below:
"Additional Stockholder" means any Person (other than Aetna Holdings,
any Institutional Stockholder, CVC Stockholder, Former Management
Stockholder or Management Stockholder) to whom Holding issues or sells or
Aetna Holdings sells Restricted Securities after the date hereof other than
pursuant to a public offering registered under the Securities Act, in each
case who has executed a Joinder Agreement as an Additional Stockholder
pursuant to Section 6.2, and its direct and indirect Permitted Transferees,
so long as any such Person shall hold Restricted Securities.
"Aetna Holdings" means Aetna Holdings, Inc., a Delaware corporation
and a wholly-owned subsidiary of Holding, and the owner of all the issued
and outstanding capital stock of the Company.
"Affiliate" means, with respect to any Person, any other Person that
controls, is controlled by or is under common control with such Person. For
the purposes of this definition, "control" (including, with its correlative
meanings, the terms "controlled by" and "under common control with"), as
used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of securities,
by contract or otherwise. For purposes of this Agreement, employees,
officers and directors of CVC and its Affiliates shall be "Affiliates" of
CVC.
"Affirmative Board Vote" means the affirmative vote of at least a
majority of the members of the Board (assuming no vacancies), which
majority shall include, unless the CVC Stockholders have elected in writing
not to designate CVC Nominees, one director who is a CVC Nominee.
"Associate" means, with respect to any Person, (i) any corporation or
organization of which such Person is an officer or partner or is, directly
or indirectly, the beneficial owner of 10 percent or more of any class of
equity securities; (ii) any trust or other estate in which such Person has
a substantial beneficial interest or as to which such Person serves as
trustee or in a similar fiduciary capacity; and (iii) any relative or
spouse of such
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of such Person, or any relative of such spouse, who has the same home as
such Person or who is a director or officer of such Person or any of its
parents or subsidiaries.
"Berkshire Stockholder" means Berkshire, each Berkshire Group Member
and each of their respective direct and indirect Permitted Transferees, so
long as any such Person shall hold Restricted Securities.
"Board" means the Board of Directors of Holding.
"Cause" means, with respect to a Management Stockholder or Additional
Stockholder, (i) a material breach by such Management Stockholder or
Additional Stockholder of this Agreement, the Individual Investor
Agreement, or any employment or confidentiality agreement to which such
Management Stockholder is a party or (ii) the commission by such Management
Stockholder of a felony, a crime involving moral turpitude or other act
causing material harm to the standing and reputation of Holding or any of
its Subsidiaries.
"Certificate" means the Certificate of Incorporation of Holding, as
the same may be amended and restated as of the Closing Date and as the same
thereafter may be amended or restated from time to time.
"Class A Common" means Holding's newly issued Class A Common Stock,
par value $.01 per share, and any securities into which such Class A Common
shall have been changed or any securities resulting from any
reclassification or recapitalization of such Class A Common.
"Class B Common" means Holding's newly issued Class B Common Stock,
par value $.01 per share, and any securities into which such Class B Common
shall have been changed or any securities resulting from any
reclassification or recapitalization of such Class B Common.
"Closing Date" is the date on which the Closings under the
Recapitalization and Stock Purchase Agreements occur.
"Commission" means the Securities and Exchange Commission and any
other similar or successor agency of the federal government administering
the Securities Act or the Exchange Act.
"Common Stock" means the Class A Common and the Class B Common, any
securities into which such Class A Common or Class B Common shall have been
changed or any securities resulting from any reclassification or
recapitalization of such Class A Common or Class B Common, and all other
securities of any class or classes (however designated) of Holding the
holders of which have the right, without limitation
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as to amount, after payment on any securities entitled to a preference on
dividends or other distributions upon any dissolution, liquidation or
winding-up, either to all or to a share of the balance of payments upon
such dissolution, liquidation or winding-up.
"Company" means Aetna Industries, Inc., a Delaware corporation.
"Company Value" shall mean the fair market value of Holding and its
Subsidiaries on a consolidated basis, as determined by the Board. In
making such determination of fair market value, except as set forth in the
proviso at the end of this sentence, there shall be no discount to reflect
the fact that there is no public market for the Restricted Securities or
that any shares are subject to any restrictions on transferability or
constitute less than 50% of the total number of Common Stock Equivalents
on a Diluted Basis or otherwise do not provide the holder with voting
control; provided, that in making its determination of fair market value
the Board shall take into account the value of the business of Holding and
its Subsidiaries as a whole rather than by reference to a public market
valuation if the Board determines that Holding cannot effect an initial
public offering of its Common Stock within a reasonable period of time
following the date of such determination.
"CVC Stockholders" means CVC, and each of its direct and indirect
Permitted Transferees, so long as any such Person shall hold Restricted
Securities.
"Debentures" means Aetna Holdings' Junior Subordinated Notes due 2007.
"Diluted Basis" means, with respect to the calculation of the number
of shares of Common Stock, (i) all shares of Common Stock outstanding at
the time of determination (other than shares of Common Stock owned by
Aetna Holdings) and (ii) all shares of Common Stock issuable upon exercise
of the Options.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Fair Market Value" means, with respect to each share of Common Stock
as of a particular date, the average of the closing prices of such Common
Stock on the New York Stock Exchange, Inc., on each of the thirty (30)
trading days next preceding such date or, if such Common Stock is not then
listed or admitted to trading on such exchange, on the principal national
securities exchange on which such Common Stock is listed or admitted to
trading or, if not listed or admitted to trading on any national
securities exchange, on the Nasdaq National Market, or if such Common
Stock is not then listed or admitted to trading on a national securities
exchange or quoted on the Nasdaq National Market, the average of the
closing bid and asked prices in the over-the-counter market as furnished
by any New York Stock Exchange member firm selected by Holding or if no
such prices are available, the fair market value per share as determined
in good faith by
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the Board acting by Affirmative Board Vote; and (ii) with respect to the
Series A Preferred, the fair market-value per share as determined in good
faith by the Board acting by Affirmative Board Vote.
"Former Management Stockholders" means the Former Management Group and
each of their direct or indirect Permitted Transferees, so long as such
Persons shall hold Restricted Securities.
"Funded Debt" means, without duplication, with respect to any Person
(i) all indebtedness for borrowed money or for the deferred purchase price
of property, (ii) the face amount of all letters of credit, banker's
acceptances and other credit facilities issued for the account of such
Person and, without duplication, all drafts drawn thereunder, (iii) all
liabilities secured by any lien on any property owned by such Person, to
the extent attributable to such Person's interest in such property, even
though such Person has not assumed or become liable for the payment
thereof, (iv) lease obligations of such Person which, in accordance with
generally accepted accounting principles, should be capitalized, (v)
obligations with respect to any conditional sale agreement or title
retention agreement and (vi) guarantees by such Person of the Funded Debt
of another Person; but excluding in each case trade and other accounts
payable in the ordinary course of business.
"Institutional Stockholder" means Berkshire, the Berkshire Group,
Prudential, Pruco, the State of Michigan and each of their respective
direct and indirect Permitted Transferees, if any, so long as any such
Person shall hold Restricted Securities.
"Institutional Investor Agreement" means the Institutional Investor
Agreement dated as of the date hereof among Holding and the Institutional
Stockholders.
"Individual Investor Agreement" means the Individual Investor
Agreement dated as of the date hereof among Holding and certain of the
Institutional Stockholders which are natural Persons.
"Involuntary Transfer" means, with respect to Restricted Securities of
any Management Stockholder or Additional Stockholder, any involuntary
Transfer or Transfer by operation of law of such Restricted Securities
(other than to a Permitted Transferee of such Management Stockholder or
Additional Stockholder) by or in which such Management Stockholder or
Additional Stockholder shall be deprived or divested of any right, title
or interest in or to Restricted Securities, including, without limitation,
by seizure under levy of attachment or execution, by foreclosure upon a
pledge, in connection with any voluntary or involuntary bankruptcy or
other court proceeding to a debtor in possession, trustee in bankruptcy or
receiver or other officer or agency, pursuant to any statute pertaining to
escheat or abandoned property, pursuant to a divorce or separation
agreement or a final decree of a court in a divorce action, upon or
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occasioned by the incompetence of any Management Stockholder or Additional
Stockholder and to a legal representative of any Management Stockholder or
Additional Stockholder.
"Joinder Agreement" means a Joinder Agreement substantially in the
form attached hereto as Exhibit A.
"Lien" means any lien, claim, change, encumbrance, security interest
or other adverse claim of any kind.
"Management Stockholders" means the Management Group and their
respective Permitted Transferees, so long as any such Person shall hold
Restricted Securities.
"New Common Stock" means any Common Stock or any security exercisable,
exchangeable or convertible for or into Common Stock ("Common Stock
Equivalents"), other than any (i) Common Stock and Common Stock Equivalents
issued in connection with any stock split, stock dividend or
reclassification of any Restricted Securities or Common Stock Equivalents;
(ii) Common Stock or Common Stock Equivalents issuable in a public offering
registered under the Securities Act; or (iii) Common Stock or Common Stock
Equivalents issuable upon conversion of the Class A Common or Class B
Common or upon exercise of the Options.
"Officer's Certificate" means a certificate signed by the Chief
Financial Officer of Holding stating that (i) the officer signing such
certificate has made or has caused to be made such investigations as are
necessary in order to permit him to verify the accuracy of the information
set forth in such certificate or any documents accompanying such
certificate and (ii) such certificate does not misstate any material fact
and does not omit to state any fact necessary to make the certificate not
misleading.
"Options" means the granted and outstanding vested Options to purchase
an aggregate of 100,000 shares of Common Stock to the Management
Stockholders pursuant to the Option Plan and any Options issued upon
subdivision or combination, or in substitution thereof.
"Option Plan" means that certain Option Plan Agreement dated as of
August 13, 1996, and the individual grants dated as of even date therewith
between Holding and certain Management Stockholders.
"Original Cost" means, (i) as to each share of Common Stock purchased
or otherwise acquired from Holding or owned by any Stockholder on the
Closing Date, $1.419520803; (ii) as to each share of Common Stock purchased
or otherwise acquired from Holding after the Closing Date, the price paid
to Holding therefor, in each case appropriately adjusted to reflect all
stock splits, stock dividends, recapitalizations or
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similar events affecting the Common Stock subsequent to the date of
purchase thereof, (iii) as to each share of Series A Preferred purchased or
otherwise acquired from Holding or owned on the Closing Date, $100.00 and
(iv) as to each share of Series A Preferred purchased or otherwise acquired
from Holding after the Closing Date, the price paid to Holding therefor in
each case appropriately adjusted to reflect all stock splits, stock
dividends, recapitalizations or similar events affecting the Series A
Preferred subsequent to the date of purchase thereof.
"Permitted Transferee" means:
(i) as to any Stockholder who is a natural person, (a) the spouse
or any lineal descendant (including by adoption) of such Stockholder,
or (b) any trust (i) (including a charitable trust) of which such
Stockholder is the trustee or (ii) which is established solely for the
benefit of any such Stockholder or such Stockholder's spouse or any
lineal descendant (including by adoption) and in the case of each of
(b)(i) or (b)(ii) above the terms of any such trust is not
inconsistent with the terms of this Agreement, or (c) any partnership
whose terms are not inconsistent with the terms of this Agreement, the
general partner(s) and limited partner(s) (if any) of which are one or
more Persons identified in this clause (i)(a);
(ii) as to any CVC Stockholder, any other CVC Stockholder; any
director, officer, employee, representative, general partner or
limited partner, Associate or Affiliate of CVC; any director, officer,
employee, representative, general partner or limited partner of any
such Affiliate; and any trust, a majority in interest of the
beneficiaries of which, or corporation or partnership, a majority in
interest of the stockholders or limited partners of which, or
partnership, the managing general partner of which, are (or is) one or
more of the Persons identified in this clause (ii), the spouse of any
such Person and/or such Person's lineal descendants (including by
adoption); or, if it would be impracticable or not advisable, in the
good faith opinion of CVC to transfer Restricted Securities to such
Persons named above, to any other Person in order to avoid a
Regulatory Problem;
(iii) as to any Institutional Stockholder, any Affiliate or
Associate of such Institutional Stockholder; provided, that with
respect to the State of Michigan, Permitted Transferee also means any
successor fiduciary for the State of Michigan;
(iv) as to any Berkshire Stockholder, any other Berkshire
Stockholder; any director, officer, employee, general partner or
limited partner, or Affiliate of Berkshire; any director, officer,
employee, general partner or limited partner of any such Affiliate;
and any trust, a majority in interest of the
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beneficiaries of which, or corporation or partnership, a majority in
interest of the stockholders or limited partners of which, or
partnership, the managing general partner of which, are (or is) one or
more of the Persons identified in this clause (ii), the spouse of any
such Person and/or such Person's lineal descendants (including by
adoption); and
(v) as to Prudential and Pruco, any trust managed by Prudential.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, limited liability company, joint venture,
government (or agency or political subdivision thereof) or any other entity
of any kind.
"Pro Rata" means, with respect to one or more Stockholders or Option
holders, (i) as it relates to Common Stock, in proportion to the number of
shares of Common Stock on a Diluted Basis owned by such Stockholder or
Stockholders or which may be acquired by any Stockholder or Stockholders or
by any Option holder or Option holders pursuant to any Option, and (ii) as
it relates to Series A Preferred, in proportion to the number of shares of
Series A Preferred, owned by such Stockholder or Stockholders.
"Pruco Stockholder" means Pruco and each of its Permitted Transferees,
so long as any such Person shall hold Restricted Securities.
"Prudential Stockholder" means Prudential and each of its Permitted
Transferees, so long as any such Person shall hold Restricted Securities.
