SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Hayes Wheels International, Inc.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
421124-10-8
(CUSIP Number)
Paul S. Levy
Joseph Littlejohn & Levy
450 Lexington Avenue, Suite 3350
New York, New York 10017
(212) 286-8600
-------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
Copy to:
Robert B. Pincus, Esq.
Skadden, Arps, Slate, Meagher & Flom
One Rodney Square
Wilmington, Delaware 19801
(302) 651-3000
July 2, 1996
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject
of this Statement because of Rule 13d-1(b)(3) or (4), check
the following: ( )
Check the following box if a fee is being paid with this
Statement: (X)
SCHEDULE 13D
CUSIP No. 421124-10-8
-----------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Joseph Littlejohn & Levy Fund II L.P.
-----------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
-----------------------------------------------------------------
(3) SEC USE ONLY
-----------------------------------------------------------------
(4) SOURCE OF FUNDS
00 (See response to Item 3)
-----------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
------------------------------------------------------------------
(7) SOLE VOTING POWER
NUMBER OF None
SHARES
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 4,817,086
EACH
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON None
WITH
(10) SHARED DISPOSITIVE POWER
4,817,086
------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,817,086
------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
43.3%
------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
PN
SCHEDULE 13D
CUSIP No. 421124-10-8
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
JLL Associates II, L.P.
------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
------------------------------------------------------------------
(3) SEC USE ONLY
------------------------------------------------------------------
(4) SOURCE OF FUNDS
00 (See response to Item 3)
------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
------------------------------------------------------------------
(7) SOLE VOTING POWER
NUMBER OF
SHARES None
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH 4,817,086
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON
WITH None
(10) SHARED DISPOSITIVE POWER
4,817,086
------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,817,086
------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
43.3%
------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
PN
SCHEDULE 13D
CUSIP No. 421124-10-8
-----------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Peter A. Joseph
-----------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
-----------------------------------------------------------------
(3) SEC USE ONLY
------------------------------------------------------------------
(4) SOURCE OF FUNDS
00 (See response to Item 3)
------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
-----------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States
------------------------------------------------------------------
(7) SOLE VOTING POWER
NUMBER OF
SHARES None
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH 4,817,086
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON
WITH None
(10) SHARED DISPOSITIVE POWER
4,817,086
------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,817,086
------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
-----------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
43.3%
------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IN
SCHEDULE 13D
CUSIP No. 421124-10-8
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Angus C. Littlejohn, Jr.
------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
------------------------------------------------------------------
(3) SEC USE ONLY
------------------------------------------------------------------
(4) SOURCE OF FUNDS
00 (See response to Item 3)
------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States
------------------------------------------------------------------
(7) SOLE VOTING POWER
NUMBER OF
SHARES None
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH 4,817,086
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON
WITH None
(10) SHARED DISPOSITIVE POWER
4,817,086
------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,817,086
------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
43.3%
------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IN
SCHEDULE 13D
CUSIP No. 421124-10-8
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Paul S. Levy
------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
------------------------------------------------------------------
(3) SEC USE ONLY
------------------------------------------------------------------
(4) SOURCE OF FUNDS
00 (See response to Item 3)
------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States
------------------------------------------------------------------
(7) SOLE VOTING POWER
NUMBER OF
SHARES None
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH 4,817,086
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON
WITH None
(10) SHARED DISPOSITIVE POWER
4,817,086
------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,817,086
------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
43.3%
------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IN
Item 1. Security and Issuer.
This statement on Schedule 13D (the "Statement") relates to
the common stock, par value $.01 per share ("Company Common Stock"), of
Hayes Wheels International, Inc., a Delaware corporation (the
"Company"), which has its principal executive offices at 38481 Huron
River Drive, Romulus, Michigan 48174.
Item 2. Identity and Background.
This Statement is being filed by Joseph Littlejohn &
Levy Fund II L.P., a Delaware limited partnership (the "Fund"),
JLL Associates II, L.P., a Delaware limited partnership ("JLL Asso-
ciates"), and Peter A. Joseph, Angus C. Littlejohn, Jr. and Paul
S. Levy (collectively, the "Reporting Persons"). JLL Associates is
the general partner of the Fund. Messrs. Joseph, Littlejohn and
Levy are each United States citizens and are the general partners
of JLL Associates. Each of the Reporting Persons is engaged
principally in the business of investing in securities. The
principal business address of each of the Reporting Persons is 450
Lexington Avenue, Suite 3350, New York, New York 10017.
During the last five years, none of the Reporting Persons
has been convicted in any criminal proceeding (excluding traffic
violations or similar misdemeanors) or has been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or state
securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On November 7, 1995, the Fund acquired 281.4815 shares of
common stock, par value $.01 per share ("Holdings Common Stock"), of MWC
Holdings, Inc., a Delaware corporation ("Holdings"), in exchange for
payment by the Fund of immediately available funds in the amount of
$38,000,000. The Fund obtained such funds from capital contributions
from its partners.
The Company and Holdings entered into the Agreement and Plan
of Merger, dated as of March 28, 1996 (the "Merger Agreement"), pursuant
to which, among other things, on July 2, 1996, Holdings merged with and
into the Company (the "Merger), with the Company continuing as the
surviving corporation.
Immediately prior to the Merger, the Company issued and sold
to the Fund, and the Fund purchased (the "Subscription"), (i) 80,000
shares of Series A Preferred Stock, par value $.01 per share ("Company
Preferred Stock"), of the Company and (ii) 60,000 warrants, with each
warrant entitling the holder thereof to purchase one share of Company
Common Stock at a price of $48.00 during the period commencing on the
fourth anniversary of the Effective Time (as defined in Item 4) and
ending on the seventh anniversary thereof ("Warrants"), in exchange for
payment by the Fund of immediately available funds in the amount of
$80,000,000. The Fund obtained such funds from capital contributions
from its partners.
Pursuant to the Merger, the Fund received (i) 31.25 shares
of Company Common Stock for each share of Company Preferred Stock owned
by the Fund at the time of the Merger and (ii) 8,231.76 shares of
Company Common Stock and 3,029.29 Warrants for each share of Holdings
Common Stock owned by the Fund at the time of the Merger. As a result of
the Merger, the Fund acquired 4,817,086 shares of Company Common Stock
and 852,688 Warrants in exchange for 80,000 shares of Company Preferred
Stock and 281.4815 shares of Holdings Common Stock.
Item 4. Purpose of Transaction.
As further described in the Joint Proxy Statement, dated May
31, 1996, of the Company and Holdings (the "Joint Proxy Statement"), and
the Merger Agreement, on July 2, 1996, at the effective time (the
"Effective Time"), Holdings merged with and into the Company, with the
Company continuing as the surviving corporation. As a result of the
Merger, the Fund acquired 4,817,086 shares of Company Common Stock, or
approximately 43.3% of the shares of Company Common Stock issued and
outstanding as of July 2, 1996 (based upon a total of 11,132,400 shares
of Company Common Stock issued and outstanding upon consummation of the
Merger on July 2, 1996, such number being the number of shares of
Company Common Stock expected to be issued and outstanding as of July 2,
1996 as reported in the Joint Proxy Statement), and 852,688 Warrants.
The foregoing summary of provisions of the Merger Agreement
is qualified in its entirety by reference to the Merger Agreement
attached hereto as Exhibit B.
Immediately after the Merger, as a result of the
Subscription and the Merger, the Fund owned (i) 4,817,086 shares of
Company Common Stock and (ii) Warrants to purchase 912,688 shares of
Company Common Stock.
Immediately after the Merger, the Company and certain
holders of Company Common Stock, including the Fund, entered into a
stockholders agreement (the "Stockholders Agreement") pursuant to which,
among other things, (i) the Fund, TSG Capital Fund II, L.P. ("TSG") and
certain other stockholders agreed to vote their shares of Company Common
Stock so that the Company's Board of Directors will consist of nine
members, of which four members will be designated by the Fund (including
Messrs. Joseph and Levy), one member will be designated by TSG, one
member will be the Chief Executive Officer of the Company and the
remaining three members, who may not be affiliated with the Company or
any of such stockholders, will be selected by the Company's Board of
Directors. The Stockholders Agreement further provides that the
respective rights of the Fund and TSG to designate directors will
terminate if any such entity ceases to own at least 50% of its initial
investment. Each stockholder that is a party to the Stockholders
Agreement has also agreed not to acquire any shares of Company Common
Stock if, as a result of such acquisition, such stockholder would own in
excess of 50% of the outstanding shares of Company Common Stock.
Pursuant to the Stockholders Agreement, such stockholders
have agreed not to transfer any shares of Company Common Stock, other
than pursuant to certain permitted transfers, until the second
anniversary of the Merger. The Stockholders Agreement gives each
stockholder a party thereto holding shares of Company Common Stock
received in the Merger with an aggregate value of $15 million the right
(exercisable after the second anniversary of the Effective Time) to
require the Company to register under the Securities Act of 1933, as
amended (the "Securities Act"), the resale of all or part of such shares
at the Company's expense on two occasions. The Company has agreed to
file the reports under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), to enable each such stockholder to sell its shares
of Company Common Stock. Each such stockholder will be entitled to an
unlimited number of piggyback registrations, which will allow such
stockholder to include shares of Company Common Stock (including shares
of Company Common Stock to be issued upon the exercise of Warrants) held
by it in certain registrations of shares of Company Common Stock
effected by the Company (subject to customary cut-back provisions). The
Stockholders Agreement also permits such stockholders to participate
proportionately in certain sales by the Fund of shares of Company Common
Stock.
The Stockholders Agreement also provides that the Company
will not repurchase any shares of Company Common Stock, other than to
fund employee benefit plans, without the approval of at least 82.5% of
the shares of Company Common Stock subject to the Stockholders
Agreement. In addition, the Stockholders Agreement provides that the
Company will file all necessary reports with the Securities and Exchange
Commission ("SEC"), if applicable, and take whatever action any
stockholder a party thereto may reasonably request to enable such
stockholder to sell shares of Company Common Stock without registration
under the Securities Act within the limitations provided by Rule 144
thereunder. The Stockholders Agreement may only be amended with the
prior written consent of the Company and at least 82.5% of the shares of
Company Common Stock initially subject thereto. The Stockholders
Agreement will terminate on the eighth anniversary thereof, unless
terminated earlier pursuant to its terms.
The foregoing summary of provisions of the Stockholders
Agreement is qualified in its entirety by reference to the Stockholders
Agreement attached hereto as Exhibit C.
The securities of the Company to which this Statement
relates are held by the Fund as an investment. Except as otherwise set
forth in this Statement, the Reporting Persons do not presently have any
plans or proposals which relate to or would result in: (i) the
acquisition by any person of additional securities of the Company, or
the disposition of securities of the Company; (ii) an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries; (iii) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries; (iv) any change in the present Board of Directors or
management of the Company, including any plans or proposals to change
the number or term of directors or to fill any existing vacancies on
such Board of Directors; (v) any material change in the present
capitalization or dividend policy of the Company; (vi) any other
material change in the Company's business or corporate structure; (vii)
changes in the Company's Amended and Restated Certificate of
Incorporation or By-laws or other actions which may impede the
acquisition of control of the Company by any person; (viii) causing a
class of securities of the Company to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities
association; (ix) a class of equity securities of the Company becoming
eligible for termination of registration pursuant to Section 12(g)(4) of
the Exchange Act; or (x) any action similar to any of those enumerated
above.
Subject to applicable law and the terms of the Stockholders
Agreement, the Reporting Persons may, individually or jointly, acquire
shares of Company Common Stock or sell some or all of the shares of the
Company Common Stock which may be owned by them from time to time,
depending on their evaluation of the Company's business, prospects and
financial condition, the market for the shares, other opportunities
available to the Reporting Persons, general economic conditions, money
and stock market conditions and other future developments.
Item 5. Interest in Securities of the Issuer.
The Fund is the record owner of 4,817,086 shares of Company
Common Stock (the "JLL Shares") and as such has the power to vote and
dispose of the JLL Shares. The JLL Shares constitute approximately 43.3%
of the shares of Company Common Stock issued and outstanding as of July
2, 1996 (based upon a total of 11,132,400 shares of Company Common Stock
issued and outstanding upon consummation of the Merger on July 2, 1996,
such number being the number of shares of Company Common Stock expected
to be issued and outstanding as of July 2, 1996 as reported in the Joint
Proxy Statement).
JLL Associates, as general partner of the Fund, and Messrs.
