Exhibit 10.3
EXISTING SHAREHOLDERS RIGHTS AGREEMENT
THIS EXISTING SHAREHOLDERS RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into effective as of the 31st day of March, 2000 by and among TSI
HANDLING, INC. d/b/a DYNA-CAM ENGINE CORPORATION, a Nevada corporation
("DYNA-CAM"), TSI CAPITAL CORP., a Nevada corporation ("TSI") and Patricia J.
Wilks and Dennis C. Palmer ("CONTROLLING SHAREHOLDERS").
RECITALS:
A. Prior to the effective date hereof, TSI held the majority of the issued
and outstanding common stock of Dyna-Cam.
B. In connection with the acquisition of the assets and certain liabilities
of Dyna-Cam Engine Corporation, a California corporation ("DCEC"), effective
March 31, 2000, the Controlling Shareholders hold a majority of the issued and
outstanding stock of Dyna-Cam.
C. As a condition to the acquisition, Dyna-Cam and the Controlling
Shareholders agreed to grant certain rights to TSI and all other shareholders of
Dyna-Cam of record immediately preceding the acquisition (the "OLD TSIH
SHAREHOLDERS").
D. As contemplated in connection with the acquisition, Dyna-Cam proposes to
offer (the "SERIES A OFFERING") up to 6,000,000 shares of its Series A 10%
Cumulative Convertible Preferred Stock (the "SERIES A PREFERRED").
E. The parties hereby enter into this Agreement to set forth the terms and
conditions of such rights.
AGREEMENT
NOW, THEREFORE, in consideration of the terms and conditions set forth
herein, the parties hereby agree as follows:
1. ANTI-DILUTION.
(a) Except as provided in (c) below, in the event Dyna-Cam shall issue
additional shares of its common stock ("COMMON STOCK") or any securities
convertible into or exercisable for its Common Stock ("COMMON STOCK
EQUIVALENTS") without consideration or for a consideration per share less than
the effective "CONVERSION PRICE" for the Series A Preferred (as determined under
the Certificate of Designation establishing the Series A Preferred) in effect on
the date of and immediately prior to such issuance, then and in such event each
of the Old TSIH Shareholders shall be issued the number of new shares equal to
the Adjusted Shares (as defined below) minus the Old Shares (as defined below).
For purposes of any calculation hereunder, the "ADJUSTED SHARES" shall equal (i)
the Old Shares multiplied by (ii) the quotient derived by dividing the previous
Conversion Price by the adjusted Conversion Price resulting from the subject
issuance (all as determined under the Certificate of Designation establishing
the Series A Preferred). The "OLD SHARES" shall equal the number of shares of
Common Stock held by the Old TSIH Shareholders as of the effective date of this
Agreement, and as adjusted from time to time hereunder.
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(b) Any Additional Shares issued hereunder shall be issued to the Old TSIH
Shareholders of record as of the date of any event causing an adjustment
hereunder and related solely to the number of shares of Common Stock held on
such date.
(c) No adjustment for any issuance shall be made under this Section 1 if
the Conversion Price of the Series A Preferred is not adjusted.
(d) The provisions of this Section 1 shall remain in effect only so long as
any Series A Preferred remains outstanding.
2. DIRECTOR REMOVAL AND APPOINTMENT
(a) If Dyna-Cam's total cumulative revenue earned through March 31, 2002
does not equal or exceed an amount equal to $2,500,000 plus an amount equal to
1.5 multiplied by the liquidation value of the outstanding Series A Preferred,
TSI shall have the right to remove one member of the Board of Directors of
Dyna-Cam elected by the holders of the Common Stock, and to replace such
director with a person of its choice.
(b) If Dyna-Cam's total cumulative revenue earned through March 31, 2003
does not equal or exceed an amount equal to $7,500,000 plus an amount equal to
4.5 multiplied by the liquidation value of the outstanding Series A Preferred,
TSI shall have the right to remove all members of the Board of Directors elected
by the holders of the Common Stock, and to replace such directors with persons
of its choice.
3. VOTING AGREEMENT.
The Controlling Shareholders shall vote their shares of Dyna-Cam Common
Stock in accordance with the terms of this Agreement. In the event the
Controlling Shareholders fail to vote their shares of Dyna-Cam in accordance
with this Agreement, Michael S. Williams, or such other person designated by
TSI, is hereby appointed proxy to vote such shares on behalf of the Controlling
Shareholders. The appointment as proxy hereunder is a power coupled with an
interest and shall be irrevocable throughout the term of this Agreement.
4. TSI AS AGENT.
For all purposes of this Agreement, TSI shall act on its own behalf and as
agent for the additional Old TSIH Shareholders and their transferees of record.
TSI is and shall be authorized to amend or terminate any provisions of this
Agreement as it determines, in its sole discretion subject to business judgment,
to be for the benefit of the Old TSIH Shareholders.
5. GOVERNING LAW; VENUE
Except to the extent corporate governance provisions are subject to the
Nevada General Corporation Law, this Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona, without reference
to choice of law principles. Jurisdiction and venue for any litigation resulting
from any dispute over the provisions of this Agreement shall reside exclusively
with the federal and state courts sitting in Maricopa County, Arizona.
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6. SEVERABILITY
If any term or provision of this Agreement shall be found by a court of
competent jurisdiction to be invalid, illegal or otherwise unenforceable, the
same shall not effect the other terms or provisions hereof or the whole of this
Agreement, but such term or provision shall be deemed modified to the extent
necessary in the court's opinion to render such term or provision enforceable,
and the rights and obligations of the parties shall be construed and enforced
accordingly, preserving to the fullest permissible extent the intent and
agreements of the parties herein set forth.
7. COMPLETE AGREEMENT; AMENDMENT
This Agreement sets forth the entire understanding between the parties
hereto and supercedes all prior agreements, arrangements and communications,
whether oral or written, with respect to the subject matter hereof. No other
agreements, representations, warranties or other matters, whether oral or
written, shall be deemed to bind the parties hereto with respect to the subject
matter hereof. This Agreement may not be modified or amended except by the
mutual written agreement of the parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement to be
effective as of the day and year first above written.
DYNA-CAM:
TSI HANDLING, INC. d/b/a
DYNA-CAM ENGINE CORPORATION
By /s/ Patricia J. Wilks
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Patricia J. Wilks
President
TSI:
TSI CAPITAL CORP.
By /s/ Michael S. Williams
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Michael S. Williams
President
CONTROLLING SHAREHOLDERS:
/s/ Patricia J. Wilks
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Patricia J. Wilks
/s/ Dennis C. Palmer
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Dennis C. Palmer
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