"Qualifying Offering" means the consummation of an underwritten
primary or secondary public offering of Common Stock pursuant to an
effective registration statement under the Securities Act as a result of
which (together with any prior public offering of Common Stock registered
under the Securities Act) Holding raises at least $20 million of aggregate
gross proceeds to the Company.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, among Holding and the parties
hereto, as the same may be amended from time to time.
"Restricted Securities" means the Common Stock, the Series A Preferred
and the Options, and any securities issued with respect thereto as a result
of any stock dividend, stock split, reclassification, recapitalization,
reorganization, merger, consolidation or similar event or upon the
conversion, exchange or exercise thereof.
"Sale of the Company" means the sale of Holding, Aetna Holdings or the
Company (whether by merger, consolidation, recapitalization,
reorganization, sale of securities, sale of assets or otherwise) in one
transaction or a series of related transactions
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to a Person or Persons that is not an Affiliate of CVC pursuant to
which such Person or Persons (together with its Affiliates) acquires
(i) securities representing at least a majority of the voting power of
all securities of Holding or the Company, assuming the conversion,
exchange or exercise of all securities convertible, exchangeable or
exercisable for or into voting securities, or (ii) all or
substantially all of Holding's or the Company's assets; provided that
a merger or consolidation of Aetna Holdings into or with Holding or
the Company shall not constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Senior Debt" means (i) the "Obligations" as such term is defined
in the guaranties by Holding or any of its Subsidiaries, including
without limitation any interest accruing on any Obligation after the
date of filing of a petition in any bankruptcy, insolvency,
arrangement, reorganization and receivership proceeding involving
Holding or any of its Subsidiaries (or any other obligor with respect
to the underlying debt), whether or not such interest is an allowed
claim in such proceeding, and (ii) any and all refundings, renewals,
refinancings, replacements and extensions of any Senior Debt described
in clause (i) above, whether or not with the original lender or
holders thereof.
"Series A Preferred" means Holding's Series A Preferred Stock,
par value $.01 per share.
"Significant Transaction" means: (i) any merger, consolidation
or other business combination of Holding or any of its Subsidiaries
with or into any Person or any formation by Holding or any of its
Subsidiaries of any Subsidiary; (ii) any sale, lease, exchange or
other disposition by Holding or any of its Subsidiaries of a
significant portion of Holding's assets on a consolidated basis, in a
single transaction or a series of related transactions, to or with any
Person; (iii) any amendment to or modification or repeal of any
provision of the Restated Certificate of Incorporation or the By-Laws
of Holding; (iv) any acquisition by Holding or any of its Subsidiaries
of securities or assets, in a single transaction or a series of
related transactions, if such securities or assets will represent a
significant portion of the total assets of Holding, as reflected on
Holding's most recent consolidated balance sheet, as such is
determined in accordance with the generally accepted accounting
principles used to prepare such balance sheet; (v) any increase or
reduction of the capital of Holding or any of its Subsidiaries or the
creation of any additional class of capital stock of Holding or any of
its Subsidiaries, or the issuance, except pursuant to the terms of the
Series A Preferred or the Debentures, by Holding or any of its
Subsidiaries of capital stock or securities convertible, exercisable
or exchangeable for or into shares of capital stock on a basis other
than pro rata to the holders of capital stock other than (A) the
issuance of Common Stock upon the exercise of securities exercisable,
convertible or exchangeable for or into Common Stock where the
issuance of such securities has been approved by Affirmative Board
Vote and (B) the
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issuance of Common Stock upon the conversion of any class of Common
Stock; (vi) the incurrence after the Closing Date by Holding or any of
its Subsidiaries of Funded Debt or any modification or amendment to
any agreement governing the extension thereof (other than any
incurrence pursuant to the terms of an agreement previously approved
by the Board by Affirmative Board Vote); (vii) the dissolution of
Holding, the adoption of a plan of liquidation by Holding, any action
by Holding to commence any suit, case, proceeding or other action (A)
under any existing or future law of any jurisdiction relating to
bankruptcy, insolvency, reorganization or relief of debtors seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it, or (B) seeking
appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets, or
making a general assignment for the benefit of its creditors; and
(viii) any transaction or dealing between Holding or any of its
Subsidiaries and one or more of its Stockholders not entered into in
the ordinary course of business on an arm's-length basis.
"State of Michigan Stockholder" means the State of Michigan and
each of its Permitted Transferees, so long as they hold Restricted
Securities.
"Stockholders" means each of the CVC Stockholders, the
Institutional Stockholders, the Former Management Stockholders, the
Management Stockholders and the Additional Stockholders.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination
thereof, or (ii) if a partnership, association or other business
entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that Person
or a combination thereof. For purposes hereof, a Person or Persons
shall be deemed to have a majority ownership interest in a
partnership, association or other business entity if such Person or
Persons shall be allocated a majority of partnership, association or
other business entity gains or losses or shall be or control the
managing director or general partner of such partnership, association
or other business entity.
"Transfer" means, directly or indirectly, any sale, transfer,
assignment, hypothecation, pledge or other disposition of any
Restricted Securities or any interests therein.
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(b) Unless otherwise provided herein, all accounting terms used
in this Agreement shall be interpreted in accordance with generally
accepted accounting principles as in effect from time to time, applied on a
consistent basis.
(c) The following terms, when used in this Agreement, shall have
the meanings defined for such terms in the Section set forth below:
Term Section
---- --------
"Acceptance Date" 7.1
"Acceptance Notice" 7.1
"Agreement" Preamble
"Article III Offer" 3.1(a)
"Berkshire Group" Preamble
"Berkshire Group Member" Preamble
"Buyer" 3.1(a)
"Common Stock Equivalents" 1.1
"Company" 1.1
"CVC" Preamble
"CVC Nominee" 5.1(a)
"CVC Nominees" 5.1(a)
"CVC Observer" 5.6
"Disinterested Director Nominee" 5.1(a)
"Disinterested Director Nominees" 5.1(a)
"Former Management Group" Preamble
"Former Management Group Member" Preamble
"Holding" Preamble
"Holding Designee" 4.1
"Holding Notice" 2.5(b)
"Inclusion Notice" 3.1(a)
"Inclusion Right" 3.1(b)
"Institutional Investors" Preamble
"Institutional Observer" 5.6
"Management Group" Preamble
"Management Group Member" Preamble
"Management Nominee" 5.1(a)
"Management Representative" 5.4
"New Common Stock Notice" 7.1
"New Common Stock Offer" 7.1
"New Common Stock Offerees" 7.1
"New Common Stock Units" 7.1
"Nominating Committee" 5.1(a)
"Nominee" 5.1(a)
"Nominees" 5.1(a)
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"Notice of Intention" 2.5(a)
"Observer" 5.6
"Offer Price" 2.5(a)
"Offered Securities" 2.5(a)
"Offerees" 3.1(a)
"Prospective Buyers" 2.5(a)
"Prospective Buyer Notice" 2.5(c)
"Pruco" Preamble
"Prudential" Preamble
"Purchase Notice" 4.1
"Recapitalization and Stock Purchase Agreements" Recitals
"Regulatory Problem" 6.4(c)
"Regulatory Right" 5.9
"Resale" 4.6(a)
"Resale Closing" 4.6(c)
"Resale Closing Date" 4.6(c)
"Resale Price" 4.6(a)
"Sale Event" 4.1
"Sale Event Acceptance Date" 4.5
"Sale Event Agent" 4.1
"Sale Event Notice" 4.5
"Sale Event Offer" 4.5
"Sale Event Purchasers" 4.1
"Sale Event Stock" 4.5
"Sell Notice" 4.6(b)
"Sellers" 4.1
"Selling Stockholder" 2.5(a)
"State of Michigan" Preamble
"Third Party" 2.5(e)
"Transferor" 3.1(a)
"Transferor Shares" 3.1(a)
ARTICLE II
TRANSFERS OF RESTRICTED SECURITIES
2.1 RESTRICTIONS GENERALLY; SECURITIES ACT. (a) Each Stockholder agrees
that it will not, directly or indirectly, Transfer any Restricted Securities
except in accordance with the terms of this Agreement. Any attempt to Transfer
any Restricted Securities not in accordance with the terms of this Agreement
shall be null and void and neither the issuer of such securities
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nor any transfer agent of such securities shall give any effect to
such attempted Transfer in its stock records.
(b) Each Stockholder agrees that, in addition to the other
requirements herein, it will not Transfer any Restricted Securities except
pursuant to an effective registration statement under the Securities Act, or
upon receipt by Holding of an opinion of counsel to the Stockholder reasonably
satisfactory to Holding or, if agreed by the Board, counsel to Holding, or a
no-action letter from the Commission addressed to Holding, to the effect that no
registration statement is required because of the availability of an exemption
from registration under the Securities Act.
2.2 LEGEND. (a) Each certificate representing Restricted
Securities shall be endorsed with the following legends and such other legends
as may be required by applicable state securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE RESTRICTIONS, RIGHTS TO REPURCHASE AND TO REQUIRE
TRANSFERS CONTAINED IN THE STOCKHOLDERS AGREEMENT, DATED AS
OF AUGUST 13, 1996 AMONG MS ACQUISITION CORP. (THE
"COMPANY") AND ITS STOCKHOLDERS, AS MAY BE AMENDED FROM TIME
TO TIME AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF (A "TRANSFER") EXCEPT
IN ACCORDANCE WITH THE PROVISIONS THEREOF, AND ANY
TRANSFEREE OF THESE SECURITIES SHALL BE SUBJECT TO THE TERMS
OF SUCH AGREEMENT AND THE RECAPITALIZATION AND STOCK
PURCHASE AGREEMENT DATED AS OF AUGUST 13, 1996 AMONG THE
COMPANY AND THE OTHER PARTIES THERETO, AND THE STOCK
PURCHASE AGREEMENT DATED AS OF AUGUST 13, 1996 AMONG THE
COMPANY AND THE OTHER PARTIES THERETO AS SUCH AGREEMENTS MAY
BE AMENDED OR MODIFIED FROM TIME TO TIME. COPIES OF THE
STOCKHOLDERS AGREEMENT, THE RECAPITALIZATION AND STOCK
PURCHASE AGREEMENT AND THE STOCK PURCHASE AGREEMENT, EACH AS
AMENDED, ARE MAINTAINED WITH THE CORPORATE RECORDS OF THE
COMPANY AND ARE AVAILABLE FOR INSPECTION AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR STATE SECURITIES LAWS, AND NO TRANSFER OF THESE
SECURITIES MAY BE MADE EXCEPT
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(A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR (B) PURSUANT TO AN EXEMPTION THEREFROM WITH
RESPECT TO WHICH THE COMPANY MAY REQUIRE AN OPINION OF COUNSEL
FOR THE HOLDER THAT SUCH TRANSFER IS EXEMPT FROM THE REQUIREMENTS
OF THE ACT, AS PROVIDED BY THE TERMS OF THE STOCKHOLDERS AGREEMENT
DESCRIBED ABOVE.
THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE
QUALIFICATIONS, LIMITATIONS, OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS OF EACH CLASS OR SERIES OF CAPITAL
STOCK OF THE COMPANY ARE SET FORTH IN THE CERTIFICATE OF
INCORPORATION. THE CORPORATION WILL FURNISH A COPY OF THE
CERTIFICATE OF INCORPORATION TO THE HOLDER OF THIS
CERTIFICATE WITHOUT CHARGE UPON REQUEST.
(b) Any certificate issued at any time in exchange or
substitution for any certificate bearing such legends (except a new certificate
issued upon the completion of a Transfer pursuant to a registered public
offering under the Securities Act and made in accordance with the Securities
Act) shall also bear such legends, unless in the opinion of counsel for Holding,
the Restricted Securities represented thereby are no longer subject to the
provisions of this Agreement or the restrictions imposed under the Securities
Act or state securities laws, in which case the applicable legend (or legends)
shall at the request of Holder be removed.
2.3 LIMITATIONS ON REPURCHASES, DIVIDENDS, ETC. Each Stockholder
understands that Holding is entering or has entered into certain financing
agreements which will or do contain prohibitions, restrictions and limitations,
among other things, on the ability of Holding to purchase any Restricted
Securities (whether pursuant to this Agreement or otherwise), to pay dividends
and to waive, modify or discharge any rights or obligations under this
Agreement.