Joseph, Littlejohn and Levy, as general partners of JLL Associates, may
be deemed to have voting and dispositive power with respect to the JLL
Shares and, pursuant to Rule 13d-3(a) promulgated under the Exchange
Act, each may be deemed to be the beneficial owner of all of the JLL
Shares. However, the filing of this Statement shall not be construed as
an admission for the purposes of Sections 13(d) and 13(g) or under any
other provision of the Exchange Act or the rules promulgated thereunder
or for any other purpose that JLL Associates, or Messrs. Joseph,
Littlejohn or Levy is a beneficial owner of any of the JLL Shares.
Except as set forth in Item 3 hereof with respect to the
Subscription and in Items 3 and 4 hereof with respect to the Merger, the
Reporting Persons have not affected any transactions in shares of
Company Common Stock during the past 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
Immediately after the Merger, as a result of the
Subscription and the Merger, the Fund owned 4,817,086 shares of Company
Common Stock and 912,688 Warrants.
Immediately after the Merger, the Company and certain
holders of Company Common Stock, including the Fund, entered into the
Stockholders Agreement. Reference is hereby made to the discussion of
the Stockholders Agreement set forth above in response to Item 4,
including the summary of provisions thereof, which is incorporated by
reference in its entirety herein.
Except as set forth in this Statement, none of the Reporting
Persons has any contracts, arrangements, understandings or relationships
(legal or otherwise) with each other or with any person with respect to
any securities of the Company, including but not limited to the transfer
or voting of any of the securities, finder's fees, joint ventures, loan
or option arrangements, puts or calls, guarantees of profits, division
of profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit A Joint Filing Agreement, dated as of July 2, 1996,
among the Fund, JLL Associates, and Messrs. Joseph,
Littlejohn and Levy.
Exhibit B Agreement and Plan of Merger, dated as of March 28,
1996, between Holdings and the Company.
[Incorporated by reference to Exhibit 2.1 to the
Registration Statement on Form S-4 of Hayes Wheels
International, Inc. Registration No. 333-04909]
Exhibit C Stockholders' Agreement, dated as of July 2, 1996,
among the Company, the Fund, Chase Equity Associates,
CIBC WG Argosy Merchant Fund 2, L.L.C., Nomura Holding
America, Inc. and TSG.
SIGNATURE
After reasonable inquiry and to the best of its knowledge
and belief, the undersigned certifies that the information set forth in
this Statement is true, complete and correct.
Dated: 7/9/ , 1996
JOSEPH LITTLEJOHN & LEVY FUND II L.P.
By: JLL Associates II, L.P.,
its General Partner
By:/s/ Paul S. Levy
Paul S. Levy
General Partner
SIGNATURE
After reasonable inquiry and to the best of its knowledge
and belief, the undersigned certifies that the information set forth in
this Statement is true, complete and correct.
Dated: 7/9/ , 1996
JLL ASSOCIATES II, L.P.
By:/s/ Paul S. Levy
Paul S. Levy
General Partner
SIGNATURE
After reasonable inquiry and to the best of his knowledge
and belief, the undersigned certifies that the information set forth in
this Statement is true, complete and correct.
Dated: July 9 , 1996
/s/ Peter Joseph
Peter A. Joseph
SIGNATURE
After reasonable inquiry and to the best of his knowledge
and belief, the undersigned certifies that the information set forth in
this Statement is true, complete and correct.
Dated: July 9 , 1996
/s/ Angus C. Littlejohn, Jr.
Angus C. Littlejohn, Jr.
SIGNATURE
After reasonable inquiry and to the best of his knowledge
and belief, the undersigned certifies that the information set forth in
this Statement is true, complete and correct.
Dated: 7/9 , 1996
/s/ Paul S. Levy
Paul S. Levy
EXHIBIT INDEX
PAGE
Exhibit A Joint Filing Agreement, dated as
of July 2, 1996, among the Fund, JLL
Associates, and Messrs. Joseph,
Littlejohn and Levy..................................
Exhibit B Agreement and Plan of Merger, dated as of March 28,
1996, between Holdings and the Company. [Incorporated
by reference to Exhibit 2.1 to the Registration
Statement on Form S-4 of Hayes Wheels International, Inc.
Registration No. 333-04909]............................
Exhibit C Stockholders' Agreement, dated as of July 2, 1996,
among the Company, the Fund, Chase Equity Associates,
CIBC WG Argosy Merchant Fund 2, L.L.C., Nomura
Holding America, Inc. and TSG...........................
Exhibit A
Joint Filing Agreement
In accordance with Rule 13d-1(f) under the Securities
Exchange Act of 1934, as amended, the undersigned hereby agree to the
joint filing with each other of a statement on Schedule 13D (including
all amendments thereto) (the "Statement") with respect to the common
stock, par value $.01 per share, of Hayes Wheels International, Inc., a
Delaware corporation, and further agree that this Joint Filing Agreement
be included as an exhibit to such Statement. In evidence whereof, the
undersigned, being duly authorized, hereby execute this Joint Filing
Agreement as of this 2nd day of July, 1996.
JOSEPH LITTLEJOHN & LEVY FUND II L.P.
By: JLL Associates II, L.P.,
its General Partner
By:/s/ Paul S. Levy
Paul S. Levy
General Partner
JLL ASSOCIATES II, L.P.
By:/s/ Paul S. Levy
Paul S. Levy
General Partner
/s/ Peter A. Joseph
Peter A. Joseph
/s/ Angus C. Littlejohn, Jr.
Angus C. Littlejohn, Jr.
/s/ Paul S. Levy
Paul S. Levy
EXHIBIT C
STOCKHOLDERS' AGREEMENT
This STOCKHOLDERS' AGREEMENT ("Agreement"), dated as of
July 2, 1996, is among Hayes Wheels International, Inc., a
Delaware corporation (the "Company"), Joseph Littlejohn & Levy
Fund II, L.P., a Delaware limited partnership ("JLL"), Chase
Equity Associates, a California limited partnership ("Chase"),
CIBC WG Argosy Merchant Fund 2, L.L.C., a Delaware limited
liability company ("Argosy"), Nomura Holding America, Inc., a
Delaware corporation ("Nomura"), and TSG Capital Fund II, L.P., a
Delaware limited partnership ("TSG") (JLL, Chase, Argosy, Nomura
and TSG, each being referred to herein as a "Stockholder" and
collectively being referred to herein as the "Stockholders").
W I T N E S S E T H
WHEREAS, pursuant to Subscription Agreements, each
dated March 28, 1996, among each Stockholder, MWC Holdings, Inc.,
a Delaware corporation ("Holdings") and the Company ("Subscrip-
tion Agreements"), each Stockholder purchased (i) shares of
preferred stock, $.01 per share ("Preferred Stock"), and (ii)
warrants ("Warrants") to purchase shares of common stock, par
value $.01 per share, of the Company following consummation of
the Merger (as defined below) ("New Company Common Stock").
WHEREAS, immediately prior to the Merger, JLL owned
281.4815 shares of common stock, par value $.01 per share of
Holdings ("Holdings Common Stock").
WHEREAS, pursuant to the Agreement and Plan of Merger,
dated as of March 28, 1996, by and between Holdings and the
Company (the "Merger Agreement"), Holdings has been merged on the
date hereof with and into the Company (the "Merger"); and
WHEREAS, as a result of the Merger, (i) each share of
Holdings Common Stock issued and outstanding immediately prior to
the Merger was converted into (A) 8231.76 shares of New Company
Common Stock and (B) 3029.29 Warrants and (ii) each share of
Preferred Stock issued and outstanding immediately prior to the
Merger was converted into 31.25 shares of New Company Common
Stock.
WHEREAS, as a result of the Merger, on the date hereof,
each Stockholder owns (i) the number of shares of New Company
Common Stock set forth in column A opposite such Stockholder's
name on Exhibit A hereto and (ii) the number of Warrants set
forth in column B opposite such Stockholder's name on Exhibit A
hereto.
NOW, THEREFORE, in consideration of the mutual cove-
nants and agreements set forth herein and for good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties agree as follows:
ARTICLE I
Certain Definitions
For purposes of this Agreement, the following terms
shall have the following meanings:
(a) The term "Affiliate" shall have the meaning
set forth in Rule 405 promulgated under the Securities Act.
(b) The term "Commission" shall mean the United
States Securities and Exchange Commission or any successor
agency.
(c) The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(d) The term "Indenture" shall mean the Inden-
ture, dated as of July 2, 1996, by and among the Company, as
issuer, the Guarantors named therein and Comerica Bank, as
trustee.
(e) The term "Market Value" shall mean the
average of the closing sales prices of the New Company Common
Stock on the New York Stock Exchange Composite Tape (or as
reported on the principal exchange on which the New Company
Common Stock is then listed, which for these purposes includes
the Nasdaq Stock Market) during each of the five (5) consecutive
trading days ending on the trading day immediately prior to the
date of any Demand.
(f) The term "Merger Agreement" shall mean the
Agreement and Plan of Merger, dated as of March 28, 1996, between
MWC Holdings, Inc. and the Company.
(g) The term "Permitted Transferee" shall mean,
with respect to each Person bound by the terms of this Agreement,
(i) any other Stockholder; (ii) in respect of a Stockholder, any
affiliate or associate (as such terms are defined in Rule 405 of
the Securities Act) of such Stockholder or any other Permitted
Transferee of such Affiliate; (iii) the Company; (iv) in the
event of the dissolution, liquidation or winding up of any such
Person that is a corporation or a partnership, the partners of a
partnership that is such Person, the stockholders of a corpora-
tion that is such Person or a successor partnership all of the
partners of which or a successor corporation all of the stock-
holders of which are the Persons who were the partners of such
partnership or the stockholders of such corporation immediately
prior to the dissolution, liquidation or winding up of such
Person; (v) a transferee by testamentary or intestate disposi-
tion; (vi) a transferee by inter vivos transfer to the transfer-
ring Person's spouse, children and/or other lineal descendants;
(vii) a trust transferee by inter vivos transfer, the beneficia-
ries of which are the transferring Person, spouse, children
and/or other lineal descendants; (viii) a successor nominee or
trustee for the beneficial owner of the Shares for which such
Person acts as nominee or trustee, as the case may be; or (ix) an
institutional lender for money borrowed pursuant to a bona fide
pledge of or the granting of a security interest in such
Stockholder's Registrable Securities; provided, however, that
such institutional lender acknowledges in writing that it agrees
to be bound by, and hold the Registrable Securities being pledged
subject to, the terms of this Agreement.
(h) The term "Person" shall mean any individual,
firm, corporation, partnership, limited liability company or
other entity, and shall include any successor (by merger or
otherwise) of such entity.
(i) The term "Public Offering" shall mean a
public offering of equity securities of the Company pursuant to
an effective registration statement under the Securities Act,
including a public offering in which Stockholders are entitled to
sell Shares pursuant to the terms of Article V hereof.
(j) The term "Registrable Securities" shall mean
(i) the Shares owned by each Stockholder on the date hereof, as
set forth opposite each Stockholder's name on Exhibit A hereto,
(ii) additional shares of New Company Common Stock issued to one
or more of the Stockholders upon the exercise of the Warrants,
and (iii) additional shares of New Company Common Stock acquired
by one or more Stockholders after the date hereof. As to any
particular Registrable Securities, such securities shall cease to
be Registrable Securities when (i) a registration statement
registering such securities under the Securities Act has been
declared effective and such securities have been sold or other-
wise transferred by the holder thereof pursuant to such effective
registration statement, or (ii) such securities are sold in
accordance with Rule 144 (or any successor provision) promulgated
under the Securities Act, or (iii) such securities are trans-
ferred under circumstances in which any legend borne by the
certificates for such securities relating to restrictions on
transferability thereof, under the Securities Act or otherwise,
is removed by the Company.
(k) The term "Registration Period" shall mean the
period commencing on the second anniversary of the date hereof
and expiring on the eighth anniversary of this Agreement.
(l) The term "Registration Statement" shall mean
the registration statement filed with the Commission on Form S-4
under the Securities Act for the purpose of registering the
shares of New Company Common Stock (as defined in the Merger
Agreement) and Warrants (as defined in the Merger Agreement)
issued in connection with the Merger (as defined in the Merger
Agreement).
(m) The term "Requisite Amount" shall mean
Registrable Securities having an aggregate Market Value as of the
date of any Demand (as hereinafter defined) of at least $15
million.
(n) The term "Securities Act" shall mean the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
(o) The term "Shares" shall mean the shares of
New Company Common Stock owned by each Stockholder on the date
hereof, as set forth opposite each Stockholder's name on Exhibit
A hereto, and all shares of New Company Common Stock acquired by
any Stockholder after the date of this Agreement, including
without limitation, shares acquired upon exercise of the War-
rants.