2.4 TRANSFERS BY INSTITUTIONAL STOCKHOLDERS, FORMER MANAGEMENT
STOCKHOLDERS, MANAGEMENT STOCKHOLDERS AND ADDITIONAL STOCKHOLDERS. Each of the
Institutional Stockholders, each of the Management Stockholders and each of the
Additional Stockholders severally agree that it will not Transfer any
Restricted Securities, except (a) to a Permitted Transferee who shall have
executed a Joinder Agreement and thereby become a party to this Agreement; (b)
with the approval of the Board acting by Affirmative Board Vote, including,
without limitation, pursuant to a merger or consolidation of Holding; (c)
pursuant to the exercise of any rights such Stockholder may have under the
Registration Rights Agreement; (d) to any CVC Stockholder; (e) subject to
Section 8.9, any Institutional Stockholder may Transfer Restricted Securities to
any other Institutional Stockholder; (f) pursuant to Section 2.6
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or 2.7, Article III (in the capacity of an Offeree thereunder) or, with respect
to Management Stockholders and Additional Stockholders, Article IV; (g) pursuant
to Section 2.5 (and to the extent applicable in the capacity of a Transferor
under Article III); provided, however, that none of the Management Stockholders
or Additional Stockholders shall Transfer any Restricted Securities pursuant to
Section 2.5 (or as a Transferor under Article III) for a period of five years
following the Closing Date, and none of the Management Stockholders or
Additional Stockholders shall transfer any Options except pursuant to Section
2.6, 2.7 or 3.2 or Article IV, (h) after August 13, 2006; or (i) after a Sale of
the Company. Notwithstanding anything to the contrary contained herein, no
Transfer (including without limitation any Involuntary Transfer but excluding
any Transfer made in accordance with this Agreement in connection with a Sale of
the Company) or entry into any agreement or arrangements with respect to
Transfer or the exercise of rights under Article V hereof (including without
limitation any agreement or arrangement entered into by the Management
Stockholders which would cause the Management Stockholders to cease to have the
full right and power to designate the Management Director) by an Institutional
Stockholder, Former Management Stockholder, Management Stockholder or Additional
Stockholder of Restricted Securities will be permitted or will be effective
(other than pursuant to Inclusion Rights exercised in connection with a Transfer
by the Institutional Stockholders and the Former Management Stockholders,
pursuant to the exercise of an Article III Offer by the Institutional
Stockholders or the Former Management Stockholders (as the case may be) or in
connection with any registered public offering) to the extent such Transfer,
agreement or other arrangement would result in (i) a change of control, event of
default or other prepayment obligation by Holding (or any of its Subsidiaries)
under (A) any agreement or instrument evidencing Senior Debt or the Series A
Preferred or (B) any successor agreement or instrument with respect to Senior
Debt that contains such a provision which is no more restrictive of the rights
of any Institutional Stockholder, Former Management Stockholder, Management
Stockholder or Additional Stockholder (as the case may be) to transfer the
securities of Holding or any Subsidiary than the most restrictive provision
contained in the agreements and instruments referred to in clause (A) above or
(ii) the Management Stockholders no longer having the right to designate the
Management Director pursuant to Section 5.1 by virtue of their ownership of
shares of Restricted Securities.
2.5 RIGHT OF FIRST OFFER. (a) Except for Transfers permitted pursuant to
clauses (a) (i) through (vi) of Section 2.4, if any Institutional Stockholder,
Former Management Stockholder, Management Stockholder or Additional Stockholder
(a "Selling Stockholder") desires to Transfer any Restricted Securities (the
"Offered Securities"), prior to any Transfer it shall give written notice of the
proposed Transfer (the "Notice of Intention") to Holding and to CVC on behalf of
each of the CVC Stockholders and to the Institutional Investors (the
"Prospective Buyers"), specifying the type and number of Offered Securities
which such Selling Stockholder wishes to Transfer, the proposed purchase price
(the "Offer Price") therefor and all other material terms and conditions of the
proposed Transfer.
(b) For a period of twenty (20) days following its receipt of the Notice
of Intention, Holding shall have an irrevocable right to purchase all or any
portion of the Offered
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Securities at the Offer Price and on the other terms specified in the Notice of
Intention, exercisable by delivery of notice (the "Holding Notice") to the
Selling Stockholder, with a copy to each of the Prospective Buyers, specifying
the number of Offered Securities with respect to which Holding is exercising its
option.
(c) For a period of twenty (20) days following its receipt of the Holding
Notice or, if no Holding Notice is so received, for a period of forty-five (45)
days following its receipt of the Notice of Intention, each of the Prospective
Buyers shall have the irrevocable right to purchase at the Offer Price and on
the other terms required to be specified in the Notice of Intention, any or all
of the Offered Securities which Holding has elected not to purchase, Pro Rata
among the Prospective Buyers; provided, however, that in the event any
Prospective Buyer does not purchase any or all of its Pro Rata portion of the
Offered Securities, the other Prospective Buyers shall have the right to
purchase such portion, Pro Rata, until all of such Offered Securities are
purchased or until such other Prospective Buyers do not desire to purchase any
more Offered Securities. The right of the Prospective Buyers pursuant to this
Section 2.5(c) shall be exercisable by delivery of a notice (the "Prospective
Buyer Notice") setting forth the maximum number of Offered Securities that such
Prospective Buyer wishes to purchase, including any number which would be
allocated to such Prospective Buyer in the event any other Prospective Buyer
does not purchase all or any portion of its Pro Rata portion, to the Selling
Stockholder, Holding and the other Prospective Buyers and shall expire if
unexercised within such 20-day or 45-day period, as applicable.
(d) Notwithstanding the foregoing provisions of this Section 2.5, unless
the Selling Stockholder shall have consented to the purchase of less than all of
the Offered Securities, neither Holding nor any Prospective Buyer may purchase
any Offered Securities unless all of the Offered Securities are to be purchased
(whether by Holding or the Prospective Buyers, or any combination thereof).
(e) If all notices required to be given pursuant to this Section 2.5 have
been duly given and (i) Holding and the Prospective Buyers determine not to
exercise their respective options to purchase the Offered Securities at the
Offer Price and on the other terms specified in the Notice of Intention or (ii)
Holding and the Prospective Buyers determine, with the consent of the Selling
Stockholder, to exercise their options to purchase less than all of the Offered
Securities or (iii) Holding or any CVC Stockholder that is a Prospective Buyer
fails to purchase any Offered Securities pursuant to and in accordance with this
Section 2.5 other than as a result of a breach of this Section 2.5 by the
Selling Stockholder, then the Selling Stockholder shall have the right, for a
period of one hundred (100) days from the earlier of (A) the expiration of the
last applicable option period pursuant to this Section 2.5 or (B) the date on
which such Selling Stockholder receives notice from Holding and the Prospective
Buyers that they will not exercise in whole or in part the options granted
pursuant to this Section 2.5, to sell to a third party (a "Third Party") the
Offered Securities remaining unsold under this Section 2.5 at a price not less
than the Offer Price and on the other terms required to be set forth in the
Notice of Intention; provided that prior to any such Transfer to a Third Party,
such Third Party executes
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and delivers to Holding, for the benefit of Holding and all Stockholders, a
Joinder Agreement and thereby becomes a party to this Agreement and such Selling
Stockholder first complies with the provisions of Article III.
(f) The closing of any purchase and sale to Holding or any Prospective
Buyer pursuant to this Section 2.5 shall take place on such date, not later than
fifteen (15) business days after the later of delivery to the Selling
Stockholder of (i) the Holding Notice and (ii) the Prospective Buyer Notice, as
Holding and the Selling Stockholder shall select. At the closing of such
purchase and sale, the Selling Stockholder shall deliver certificates evidencing
the Offered Securities being sold duly endorsed, or accompanied by written
instruments of transfer in form satisfactory to the purchasers thereof, duly
executed by the Selling Stockholder, free and clear of any Liens, against
delivery of the Offer Price therefor.
(g) The Stockholders hereby agree that the following events shall be
deemed a Transfer of Restricted Securities owned or held of record by any
Stockholder for purposes of this Agreement: Any change of control of such
Stockholder, whereby (i) all or substantially all of the assets of, or equity
interest in such Stockholder is sold, whether by merger or otherwise, to any
Person or Persons other than a Permitted Transferee of such Stockholder; or (ii)
a majority of the economic interest of such Stockholder is transferred to any
Person or Persons other than a Permitted Transferee.
2.6 INVOLUNTARY TRANSFERS. (a) Upon the occurrence of any event which
would cause any Restricted Securities owned by a Management Stockholder or by an
Additional Stockholder to be Transferred by Involuntary Transfer, such
Management Stockholder or Additional Stockholder (or his legal representative or
successor) shall give Holding written notice thereof stating the terms of such
Involuntary Transfer, the identity of the transferee or proposed transferee, the
price or other consideration, if readily determinable, for which the Restricted
Securities are proposed to be or have been Transferred and the number of
Restricted Securities which are the subject of such Transfer, and Holding shall
notify all of the Stockholders of the same. After its receipt of such notice
or, failing such receipt, after Holding otherwise obtains actual knowledge of
such a proposed or completed Involuntary Transfer, Holding shall have the right
and option to purchase (or to have any designee purchase) all or any portion of
such Restricted Securities, which right shall be exercised by written notice
given by Holding to the transferor (or transferee following the occurrence of
any Involuntary Transfer) within sixty (60) days following the later of (i)
Holding's receipt of such notice or, failing such receipt, Holding's obtaining
actual knowledge of such proposed or completed Transfer and (ii) the date of
such Involuntary Transfer.
(b) Any purchase pursuant to this Section 2.6 shall be at the price and on
the terms applicable to such Involuntary Transfer; provided, however, that if
the nature of the event giving rise to such Involuntary Transfer is such that no
readily determinable consideration is to be paid for or assigned to the Transfer
of the Restricted Securities, the price to be paid by Holding and the applicable
terms shall be the purchase price and terms applicable to a Sale
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Event pursuant to Section 4.2. The closing of the purchase and sale of such
Restricted Securities pursuant to this Section 2.6 shall be held at the place
and on the date established by Holding, which in no event shall be less than ten
(10) nor more than forty-five (45) days from the date on which Holding gives
notice of its election to purchase such Restricted Securities, and such purchase
price shall be determined as of the date of the notice of election to purchase
such Restricted Securities. At such closing, the Management Stockholder or
Additional Stockholder (or his legal representative or successor) shall deliver
the certificates evidencing the Restricted Securities to be purchased by
Holding, as applicable, accompanied by stock powers, duly endorsed in blank, or
duly executed instruments of transfer, and any other documents that are
necessary to Transfer to Holding good title to such Restricted Securities free
and clear of all Liens and, concurrently with such delivery, Holding shall
deliver to the transferor thereof the full amount of the purchase price therefor
by certified or bank cashier's check.
(c) Notwithstanding anything to the contrary contained herein, in the
event a purchase (or the payment of the purchase price) by Holding pursuant to
this Section 2.6 would violate or conflict with any statute, rule, injunction,
regulation, order, judgment or decree applicable to Holding or any of its
Subsidiaries or by which any of them or their respective properties may be bound
or affected or would result in any breach of, or constitute a default (or an
event which with notice or lapse of time, or both, would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien on any of the property or
assets of Holding or any of its Subsidiaries pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, franchise or other
instrument or obligation to which Holding or any of its Subsidiaries is a party
or by which any of their respective properties is bound or affected, with the
prior written consent of CVC, the rights of Holding to purchase (or to have any
designee purchase) the Restricted Securities of any Management Stockholder or
Additional Stockholder shall be suspended until the date which falls thirty (30)
days following such time as such prohibition first lapses or is waived and no
such default would be caused. For the purposes of this Section 2.6 only, the
date of such lapse or waiver shall be deemed the date of the Involuntary
Transfer for purposes of the purchase and sale of Restricted Securities pursuant
to this Section 2.6 and such purchase price shall be determined as of the date
such prohibition lapses or is waived. Holding shall use its reasonable efforts
to obtain a waiver of any such prohibition but shall not be obligated to incur
any additional interest or other costs or charges or to make any prepayment with
respect to any indebtedness in connection with such efforts.
(d) Notwithstanding anything to the contrary contained in this Section
2.6, any event giving rise to an Involuntary Transfer which is also subject to
the provisions of Article IV shall be governed by the provisions of Article IV.
2.7 SALE OF THE COMPANY. If CVC Stockholders, so long as they own at least
thirty-five (35) percent of the shares of Common Stock on a Diluted Basis or
thirty-five (35) percent of the Series A Preferred on a Diluted Basis desire to
effect a Sale of the Company providing aggregate consideration to the non-CVC
Stockholders at least equal to the non-CVC
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Stockholders' pro rata share of the aggregate Company Value at the time of such
sale, the CVC Stockholders shall notify each other Stockholder, in writing, of
such desire and the material terms and conditions of such proposed sale.
Notwithstanding any other provision of this Agreement, each such other
Stockholder and Holding will take all actions reasonably requested by either
the CVC Stockholders or Holding in connection with the consummation of such Sale
of the Company, and if such transaction is structured as a sale of Restricted
Securities within ten (10) business days of the receipt of such notice (or such
longer period of time as the CVC Stockholders shall designate in such notice)
such other Stockholders shall cause their respective Restricted Securities to be
sold to the designated purchaser on the same terms and conditions, in the same
proportionate amount and for the same per share consideration as the Restricted
Securities being sold by the CVC Stockholders, provided, however, that if any of
such Restricted Securities are Options, the purchase price of such Options shall
equal the aggregate price that would be paid for the shares of Common Stock
issuable upon the exercise thereof minus the aggregate exercise price under such
Options for such shares of Common Stock and if any Stockholders are given a
choice as to the type or amount of consideration to be received, all
Stockholders will be given the same choice; provided, further, that upon the
consummation of any transaction resulting in a sale or transfer of all or
substantially all of the assets or business of Holding (whether by merger, sale
or otherwise) Holding will immediately distribute all of the net proceeds of
such transaction to the Stockholders, in accordance with their respective rights
and privileges. In furtherance of, and not in limitation of the foregoing, in
connection with a Sale of the Company, each Stockholder, will (i) raise no
commercially unreasonable objections against the Sale of the Company or the
process pursuant to which it was arranged, (ii) waive any appraisal rights under
Section 262 of the Delaware General Corporation Law and other similar rights,
and (iii) execute all documents containing such terms and conditions as those
executed by other Stockholders as reasonably directed by the CVC Stockholders,
as applicable except that the State of Michigan and Prudential for so long as
they shall hold Restricted Securities, shall not be required to deliver powers
of attorney. Each Stockholder required to make any indemnification payment in
connection with a Sale of the Company shall have a right to recover from the
other Stockholders to the extent that the amount required to be paid by such
Stockholder is disproportionate to the proportion of the total consideration
received by all Stockholders, compared to the consideration actually received by
such Stockholder (except to the extent such indemnification payment arises from
a misrepresentation or breach relating to such Stockholder). No Stockholder
shall be required to make indemnification payments or contribution payments if
the aggregate amount thereof would exceed the total consideration received by
such Stockholder in connection with a Sale of the Company (except to the extent
such indemnification or contribution payment arises from a misrepresentation or
breach relating to such Stockholder (rather than to Holding)). All Stockholders
will bear their Pro Rata share of the costs and expenses incurred in connection
with a Sale of the Company to the extent such costs are incurred for the benefit
of all Stockholders and are not otherwise paid by Holding or the purchaser.
Costs incurred by any Stockholder on its own behalf will not be shared by other
Stockholders.
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ARTICLE III
RIGHTS OF INCLUSION
3.1 RIGHTS OF INCLUSION. (a) If any CVC Stockholder (the "Transferor")
proposes to Transfer any Restricted Securities ("Transferor Shares") to any
Person (the "Buyer"), other than to a Permitted Transferee who shall have
executed a Joinder Agreement and thereby became a party to this Agreement or as
permitted by Section 3.3, then, as a condition to such Transfer, the Transferor
shall cause the Buyer to include an offer (the "Article III Offer") to each of
the CVC Stockholders who are not Transferors, the Institutional Stockholders,
the Former Management Stockholders, the Management Stockholders and the
Additional Stockholders (collectively, the "Offerees"), to sell to the Buyer, at
the option of each Offeree, that number of shares of Restricted Securities
determined in accordance with Section 3.1(b), at the same time(s) and on the
same terms and conditions as are applicable to the Transferor Shares. The
Transferor shall provide a written notice (the "Inclusion Notice") of the
Article III Offer to each Offeree.
(b) Each Offeree shall have the right (an "Inclusion Right") to sell
pursuant to the Article III Offer part or all of a Pro Rata number of its shares
of Restricted Securities as is sold by the Transferor, provided, however, that
in the event any Offeree does not exercise his or its Inclusion Right as to any
or all of its Pro Rata portion of its Restricted Securities, the other Offerees
shall have the right to sell their Restricted Securities, Pro Rata, in an amount
equal to such remaining portion of Restricted Securities not being sold by such
non-exercising Offeree until all of such remaining portion is eliminated or
until such other Offerees do not desire to sell any more of their Restricted
Securities. The Inclusion Right shall be exercisable by delivery of a notice by
each Offeree (the "Inclusion Notice"), setting forth the number of Restricted
Securities that such Offeree wishes to sell, including any number which would be
allocated to such Offeree in the event any other Offeree does not exercise his
or its Inclusion Right as to all or any of its Pro Rata portion, to the
Transferor within twenty (20) days of delivery of the Inclusion Notice. The
Transferor shall have the right to sell the balance of the shares of Common
Stock not being sold by such Offerees as provided for above and no other Offeree
shall have any Inclusion Right with respect thereto. Any Offeree which owns
Options may exercise and sell shares of Common Stock pursuant to the Article III
Offer, and the purchase price therefor shall equal the aggregate price that
would be paid for the shares of Common Stock issuable upon the exercise thereof
minus the aggregate exercise price under such Option Plan for such shares of
Common Stock.
3.2 ARTICLE III SALES. (a) Upon its exercise of an Inclusion Right, each
Offeree shall deliver to the Transferor a certificate or certificates
representing the shares of Common Stock to be sold or otherwise disposed of
pursuant to the Article III Offer by such Offeree, free and clear of all Liens,
and a limited power-of-attorney authorizing the Transferor to sell or otherwise
dispose of such shares of Common Stock pursuant to the terms of the Article III
Offer; provided, however, for so long as they own Restricted Securities and are
subject to this
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Agreement, Prudential and the State of Michigan shall not be required to execute
a limited power-of-attorney; and provided, further, Prudential and the State of
Michigan hereby agree to take all reasonable actions to effectuate a sale by
such Stockholder pursuant to an Article III Offer.
The Transferor shall have one hundred (100) days, commencing on the
expiration of the Inclusion Rights, in which to sell or otherwise dispose of, on
behalf of itself and the Offerees, up to the number of shares of Common Stock
covered by the Article III Offer (and the number of Transferor Shares) to the
Buyer. If all such shares are not sold to the Buyer, the Transferor, at its
option, may elect to sell on behalf of itself and the Offerees such number of
shares as the Buyer will purchase, Pro Rata among the Transferor and the
Offerees, as nearly as practicable. The material terms of such sale, including,
without limitation, price and form of consideration, shall be as set forth in
the Inclusion Notice. If at the end of such 100-day period the Transferor has
not completed the sale or other disposition of all the Transferor Shares and all
the Offerees' Common Stock or Options (if any) proposed to be sold, the
Transferor shall return to each of the Offerees its respective certificates, if
any, representing shares of Common Stock or Options which the Offerees delivered
for sale or other disposition pursuant to this Article III and which were not
sold pursuant thereto and the provisions of this Article III shall continue to
be in effect.
(b) Promptly after the consummation of the sale or other disposition of
the Transferor Shares and shares of Common Stock or Options of the Offerees to
the Buyer pursuant to the Article III Offer, the Transferor shall notify the
Offerees thereof, and the Buyer shall pay to the Transferor and each of the
Offerees their respective portions of the sales price of the shares of Common
Stock or Options sold or otherwise disposed of pursuant thereto, and shall
furnish such other evidence of the completion of such sale or other disposition
and the terms thereof as may be reasonably requested by the Offerees.
(c) Notwithstanding anything to the contrary contained in this Article
III, except for the Transferor's obligation to return to each Offeree any
certificates representing the Offerees' Common Stock or Options, there shall be
no liability on the part of the Transferor to any Stockholder in the event that
the proposed sale pursuant to this Article III is not consummated for whatever
reason. Whether a sale of Common Stock is effected pursuant to this Article III
by the Transferor is in the sole and absolute discretion of the Transferor.
3.3 CERTAIN TRANSFERS. The provisions of this Article III shall not apply
to any Transfer or proposed Transfer of Restricted Securities by a CVC
Stockholder: (a) pursuant to a registration statement filed under the
Securities Act, or (b) to any Person who shall execute a Joinder Agreement and
thereby become a party to this Agreement, if such Transfer is consented to by
the CVC Stockholders and such Transfer, taken together with all other Transfers
of Restricted Securities by a Transferor who is a CVC Stockholder or other CVC
Stockholders (not including Transfers described in clause (a) above or to
Permitted Transferees) that were previously consented to by the CVC Stockholders
represent, in the aggregate, less than five (5)
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percent of the Common Stock, on a Diluted Basis, held in the aggregate by the
CVC Stockholders on the Closing Date, appropriately adjusted to reflect any
stock split, stock dividend, recapitalization or similar event.
ARTICLE IV
REPURCHASE OF RESTRICTED SECURITIES OWNED
BY MANAGEMENT STOCKHOLDERS OR ADDITIONAL STOCKHOLDERS
4.1 SALE EVENT. In the event that any Management Stockholder shall cease to
be employed by Holding or any of its Subsidiaries for any reason, or any
Additional Stockholder that is a director of Holding or any of its Subsidiaries
shall cease to be such a director for any reason, or in each case, including
death, permanent disability, termination for cause or without cause, retirement
or otherwise (such termination being referred to herein as a "Sale Event"), but
in each case subject to Section 4.4, such Management Stockholder (or his
personal representative) or Additional Stockholder (or his personal
representative) shall promptly notify Holding and each other Stockholder of the
applicable Sale Event and, within ninety (90) days after Holding's receipt of
such notice, Holding or, at the option of Holding, any employee or director of
Holding (who is not a Permitted Transferee of CVC) or any of its designees (who
is not CVC or a Permitted Transferee of CVC) who shall have been designated by
the Board acting by Affirmative Board Vote (a "Holding Designee") may, at its
option elect to purchase, exercisable by written notice (a "Purchase Notice")
delivered to such Management Stockholder (or his personal representative) or
Additional Stockholder (or his personal representative) and, in each case, his
respective Permitted Transferees who hold Restricted Securities (collectively,
"Sellers") (with a copy to CVC, as agent (the "Sale Event Agent") for each of
the CVC Stockholders and the Institutional Stockholders (collectively, the "Sale
Event Purchasers"), and upon the giving of such notice, Sellers shall be
obligated to sell, those Restricted Securities of Sellers which are designated
in the Purchase Notice; provided, however, that in the event notice of a Sale
Event is not given, a Purchase Notice (or notice from the Sale Event Agent as
described in the next sentence) may in any event be given at any time following
a Sale Event. To the extent Holding or any Holding Designee fails to deliver a
Purchase Notice or otherwise does not purchase all of the Restricted Securities
then owned by Sellers, the Sale Event Agent (or any designees thereof) may at
its sole option, exercisable by written notice delivered to Sellers within
fifteen (15) days after delivery of the Purchase Notice (or one hundred (100)
days after written notice from Sellers (or any legal representative) to Holding
of the applicable Sale Event, if no Purchase Notice is given by Holding or any
Holding Designee), elect on behalf of the Sale Event Purchasers to purchase the
Restricted Securities not so purchased by Holding which are designated in such
written notice from the Sale Event Agent (or its designee).
4.2 PURCHASE PRICE. The purchase price for each share of Common Stock to be
purchased pursuant to Section 4.1 shall be (a) if the Sale Event did not occur
as a result of
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termination for Cause the Fair Market Value thereof as of the date of the Sale
Event, (b) if the occurred as a result of a termination for Cause the lower of
(x) the Fair Market Value thereof as of the date of the Sale Event and (y) the
Original Cost thereof. Such purchase price shall be paid in cash or by
certified or cashier's bank check. Notwithstanding anything to the contrary
contained herein, no provision of this Agreement shall prevent or otherwise
restrict the Board acting by Affirmative Board Vote from determining (in its
discretion) that Holding will purchase Restricted Securities from Management
Stockholders or Additional Stockholders pursuant to Section 4.1 at a price per
share in excess of the purchase price specified in this Section 4.2.
4.3 CLOSING. Subject to Section 4.4, the closing for all purchases and
sales of Restricted Securities provided for in this Article IV shall be held at
the principal executive offices of Holding at 10:00 a.m., local time, on the
30th day after the determination of the purchase price in respect thereof
determined in accordance with Section 4.2 or at such other date and time as
shall have been agreed to by the Board of Holding (acting by Affirmative Board
Vote) and the Seller; provided, however, that if any Seller who has become
obligated to sell Restricted Securities is deceased on such 30th day as
aforesaid and such deceased person's personal representative shall not have been
appointed and qualified by such date, then unless otherwise agreed to as
provided above, the closing shall be postponed until the 10th day after the
appointment and qualification of such personal representative.
All Restricted Securities to be sold pursuant to this Article IV shall be
delivered to the purchaser at the aforesaid closing free and clear of all Liens.
The purchaser will be entitled to receive customary representations as to title,
authority and capacity to sell and to require a guaranteed signature of the
Seller, as applicable. Each Seller hereby appoints Holding as attorney-in-fact
to transfer such Restricted Securities on the books of Holding in the event of a
sale pursuant to this Article IV. Such Sellers shall take all such actions as
Holding or any other purchaser shall request as necessary to vest in Holding or
any other purchaser at such closing good title to such Restricted Securities,
free and clear of all Liens.
4.4 POSTPONEMENT. Notwithstanding anything to the contrary contained
herein, in the event a purchase (or the payment of the purchase price) by
Holding pursuant to this Article IV would (a) violate or conflict with any
statute, rule, injunction, regulation, order, judgment or decree applicable to
Holding or any of its Subsidiaries or by which any of them or their respective
properties may be bound or affected, (b) result in any breach of, or constitute
a default (or an event which with notice or lapse of time, or both, would become
a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any of
the property or assets of Holding or any of its Subsidiaries pursuant to any
note, bond, mortgage, indenture, contract, agreement, lease, license, franchise
or other instrument or obligation to which Holding or any of its Subsidiaries is
a party or by which any of their respective properties is bound or affected or
(c) in the judgment of the Board, jeopardize the financial health of Holding,
Aetna Holdings or the Company or otherwise have a material adverse effect on the
business, condition (financial or otherwise), results of operations
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or assets or properties of the Company, with the prior written consent of the
Sale Event Agent, the rights of Holding or the Sale Event Agent to purchase the
Restricted Securities of the Sellers with respect to whom the Sale Event has
occurred pursuant to this Article IV shall be suspended, in the case of clauses
(a) or (b) above, until the date which falls thirty (30) days following such
time as such prohibition first lapses or is waived and no such default would be
caused and in the case of clause (c) above, until the date which falls thirty
(30) days following such time as the Board determines that such purchase (or
payment of the purchase price) would no longer jeopardize the financial health
of Holding on a consolidated basis or otherwise have a material adverse effect
on Holding on a consolidated basis. For the purposes of this Section 4.4 only,
the date of such lapse, waiver or determination shall be deemed the date of the
relevant Sale Event for purposes of the purchase and sale and determination of
the Purchase Price of Restricted Securities pursuant to this Article IV.
Holding shall use its reasonable efforts to obtain a waiver of any such
prohibition but shall not be obligated to incur any additional interest or other
costs or charges or to make any prepayment with respect to any indebtedness in
connection with such efforts.