(p) The term "Transfer" shall mean any voluntary
or involuntary attempt to, directly or indirectly through the
transfer of interests in controlled Affiliates or otherwise,
offer, sell, assign, transfer, grant a participation in, pledge
or otherwise dispose of any Shares, or the consummation of any
such transactions, or the soliciting of any offers to purchase or
otherwise acquire, or take a pledge of, any of the Shares, other
than hedging or other derivative transactions that hedge or
otherwise relate to investment risks in respect of any of the
Shares; provided, however, that the transfer of an interest in
any of the Stockholders shall not be deemed to be a transfer.
ARTICLE II
Representations and Warranties and Covenants
Section 2.01. Representations and Warranties of the Company.
The Company represents and warrants to each Stockholder
as follows:
(a) Corporate Authority. The Company has full
power and authority to execute, deliver and perform this Agreement;
(b) Due Authorization. This Agreement has been
duly and validly authorized, executed and delivered by the
Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, except that (i) the enforceability hereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting creditors
rights, (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before
which any proceedings therefor may be brought, and (iii) the
rights to indemnity hereunder may be limited by federal or state
securities laws or the public policy underlying such laws;
(c) No Conflict. The execution, delivery and
performance of this Agreement by the Company do not violate or
conflict with or constitute a default under (i) the Company s
certificate of incorporation and by-laws, (ii) any judgment,
order or decree or statute, law, ordinance, rule or regulation of
any governmental entity applicable to the Company or (iii) any
material agreement to which it is a party or by which it or its
property is bound;
(d) Registration Rights. Except as provided
herein and for rights granted pursuant to that certain Registra-
tion Rights Agreement, dated March 28, 1996, among the Company,
Varity Corporation, a Delaware corporation, and its wholly owned
subsidiary K-H Corporation, a Delaware corporation, as of the
date hereof, no other party is entitled to any registration or
similar right with respect to any securities of the Company;
(e) Voting Agreements. Except as set forth
herein, the Company is not aware of any voting trust, voting
agreement or arrangement with respect to any of its voting
securities; and
(f) Information in Disclosure Documents and
Registration Statement. None of the information in (i) the
Registration Statement or (ii) the joint proxy state-
ment/prospectus distributed in connection with the meeting of
stockholders of each of MWC Holdings, Inc. ("Holdings") and the
Company to vote upon the Merger (as defined in the Merger Agree-
ment) (the "Proxy Statement"), in the case of the Registration
Statement, at the time it became effective or, in the case of the
Proxy Statement or any amendments thereof or supplements thereto,
at the time of the initial mailing of the Proxy Statement and any
amendments or supplements thereto, and at the time of the meeting
of stockholders of Holdings and the Company held in connection
with the Merger, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not mis-
leading. The Registration Statement, as of its effective date,
complied as to form in all material respects with the require-
ments of the Securities Act, and the rules and regulations
promulgated thereunder, and as of the date of its initial mailing
and as of the date of the Company's stockholders' meeting, the
Proxy Statement complied as to form in all material respects with
the applicable requirements of the Exchange Act, and the rules
and regulations promulgated thereunder. Notwithstanding the
foregoing, the representations and warranties contained in this
Section 2.01(f) shall not apply to any statements or omissions
made in reliance upon or in conformity with information furnished
in writing to the Company by a Stockholder expressly for use
therein.
Section 2.02 Representations and Warranties of the Stockholders.
Each Stockholder individually represents and warrants
to each other Stockholder and the Company as follows:
(a) Corporate Authority. The Stockholder has
full power and authority to execute, deliver and perform this
Agreement;
(b) Due Authorization. This Agreement has been
duly and validly authorized, executed and delivered by the
Stockholder and constitutes a valid and binding obligation of the
Stockholder, enforceable against the Stockholder in accordance
with its terms, except that (i) the enforceability hereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting credi-
tors rights, (ii) the remedy of specific performance and injunc-
tive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court
before which any proceedings therefor may be brought, and (iii)
the rights to indemnity and contribution hereunder may be limited
by federal or state securities laws or the public policy underly-
ing such laws; and
(c) No Conflict. The execution, delivery and
performance of this Agreement by the Stockholder do not violate
or conflict with or constitute a default under (i) the Stockhold-
er s organizational documents, (ii) any judgment, order or decree
or statute, law ordinance, rule or regulation of any governmental
entity applicable to the Stockholder, or any material agreement
to which it is a party or by which it or its property is bound.
Section 2.03. Covenants.
The Company covenants to each Stockholder that it will:
(a) Timely file all reports required to be filed
by it under the Exchange Act, and if at any time the Company is
not required to file such reports, it will take such further
action as a Stockholder may reasonably require, including,
without limitation, supply and make publicly available any other
information in the possession of or reasonably obtainable by the
Company, with the purpose of allowing such holder to avail itself
of Rule 144 of the Securities Act or any other rule or regulation
of the SEC allowing it to sell securities without registration
under the Securities Act. Upon the request of any Stockholder,
the Company will deliver to such Stockholder a written statement
as to its compliance with such requirements.
(b) Not repurchase, and shall cause each of its
subsidiaries not to repurchase, any shares of New Company Common
Stock (other than shares of New Company Common Stock repurchased
to fund employee benefit plans) without the written approval of
the holders of at least 82.5% of the Shares outstanding on the
date hereof less any Shares subsequently Transferred other than
to a Person described in clauses (i) or (ii) of the definition of
a Permitted Transferee.
(c) Afford to the Stockholders and their respec-
tive officers, employees, financial advisors, legal counsel,
accountants, consultants and other representatives (except to the
extent not permitted under applicable law as advised by counsel
and except as may be limited by any confidentiality obligations
contained in any contract with a third party) reasonable access
during normal business hours during the term of this Agreement to
all of its books and records and its properties and facilities
and, during such period, shall furnish promptly to each Stock-
holder periodic financial and other information provided to the
Board or to JLL. Unless otherwise required by law, each Stock-
holder agrees that it shall (i) hold in confidence all non-public
information so acquired and (ii) not use any such information as
the basis for any market transaction in the securities of the
Company unless and until such is made generally available to the
public.
(d) Indemnify, to the fullest extent permitted by
law, each Stockholder, its officers, directors, employees,
advisors, affiliates and agents, from and against all losses,
damages and liabilities which arise in connection with any action
or proceeding relating to the Registration Statement or the Proxy
Statement; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue
statement or omission or alleged omission made in the Registra-
tion Statement or the Proxy Statement in reliance upon and in
conformity with written information furnished to the Company by
any Stockholder expressly for use therein.
(e) Not, directly or indirectly, enter into or
suffer to exist any transaction or series of related transactions
(including, without limitation, the sale, purchase, exchange or
lease of assets, property or services) with any Affiliate (in-
cluding entities in which the Company or any of its subsidiaries
own a minority interest) or holder of 10% or more of the
Company's Common Stock (an "Affiliate Transaction") or extend,
renew, waive or otherwise modify the terms of any Affiliate
Transaction entered into prior to the date hereof unless (i) such
Affiliate Transaction is between or among the Company and/or its
subsidiaries; or (ii) the terms of such Affiliate Transaction are
fair and reasonable to the Company or such subsidiary, as the
case may be, and the terms of such Affiliate Transaction are at
least as favorable as the terms which could be obtained by the
Company or such subsidiary, as the case may be, in a comparable
transaction made on an arm's-length basis between unaffiliated
parties. The foregoing provisions of this Section 2.03(e) will
not apply to (i) any Restricted Payment as defined in the Inden-
ture that is not prohibited by Section 4.13 of the Indenture,
(ii) reasonable and customary fees paid by the Company or its
subsidiaries to their respective directors or (iii) customary
investment banking, underwriting, placement agent or financial
advisor fees paid in connection with services rendered to the
Company or its subsidiaries.
ARTICLE III
Board of Directors
Section 3.01. Composition.
(a) Members. During the term of this Agreement,
each of JLL, TSG and Nomura will use their best efforts to cause
the Board of Directors of the Company (the "Board") to consist of
nine (9) members, of which: (i) four members shall be designees
of JLL; (ii) one member shall be a designee of TSG; (iii) one
member shall be the Chief Executive Officer of the Company; and
(iv) the other three members shall be determined by the Board;
provided, however, such members determined by the Board shall not
be affiliated with the Company or any of the Stockholders.
During the term of this Agreement, the Company shall use its best
efforts and shall exercise all authority under applicable law to
cause to be elected or appointed, as the case may be, as direc-
tors of the Company a slate of directors consisting of individu-
als meeting the requirements of the previous sentence. Argosy
shall be entitled to appoint a representative who shall be
permitted to attend all meetings of the Board of Directors, but
who shall have no voting power. Such representative shall be
given the same notice of any meeting of the Board of Directors as
is required to be provided to a member of the Board of Directors
and shall be entitled to participate in discussions and consult
with the Board of Directors. Such representative shall receive
all copies of all documents and shall have the same access to
information provided to members of the Board of Directors, in
each case, at the same time as such members of the Board of
Directors. In addition, such representative shall receive the
same compensation or other economic consideration or benefits, if
any, that any member of the Board of Directors designated pursu-
ant to clause (i) or (ii) of this Section 3.01(a) receives.
(b) Failure to Designate. In the event that (i)
a Stockholder entitled to designate a nominee for the Board is
unable to designate such a nominee, or (ii) the designee of a
Stockholder resigns, in either case, due to any legal provision
or restriction relating to such Stockholder, such Stockholder
shall have the right to designate one Person to attend, but not
vote at, any meeting of the Board.
(c) Removal. No Stockholder shall take any
action to cause the removal of any director designated by any
other Stockholder other than "for cause".
(d) Vacancies. If at any time a vacancy is
created on the Board by reason of the death, removal or resigna-
tion (other than pursuant to Section 3.01(b)) of any director who
was nominated and elected as a director pursuant to Section
3.01(a) above or this Section 3.01(d), the Stockholders shall, as
soon as practicable, vote their Shares or act by written consent
with respect to such Shares to elect the individual designated to
fill such vacancy or vacancies by the Stockholder who designated
such former director to fill such vacancy for the unexpired term
of the director whom such individual is replacing.
(e) Decrease in Shares Held. Notwithstanding
anything to the contrary in this Section 3.01, in the event that
any Stockholder entitled pursuant to Section 3.01(a) to desig-
nate one or more individuals for nomination and election to the
Board shall, together with its affiliates or associates (as such
terms are defined in Rule 405 of the Securities Act), cease to
own at least 50% of the Shares owned by such Stockholder on the
date hereof, such Stockholder shall no longer have any right
pursuant to this Agreement to designate any nominees for election
to the Board.
(f) Board Designees. The majority of the direc-
tors then comprising the Board shall have the right to designate
nominees to be elected to the Board for any available director-
ship as to which no Stockholder has the right to designate a
nominee pursuant to Section 3.01(a) hereof.
(g) Voting Agreement. Each of JLL, TSG and
Nomura agrees that, during the term of this Agreement, (i) it
will be present, in person or represented by proxy, at all
stockholder meetings of the Company for the election of direc-
tors, so that all shares of New Company Common Stock, including
the Shares, beneficially owned by it shall be counted for the
purpose of determining the presence of a quorum for the election
of directors at such meetings, and (ii) it shall vote, or act by
consent with respect to, all shares of New Company Common Stock,
including the Shares, beneficially owned by it for the election
of the nominees for the Board nominated by the Board so long as
such nominees consist of individuals meeting the requirements of
this Section 3.01. Except as specifically set forth in this
Section 3.01(g), each of JLL, TSG and Nomura shall be entitled to
vote its Shares on all other matters as it deems fit.
Section 3.02. Indemnification.
Immediately following the Merger, the Company shall
enter into indemnification agreements substantially in the form
of Exhibit B hereto with each member of the Board.
ARTICLE IV
Restrictions on Transfer
Section 4.01. General Restrictions.
(a) No Stockholder may Transfer any Shares prior
to the second anniversary hereof except for Transfers (i) to any
of its Permitted Transferees; provided, however, that prior to
any Transfer of Shares, such Permitted Transferee shall agree in
writing to take such Shares subject to, and to comply with, all
of the provisions of this Agreement, a copy of which agreement
shall be on file with the Secretary of the Company and shall
include the address of such transferee to which notices hereunder
shall be sent, (ii) pursuant to any offer, including a tender or
exchange offer, by any party (including the Company) to purchase
all of the outstanding shares of New Company Common Stock, which
offer has been approved by the Board and (iii) pursuant to any
corporate transaction requiring the approval of the holders of a
majority of the shares of outstanding New Company Common Stock
and as to which the requisite approval of the Stockholders shall
have been obtained.