4.5 SALE EVENT AGENT. In the event that the Sale Event Agent elects to
purchase Restricted Securities pursuant to Section 4.1 ("Sale Event Stock"),
each Sale Event Purchaser will be entitled to purchase Sale Event Stock on the
same terms and conditions as each other Sale Event Purchaser pro rata among all
of the Sale Event Purchasers. Promptly after making such election, the Sale
Event Agent shall make an offer (a "Sale Event Offer") by providing each Sale
Event Purchaser with a notice (the "Sale Event Notice") setting forth (i) each
Sale Event Purchaser's pro rata portion of such Sale Event Stock, (ii) the cash
consideration to be paid for each share of Sale Event Stock, and (iii) all other
material terms of such Sale Event Offer.
In order for any Sale Event Purchaser to accept the Sale Event Offer, such
Sale Event Purchaser shall on or before twenty (20) days following its receipt
of a Notice (the expiration of such twenty (20) days being referred to herein as
the "Sale Event Acceptance Date") provide written notice to the Sale Event Agent
of its acceptance of the Sale Event Offer, and such notice shall set forth the
number of shares of Sale Event Stock allocated to such Sale Event Purchaser that
are accepted thereby.
To the extent any Sale Event Purchaser does not elect to accept the Sale
Event Offer on or before the Sale Event Acceptance Date, the Sale Event Stock
allocated to such non-accepting Sale Event Purchaser in the Sale Event Notice,
shall be re-offered, pro rata, to all other Sale Event Purchasers until all such
shares of Sale Event Stock have been accepted for purchase.
4.6 SALE EVENT CLAW-BACK PROVISION. (a) Each Sale Event Purchaser hereby
agrees with each of Holding and CVC that at the written request of the Sale
Event Agent or Holding, it shall sell (a "Resale") shares of Sale Event Stock,
pro rata, to current or future officers, directors, employees or independent
contractors of Holding or any of its Subsidiaries at
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a price equal to the greater of (i) the price paid by such Sale Event Purchaser
pursuant to Section 4.4 and (ii) the price determined by the Board (the "Resale
Price").
(b) Either CVC or Holding may at any time following a sale of Sale Event
Stock by the Sale Event Purchaser request a resale of such stock to a
prospective Management Stockholder by delivering a written notice (the "Sell
Notice") to such Sale Event Purchasers. The Sell Notice shall set forth (i) the
total number of shares of Sale Event Stock and (ii) the pro rata number of
shares of Sale Event Stock each Sale Event Purchaser is required to sell
hereunder.
(c) The closing of the Resale purchase of the shares of Sale Event Stock
specified in the Sell Notice (the "Resale Closing") shall take place at the
offices of Holding at the time and on the date (the "Resale Closing Date") set
forth in the Sell Notice (which date shall not be earlier than ten business days
nor more than thirty business days after the date the Sell Notice is given).
Each such Sale Event Purchaser has an obligation to deliver the shares of Sale
Event Stock specified in the Sell Notice at the Resale Closing in return for
receipt of the Resale Price.
ARTICLE V
CORPORATE GOVERNANCE
5.1 BOARD OF DIRECTORS. (a) From and after the date hereof, each
Institutional Stockholder, Former Management Stockholder, Management Stockholder
and Additional Stockholder shall vote or cause to be voted all shares of voting
Common Stock and any other voting securities of Holding over which such
Stockholder has voting control, at any regular or special meeting of
stockholders called for the purpose of filling positions on the Board, or to
execute a written consent in lieu of such a meeting of stockholders for the
purpose of filling positions on the Board, and shall take all actions necessary,
to ensure that the Board consists of five (5) members, as follows: (i) for so
long as the CVC Stockholders own at least ten (10) percent of the outstanding
Common Stock on a Diluted Basis, two (2) individuals (individually, each a "CVC
Nominee" and, collectively, the "CVC Nominees") to be designated by the CVC
Stockholders (provided that, at any time, and from time to time, the CVC
Stockholders, in their sole discretion, may determine not to designate any or
either of the CVC Nominees), (ii) one (1) individual to be designated by the
Management Stockholders (a "Management Nominee") and (iii) subject to the
Regulatory Right described in Section 5.9, two (2) individuals (individually,
each a "Disinterested Director Nominee" and, collectively, the "Disinterested
Director Nominees") who are not (A) an Affiliate of CVC, (B) employed by Holding
or any Subsidiary of Holding, (C) an Institutional Stockholder or a Management
Stockholder or (D) an Affiliate of any Institutional Stockholder or Management
Stockholder, and who is designated by a nominating committee consisting of (x)
one (1) CVC Nominee, (y) one (1) Management Nominee and (z) one (1)
Disinterested Director Nominee (collectively, the "Nominating
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Committee"), acting by a majority vote; provided, however, that with the consent
of the CVC Nominees, a Management Stockholder may be a Disinterested Director
Nominee and upon the closing under the Recapitalization and Stock Purchase
Agreements, the Board shall consist of Michael A. Delaney and David Y. Howe as
the CVC Nominees, Ueli Spring as the Management Nominee and John F. Wurster and
Harold A. Brown as the Disinterested Director Nominees, and the Nominating
Committee shall consist of one (1) CVC Nominee, the Management Nominee and one
(1) Disinterested Director Nominee who initially shall be John F. Wurster;
provided, however, that if the CVC Stockholders do not designate any or either
of the CVC Nominees, the Nominating Committee will consist of, during such
period when there is no CVC Nominee, two (2) Disinterested Director Nominees and
the Management Nominee. The CVC Nominees, the Management Nominee and the
Disinterested Director Nominees are from time to time collectively referred to
herein as the "Nominees" and, individually, as a "Nominee". No CVC Stockholder
shall have any obligation to vote its shares of voting Common Stock or other
voting securities of Holding in favor of any Nominees other than any CVC
Nominee.
(b) If, prior to his election to the Board pursuant to Section 5.1(a), any
Nominee shall be unable or unwilling to serve as a director of Holding, the
group of Stockholders or Nominating Committee who nominated any such Nominee
shall be entitled to nominate a replacement who shall then be a Nominee for
purposes of Section 5.1(a).
(c) If at any time any CVC Nominee or any Disinterested Director Nominee
is not then serving as a director of Holding, upon the written request of the
CVC Stockholders, the Board shall promptly take such action as may be necessary
to approve and appoint individuals designated by the CVC Stockholders (in the
case of any CVC Nominee) and by the Nominating Committee (in the case of any
Disinterested Director Nominee) to serve as directors from and after the time of
such request and each Stockholder agrees to take such action as may be necessary
to effect the foregoing. In the event that at any time there shall be no
Disinterested Director serving as a director of Holding, the remaining members
of the Nominating Committee shall have authority to designate the appropriate
number of Disinterested Director Nominees to fill such vacancy or vacancies.
5.2 REMOVAL. If (a) the CVC Stockholders request that a CVC Nominee
elected as a director be removed (with or without cause), by written notice to
the other Stockholders; (b) the Management Stockholders request that the
Management Nominee elected as a director be removed (with or without cause), by
written notice to the other Stockholders; or (c) the Nominating Committee
requests that a Disinterested Director Nominee elected as a director be removed
(with or without cause), by written notice to other Stockholders, or such
director ceases to be a Disinterested Director; then in each such case, such
director shall be removed and each Institutional Stockholder, Management
Stockholder and Additional Stockholder hereby agrees to vote all shares of
Common Stock owned by such Stockholder and other securities over which such
Stockholder has voting control to effect such removal or to consent in writing
to effect such removal upon such request. The Stockholders will not take any
action to remove any director that is a CVC Nominee without cause except as
provided in this Section 5.2. In the event (x) the
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CVC Stockholders or (y) the CVC Stockholders, together with other Persons who
have granted a proxy to any of the CVC Stockholders or who have agreed with the
CVC Stockholders with respect to the removal of directors as provided below, at
any time hold shares of Class A Common (or any other voting securities of
Holding) which in the aggregate represent more than 50 percent of the total
number of votes of all outstanding shares of Class A Common (and any other
voting securities of Holding) which would be entitled to vote in an ordinary
election of directors, the CVC Stockholders or the CVC Stockholders together
with such other Persons, as applicable, may remove any director, with or without
cause, including, but not limited to, any director that is a Disinterested
Director Nominee and may fill the vacancy resulting from such removal with any
Person of their choosing. Notwithstanding any provision in this Article V to
the contrary, no Stockholder shall have any obligation under this Article V with
respect to any Nominee to the extent such obligation would be in conflict with
any action taken under the foregoing sentence.
5.3 VACANCIES. In the event that a vacancy is created on the Board at any
time by the death, disability, retirement, resignation or removal (with or
without cause) of a director, each Stockholder agrees to vote all shares of
Common Stock owned by such Stockholder and other securities over which such
Stockholder has voting control for the individual designated to fill such
vacancy by whichever of the Stockholders or Nominating Committee designated
and/or approved (pursuant to Section 5.1 hereof) the director whose death,
disability, retirement, resignation or removal (with or without cause) resulted
in such vacancy on the Board in the manner set forth in Section 5.1 hereof;
provided, however, that such other individual so designated may not previously
have been a director of Holding who was removed for cause from the Board;
provided, further, that the CVC Stockholders shall not be required to cause the
directors designated by them to vote for any Nominee.
5.4 DESIGNATION OF PROXY. In order to effectuate the provisions of this
Article V and in addition to and not in lieu of Sections 5.1 through 5.3 hereof,
each of the Management Stockholders and Additional Stockholders hereby grants to
Ueli Spring, or if Ueli Spring shall cease to be the Chief Executive Officer of
Holding, to his successor as Chief Executive Officer of Holding (the "Management
Representative"), an irrevocable proxy (which proxy is coupled with an interest)
to vote at any annual or special meeting of stockholders, or to take action by
written consent in lieu of such meeting with respect to, all of the shares of
Common Stock owned or held of record by the Management Stockholders and
Additional Stockholders solely for (a) the election of directors designated in
accordance with Section 5.1, (b) the removal of directors in accordance with
Section 5.2 and (c) the election of a director to fill any vacancy on the Board
in accordance with Section 5.3.
5.5 COMMITEES OF THE BOARD; SUBSIDIARY BOARDS. Unless otherwise consented
to by CVC, the Stockholders shall take all action necessary or appropriate (to
the extent permitted by law) to cause Holding to have an audit committee and a
compensation committee of the Board each of which shall consist of one (1)
director who is a CVC Nominee, the Disinterested Director Nominee which
initially shall be John F. Wurster and one (1)
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Management Nominee. The Stockholders shall take all action necessary or
appropriate (to the extent permitted by law) to cause each additional committee
of the Board to have the same number of directors and composition of Nominees as
such audit committee and compensation committee. The Stockholders agree that
the composition of the board of directors of each Subsidiary of Holding and of
each committee thereof shall be consistent with the composition of the Board and
each corresponding committee thereof; provided that no member of the Board shall
be required to serve as a director or committee member of any Subsidiary of
Holding.
5.6 OBSERVER'S RIGHTS. In the event the CVC Stockholders elect not to
exercise, or are prohibited by applicable law from exercising, their rights to
designate either or both of the CVC Nominees, or once appointed, the CVC
Stockholders desire to remove one (1) or both of the CVC Nominees, the CVC
Stockholders shall have the right to one (1) individual (a "CVC Observer")
attend any meeting of the Board or any committee thereof unless attendance at
such meeting, in Holding's reasonable judgment, would create a conflict of
interest for such Stockholder. The Institutional Stockholders holding a majority
of Common Stock held by all Institutional Stockholders shall have the right to
one (1) individual (an "Institutional Observer"; and together with the CVC
Observer, an "Observer") who may attend any meeting of the Board or any
committee thereof unless attendance at such meeting, in Holding's reasonable
judgment, would create a conflict of interest for such Stockholder. In
addition, the Institutional Stockholders holding a majority of Restricted
Securities held by all Institutional Stockholders and the CVC Stockholders shall
each have the right to appoint an Institutional Observer and CVC Observer,
respectively, to the Board of Directors of any Subsidiary. An Observer shall
not have the right to vote on any matter presented to the Board or any committee
thereof. Holding shall give CVC, the CVC Observer and the Institutional
Investors written notice of each meeting thereof at the same time and in the
same manner as the members of the Board or such committee receive notice of such
meetings, and Holding shall permit each Observer to attend as an observer at all
meetings thereof; provided that in the case of telephonic meetings, such
Stockholders need receive only actual notice thereof at the same time and in the
same manner as notice is given to the directors. Each Observer shall be
entitled to receive all written materials and other information given to the
directors in connection with such meetings at the same time such materials and
information are given to the directors, and each Observer shall keep such
materials and information confidential. If Holding proposes to take any action
by written consent in lieu of a meeting of the Board, Holding shall give written
notice thereof to each Observer prior to the effective date of such consent
describing the nature and substance of such action.
5.7 AFFIRMATIVE BOARD VOTE. In addition to any other action requiring an
Affirmative Board Vote, an Affirmative Board Vote shall be required prior to
Holding or any of its Subsidiaries entering into any Significant Transaction.
5.8 ACTION BY WRITTEN CONSENT STOCKHOLDERS. The parties hereto agree that
whenever any action is proposed to be taken by Stockholders without a meeting,
the Stockholders proposing to act by such consent shall, or shall cause Holding
to, give CVC at least
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seven (7) days' prior written notice of such proposed action specifying the
action to be taken and the purpose thereof.
5.9 REGULATORY RIGHT. If the CVC Stockholders determine in their sole
discretion that applicable law permits the CVC Stockholders to have the right to
designate a majority of the directors of the Board or directors having a
majority of the weighted votes on the Board, then notwithstanding the provisions
of Section 5.1 the CVC Stockholders may, upon the giving of notice thereof to
the Company and the Institutional Stockholders, designate each of the
Disinterested Directors instead of the Nominating Committee and take any and all
other actions otherwise permitted or required to be taken by the Nominating
Committee in this Agreement or otherwise and provided that from and after the
date such notice is given the qualifications of a Disinterested Director set
forth in clauses (A) - (C) of Section 5.1(a)(iii) shall no longer be required.