(b) From and after the second anniversary of the
Merger until the expiration or earlier termination of this
Agreement, in addition to Transfers permitted by Section 4.01(a),
any Stockholder may Transfer any or all of its Shares to any
other Stockholder or any third party, pursuant to: (i) paragraphs
(e) and (f) of Rule 144 or any similar rule adopted by the
Commission (whether or not paragraph (k) of Rule 144 is applica-
ble); (ii) a Public Offering; or (iii) any other Transfer;
provided, however, that prior to any Transfer of Shares to a
third party pursuant to this Section 4.01(b)(iii), such third-
party transferee shall agree in writing to take such Shares
subject to, and to comply with, the provisions of Section 3.01(g)
of this Agreement. Notwithstanding anything stated herein to the
contrary, the Transfer of Shares by either JLL or TSG shall not
result in the assignment of such transferring Stockholder's
rights under Section 3.01(a) hereof.
Section 4.02. Compliance with Securities Laws.
Each Stockholder agrees that every Transfer of its
Shares shall comply with all federal and state securities laws
applicable to such transaction. At the request of the Company,
the transferring Stockholder shall deliver to the Company an
opinion of counsel, which counsel and opinion shall be reasonably
satisfactory to the Company, to the effect that the sale, trans-
fer or other disposition satisfies this Section 4.02.
Section 4.03. Transfers Not In Compliance.
In the event of any purported or attempted Transfer of
Shares by a Stockholder that does not comply with this Agreement,
the purported transferee or successor by operation of law shall
not be deemed to be a stockholder of the Company for any purpose
and shall not be entitled to any of the rights of a stockholder,
including, without limitation, the right to vote the Shares or to
receive a certificate for the Shares or any dividends or other
distributions on or with respect to the Shares.
Section 4.04. Tag-Along Rights.
Except as provided below, if, at any time during the
term of this Agreement, JLL proposes to directly or indirectly
Transfer its Shares to a Person (other than transfers to (a)
persons or entities described in clauses (ii) or (iv) of the
definition of Permitted Transferee or (b) pursuant to a Public
Offering), JLL shall provide the remaining Stockholders (each a
"Notice Recipient") and the Company with not less than twenty
(20) days' prior written notice of such proposed sale, which
notice shall include all of the terms and conditions of such
proposed sale and which shall identify such purchaser (the "Sale
Notice"); Each Notice Recipient shall have the option, exercis-
able by written notice to JLL within ten (10) days after the
receipt of the Sale Notice, to require JLL to arrange for such
purchaser or purchasers to purchase the same percentage (the
"Percentage") of the Shares then owned by such Notice Recipient
as the ratio of the total number of Shares which are to be sold
by JLL pursuant to the proposed sale to the total number of
Shares owned by JLL immediately prior to such Transfer, or any
lesser amount of Shares as such Notice Recipient shall desire,
together with JLL's Shares at the same time as, and upon the same
terms and conditions (including all direct or indirect consider-
ation or compensation) at which, JLL sells its Shares; provided
that such terms and conditions shall (i) not include a covenant
not to compete or (ii) provide for indemnity or contribution in
excess of such Notice Recipient's proceeds from such sale. If a
Notice Recipient shall so elect, JLL agrees that it shall either
(a) arrange for the proposed purchaser or purchasers to purchase
all or a portion (as such Notice Recipient shall specify) of the
same Percentage of the Shares then owned by such Notice Recipi-
ent at the same time as and upon the same terms and conditions at
which JLL sells its Shares (it being understood that in the event
such Notice Recipient's Shares require exercise, conversion or
exchange to effect such sale, such exercise, conversion or
exchange may be made simultaneously with the closing of such
sale), and provided that if such purchaser or purchasers shall
elect to purchase only such aggregate number of Shares as origi-
nally agreed with JLL, then the number of Shares to be sold by
JLL and all Notice Recipients electing to participate in the
proposed sale shall be reduced pro rata to such aggregate number,
or (b) not effect the proposed sale to such purchaser or purchas-
ers. In the event that a Notice Recipient does not exercise its
right to participate in such sale or declines to so participate,
JLL shall have 120 days from the date of such Sale Notice to
consummate the transaction on the terms set forth therein without
being required to provide an additional Sale Notice to the
remaining Stockholders. Notwithstanding the foregoing, JLL
shall not be obligated to provide any rights pursuant to this
Section 4.04 unless and until JLL has previously Transferred an
aggregate of at least 482,000 of its Shares.
Section 4.05 Restrictions on New Company Common Stock Acquired
After the Date Hereof.
No Stockholder or any of its controlled or commonly
controlled Affiliates may acquire additional shares of New
Company Common Stock if, as a result of any such acquisition,
such Stockholder's ownership (together with the ownership of any
of its controlled or commonly controlled Affiliates) would be in
excess of 50% of the then outstanding shares of New Company
Common Stock. Shares of New Company Common Stock acquired by any
Stockholder after the date of this Agreement shall be treated the
same as, and shall be subject to the same restrictions as, Shares
held by such Stockholder as of the date of this Agreement for
purposes of this Agreement.
ARTICLE V
Registration Rights
Section 5.01. Demand Registrations.
(a) Requests for Registration. During the
Registration Period, Stockholders holding the Requisite Amount of
Registrable Securities shall be entitled to make a written
request of the Company (a "Demand") for registration under the
Securities Act of all or part of the Registrable Securities (a
"Demand Registration"). Such Demand shall specify: (i) the
aggregate number of Registrable Securities requested to be
registered, (ii) the intended method of distribution in connec-
tion with such Demand Registration to the extent then known and
(iii) the identity of the Stockholder or Stockholders (each, a
"Demanding holder") requesting such Demand. Within ten (10) days
after receipt of a Demand, the Company shall give written notice
of such Demand to all other Stockholders and shall include in
such registration all Registrable Securities with respect to
which the Company has received a written request for inclusion
therein within twenty (20) days after the receipt by such Stock-
holder of the Company's notice required by this paragraph.
(b) Number of Demands. Each of JLL, TSG, Argosy,
Chase and Nomura shall be entitled to two (2) Demand Registra-
tions; provided, however, that each Stockholder who is identified
as a Demanding holder shall be deemed to have made a demand with
respect to such Demand Registration.
(c) Satisfaction of Obligations. A registration
shall not be treated as a permitted Demand for a Demand Registra-
tion until (i) the applicable registration statement under the
Securities Act has been filed with the Commission with respect to
such Demand Registration (which shall include any registration
statement that is not withdrawn by holders of Registrable Securi-
ties in the circumstances contemplated by Section 5.03), and (ii)
such registration statement shall have been maintained continu-
ously effective for a period of at least ninety (90) days or such
shorter period as all Registrable Securities included therein
have been disposed of thereunder in accordance with the manner of
distribution set forth in such registration statement.
(d) Availability of Short Form Registrations.
The Company shall use its best efforts to comply with the re-
quirements for use of short form registration for the sale of
securities under the Securities Act.
(e) Restrictions on Demand Registrations. The
Company shall not be obligated (i) in the case of a Demand
Registration, to maintain the effectiveness of a registration
statement under the Securities Act, for a period longer than
ninety (90) days or (ii) to effect any Demand Registration within
one hundred eighty (180) days after the effective date of (A) a
"firm commitment" underwritten registration in which all Stock-
holders were given "piggyback" rights pursuant to Section 5.02
hereof (provided that, with respect to such a registration in
which such piggyback rights were exercised, each such Stockholder
exercising such piggyback rights was permitted to include in such
registration at least 75% of the Registrable Securities that such
Stockholder sought to include therein) or (B) any other Demand
Registration. In addition, the Company shall be entitled to
postpone (upon written notice to all Stockholders) for up to
ninety (90) days the filing or the effectiveness of a registra-
tion statement in respect of a Demand (but no more than once in
any period of twelve (12) consecutive months) if the Board
determines in good faith and in its reasonable judgment that
effecting the Demand Registration in respect of such Demand would
have a material adverse affect on any proposal or plan by the
Company to engage in any debt or equity offering, material
acquisition or disposition of assets (other than in the ordinary
course of business) or any merger, consolidation, tender offer or
other similar transaction. In the event of a postponement by the
Company of the filing or effectiveness of a registration state-
ment in respect of a Demand, the Demanding holders shall have the
right to withdraw such Demand in accordance with Section 5.03
hereof.
(f) Participation in Demand Registrations. The
Company shall not include any securities other than Registrable
Securities in a Demand Registration, except with the written
consent of the holders of the majority of the Registrable Securi-
ties sought to be registered pursuant to such Demand Registration
held by all the Demanding holders. If, in connection with a
Demand Registration, any managing underwriter (or, if such Demand
Registration is not an underwritten offering, a nationally
recognized independent underwriter selected by the Demanding
holders of a majority of the Registrable Securities held by all
the Demanding holders (which such underwriter shall be reasonably
acceptable to the Company and whose fees and expenses shall be
borne solely by the Company)) advises the Company and the Demand-
ing holders of a majority of the Registrable Securities held by
all the Demanding holders that, in its opinion, the inclusion of
all the Registrable Securities and, if authorized pursuant to
this paragraph, other securities of the Company, in each case,
sought to be registered in connection with such Demand Registra-
tion would adversely affect the marketability of the Registrable
Securities sought to be sold pursuant thereto, then the Company
shall include in the registration statement applicable to such
Demand Registration only such securities as the Company and the
holders of Registrable Securities sought to be registered therein
("Demanding Sellers") are advised by such underwriter can be sold
without such an effect (the "Maximum Demand Number"), as follows
and in the following order of priority:
(i) first, the number of Registrable Securi-
ties received pursuant to the Merger (excluding, for these
purposes, Registrable Securities issued upon exercise of Warrants
received pursuant to the Merger) sought to be registered by each
Demanding Seller, pro rata in proportion to the number of Regis-
trable Securities received pursuant to the Merger sought to be
registered by all Demanding Sellers; and
(ii) second, if the number of Registrable
Securities to be included under clause (i) above is less than the
Maximum Demand Number, the number of Registrable Securities
received other than pursuant to the Merger (including, for these
purposes, Registrable Securities issued upon exercise of Warrants
received pursuant to the Merger) sought to be registered by each
Demanding Seller, pro rata in proportion to the number of Regis-
trable Securities not received pursuant to the Merger sought to
be registered by all Demanding Sellers; and
(iii) third, if the number of Regis-
trable Securities to be included under clauses (i) and (ii) above is
less than the Maximum Demand Number, the number of securities sought to
be included by each other seller, pro rata in proportion to the
number of securities sought to be sold by all such other sellers,
which in the aggregate, when added to the number of securities to
be included pursuant to clauses (i) and (ii) above, equals the
Maximum Demand Number.
(g) Selection of Underwriters. If the Demanding
holders of a majority of the Registrable Securities held by all
the Demanding holders request that such Demand Registration be an
underwritten offering, then such holders shall select a national-
ly recognized underwriter or underwriters to manage and adminis-
ter such offering, such underwriter or underwriters, as the case
may be, to be subject to the approval of the Company's Board of
Directors, which approval shall not be unreasonably withheld or
delayed.
(h) Other Registrations. If the Company has
received a Demand and if the applicable registration statement in
respect of such Demand has not been withdrawn or abandoned, the
Company will not file or cause to be effected any other registra-
tion of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under
the Securities Act (other than a registration relating to the
Company employee benefit plans, exchange offers by the Company or
a merger or acquisition of a business or assets by the Company,
including, without limitation, a registration on Form S-4 or S-8
or any successor form), whether on its own behalf or at the
request of any holder or holders of such securities, until a
period of at least ninety (90) days has elapsed from the effec-
tive date of any Demand Registration, unless a shorter period of
time is approved by the Demanding holders of a majority of the
Registrable Securities held by all the Demanding holders.
Notwithstanding the foregoing, the Company shall be entitled to
postpone any such Demand Registration and may file or cause to be
effected such other registration in accordance with the terms of
Section 5.01(e) hereof.
Section 5.02 Piggyback Registrations.
(a) Right to Piggyback. During the Registration
Period, whenever the Company proposes to register any of its
equity securities or securities convertible or exchangeable into
or exercisable for its equity securities under the Securities Act
(other than a registration relating to the Company employee
benefit plans, exchange offers by the Company or a merger or
acquisition of a business or assets by the Company including,
without limitation, a registration on Form S-4 or Form S-8 or any
successor form) (a "Piggyback Registration"), the Company shall
give all Stockholders prompt written notice thereof (but not less
than ten (10) days prior to the filing by the Company with the
Commission of any registration statement with respect thereto).
Such notice (a "Piggyback Notice") shall specify, at a minimum,
the number of securities proposed to be registered, the proposed
date of filing of such registration statement with the Commis-
sion, the proposed means of distribution, the proposed managing
underwriter or underwriters (if any and if known), and a good
faith estimate by the Company of the proposed minimum offering
price of such securities. Upon the written request of a Stock-
holder given within ten (10) business days of such Stockholder's
receipt of the Piggyback Notice (which written request shall
specify the number of Registrable Securities intended to be
disposed of by such Stockholder and the intended method of
distribution thereof), the Company shall include in such regis-
tration all Registrable Securities with respect to which the
Company has received such written requests for inclusion.
(b) Priority on Piggyback Registrations. If, in
connection with a Piggyback Registration, any managing underwrit-
er (or, if such Piggyback Registration is not an underwritten
offering, a nationally recognized independent underwriter select-
ed by the Company (reasonably acceptable to the holders of a
majority of the Registrable Securities sought to be included in
such Piggyback Registration and whose fees and expenses shall be
borne solely by the Company)) advises the Company and the holders
of the Registrable Securities to be included in such Piggyback
Registration, that, in its opinion, the inclusion of all the
securities sought to be included in such Piggyback Registration
by the Company, any Persons who have sought to have shares
registered thereunder pursuant to rights to demand (other than
pursuant to so-called "piggyback" or other incidental or partici-
pation registration rights) such registration (such demand rights
being "Other Demand Rights" and such Persons being "Other Demand-
ing Sellers"), any holders of Registrable Securities seeking to
sell such securities in such Piggyback Registration ("Piggyback
Sellers") and any other proposed sellers, in each case, if any,
would adversely affect the marketability of the securities sought
to be sold pursuant thereto, then the Company shall include in
the registration statement applicable to such Piggyback Registra-
tion only such securities as the Company, the Other Demanding
Sellers, and the Piggyback Sellers are so advised by such under-
writer can be sold without such an effect (the "Maximum Piggyback
Number"), as follows and in the following order of priority:
(i) if the Piggyback Registration is an
offering on behalf of the Company and not any Person
exercising Other Demand Rights (whether or not other
Persons seek to include securities therein pursuant to
so-called "piggyback" or other incidental or participa-
tory registration rights) (a "Primary Offering"), then
(A) first, such number of securities to be sold by the
Company as the Company, in its reasonable judgment and
acting in good faith and in accordance with sound
financial practice, shall have determined, (B) second,
if the number of securities to be included under clause
(A) above is less than the Maximum Piggyback Number,
the number of Registrable Securities received pursuant
to the Merger (excluding, for these purposes, Registra-
ble Securities issued upon exercise of Warrants re-
ceived pursuant to the Merger) sought to be registered
by each Piggyback Seller, pro rata in proportion to the
number of Registrable Securities received pursuant to
the Merger sought to be registered by all the Piggyback
Sellers, (C) third, if the number of securities to be
included under clauses (A) and (B) above is less than
the Maximum Piggyback Number the number of Registrable
Securities received other than pursuant to the Merger
(including, for these purposes, Registrable Securities
issued upon exercise of Warrants received pursuant to
the Merger) sought to be registered by each Piggyback
Seller, pro rata in proportion to the Registrable
Securities not received in the Merger sought to be
registered by all the Piggyback Sellers and all other
proposed sellers, which in the aggregate, when added to
the number of securities to be registered under clauses
(A) and (B) above, equals the Maximum Piggyback Number;
(ii) if the Piggyback Registration is an
offering other than pursuant to a Primary Offering,
then (A) first, such number of securities sought to be
registered by each Other Demanding Seller, pro rata in
proportion to the number of securities sought to be
registered by all such Other Demanding Sellers, (B)
second, if the number of securities to be included
under clause (A) above is less than the Maximum Piggy-
back Number, the number of Registrable Securities
received pursuant to the Merger (excluding, for these
purposes, Registrable Securities issued upon exercise
of Warrants received pursuant to the Merger) sought to
be registered by each Piggyback Seller, pro rata in
proportion to the number of Registrable Securities
received pursuant to the Merger sought to be registered
by all the Piggyback Sellers, (C) third, if the number
of securities to be included under clauses (A) and (B)
above is less than the Maximum Piggyback Number, the
number of Registrable Securities received other than
pursuant to the Merger (including, for these purposes,
Registrable Securities issued upon exercise of Warrants
received pursuant to the Merger) sought to be regis-
tered by each Piggyback Seller, pro rata in proportion
to the Registrable Securities received other than
pursuant to the Merger sought to be registered by all
the Piggyback Sellers and all other proposed sellers,
which in the aggregate, when added to the number of
securities to be registered under clauses (A) and (B)
above, equals the Maximum Piggyback Number.
(c) Withdrawal by the Company. If, at any time
after giving written notice of its intention to register any of
its securities as set forth in Section 5.02 and prior to time the
registration statement filed in connection with such registration
is declared effective, the Company shall determine for any reason
not to register such securities, the Company may, at its elec-
tion, give written notice of such determination to each Stock-
holder and thereupon shall be relieved of its obligation to
register any Registrable Securities in connection with such
particular withdrawn or abandoned registration (but not from its
obligation to pay the Registration Expenses in connection there-
with as provided herein). In the event that the Piggyback
Sellers of such a registration hold the Requisite Amount of
Registrable Securities, such holders may continue the registra-
tion as a Demand Registration. The continuation of such regis-
tration shall be counted as a Demand for all Stockholders who
continue as participants in such registration.
Section 5.03. Withdrawal Rights.
Any Stockholder having notified or directed the
Company to include any or all of its Registrable Securities in a
registration statement under the Securities Act shall have the
right to withdraw any such notice or direction with respect to
any or all of the Registrable Securities designated for registra-
tion thereby by giving written notice to such effect to the
Company prior to the effective date of such registration state-
ment. In the event of any such withdrawal, the Company shall not
include such Registrable Securities in the applicable registra-
tion and such Registrable Securities shall continue to be Regis-
trable Securities hereunder. No such withdrawal shall affect the
obligations of the Company with respect to the Registrable
Securities not so withdrawn; provided that in the case of a
Demand Registration, if such withdrawal shall reduce the number
of Registrable Securities sought to be included in such registra-
tion below the Requisite Amount, then the Company shall as
promptly as practicable give each holder of Registrable Securi-
ties sought to be registered notice to such effect, referring to
this Agreement and summarizing this Section 5.03, and within five
(5) business days following the effectiveness of such notice,
either the Company or the holders of a majority of the Registra-
ble Securities sought to be registered may, by written notices
made to each holder of Registrable Securities sought to be
registered and the Company, respectively, elect that such regis-
tration statement not be filed or, if theretofore filed, be
withdrawn. During such five (5) business day period, the Company
shall not file such registration statement if not theretofore
filed or, if such registration statement has been theretofore
filed, the Company shall not seek, and shall use its best efforts
to prevent, the effectiveness thereof. Any registration state-
ment withdrawn or not filed (i) in accordance with an election by
the Company, (ii) in accordance with an election by the holders
of the majority of the Registrable Securities sought to be
registered pursuant to such Demand Registration held by all the
Demanding holders pursuant to Section 5.01(e) hereof, (iii) in
accordance with an election by the holders of the majority of the
Registrable Securities sought to be registered pursuant to such
Demand Registration held by all the Demanding holders prior to
the effectiveness of the applicable Demand Registration Statement
or (iv) in accordance with an election by the holders of the
majority of the Registrable Securities sought to be registered
pursuant to such Demand Registration held by all the Demanding
holders subsequent to the effectiveness of the applicable Demand
Registration Statement, if any post-effective amendment or
supplement to the applicable Demand Registration Statement
contains adverse information regarding the Company shall not be
counted as a Demand. Except as set forth in clause (iv) of the
previous sentence any Demand withdrawn in accordance with an
election by the Demanding holders subsequent to the effectiveness
of the applicable Demand Registration Statement shall be counted
as a Demand unless the Stockholders reimburse the Company for
its reasonable out-of-pocket expenses (but, without implication
that the contrary would otherwise be true, not including any
Internal Expenses, as defined below) related to the preparation
and filing of such registration statement (in which event such
registration statement shall not be counted as a Demand hereun-
der). Upon the written request of a majority of the Stockhold-
ers, the Company shall promptly prepare a definitive statement of
such out-of-pocket expenses in connection with such registration
statement in order to assist such holders with a determination in
accordance with the next preceding sentence.
Section 5.04. Holdback Agreements.
Each Stockholder agrees not to effect any public
sale or distribution (including sales pursuant to Rule 144) of
equity securities of the Company, or any securities convertible
into or exchangeable or exercisable for such securities, during
the ten (10) day period prior to the date which the Company has,
or in the case of a Demand Registration, the Demanding holders
have, notified the Stockholders that it or they intend to com-
mence a Public Offering through the sixty (60) day period immedi-
ately following the effective date of any Demand Registration or
any Piggyback Registration (in each case, except as part of such
registration), or, in each case, if later, the date of any
underwriting agreement with respect thereto; provided, however,
that the Stockholders shall not be obligated to comply with this
Section 5.04 on more than one (1) occasion in any nine (9) month
period. The holders of 82.5% of the Registrable Securities
included in a Demand Registration may waive the limitation
contained in this paragraph with respect to such Demand Registra-
tion.
Section 5.05. Registration Procedures.