Such right exercised under this Section 5.9 is referred to as the "Regulatory
Right".
ARTICLE VI
CERTAIN COVENANTS OF THE PARTIES
6.1 REGISTRATION OF COMMON STOCK. In the event of a registration by
Holding of Common Stock under the Securities Act each Stockholder shall, at a
meeting convened for the purpose of amending the Certificate, vote (which vote
shall become effective immediately prior to the closing of the sale of Common
Stock pursuant to such registration by Holding): (a) to remove from the
Certificate requirements, if any such requirements are at such time imposed
thereby, that the Board act by Affirmative Board Vote, except as otherwise
required by law; (b) to remove from the Certificate requirements, if any such
requirements are at such time imposed thereby, relating to preemptive rights
with respect to Common Stock; and (c) to change the number of authorized shares
of Common Stock and, if necessary, change the number of issued and outstanding
shares of Common Stock, whether by stock split, stock dividend or otherwise, or
change its par value or effect any other reclassification, recapitalization or
similar event relating to the Common Stock; in the case of each of clauses (a),
(b) and (c) above, as recommended by a majority of the members of the Board to
facilitate such registration. Notwithstanding the foregoing, nothing set forth
herein shall be construed to allow any stock of any class or series to be
treated differently from any other stock of the same class or series or to
reduce the rights afforded under Article VII hereof.
6.2 MANAGEMENT STOCKHOLDERS; ADDITIONAL STOCKHOLDERS. The parties hereto
agree that as a condition precedent to the issuance by Holding of shares of
Common Stock or of securities convertible, exchangeable or exercisable for or
into shares of Common Stock (a) to any employee of Holding or its Subsidiaries
or (b) any Person other than any such employee, any CVC Stockholder, any
Institutional Stockholder or any Management Stockholder, Holding shall require
such employee or other Person to execute a Joinder Agreement and thereby enter
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into and become a party to this Agreement. From and after such time, the term
"Management Stockholder" shall be deemed to include such employees and the term
"Additional Stockholder" shall be deemed to include such other Person. Nothing
contained herein nor the ownership of any Restricted Securities shall confer
upon any Management Stockholder the right to employment or to remain in the
employ of Holding or any of its Subsidiaries. Notwithstanding the foregoing, to
the extent approved by a majority of the Board (which shall include any members
of the Board who are Disinterested Director Nominees) and specified in any
Joinder Agreement (or amendment thereto) pursuant to which any Management
Stockholder or Additional Stockholder may become a party hereto, the provisions
of this Agreement may be varied to be more or less restrictive with respect to
any such Management Stockholder or Additional Stockholder or to reduce the
rights afforded by Article VII hereof.
6.3 STOCKHOLDERS LIST; CERTAIN NOTICES. Upon the request of any CVC
Stockholder, Prudential, Pruco, Berkshire or the State of Michigan, Holding
shall deliver promptly to such CVC Stockholder, Prudential, Pruco, Berkshire or
the State of Michigan, respectively, as the case may be, a list setting forth
the names of all Stockholders and the number of shares of Class A Common and
Class B Common owned by each Stockholder. In addition, Holding shall give each
of the CVC Stockholders prior written notice of (a) the conversion of any shares
of any class of Common Stock and (b) any record transfer of Restricted
Securities, setting forth the name of the transferee and the number and type of
Restricted Securities being so transferred.
6.4 REGULATORY COMPLIANCE COOPERATION. Before Holding redeems, purchases
or otherwise acquires, directly or indirectly, or converts or takes any action
with respect to the voting rights of, any shares of any class of its capital
stock or any securities convertible, exchangeable or exercisable for or into any
shares of any class of its capital stock, Holding will give written notice of
such pending action to CVC. Upon the written request of any CVC Stockholder
made within twenty (20) days after its receipt of any such notice, stating that
after giving effect to such action such CVC Stockholder would have a Regulatory
Problem (as defined below), Holding will defer taking such action for such
period (not to extend beyond forty-five (45) days after such CVC Stockholder's
receipt of Holding's original notice) as such CVC Stockholder requests to permit
it and its Affiliates to reduce the quantity of securities owned by them in
order to avoid the Regulatory Problem. In the event Holding or any CVC
Stockholder is precluded from taking any action under this Agreement within any
allotted period of time as a consequence of this Section, such period of time
shall be extended by the number of days during which Holding or such CVC
Stockholder is precluded from acting.
(b) In the event that CVC determines that it has a Regulatory Problem (as
defined below), Holding agrees to take all such actions as are reasonably
requested by CVC in order to (i) effectuate and facilitate any transfer by the
CVC Stockholders of any securities of Holding then held by the CVC Stockholders
to any Person designated by CVC, such transfer to be at the expense of CVC only
to the extent that the expenses in facilitating such transfer were incurred
solely to cure a Regulatory Problem, (ii) permit the CVC Stockholders (or any of
their
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Affiliates) to exchange all or a portion of any voting security then held by
them on a share-for-share basis for shares of a non voting security of Holding,
which non voting security shall be identical in all respects to the voting
security exchanged for it, except that it shall be non voting and shall be
convertible into a voting security on such terms as are requested by the CVC
Stockholders in light of regulatory considerations then prevailing, and (iii)
continue and preserve the respective allocation of the voting interests with
respect to Holding provided for herein, and with respect to CVC's ownership of
Holding's securities. Such actions may include, but shall not necessarily be
limited to, entering into such additional agreements, adopting such amendments
to the Certificate and by-laws of Holding and taking such additional actions as
are reasonably requested by CVC in order to effectuate the intent of the
foregoing.
(c) In addition, Holding will not be a party to any merger, consolidation,
recapitalization or other transaction pursuant to which CVC would be required to
take any voting securities, or any securities convertible, exchangeable or
exercisable for or into voting securities, which might reasonably be expected to
cause CVC to have a Regulatory Problem. For purposes of this Agreement,
"Regulatory Problem" means any set of facts or circumstances wherein it has been
asserted by any governmental agency or other authority or CVC reasonably
believes that, such Person and such Person's Affiliates own, control or have
power over a greater quantity of securities of any kind issued by Holding than
are permitted under any requirement of any governmental authority.
6.5 FINANCIAL DISCLOSURE. For so long as any of CVC, Prudential, Pruco,
Berkshire, the State of Michigan, Jerome Singer, Douglas A. Thal, Robert J.
Klein or Steven Singer owns any Restricted Securities or securities convertible,
exchangeable or exercisable for or into Common Stock, Holding shall deliver to
CVC, Prudential, Pruco, Berkshire, the State of Michigan, Jerome Singer, Douglas
A. Thal, Robert J. Klein or Steven Singer as the case may be: (a) as soon as
available but in any event within thirty (30) days after the end of each monthly
accounting period in each fiscal year, unaudited consolidating and consolidated
statements of income and cash flows of Holding and its Subsidiaries for such
monthly period and for the period from the beginning of the fiscal year to the
end of such month, and unaudited consolidating and consolidated balance sheets
of Holding and its Subsidiaries as of the end of such monthly period, setting
forth in each case comparisons to the annual budget and to the corresponding
period in the preceding fiscal year, and all such statements shall be prepared
in accordance with generally accepted accounting principles, consistently
applied, subject to the absence of footnote disclosures and to normal year-end
adjustments, and shall be accompanied by an Officer's Certificate; (b) within
forty-five (45) days after the end of each quarterly accounting period in each
fiscal year, unaudited consolidating and consolidated statements of income and
cash flows of Holding and its Subsidiaries for such quarterly period, and
unaudited consolidating and consolidated balance sheets of Holding and its
Subsidiaries as of the end of such quarterly period, setting forth in each case
comparisons to the annual budget and to the corresponding period in the
preceding fiscal year, and all such statements shall be prepared in accordance
with generally accepted accounting principles, consistently applied, subject to
the absence of footnote disclosures and to normal year-end adjustments, and
shall be accompanied
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by an Officer's Certificate; (c) within ninety (90) days after the end of each
fiscal year, audited consolidating and consolidated statements of income and
cash flows of Holding and its Subsidiaries for such fiscal year, and audited
consolidating and consolidated balance sheets of Holding and its Subsidiaries as
of the end of such fiscal year, setting forth in each case comparisons to the
annual budget and to the preceding fiscal year, all prepared in accordance
accompanied by (i) with respect to the consolidated portions of such statements,
an opinion of an independent accounting firm of recognized national standing,
(ii) a certificate from such accounting firm, addressed to the Board, stating
that in the course of its examination nothing came to its attention that caused
it to believe that there was any default by Holding or any Subsidiary in the
fulfillment of or compliance with any of the terms, covenants, provisions or
conditions of any material agreement to which Holding or any Subsidiary is a
party or, if such accountants have reason to believe any default by Holding or
any Subsidiary exists, a certificate specifying the nature and period of
existence thereof and (iii) a copy of such firm's annual management letter to
the Board; (d) promptly upon receipt thereof, any additional reports, management
letters or other detailed information concerning significant aspects of the
operations or financial affairs of Holding given to Holding by its independent
accountants (and not otherwise contained in other materials provided hereunder);
(e) at least thirty (30) days prior to the end of each fiscal year, an annual
budget prepared on a monthly basis for Holding and its Subsidiaries for the
following fiscal year (displaying anticipated statements of income and cash
flows and balance sheets), and following preparation thereof quarterly revisions
of such budget and any other significant budgets prepared by Holding or its
Subsidiaries, and within thirty (30) days after any monthly period in which
there is a material adverse deviation from the annual budget, an Officer's
Certificate explaining the deviation and what actions Holding has taken and
proposes to take with respect thereto; (f) promptly upon their becoming
available drafts of the annual financial statements of Holding and its
Subsidiaries, together with a draft report of Holding's independent public
accountants thereon, and will afford CVC reasonable opportunity to review and
comment on such drafts; and (g) with reasonable promptness, such other
information and financial data concerning Holding and its Subsidiaries as any
Person entitled to receive information under this Section 6.5 may reasonably
request (provided that any Institutional Investor or Former Management Group
Member may elect in writing not to receive any such financials described in this
Section 6.5). Additionally, CVC and the Institutional Observer, if any, shall
have the right to inspect all books and records of Holding and its Subsidiaries.
6.6 PURCHASER REPRESENTATIVE. If Holding enters into any negotiation or
transaction involving the issuance of securities of another Person to the
Stockholders for which Rule 506 (or any similar rule then in effect) promulgated
under the Securities Act by the Commission may be available with respect to such
negotiation or transaction (including a merger, consolidation or other
reorganization), each Management Stockholder and Additional Stockholder (if an
individual) will, at the request of Holding, appoint a purchaser representative
(as such term is defined in Rule 501 under the Securities Act) reasonably
acceptable to Holding. If any Management Stockholder or Additional Stockholder
appoints the purchaser representative designated by Holding, Holding will pay
the fees of such purchaser representative, but if any
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such Management Stockholder or Additional Stockholder declines to appoint the
purchaser representative designated by Holding, such Management Stockholder or
Additional Stockholder will appoint, at his own expense, another purchaser
representative reasonably acceptable to Holding.
ARTICLE VII
RIGHT OF OFFER
7.1 RIGHTS OF OFFER. Prior to Holding issuing or selling, or Aetna
Holdings selling, any New Common Stock to the CVC Stockholders, Holding or Aetna
Holdings, as the case may be, shall offer (the "New Common Stock Offer") each
Institutional Stockholder, Former Management Stockholder, Management Stockholder
and Additional Stockholder (the "New Common Stock Offerees") an opportunity to
purchase any or all of its Pro Rata portion of such New Common Stock on the same
terms and conditions as the New Common Stock being offered to the CVC
Stockholders and, if such New Common Stock is to be issued as a part of a unit
of securities, Holding or Aetna Holdings, as the case may be, shall offer each
such New Common Stock Offeree an opportunity to purchase any or all of its Pro
Rata portion of such unit of securities (together with the New Common Stock, the
"New Common Stock Units") on the same terms and conditions as the New Common
Stock being offered to the CVC Stockholders; provided, however, that in the
event any New Common Stock Offeree does not purchase any or all of its Pro Rata
portion of either New Common Stock or New Common Stock Units, as the case may
be, the other New Common Stock Offerees and the CVC Stockholders shall have the
right to purchase such portion, Pro Rata, until all of such New Common Stock or
New Common Stock Units, as the case may be, are purchased or until such other
New Common Stock Offerees or the CVC Stockholders do not desire to purchase any
more New Common Stock or New Common Stock Units, as the case may be. Holding
shall make such New Common Stock Offer by providing each New Common Stock
Offeree with a notice (the "New Common Stock Notice") setting forth (i) each New
Common Stock Offeree's Pro Rata portion of such New Common Stock or of such New
Common Stock Units, as the case may be, (ii) the consideration to be paid for
each share of New Common Stock or each unit of New Common Stock Units, as the
case may be, and (iii) all other material terms of such New Common Stock Offer.
In order for any New Common Stock Offerees to accept the New Common Stock
Offer, such New Common Stock Offeree shall on or before twenty (20) days
following its receipt of a New Common Stock Notice deliver written notice of its
acceptance ("Acceptance Notice") to Holding, CVC and the other New Common Stock
Offerees (the expiration of such twenty (20) days being referred to herein as
the "Acceptance Date"). The Acceptance Notice shall set forth the maximum
number of New Common Stock or New Common Stock Units, as the case may be, that
such New Common Stock Offeree wishes to purchase, including any number which
would be allocated to such New Common Stock Offeree in the event any other New
Common Stock Offeree does not purchase all or any portion of its Pro Rata
portion.