(a) Whenever the Stockholders have requested that
any Registrable Securities be registered pursuant to this Agree-
ment (whether pursuant to Demand Registration or Piggyback
Registration), the Company (subject to its right to withdraw such
registration as contemplated by Section 5.02(c)) shall use its
best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of
disposition thereof and, in connection therewith, the Company
shall as expeditiously as possible:
(i) prepare and file with the Commission a
registration statement with respect to such Registrable Securi-
ties on any form for which the Company then qualifies and is
available for the sale of Registrable Securities to be registered
thereunder in accordance with the intended method of distribution
and use its best efforts to cause such registration statement to
become effective within ninety (90) days of the date hereof;
(ii) prepare and file with the Commission
such amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be neces-
sary to keep such registration statement effective for a continu-
ous period of not less than ninety (90) days (or, if earlier,
until all Registrable Securities included in such registration
statement have been sold thereunder in accordance with the manner
of distribution set forth therein) and comply with the provisions
of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such
period in accordance with the intended methods of disposition by
the sellers thereof as set forth in such registration statement
(including, without limitation, by incorporating in a prospectus
supplement or post-effective amendment, at the request of a
seller of Registrable Securities, the terms of the sale of such
Registrable Securities);
(iii) before filing with the Commission
any such registration statement or prospectus or any amendments
or supplements thereto, the Company shall furnish to counsel
selected by the Demanding holders of a majority of the Registra-
ble Securities held by the Demanding holders, counsel for the
underwriter or sales or placement agent, if any, and any other
counsel for holders of Registrable Securities, if any, in connec-
tion therewith, drafts of all such documents proposed to be filed
and provide such counsel with a reasonable opportunity for review
thereof and comment thereon, such review to be conducted and such
comments to be delivered with reasonable promptness;
(iv) promptly (i) notify each seller of
Registrable Securities of each of (x) the filing and effective-
ness of the registration statement and prospectus and any amend-
ment or supplements thereto, (y) the receipt of any comments from
the Commission or any state securities law authorities or any
other governmental authorities with respect to any such registra-
tion statement or prospectus or any amendments or supplements
thereto, and (z) any oral or written stop order with respect to
such registration, any suspension of the registration or qualifi-
cation of the sale of such Registrable Securities in any juris-
diction or any initiation or threatening of any proceedings with
respect to any of the foregoing and (ii) use its best efforts to
obtain the withdrawal of any order suspending the registration or
qualification (or the effectiveness thereof) or suspending or
preventing the use of any related prospectus in any jurisdiction
with respect thereto;
(v) furnish to each seller of Registrable
Securities, the underwriters and the sales or placement agent, if
any, and counsel for each of the foregoing, a conformed copy of
such registration statement and each amendment and supplement
thereto (in each case, including all exhibits thereto and docu-
ments incorporated by reference therein) and such additional
number of copies of such registration statement, each amendment
and supplement thereto (in such case without such exhibits and
documents) the prospectus (including each preliminary prospectus)
included in such registration statement and prospectus supple-
ments and all exhibits thereto and documents incorporated by
reference therein and such other documents as such seller,
underwriter, agent or counsel may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by
such Seller;
(vi) if requested by the managing underwriter
or underwriters of any registration or by the Demanding holders
of a majority of the Registrable Securities held by the Demanding
holders, subject to approval of counsel to the Company in its
reasonable judgment, promptly incorporate in a prospectus,
supplement or post-effective amendment to the registration
statement such information concerning underwriters and the plan
of distribution of the Registrable Securities as such managing
underwriter or underwriters or such holders reasonably shall
furnish to the Company in writing and request be included there-
in, including, without limitation, with respect to the number of
Registrable Securities being sold by such holders to such under-
writer or underwriters, the purchase price being paid therefor by
such underwriter or underwriters and with respect to any other
terms of the underwritten offering of the Registrable Securities
to be sold in such offering; and make all required filings of
such prospectus, supplement or post-effective amendment as soon
as possible after being notified of the matters to be incorporat-
ed in such prospectus, supplement or post-effective amendment;
(vii) use its best efforts to register or
qualify such Registrable Securities under such securities or
"blue sky" laws of such jurisdictions as the holders of a majori-
ty of Registrable Securities sought to be registered reasonably
request and do any and all other acts and things which may be
reasonably necessary or advisable to enable the holders of a
majority of Registrable Securities sought to be registered to
consummate the disposition in such jurisdictions of the Registra-
ble Securities owned by such holders and keep such registration
or qualification in effect for so long as the registration
statement remains effective under the Securities Act (provided
that the Company shall not be required to (x) qualify generally
to do business in any jurisdiction where it would not otherwise
be required to qualify but for this paragraph, (y) subject itself
to taxation in any such jurisdiction where it would not otherwise
be subject to taxation but for this paragraph or (z) consent to
the general service of process in any jurisdiction where it would
not otherwise be subject to general service of process but for
this paragraph);
(viii) notify each seller of such Regis-
trable Securities, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, upon the
discovery that, or of the happening of any event as a result of
which, the registration statement covering such Registrable
Securities, as then in effect, contains an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or any fact necessary to make the statements
therein not misleading, and promptly prepare and furnish to each
such seller a supplement or amendment to the prospectus contained
in such registration statement so that such Registration State-
ment shall not, and such prospectus as thereafter delivered to
the purchasers of such Registrable Securities shall not, contain
an untrue statement of a material fact or omit to state any material
fact required to be stated therein or any fact necessary to make
the statements therein not misleading;
(ix) cause all such Registrable Securities to
be listed on the New York Stock Exchange and/or any other securi-
ties exchange and included in each established over-the-counter
market on which or through which similar securities of the
Company are listed or traded and, if not so listed or traded, to
be listed on the NASD automated quotation system ("Nasdaq") and
if listed on Nasdaq, use its reasonable efforts to secure desig-
nation of all such Registrable Securities covered by such regis-
tration statement as a Nasdaq "national market system security"
within the meaning of Rule 11Aa2-1 under the Securities Exchange
Act of 1934, as amended, or, failing that, to secure Nasdaq
authorization for such Registrable Securities;
(x) make available for inspection by any
seller of Registrable Securities, any underwriter participating
in any disposition pursuant to such registration statement, and
any attorney, accountant or other agent retained by any such
seller or underwriter all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors, employees, attorneys and indepen-
dent accountants to supply all information reasonably requested
by any such sellers, underwriters, attorneys, accountants or
agents in connection with such registration statement. Informa-
tion which the Company determines, in good faith, to be confiden-
tial shall not be disclosed by such persons unless (x) the
disclosure of such information is necessary to avoid or correct a
misstatement or omission in such registration statement, or (y)
the release of such information is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction. Each
seller of Registrable Securities agrees, on its own behalf and on
behalf of all its underwriters, accountants, attorneys and
agents, that the information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by
it as the basis for any market transactions in the securities of
the Company unless and until such is made generally available to
the public. Each seller of Registrable Securities further
agrees, on its own behalf and on behalf of all its underwriters,
accountants, attorneys and agents, that it will, upon learning
that disclosure of such information is sought in a court of
competent jurisdiction, give notice to the Company and allow the
Company, at its expense, to undertake appropriate action to
prevent disclosure of the information deemed confidential;
(xi) use its best efforts to comply with all
applicable laws related to such registration statement and
offering and sale of securities and all applicable rules and
regulations of governmental authorities in connection therewith
(including, without limitation, the Securities Act and the
Exchange Act) and make generally available to its security
holders as soon as practicable (but in any event not later than
fifteen (15) months after the effectiveness of such registration
statement) an earnings statement of the Company and its subsid-
iaries complying with Section 11(a) of the Securities Act;
(xii) permit any Stockholder, which
Stockholder, in its sole and exclusive judgment, might be deemed
to be an underwriter or controlling person of the Company, to
participate in the preparation of such registration statement and
to require the insertion therein of material, furnished to the
Company in writing, which in the reasonable judgment of such
holder and such holder's counsel should be included;
(xiii) use reasonable best efforts to
furnish to each seller of Registrable Securities a signed coun-
terpart of (x) an opinion of counsel for the Company and (y) a
"comfort" letter signed by the independent public accountants who
have certified the Company's financial statements included or
incorporated by reference in such registration statement, cover-
ing such matters with respect to such registration statement and,
in the case of the accountants' comfort letter, with respect to
events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in
accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities for the account of,
or on behalf of, an issuer of common stock, such opinion and
comfort letters to be dated the date of such opinions and comfort
letters are customarily dated in such transactions, and covering
in the case of such legal opinion, such other legal matters and,
in the case of such comfort letter, such other financial matters,
as the holders of a majority of the Registrable Securities being
sold may reasonably request;
(xiv) take all such other actions as the
holders of a majority of the Registrable Securities being sold or
the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of such Registrable Securities; and
(xv) the Company shall use its best reason-
able efforts so that in lieu of exercising any Warrant prior to
or simultaneously with the filing or the effectiveness of any
registration statement filed pursuant to this Article V, the
holder of such Warrant may sell such Warrant to the underwriter
of the offering being registered upon the undertaking of such
underwriter to exercise such Warrant before making any distribu-
tion pursuant to such registration statement and to include the
Common Stock issued upon such conversion among the securities
being offered pursuant to such registration statement. The
Company agrees to cause such Common Stock to be included among
the securities being offered pursuant to such registration
statement to be issued within such time as will permit the
underwriter to make and complete the distribution contemplated by
the underwriting.
(b) Underwriting. Without limiting any of the
foregoing, in the event that the offering of Registrable Securi-
ties is to be made by or through an underwriter, the Company
shall enter into an underwriting agreement with a managing
underwriter or underwriters containing representations, warran-
ties, indemnities and agreements customarily included (but not
inconsistent with the agreements contained herein) by an issuer
of common stock in underwriting agreements with respect to
offerings of common stock for the account of, or on behalf of,
such issuers. In connection with the sale of Registrable Securi-
ties hereunder, any seller of such Registrable Securities may, at
its option, require that any and all representations and warran-
ties by, and indemnities and agreements of, the Company to or for
the benefit of such underwriter or underwriters (or which would
be made to or for the benefit of such an underwriter or under-
writer if such sale of Registrable Securities were pursuant to a
customary underwritten offering) be made to and for the benefit
of such seller and that any or all of the conditions precedent to
the obligations of such underwriter or underwriters (or which
would be so for the benefit of such underwriter or underwriters
under a customary underwriting agreement) be conditions precedent
to the obligations of such seller in connection with the disposi-
tion of its securities pursuant to the terms hereof (it being
agreed that in connection with any Demand Registration, without
limiting any rights or remedies of the Stockholders, in the event
any such condition precedent shall not be satisfied and, if not
so satisfied, shall not be waived by the holders of a majority of
the Registerable Securities to be included in such Demand Regis-
tration, such Demand Registration shall not be counted as a
permitted Demand hereunder). In connection with any offering of
Registrable Securities registered pursuant to this Agreement, the
Company shall (x) furnish to the underwriter, if any (or, if no
underwriter, the sellers of such Registrable Securities),
unlegended certificates representing ownership of the Registrable
Securities being sold, in such denominations as requested and (y)
instruct any transfer agent and registrar of the Registrable
Securities to release any stop transfer order with respect
thereto.
(c) Return of Prospectuses. Each seller of
Registrable Securities hereunder agrees that upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 5.05(a)(viii), such seller shall forthwith
discontinue such seller's disposition of Registrable Securities
pursuant to the applicable registration statement and prospectus
relating thereto until such seller's receipt of the copies of the
supplemented or amended prospectus contemplated by Section
5.05(a)(viii) and, if so directed by the Company, deliver to the
Company all copies, other than permanent file copies, then in
such seller's possession of the prospectus current at the time of
receipt of such notice relating to such Registrable Securities.
In the event the Company shall give such notice, the ninety (90)-
day period during which such registration statement must remain
effective pursuant to this Agreement shall be extended by the
number of days during the period from the date of giving of a
notice regarding the happening of an event of the kind described
in Section 5.05(a)(viii) to the date when all such sellers shall
receive such a supplemented or amended prospectus and such
prospectus shall have been filed with the Commission.
Section 5.06. Registration Expenses.
All expenses incident to the Company's performance of,
or compliance with, its obligations under this Agreement includ-
ing, without limitation, all registration and filing fees, all
fees and expenses of compliance with securities and "blue sky"
laws (including, without limitation, the fees and expenses of
counsel for underwriters or placement or sales agents in connec-
tion therewith), all printing and copying expenses, all messenger
and delivery expenses, all fees and expenses of underwriters and
sales and placement agents in connection therewith (excluding
discounts and commissions and the fees and expenses of counsel
therefor), all fees and expenses of the Company's independent
certified public accountants and counsel (including, without
limitation, with respect to "comfort" letters and opinions)
(collectively, the "Registration Expenses") shall be borne by the
Company; provided, however, that in the case of a Piggyback
Registration, all incremental costs resulting from applicable
federal and blue sky registration and filing fees, National
Association of Securities Dealers filing fees, the expenses and
fees for listing the securities to be registered on each securi-
ties exchange and included in each established over-the-counter
market on which similar securities issued by the Company are then
listed or traded or for listing on Nasdaq and underwriting
discounts and commissions allocable to each Stockholder selling
Registrable Securities shall be borne by such Stockholder. The
Company shall be responsible for the fees and expenses of one (1)
legal counsel retained by all of the Stockholders in the aggre-
gate in connection with the sale of Registrable Securities.
Notwithstanding the foregoing, the Company shall not be responsi-
ble for the fees and expenses of any additional counsel, or any
of the accountants, agents or experts retained by the Stockhold-
ers in connection with the sale of Registrable Securities. The
Company will pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employ-
ees performing legal or accounting duties, the expense of any
annual audit and the expense of any liability insurance) (collec-
tively, "Internal Expenses") and the expenses and fees for
listing the securities to be registered on each securities
exchange and included in each established over-the-counter market
on which similar securities issued by the Company are then listed
or traded or for listing on Nasdaq.
Section 5.07. Indemnification.
(a) By the Company. The Company agrees to
indemnify, to the fullest extent permitted by law, each holder of
Registrable Securities being sold, its officers, directors,
employees and agents and each Person who controls (within the
meaning of the Securities Act) such holder or such an other
indemnified Person against all losses, claims, damages, liabili-
ties and expenses (collectively, the "Losses") caused by, result-
ing from or relating to any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact
required to be stated therein or a fact necessary to make the
statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished to the
Company by such holder expressly for use therein or by such
holder's failure to deliver a copy of the registration statement
or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of
copies of the same. In connection with an underwritten offering
and without limiting any of the Company's other obligations under
this Agreement, the Company shall indemnify such underwriters,
their officers, directors, employees and agents and each Person
who controls (within the meaning of the Securities Act) such
underwriters or such an other indemnified Person to the same
extent as provided above with respect to the indemnification of
the holders of Registrable Securities being sold.
(b) By Stockholders. In connection with any
registration statement in which a holder of Registrable Securi-
ties is participating, each such holder will furnish to the
Company in writing information regarding such holder's ownership
of Registrable Securities and its intended method of distribution
thereof and, to the extent permitted by law, shall indemnify the
Company, its directors, officers, employees and agents and each
Person who controls (within the meaning of the Securities Act)
the Company or such an other indemnified Person against all
Losses caused by, resulting from or relating to any untrue or
alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or omission is
caused by and contained in such information so furnished in
writing by such holder; provided, however, that each holder's
obligation to indemnify the Company hereunder shall be appor-
tioned between each holder based upon the net amount received by
each holder from the sale of Registrable Securities, as compared
to the total net amount received by all of the holders of Regis-
trable Securities sold pursuant to such registration statement,
no such holder being liable to the Company in excess of such
apportionment.
(c) Notice. Any Person entitled to indemnifica-
tion hereunder shall give prompt written notice to the indemnify-
ing party of any claim with respect to which its seeks indemnifi-
cation; provided, however, the failure to give such notice shall
not release the indemnifying party from its obligation, except to
the extent that the indemnifying party has been materially
prejudiced by such failure to provide such notice.
(d) Defense of Actions. In any case in which any
such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and,
to the extent that it may wish, jointly with any other indemnify-
ing party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof the
indemnifying party will not (so long as it shall continue to have
the right to defend, contest, litigate and settle the matter in
question in accordance with this paragraph) be liable to such
indemnified party hereunder for any legal or other expense
subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investi-
gation, supervision and monitoring (unless such indemnified party
reasonably objects to such assumption on the grounds that there
may be defenses available to it which are different from or in
addition to the defenses available to such indemnifying party,
in which event the indemnified party shall be reimbursed by the
indemnifying party for the expenses incurred in connection with
retaining separate legal counsel). An indemnifying party shall
not be liable for any settlement of an action or claim effected
without its consent. The indemnifying party shall lose its right
to defend, contest, litigate and settle a matter if it shall fail
to diligently contest such matter (except to the extent settled
in accordance with the next following sentence). No matter shall
be settled by an indemnifying party without the consent of the
indemnified party (which consent shall not be unreasonably
withheld).
(e) Survival. The indemnification provided for
under this Agreement shall remain in full force and effect
regardless of any investigation made by or on behalf of the
indemnified Person and will survive the transfer of the Registra-
ble Securities and the termination of this Agreement.
(f) Contribution. If recovery is not available
under the foregoing indemnification provisions for any reason or
reasons other than as specified therein, any Person who would
otherwise be entitled to indemnification by the terms thereof
shall nevertheless be entitled to contribution with respect to
any Losses with respect to which such Person would be entitled to
such indemnification but for such reason or reasons. In deter-
mining the amount of contribution to which the respective Persons
are entitled, there shall be considered the Persons' relative
knowledge and access to information concerning the matter with
respect to which the claim was asserted, the opportunity to
correct and prevent any statement or omission, and other equita-
ble considerations appropriate under the circumstances. It is
hereby agreed that it would not necessarily be equitable if the
amount of such contribution were determined by pro rata or per
capita allocation. No person guilty of fraudulent misrepresenta-
tion (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not
found guilty of such fraudulent misrepresentation. Notwithstand-
ing the foregoing, no Stockholder shall be required to make a
contribution in excess of the net amount received by such holder
from the sale of Registrable Securities.
ARTICLE VI
Miscellaneous
(a) Legends. Each of the Stockholders agrees
that substantially the following legends shall be placed on the
certificates representing any Shares owned by them:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF A STOCKHOLDERS AGREE-
MENT DATED AS OF JULY 2, 1996, A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF HAYES WHEELS INTERNATIONAL,
INC. AND IS AVAILABLE WITHOUT CHARGE UPON WRITTEN
REQUEST THEREFOR. THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY
ALL OF THE PROVISIONS OF THE AFORESAID AGREEMENT.
The Company agrees to remove the legend on the Shares upon the
resale of such Shares in accordance with the terms of this
Agreement (other than pursuant to Section 4.01(a)(i) and Section
4.01(b)(iii) hereof).
(b) Specific Performance. Each of the Stockhold-
ers acknowledges and agrees that in the event of any breach of
this Agreement, the non-breaching party or parties would be
irreparably harmed and could not be made whole by monetary
damages. The Stockholders hereby agree that in addition to any
other remedy to which they may be entitled at law or in equity,
they shall be entitled to compel specific performance of this
Agreement in any action instituted in any court of the United
States or any state thereof having subject matter jurisdiction
for such action.
(c) Headings. The headings in this Agreement are
for convenience of reference only and shall not control or affect
the meaning or construction of any provisions hereof.
(d) Entire Agreement. This Agreement and the
Subscription Agreement constitute the entire agreement and
understanding of the parties hereto in respect of the subject
matter contained herein, and there are no restrictions, promises,
representations, warranties, covenants, conditions or undertak-
ings with respect to the subject matter hereof, other than those
expressly set forth or referred to herein. This Agreement and
the Subscription Agreement supersede all prior agreements and
understandings between the parties hereto with respect to the
subject matter hereof.
(e) Proxy. For so long as this Agreement is in
effect, if any Stockholder fails or refuses to vote that
Stockholder's Shares pursuant to this Agreement, then, without
further action by such Stockholder, each other Stockholder shall
have an irrevocable proxy coupled with an interest to vote such
Stockholder's Shares in accordance with this Agreement, and each
Stockholder hereby grants to the other Stockholders such irrevo-
cable proxy coupled with an interest.
(f) Notices. All notices and other communica-
tions hereunder shall be in writing and shall be delivered
personally or by next-day courier or telecopied with confirmation
of receipt, to the parties at the addresses specified below (or
at such other address for a party as shall be specified by like
notice; provided that notices of change of address shall be
effective only upon receipt thereof). Any such notice shall be
effective upon receipt, if personally delivered or telecopied, or
one day after delivery to a courier for next-day delivery.
If to the Company, to:
Hayes Wheels International, Inc.
38481 Huron River Drive
Romulus, Michigan 48174
Telecopier: (313) 942-5199
With copies to:
Hayes Wheels International, Inc.
38481 Huron River Drive
Romulus, Michigan 48174
Attn: General Counsel
Telecopier: (313) 942-5199
and
Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
Attention: Louis B. Goldman, Esquire
Telecopier: (312) 715-4800
If to JLL, to:
Joseph Littlejohn & Levy
450 Lexington Avenue
New York, New York 10017
Attention: Paul Levy
Telecopier: (212) 286-8624
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
One Rodney Square
Wilmington, Delaware 19801
Attention: Robert B. Pincus, Esquire
Telecopier: (302) 651-3001
If to Nomura, to:
Nomura Holding America, Inc.
Two World Financial Center
Building B
New York, New York 10281
Attention: Dennis Dolan
Telecopier: (212) 667-1708
If to TSG, to:
TSG Capital Fund II, L.P.
177 Broad Street
Stamford, Connecticut 06901
Attention: Cleveland Christophe
Telecopier: (203) 406-1590
With a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: James B. Carlson, Esquire
Telecopier: (212) 262-1910
If to Argosy, to:
CIBC WG Argosy Merchant Fund II, LLC
1325 Avenue of the Americas
22nd Floor
New York, New York 10019
Attention: Jay Bloom
Telecopier: (212) 664-1429
With a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Laurence D. Weltman, Esquire
Telecopier: (212) 832-8111
If to Chase, to:
Chase Capital Partners
380 Madison Avenue
12th Floor
New York, New York 10017
Attention: Brett Ingersoll
Telecopier: (212) 622-3101
With a copy to:
O'Sullivan, Graeve & Karabell
30 Rockefeller Plaza
41st Floor
New York, New York 10012
Attention: John Soydam, Esquire
Telecopier: (212) 408-2420
(g) Applicable Law. The substantive laws of the
State of New York shall govern the interpretation, validity and
performance of the terms of this Agreement, regardless of the law
that might be applied under applicable principles of conflicts of
laws.
THE PARTIES HERETO WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT
TO DISPUTES HEREUNDER; ALL SUCH DISPUTES SHALL BE SETTLED BY
BINDING ARBITRATION PURSUANT TO THE RULES OF THE AMERICAN ARBI-
TRATION ASSOCIATION IN NEW YORK CITY, NEW YORK AND THE ORDER OF
SUCH ARBITRATORS SHALL BE FINAL AND BINDING ON ALL PARTIES HERETO
AND MAY BE ENTERED AS A JUDGMENT IN A COURT HAVING JURISDICTION
OVER THE PARTIES.
(h) Severability. The invalidity, illegality or
unenforceability of one or more of the provisions of this Agree-
ment in any jurisdiction shall not affect the validity, legality
or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this
Agreement, including any such provision, in any other jurisdic-
tion, it being intended that all rights and obligations of the
parties hereunder shall be enforceable to the fullest extent
permitted by law.
(i) Successors; Assigns. The provisions of this
Agreement shall be binding upon the parties hereto and their
respective heirs, successors and permitted assigns. Neither this
Agreement nor the rights or obligations of any Stockholder
hereunder may be assigned, except in connection with the transfer
by a Stockholder of shares of New Company Common Stock to a
Permitted Transferee. Any such attempted assignment in contra-
vention of this Agreement shall be void and of no effect.
(j) Amendments. This Agreement may not be
amended, modified or supplemented unless such modification is in
writing and signed by the Company and the holders of at least
82.5% of the Shares outstanding on the date hereof less any
Shares subsequently Transferred other than to a Person described
in clauses (i) or (ii) of the definition of a Permitted Transferee.
(k) Waiver. Any waiver (express or implied) of
any default or breach of this Agreement shall not constitute a
waiver of any other or subsequent default or breach.
(l) Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same
Agreement.
(m) Recapitalization. In the event that any
capital stock or other securities are issued in respect of, in
exchange for, or in substitution of, any shares of New Company
Common Stock by reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets,
distribution to stockholders or combination of the shares of New
Company Common Stock or any other change in the Company's capital
structure, appropriate adjustments shall be made to the terms
hereof if necessary to fairly and equitably preserve the original
rights and obligations of the parties hereto under this Agreement.
(n) Termination. Unless terminated earlier
pursuant to the terms contained herein, this Agreement shall
terminate on the eighth anniversary of the date hereof.
IN WITNESS WHEREOF, the undersigned hereby agrees
to be bound by the terms and provisions of this Stockholders
Agreement as of the date first above written.
HAYES WHEELS INTERNATIONAL, INC.
By: /s/ Daniel M. Sandberg
Name: Daniel M. Sandberg
Title: Vice President & General
Counsel
JOSEPH LITTLEJOHN & LEVY FUND II, L.P.
By: JLL ASSOCIATES II, L.P.,
its General Partner
By: /s/ Paul S. Levy
Name: Paul S. Levy
Title: General Partner
CHASE EQUITY ASSOCIATES, a
California Limited Partnership
By: CHASE CAPITAL PARTNERS,
its General Partner
By: /s/ Donald J. Hofmann
Name: Donald J. Hofmann
Title: General Partner
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
By: /s/ Jay Bloom
Name: Jay Bloom
Title:
NOMURA HOLDING AMERICA, INC.
By: /s/ Lawrence J. Pomerantz
Name: Lawrence J. Pomerantz
Title: Executive Managing Director
TSG CAPITAL FUND II, L.P.
By: TSG ASSOCIATES II, L.P.,
its General Partner
By: TSG ASSOCIATES II, INC.,
its General Partner
By: /s/ Cleveland A. Christophe
Name: Cleveland A. Christophe
Title: President
Exhibit A
Column A Column B
Shares of New Warrants to pur-
Name of Company Common chase New Company
Stockholder Stock Owned (#) Common Stock Held (#)
JLL 4,817,086 912,689
TSG 1,406,250 33,750
Argosy 1,250,000 30,000
Chase 625,000* 15,000**
Nomura 468,750 11,250
___________________
* Includes 74,513 shares of non-voting New Company
Common Stock.
** Consists of Warrants to purchase non-voting New
Company Common Stock.
Exhibit B
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of _______________,
between Hayes Wheels International, Inc., a Delaware
corporation (the "Company"), and _______________ the
("Indemnitee").