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Notwithstanding the foregoing, if the issuance and sale to CVC is in conjunction
with the borrowing of money from CVC or its Affiliates or the guaranteeing of
debt of Holding or its Subsidiaries by CVC or its Affiliates, then no New Common
Stock Offeree shall have any preemptive rights as set forth herein unless such
New Common Stock Offeree purchases or participates, on a Pro Rata basis, in the
related financing or guarantee, as the case may be, on the same terms as CVC and
its Affiliates.
Within one hundred twenty (120) days following the Acceptance Date, Holding
or Aetna Holdings, as the case may be, (i) shall issue or sell New Common Stock
or New Common Stock Units, as the case may be, to each New Common Stock Offeree
who timely accepted such New Common Stock Offer upon the terms specified in such
New Common Stock Offer and the CVC Stockholders, if applicable, and (ii) may
issue or sell New Common Stock or New Common Stock Units, as the case may be, to
any other Person or Persons in an amount not to exceed the aggregate amount
offered pursuant to the New Common Stock Offer (less the aggregate amount of
shares of New Common Stock or units of New Common Stock Units, as the case may
be, issued or sold to New Common Stock Offerees and the CVC Stockholders
pursuant to the foregoing clause (i)) and for a price which equals or exceeds
the price per share of New Common Stock or per unit of New Common Stock Units,
as the case may be, specified in the New Common Stock Offer. This Section 7.1
shall terminate automatically and be of no further force and effect upon the
consummation of a Qualifying Offering.
ARTICLE VIII
MISCELLANEOUS
8.1 GOVERNING LAW. The construction, validity and interpretation of this
Agreement shall be governed and construed in accordance with the domestic laws
of the State of Delaware, without giving effect to any choice of law or conflict
of law provision or rule (whether of 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.
8.2 ENTIRE AGREEMENT; AMENDMENTS. This Agreement (when read in conjunction
with the Recapitalization and Stock Purchase Agreements) constitutes the entire
agreement of the parties with respect to the subject matter hereof and may be
amended, modified or supplemented only by a written instrument duly executed by
Holding and the CVC Stockholders; provided that Holding shall provide twenty
(20) days' prior written notice of any such amendment not governed by the next
proviso; and provided further that (a) any amendment, modification or supplement
that adversely or disproportionately affects the Institutional Stockholders,
Former Management Stockholders, Management Stockholders or the Additional
Stockholders, as the case may be, shall require the consent of the Institutional
Stockholders, Former Management Stockholders, Management Stockholders or
Additional
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36
Stockholders, respectively, and (b) any amendment, modification or supplement
that disproportionately affects less than all of the Institutional Stockholders,
Former Management Stockholders, Management Stockholders or Additional
Stockholders, as the case may be, shall require the consent of the Institutional
Stockholders, Former Management Stockholders, Management Stockholders or the
Additional Stockholders so affected. In the event of an amendment, modification
or supplement of this Agreement in accordance with its terms, the Stockholders
shall cause the Board to meet within thirty (30) calendar days following such
amendment, modification or supplement, or as soon thereafter as is practicable
for the purpose of adopting any amendment to the Certificate and By-Laws of
Holding that may be required as a result of such amendment, modification or
supplement to this Agreement, and, if required, proposing such amendments to the
stockholders entitled to vote thereon. The Stockholders hereby agree to vote
their shares of voting Common Stock to approve such amendments to the
Certificate and By-Laws of Holding.
8.3 TERM. This Agreement shall terminate upon the earliest to occur of (i)
a Qualifying Offering, (ii) a Sale of the Company pursuant to clause (i) of the
definition of "Sale of the Company", and (iii) upon the distribution of any
proceeds from a Sale of the Company to the Stockholders pursuant to clause (ii)
of the definition of "Sale of the Company".
8.4 CERTAIN ACTIONS. Unless otherwise expressly provided herein, whenever
any action is required under this Agreement by:
(i) the CVC Stockholders, it shall be by the affirmative vote of the
holders of shares of Common Stock representing more than 50 percent of the
Common Stock then held by the CVC Stockholders as a group, or as otherwise
agreed in writing by the CVC Stockholders as a group;
(ii) the Berkshire Stockholders, it shall be by the affirmative vote
of the holders of shares of Common Stock representing more than 50 percent
of the Common Stock on a Diluted Basis then held by the Berkshire
Stockholders, as a group;
(iii) the Prudential Stockholders, it shall be by the affirmative vote
of the holders of shares of Common Stock representing more than 50 percent
of the Common Stock on a Diluted Basis then held by the Prudential
Stockholders, as a group;
(iv) the Pruco Stockholders, it shall be by the affirmative vote of
the holders of shares of Common Stock representing more than 50 percent of
the Common Stock on a Diluted Basis then held by the Pruco Stockholders, as
a group;
(v) the Former Management Stockholders, it shall be by the affirmative
vote of the holders of shares of Common Stock representing more than 50
percent of the Common Stock on a Diluted Basis then held by the Former
Management Stockholders, as a group;
-35-
37
(vi) the State of Michigan Stockholders, it shall be by the
affirmative vote of the holders of shares of Common Stock representing
more than 50 percent of the Common Stock on a Diluted Basis then held
by the State of Michigan Stockholders, as a group;
(vii) the Management Stockholders, it shall be by the Management
Representative; or
(viii) the Additional Stockholders, it shall be by the
affirmative vote of the holders of shares of Common Stock representing
more than 50% of the Common Stock on a Diluted Basis then held by the
Additional Stockholders as a group.
8.5 INSPECTION For so long as this Agreement shall remain in effect, this
Agreement shall be made available for inspection by any Stockholder at the
principal executive offices of Holding.
8.6 RECAPITALIZATION, EXCHANGES, ETC. AFFECTING RESTRICTED SECURITIES. The
provisions of this Agreement shall apply, to the full extent set forth herein
with respect to the Restricted Securities, to any and all shares of Holding
capital stock or any successor or assign of Holding (whether by merger,
consolidation, sale of assets, or otherwise, including shares issued by a parent
corporation in connection with a triangular merger) which may be issued in
respect of, in exchange for, or in substitution of, Restricted Securities and
shall be appropriately adjusted for any stock dividends, splits, reverse splits,
combinations, reclassifications and the like occurring after the date hereof.
8.7 COMPLIANCE WITH REGULATIONS. Whenever a Stockholder is entitled to
purchase Restricted Securities pursuant to the provisions of this Agreement, any
closing time period specified in such provision shall be tolled until any
necessary governmental approval is received including without limitation,
approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
provided that such tolling period shall not exceed sixty (60) days.
8.8 WAIVER. No waiver by any party of any term or condition of this
Agreement, in one or more instances, shall be valid unless in writing, and no
such waiver shall be deemed to be construed as a waiver of any subsequent breach
or default of the same or similar nature.
8.9 SUCCESORS AND ASSIGNS. Except as otherwise expressly provided herein,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal representatives, successors and
permitted assigns (including without limitation transferees of Restricted
Securities); provided, however, that (a) nothing contained herein shall be
construed as granting any Stockholder the right to transfer any of its
Restricted Securities except in accordance with this Agreement, (b) any Third
Party which acquires Restricted Securities in accordance with Section 2.5 shall
be bound by and have the benefits of the provisions of Sections 2.1, 2.2, 2.4,
2.5, 2.6, 2.7 and Article III to the same extent as the
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38
transferor of such Restricted Securities, but the remaining provisions of this
Agreement shall not inure to the benefit of, and the provisions of Article IV
shall not apply to the Restricted Securities of, such Third Party; provided,
however, such Third Party will be entitled to the same rights and benefits
granted to the transferor of such Restricted Securities with respect to Article
III Offers, Article V, Section 6.5 and Section 7.1, (c) unless otherwise
provided in the terms of the Transfer, none of the provisions of this Agreement,
other than those set forth in Sections 2.1 and 2.2 to the extent those Sections
require compliance with the Securities Act, delivery of opinions of counsel and
placement of Securities Act (or state securities laws) legends, shall apply to
any Transfer of Restricted Securities (or to the transferee thereof) subsequent
to a Transfer of those securities pursuant to Article III or by a CVC
Stockholder in accordance with Section 3.3(b), (d) none of the provisions of
this Agreement shall apply to any Transfer of Restricted Securities subsequent
to a Transfer pursuant to a registered public offering under the Securities Act
made in accordance with the Securities Act, (e) notwithstanding any Transfer of
Restricted Securities by any Berkshire Stockholder, Prudential Stockholder,
Pruco Stockholder, State of Michigan Stockholder, Former Management Stockholder,
Management Stockholder or Additional Stockholder to a CVC Stockholder, only the
provisions of this Agreement which are expressly applicable to CVC Stockholders
shall be applicable to such CVC Stockholder and to such Restricted Securities in
the hands of such CVC Stockholder, (f) notwithstanding any Transfer of
Restricted Securities by any Additional Stockholder, CVC Stockholder, Prudential
Stockholder, Pruco Stockholder, Former Management Stockholder, State of Michigan
Stockholder or Management Stockholder to a Berkshire Stockholder, only the
provisions of this Agreement which are expressly applicable to such Berkshire
Stockholder shall be applicable to such Berkshire Stockholder and to such
Restricted Securities in the hands of such Berkshire Stockholder, (g)
notwithstanding any Transfer of Restricted Securities by any CVC Stockholder,
Berkshire Stockholder, Pruco Stockholder, State of Michigan Stockholder, Former
Management Stockholder, Management Stockholder, or Additional Stockholder to a
Prudential Stockholder, only the provisions of this Agreement which are
expressly applicable to such Prudential Stockholder shall be applicable to such
Prudential Stockholder and to such Restricted Securities in the hands of such
Prudential Stockholder, (h) notwithstanding any Transfer of Restricted
Securities by any CVC Stockholder, Berkshire Stockholder, Prudential
Stockholder, State of Michigan Stockholder, Former Management Stockholder,
Management Stockholder or Additional Stockholder to any Pruco Stockholder, only
the provisions of this Agreement
-37-
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which are expressly applicable to such Pruco Stockholder shall be applicable to
such Pruco Stockholder and to the Restricted Securities in the hands of such
Pruco Stockholder, (i) notwithstanding any Transfer of Restricted Securities by
any CVC Stockholder, Berkshire Stockholder, Prudential Stockholder, Pruco
Stockholder, Former Management Stockholder, Management Stockholder or Additional
Stockholder to any State of Michigan Stockholder, only the provisions of this
Agreement which are expressly applicable to such State of Michigan Stockholder
shall be applicable to such State of Michigan Stockholder and to the Restricted
Securities in the hands of such State of Michigan Stockholder and to the
Restricted Securities in the hands of such State of Michigan Stockholder, (j)
notwithstanding any Transfer of Restricted Securities by any CVC Stockholder,
State of Michigan Stockholder, Management Stockholder or Additional Stockholder
to any Former Management Stockholder, only the provisions of this Agreement
which are expressly applicable to such Former Management Stockholder shall be
applicable to such Former Management Stockholder and to such Restricted
Securities in the hands of such Former Management Stockholder, (k)
notwithstanding any Transfer of Restricted Securities by any Additional
Stockholder, CVC Stockholder, Berkshire Stockholder, Prudential Stockholder,
State of Michigan Stockholder or Pruco Stockholder to a Management Stockholder,
only the provisions of this Agreement which are expressly applicable to such
Management Stockholder shall be applicable to such Management Stockholder and to
such Restricted Securities in the hands of such Management Stockholder, and (l)
notwithstanding any Transfer of Restricted Securities by any CVC Stockholder,
Management Stockholder, Berkshire Stockholder, Prudential Stockholder, Former
Management Stockholder, State of Michigan Stockholder or Pruco Stockholder to an
Additional Stockholder, only the provisions of this Agreement which are
expressly applicable to such Additional Stockholder shall be applicable to such
Additional Stockholder and to such Restricted Securities in the hands of such
Additional Stockholder.
8.10 REMEDIES. In the event of a breach by any party to this Agreement of
its obligations under this Agreement, any party injured by such breach, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages and costs (including reasonable attorneys' fees), will be
entitled to specific performance of its rights under this Agreement. The
parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that the remedy at law, including
monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is waived.
8.11 INCOME TAX WITHOLDING. Each Management Stockholder and Additional
Stockholder authorizes Holding to make any required withholding from such
Management Stockholder's (or the Additional Stockholder, as the case may be)
compensation for the payment of any and all income taxes and other sums that may
be due any governmental authority as a result of the receipt by either the
Management Stockholders of compensation income under Section 83 of the Internal
Revenue Code of 1986, as amended, or similar provisions of state or local law,
if required by applicable law, and agrees, if requested by Holding, and in lieu
of all or a portion of such withholding, to pay Holding in a lump sum such
amounts as Holding may be required to remit to any governmental authority on
behalf of Management Stockholder (or Additional Stockholder, as the case may be)
in respect of any such taxes and other sums.
8.12 INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance here from and (d) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this
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Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
8.13 HEADINGS. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
8.14 FURTHER ASSURANCES. Each party hereto shall cooperate and shall take
such further action and shall execute and deliver such further documents as may
be reasonably requested by any other party in order to carry out the provisions
and purposes of this Agreement. Any provision herein that by its terms requires
a Subsidiary of Holding to take any action or refrain from taking any action
shall be interpreted to require Holding to cause such Subsidiary to take such
action or to refrain from taking such action, respectively, to the fullest
extent permitted by law.