WHEREAS, it is essential to the Company to
retain and attract as directors the most capable persons
available;
WHEREAS, Indemnitee is a director of the Company;
WHEREAS, both the Company and Indemnitee recog-
nize the increased risk of litigation and other claims
being asserted against directors of public companies in
today's environment;
WHEREAS, the Restated Certificate of Incorpora-
tion (the "Charter") permits, and the By-laws (the "By-
Laws") of the Company require, the Company to indemnify
its directors to the fullest extent permitted by law and
the Indemnitee has agreed to serve as a director of the
Company in part in reliance on such Charter and By-Laws;
WHEREAS, in recognition of Indemnitee's need
for substantial protection against personal liability in
order to enhance Indemnitee's service to the Company in
an effective manner, the increasing difficulty in obtain-
ing satisfactory director liability insurance coverage
and Indemnitee's reliance on the aforesaid Charter and
By-Laws, and in part to provide Indemnitee with specific
contractual assurance that the protection afforded by
such Charter and By-Laws will be available to Indemnitee
(regardless of, among other things, any amendment to or
revocation of the Charter and By-Laws or any change in
the composition of the Company's Board of Directors or
acquisition transaction relating to the Company), the
Company wishes to provide in this Agreement for the
indemnification of and the advancing of expenses to
Indemnitee to the fullest extent (whether partial or
complete) permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained,
for the continued coverage of Indemnitee under the
Company's directors' liability insurance policies;
NOW, THEREFORE, in consideration of the premis-
es and of Indemnitee continuing to serve the Company
directly or, at its request, another enterprise, and
intending to be legally bound hereby, the parties hereto
agree as follows:
1. Certain Definitions:
(a) Change in Control: shall be deemed to have
occurred if (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Securi-
ties Exchange Act of 1934, as amended), other
than a trustee or other fiduciary holding secu-
rities under an employee benefit plan of the
Company or a corporation owned directly or
indirectly by the stockholders of the Company
in substantially the same proportions as their
ownership of stock of the Company, is or be-
comes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indi-
rectly, of securities of the Company represent-
ing 30% or more of the total voting power rep-
resented by the Company's then outstanding
Voting Securities (other than Joseph Littlejohn
& Levy Fund II, L.P. or any of its affiliates),
or (ii) during any period of two consecutive
years, individuals who at the beginning of such
period constitute the Board of Directors of the
Company and any new director whose election by
the Board of Directors or nomination for elec-
tion by the Company's stockholders was approved
by a vote of at least two-thirds (2/3) of the
directors then still in office who either were
directors at the beginning of the period or
whose election or nomination for election was
previously so approved, cease for any reason to
constitute a majority thereof, or (iii) the
stockholders of the Company approve a merger or
consolidation of the Company with any other
corporation, other than a merger or consolida-
tion which would result in the Voting Securi-
ties of the Company outstanding immediately
prior thereto continuing to represent (either
by remaining outstanding or by being converted
into Voting Securities of the surviving entity)
at least [80%] of the total voting power repre-
sented by the Voting Securities of the Company
or such surviving entity outstanding immediate-
ly after such merger or consolidation, or the
stockholders of the Company approve a plan of
complete liquidation of the Company or an
agreement for the sale or disposition by the
Company of (in one transaction or a series of
transactions) all or substantially all the
Company's assets.
(b) Claim: any threatened, pending or completed
action, suit or proceeding, or any inquiry or
investigation, whether instituted by the Compa-
ny or any other party, that Indemnitee in good
faith believes might lead to the institution of
any such action, suit or proceeding, whether
civil, criminal, administrative, investigative
or other.
(c) Expenses: include attorneys' fees and all
other costs, expenses and obligations paid or
incurred in connection with investigating,
defending, being a witness in or participating
in (including on appeal), or preparing to de-
fend, be a witness in or participate in any
Claim relating to any Indemnifiable Event.
(d) Indemnifiable Event: any event or occurrence
related to the fact that Indemnitee is or was a
director, officer, employee, agent or fiduciary
of the Company, or is or was serving at the
request of the Company as a director, officer,
employee, trustee, agent or fiduciary of anoth-
er corporation, partnership, joint venture,
employee benefit plan, trust or other enter-
prise, or by reason of anything done or not
done by Indemnitee in any such capacity.
(e) Independent Legal Counsel: an attorney or firm
of attorneys, selected in accordance with the
provisions of Section 3, who shall not have
otherwise performed services for the Company,
any of its subsidiaries or Indemnitee within
the last two years (other than with respect to
matters concerning the rights of Indemnitee
under this Agreement, or of other indemnitees
under similar indemnity agreements).
(f) Reviewing Party: any appropriate person or
body consisting of a member or members of the
Company's Board of Directors or any other per-
son or body appointed by the Board who is not a
party to the particular Claim for which Indem-
nitee is seeking indemnification, or Indepen-
dent Legal Counsel.
(g) Voting Securities: any securities of the Com-
pany which vote generally in the election of
directors.
2. Basic Indemnification Arrangement. (a) In the
event Indemnitee was, is or becomes a party to or witness
or other participant in, or is threatened to be made a
party to or witness or other participant in, a Claim by
reason of (or arising in part out of) an Indemnifiable
Event, the Company shall indemnify Indemnitee to the
fullest extent permitted by law as soon as practicable,
but in any event no later than thirty days after written
demand is presented to the Company, against any and all
Expenses, judgments, fines, penalties and amounts paid in
settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect
of such Expenses, judgments, fines, penalties or amounts
paid in settlement) of such Claim. If so requested by
Indemnitee, the Company shall advance (within two busi-
ness days of such request) any and all Expenses to Indem-
nitee (an "Expense Advance"). Notwithstanding anything
in this Agreement to the contrary, except as provided in
Section 5 hereof, prior to a Change in Control, Indemni-
tee shall not be entitled to indemnification or Expense
Advances pursuant to this Agreement in connection with
any Claim initiated by Indemnitee unless the Board of
Directors has authorized or consented to the initiation
of such Claim.
(b) Notwithstanding the foregoing, (i) the
obligations of the Company under Section 2(a) shall be
subject to the condition that the Reviewing Party shall
not have determined (in a written opinion, in any case in
which the Independent Legal Counsel referred to in Sec-
tion 3 hereof is involved) that Indemnitee would not be
permitted to be indemnified under applicable law, and
(ii) the obligation of the Company to make an Expense
Advance pursuant to Section 2(a) shall be subject to the
condition that, if, when and to the extent that the
Reviewing Party determines that Indemnitee would not be
permitted to be so indemnified under applicable law, the
Company shall be entitled to be reimbursed by Indemnitee
(who hereby agrees to reimburse the Company) for all such
amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal
proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee should be indemni-
fied under applicable law, any determination made by the
Reviewing Party that Indemnitee would not be permitted to
be indemnified under applicable law shall not be binding
and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which
all rights of appeal therefrom have been exhausted or
lapsed). If there has not been a Change in Control, the
Reviewing Party shall be selected by the Board of Direc-
tors, and, if there has been such a Change in Control
(other than a Change in Control which has been approved
by a majority of the Company's Board of Directors who
were directors immediately prior to such Change in Con-
trol), the Reviewing Party shall be the Independent Legal
Counsel referred to in Section 3 hereof. If there has
been no determination by the Reviewing Party or if the
Reviewing Party determines that Indemnitee substantively
would not be permitted to be indemnified in whole or in
part under applicable law, Indemnitee shall have the
right to commence litigation in any court in the State of
Delaware having subject matter jurisdiction thereof and
in which venue is proper seeking an initial determination
by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, including the
legal or factual bases therefor, and the Company hereby
consents to service of process and to appear in any such
proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company
and Indemnitee.
3. Change in Control. The Company agrees that, if
there is a Change in Control of the Company (other than a
Change in Control which has been approved by a majority
of the Company's Board of Directors who were directors
immediately prior to such Change in Control), then with
respect to all matters thereafter arising concerning the
rights of Indemnitee to indemnity payments and Expense
Advances under this Agreement or any other agreement or
Charter or By-law provision now or hereafter in effect
relating to Claims for Indemnifiable Events, the Company
shall seek legal advice only from Independent Legal
Counsel selected by Indemnitee and approved by the Compa-
ny (which approval shall not be unreasonably withheld).
Such counsel, among other things, shall render its writ-
ten opinion to the Company and Indemnitee as to whether
and to what extent the Indemnitee would be permitted to
be indemnified under applicable law. The Company agrees
to pay the reasonable fees of the Independent Legal
Counsel referred to above and to fully indemnify such
counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising
out of or relating to this Agreement or its engagement
pursuant hereto.
4. Indemnification for Additional Expenses. The
Company shall indemnify Indemnitee against any and all
expenses (including attorneys' fees) and, if requested by
Indemnitee, shall (within two business days of such
request) advance such expenses to Indemnitee, which are
incurred by Indemnitee in connection with any action
brought by Indemnitee for (i) indemnification or advance
payment of Expenses by the Company under this Agreement
or any other agreement or Charter or By-Law provision now
or hereafter in effect relating to Claims for
Indemnifiable Events and/or (ii) recovery under any
directors' liability insurance policies maintained by the
Company, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, ad-
vance expense payment or insurance recovery, as the case
may be.
5. Partial Indemnity, Etc. If Indemnitee is
entitled under any provision of this Agreement to indem-
nification by the Company for some or a portion of the
Expenses, judgments, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the
total amount thereof, the Company shall nevertheless
indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled. Moreover, notwithstanding any
other provision of this Agreement, to the extent that
Indemnitee has been successful on the merits or otherwise
in defense of any or all Claims relating in whole or in
part to an Indemnifiable Event or in defense of any issue
or matter therein, including dismissal without prejudice,
Indemnitee shall be indemnified against all Expenses
incurred in connection therewith.
6. Burden of Proof. In connection with any deter-
mination by the Reviewing Party or otherwise as to wheth-
er Indemnitee is entitled to be indemnified hereunder the
burden of proof shall be on the Company to establish that
Indemnitee is not so entitled.
7. No Presumptions. For purposes of this Agree-
ment, the termination of any claim, action, suit or
proceeding, by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea
of nolo contendere, or its equivalent, shall not create a
presumption that Indemnitee did not meet any particular
standard of conduct or have any particular belief or that
a court has determined that indemnification is not per-
mitted by applicable law. In addition, neither the
failure of the Reviewing Party to have made a determina-
tion as to whether Indemnitee has met any particular
standard of conduct or had any particular belief, nor an
actual determination by the Reviewing Party that Indemni-
tee has not met such standard of conduct or did not have
such belief, prior to the commencement of legal proceed-
ings by Indemnitee to secure a judicial determination
that Indemnitee should be indemnified under applicable
law shall be a defense to Indemnitee's claim or create a
presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief.
8. Nonexclusivity, Etc. The rights of the Indem-
nitee hereunder shall be in addition to any other rights
Indemnitee may have under the Charter, By-Laws or the
Delaware General Corporation Law or otherwise. To the
extent that a change in the Delaware General Corporation
Law (whether by statute or judicial decision) permits
greater indemnification by agreement than would be af-
forded currently under the Charter, By-Laws and this
Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change.
9. Liability Insurance. To the extent the Company
maintains an insurance policy or policies providing
directors' liability insurance, Indemnitee shall be
covered by such policy or policies, in accordance with
its or their terms, to the maximum extent of the coverage
available for any Company director.
10. Period of Limitations. No legal action shall
be brought and no cause of action shall be asserted by or
in the right of the Company against Indemnitee,
Indemnitee's spouse, heirs, executors or personal or
legal representatives after the expiration of two years
from the date of accrual of such cause of action, and any
claim or cause of action of the Company shall be extin-
guished and deemed released unless asserted by the timely
filing of a legal action within such two-year period;
provided, however, that if any shorter period of limita-
tions is otherwise applicable to any such cause of action
such shorter period shall govern.
11. Amendments, Etc. No supplement, modification
or amendment of this Agreement shall be binding unless
executed in writing by both of the parties hereto. No
waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.
12. Subrogation. In the event of payment under
this Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery
of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such
rights, including the execution of such documents neces-
sary to enable the Company effectively to bring suit to
enforce such rights.
13. No Duplication of Payments. The Company shall
not be liable under this Agreement to make any payment in
connection with any Claim made against Indemnitee to the
extent Indemnitee has otherwise actually received payment
(under any insurance policy, Charter or By-law provision
or otherwise) of the amounts otherwise indemnifiable
hereunder.
14. Binding Effect, Etc. This Agreement shall be
binding upon and inure to the benefit of and be enforce-
able by the parties hereto and their respective succes-
sors, assigns, including any direct or indirect successor
by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the
Company, spouses, heirs, executors and personal and legal
representatives. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as a
director of the Company or of any other enterprise at the
Company's request.
15. Severability. The provisions of this Agreement
shall be severable in the event that any of the provi-
sions hereof (including any provision within a single
section, paragraph or sentence) is held by a court of
competent jurisdiction to be invalid, void or otherwise
unenforceable in any respect, and the validity and en-
forceability of any such provision in every other respect
and of the remaining provisions hereof shall not be in
any way impaired and shall remain enforceable to the
fullest extent permitted by law.
16. Governing Law. This Agreement shall be gov-
erned by and construed and enforced in accordance with
the laws of the State of Delaware applicable to contracts
made and to be performed in such state without giving
effect to the principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement this ____ day of July, 1996.
HAYES WHEELS INTERNATIONAL, INC.
By ______________________
Name:
Title:
________________________
Indemnitee