8.15 GENDER. Whenever the pronouns "he" or "his" are used herein, they
shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in the
plural, and words in the plural shall be construed as though in the singular in
all cases where they would so apply.
8.16 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
8.17 NOTICES. (a) All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission or mailed (by
registered or certified mail, return receipt requested) or by reputable
overnight courier, fee prepaid to the parties at the following addresses or
facsimile numbers:
(i) If to any CVC Stockholder, to:
Citicorp Venture Capital, Ltd.
399 Park Avenue
New York, New York 10043
Facsimile No.: 212-888-2940
Attn: David Y. Howe
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Facsimile No.: 212-309-6273
-39-
41
Attn: Philip H. Werner
(ii) If to any Berkshire Stockholder, to:
Berkshire Partners
One Boston Place, Suite 3425
Boston, MA 02108
Facsimile No.: 617-227-6105
Attn: Russell L. Epker
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109-2881
Facsimile No.: 617-523-1231
Attn: Stephen W. Carr, P.C.
(iii) If to any Prudential Stockholder, to:
The Prudential Insurance Company of America
c/o Financial Restructuring Group
Gateway Center Four
100 Mulberry Street
Newark, NJ 07102
Facsimile No.: 201-802-2662
Attn: Managing Director
with copies to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Facsimile No.: 212-821-8111
Attn: Duncan J. Stewart
The Prudential Insurance Company of America
c/o Law Department
Gateway Center Four
100 Mulberry Street
Newark, NJ 07102
Facsimile No.: 201-802-3853
-40-
42
Attn: Jack Pfeilsticker
(iv) If to any Pruco Stockholder, to
Pruco Life Insurance Company
c/o Financial Restructuring Group
Gateway Center Four
100 Mulberry Street
Newark, NJ 07102
Facsimile No.: 201-802-2662
Attn: Managing Director
with copies to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Facsimile No.: 212-821-8111
Attn: Duncan J. Stewart
Pruco Life Insurance Company
c/o Law Department
Gateway Center Four
100 Mulberry Street
Newark, NJ 07102
Facsimile No.: 201-802-3853
Attn: Jack Pfeilsticker
(v) If to any State of Michigan Stockholder, to
Michigan Department of Treasury
450 West Allegan
Lansing, MI 48922
Facsimile No.: 517-335-3668
Attn: Thomas Hufnagel
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
-41-
43
New York, NY 10022
Facsimile No.: 212-821-8111
Attn: Duncan J. Stewart
(vi) If to Holding, to:
MS Acquisition Corp.
c/o Aetna Industries, Inc.
24331 Sherwood Avenue
P.O. Box 3067
Centerline, MI 48015
Facsimile No.: 816-759-2209
Attn: Chief Executive Officer
with copies to:
Citicorp Venture Capital, Ltd.
399 Park Avenue - 14th Floor
New York, NY 10043
Facsimile No.: 212-888-2940
Attn: Michael A. Delaney
and
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Facsimile No.: 212-309-6273
Attn: Philip H. Werner
(vii) If to a Stockholder other than a CVC Stockholder,
Berkshire Stockholder, Prudential Stockholder, Pruco
Stockholder or State of Michigan Stockholder, to the
address of such Person set forth in the stock records of
Holding.
(b) All such notices, requests and other communications will (w) if
delivered personally to the address as provided in this Section 8.17 be deemed
given upon delivery, (x) if delivered by facsimile transmission to the facsimile
number as provided in this Section 8.17 be deemed given upon receipt, (y) if
delivered by mail in the manner described above to the address as provided in
this Section 8.17, be deemed given upon the earlier of the third business day
following mailing or upon receipt and (z) if delivered by reputable overnight
courier to the address as provided in this Section 8.17, be deemed given upon
the earlier of the first business
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44
day following the date sent by such reputable overnight courier or upon receipt
(in each case regardless of whether such notice, request or other communication
is received by any other Person to whom a copy of such notice is to be delivered
pursuant to this Section 8.17). Any party from time to time may change its
address, facsimile number or other information for the purpose of notices to
that party by giving notice specifying such change to the other parties hereto.
8.18 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
EACH OF THE PARTIES HERETO, OTHER THAN THE STATE OF MICHIGAN, CONSENTS TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW
YORK, STATE OF NEW YORK, AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS
RELATING TO THIS AGREEMENT MAY BE LITIGATED IN SUCH COURTS. EACH SUCH PARTY
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH SUCH
PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PARTY AT THE
ADDRESS SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE FIFTEEN
(15) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO
LIMIT THE ABILITY OF ANY PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS,
NOTICES AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO
OBTAIN JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY
OF THE OTHER PARTIES HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS
MAY BE PERMITTED BY ANY APPLICABLE LAW.
8.19 WAIVER OF JURY TRIAL.
EACH PARTY, OTHER THAN THE STATE OF MICHIGAN, HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. EACH SUCH PARTY ALSO WAIVES ANY BOND OR SURETY
OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF
SUCH PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER
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45
COMMON LAW AND STATUTORY CLAIMS. EACH SUCH PARTY WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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46
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
MS ACQUISITION CORP.
By: /s/ Ueli Spring
---------------------------
Name: Ueli Spring
Title: President and
Chief Executive
Officer
AETNA HOLDINGS, INC.
By: /s/ Ueli Spring
---------------------------
Name: Ueli Spring
Title: President and
Chief Executive
Officer
CITICORP VENTURE CAPITAL, LTD.
By: /s/ David Y. Howe
---------------------------
Name: David Y. Howe
Title: Assistant Vice
President
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ Stephen R. Haeckel
---------------------------
Vice President
PRUCO LIFE INSURANCE COMPANY
By: /s/ B. Ross Smead
---------------------------
Vice President
47
THE BERKSHIRE FUND,
A LIMITED PARTNERSHIP
By: BERKSHIRE CAPITAL
ASSOCIATES,
LIMITED PARTNERSHIP
Its General Partner
By: /s/ Russell L. Epker
----------------------------
A General Partner
BERKSHIRE STOCKHOLDERS
/s/ Bradley M. Bloom
------------------------------
BRADLEY M. BLOOM
/s/ J. Christopher Clifford
------------------------------
J. CHRISTOPHER CLIFFORD
/s/ Russell L. Epker
------------------------------
RUSSELL L. EPKER
/s/ Carl Ferenbach
------------------------------
CARL FERENBACH
/s/ Richard K. Lubin
------------------------------
RICHARD K. LUBIN
/s/ Lea Anne S. Ottinger
------------------------------
LEA ANNE S. OTTINGER
/s/ Kevin T. Callaghan
------------------------------
KEVIN T. CALLAGHAN
48
STATE OF MICHIGAN
STATE TREASURER OF THE STATE OF
MICHIGAN, AS CUSTODIAN OF THE
PUBLIC SCHOOL EMPLOYEES'
RETIREMENT SYSTEM; STATE
EMPLOYEES' RETIREMENT SYSTEM;
MICHIGAN STATE POLICE
RETIREMENT SYSTEM; JUDGES'
RETIREMENT SYSTEM; AND PROBATE
JUDGES' RETIREMENT SYSTEM
By: /s/ Paul E. Rice
---------------------------
Title: Administrator
FORMER MANAGEMENT STOCKHOLDERS
/s/ Jerome Singer
--------------------------------
JEROME SINGER
/s/ Douglas A. Thal
--------------------------------
DOUGLAS A. THAL
/s/ Robert J. Klein
--------------------------------
ROBERT J. KLEIN
/s/ Steven Singer
--------------------------------
STEVEN SINGER
49
MANAGEMENT STOCKHOLDERS
/s/ Ueli Spring
--------------------------
UELI SPRING
/s/ Harold Brown
--------------------------
HAROLD BROWN
/s/ Gary Easterly
--------------------------
GARY EASTERLY
/s/ Edward Lawson
--------------------------
EDWARD LAWSON
/s/ Daniel Pierce
--------------------------
DANIEL PIERCE
/s/ David Thal
--------------------------
DAVID THAL
/s/ Ralph Bredenbeck
--------------------------
RALPH BREDENBECK
/s/ Theresa Johnson
--------------------------
THERESA JOHNSON
50
Annex I
Ownership Chart
[To Come]
51
Exhibit A
Form of Joinder Agreement
Attention: Chief Executive Officer
Gentlemen:
In consideration of the [transfer][issuance] to the undersigned of [a
Warrant to purchase] _____ shares of [Class A] [Class B] Common Stock, par
value $.01 per share, [Describe any other security being transferred] of MS
Acquisition Corp., a Delaware corporation (the "Company"), the undersigned
[represents that it is a Permitted Transferee of [Insert name of transferor]
and]* agrees that, as of the date written below, [he] [she] [it] shall become a
party to[, and a Permitted Transferee as defined in,]* that certain
Stockholders Agreement dated as of August 13, 1996, as such agreement may have
been amended from time to time (the "Agreement"), among the Company and the
persons named therein, and [as a Permitted Transferee shall be fully bound by,
and subject to, all of the covenants, terms and conditions of the Agreement
that were applicable to the undersigned's transferor,]* [shall be fully bound
by, and subject to, the provisions of Sections 2.1, 2.2, 2.4, 2.5, 2.6, 2.7 and
3.2 of the Agreement that were applicable to the undersigned's transferor,]**
[shall be fully bound by, and subject to, all of the covenants, terms and
conditions of the Agreement,]*** [shall be fully bound by, and subject to, the
provisions of Sections 2.1 and 2.2 [insert other provisions, if
applicable]]**** as though an original party thereto and shall be deemed a [CVC
Stockholder] [Management Stockholder] [Institutional Stockholder] [Former
Management Stockholder] [Additional Stockholder] for [all]* [solely for]**
[all]*** [solely for]**** purposes thereof.
Executed as of the day of , .
TRANSFEREE:
-------------------------------
Address:
-------------------------------
-------------------------------
ACKNOWLEDGED AND ACCEPTED:
MS ACQUISITION CORP.
By:
---------------------------------
Name:
Title:
52
* Include if transferee is a Permitted Transferee
** Include if transferee is a Third Party
*** Include if transferee is an Additional Stockholder
**** Include if transferee is receiving securities from CVC
53
TABLE OF CONTENTS
Page
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RECITALS.................................................................... 1
ARTICLE I
CERTAIN DEFINITIONS
1.1 Defined Terms.......................................................... 2
ARTICLE II
TRANSFERS OF RESTRICTED SECURITIES
2.1 Restrictions Generally; Securities Act................................. 13
2.2 Legend................................................................. 13
2.3 Limitations on Repurchases, Dividends, Etc............................. 14
2.4 Transfers by Institutional Stockholders, Former Management
Stockholders, Management Stockholders, and Additional Stockholders.... 15
2.5 Right of First Offer................................................... 16
2.6 Involuntary Transfers.................................................. 17
2.7 Sale of the Company.................................................... 19
ARTICLE III
RIGHTS OF INCLUSION
3.1 Rights of Inclusion.................................................... 20
3.2 Article III Sales...................................................... 21
3.3 Certain Transfers...................................................... 22
ARTICLE IV
REPURCHASE OF RESTRICTED SECURITIES OWNED
BY MANAGEMENT STOCKHOLDERS OR ADDITIONAL STOCKHOLDERS
4.1 Sale Event............................................................. 22
4.2 Purchase Price......................................................... 23
4.3 Closing................................................................ 23
4.4 Postponement........................................................... 24
4.5 Sale Event Agent....................................................... 24
4.6 Sale Event Claw-Back Provision......................................... 25
ARTICLE V
CORPORATE GOVERNANCE
5.1 Board of Directors..................................................... 26
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5.2 Removal............................................................. 27
5.3 Vacancies........................................................... 27
5.4 Designation of Proxy................................................ 28
5.5 Committees of the Board; Subsidiary Boards.......................... 28
5.6 Observer's Rights................................................... 28
5.7 Affirmative Board Vote.............................................. 29
5.8 Action by Written Consent of Stockholders........................... 29
5.9 Regulatory Right.................................................... 29
ARTICLE VI
CERTAIN COVENANTS OF THE PARTIES
6.1 Registration of Common Stock........................................ 30
6.2 Management Stockholders; Additional Stockholders.................... 30
6.3 Stockholders List; Certain Notices.................................. 31
6.4 Regulatory Compliance Cooperation................................... 31
6.5 Financial Disclosure................................................ 32
6.6 Purchaser Representative............................................ 33
ARTICLE VII
RIGHTS OF OFFER
7.1 Rights of Offer..................................................... 34
ARTICLE VIII
MISCELLANEOUS
8.1 Governing Law....................................................... 35
8.2 Entire Agreement; Amendments........................................ 35
8.3 Term................................................................ 36
8.4 Certain Actions..................................................... 36
8.5 Inspection.......................................................... 37
8.6 Recapitalization, Exchanges, Etc., Affecting Restricted Securities.. 37
8.7 Compliance with Regulations......................................... 37
8.8 Waiver.............................................................. 37
8.9 Successors and Assigns.............................................. 37
8.10 Remedies............................................................ 39
8.11 Income Tax Withholding.............................................. 39
8.12 Invalid Provisions.................................................. 39
8.13 Headings............................................................ 40
8.14 Further Assurances.................................................. 40
8.15 Gender.............................................................. 40
8.16 Counterparts........................................................ 40
8.17 Notices............................................................. 40
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8.18 Consent to Jurisdiction and Service of Process...................... 44
8.19 Waiver of Jury Trial................................................ 45
Annex I - Ownership Chart
Exhibit A - Form of Joinder Agreement
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