EXHIBIT F
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement, dated as of March 12, 1993
among the stockholders (collectively, the "Stockholders" and,
individually, a "Stockholder") of ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC., a Delaware corporation (the "Company") set
forth on Schedule 1 annexed hereto.
W I T N E S S E T H:
WHEREAS, on the date hereof, Norton Xxxxxxxxx ("Xxxxxxxxx")
and his Related Transferees (as hereinafter defined) are entitled
to receive 5,608,733 shares of the issued and outstanding common
stock, $.01 par value (the "Common Stock"), of the Company, and
Xxxxx X. Failing, Jr. ("Failing", and together with Xxxxxxxxx, the
"Principal Stockholders") and his Related Transferees are entitled
to receive 2,804,367 shares of the issued and outstanding Common
Stock pursuant to a Reorganization Agreement dated as of even date
herewith;
WHEREAS, Xxxxxxxxx, Failing, and their respective Related
Transferees have agreed that they will not transfer any of the
Common Stock held thereby except in accordance with this
Agreement; and
WHEREAS, the Stockholders believe it to be in their
respective best interests to enter into this Agreement providing
for certain rights and restrictions with respect to the Common
Stock held thereby as well as certain other obligations with
respect to the Company;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, and for other good and
valuable consideration, the parties agree as follows:
1. Restrictions on Transfer of Shares; Rights of First
Refusal.
1.1. Each of the Stockholders hereby agree not to sell,
transfer, exchange or otherwise dispose of any shares of Common
Stock which he may now or hereafter own, or grant any option or
right to purchase the shares or any beneficial interest therein (a
"Transfer") except in accordance with this Agreement. No
Stockholder nor any Related Transferee will Transfer any shares of
Common Stock to any Related Transferee unless the transferee
executes and delivers to the parties hereto a written agreement in
which the transferee agrees to be bound by all the terms and
provisions of this Agreement applicable to the transferor as if
the transferee were a party hereto.
1.2. Each of Xxxxxxxxx and Failing, at any time, may
Transfer any shares of Common Stock which he may now or hereafter
own to (i) any member of his immediate family (including parents,
spouse, siblings, children or grandchildren); (ii) any affiliate
(as defined in Rule 405 under the Securities Act of 1933, as
amended (the "Act")) of the owner; or (iii) any trust for his
benefit and/or the benefit of members of his immediate family or
affiliates (each permitted transferee of Xxxxxxxxx or Failing is
herein referred to as a "Related Transferee" and, in the case of
Xxxxxxxxx, shall include The G/N Xxxxxxxxx Trust, and in the case
of Failing, shall include The Failing Trust and Xxxxxxxxx X.
Failing), without the consent the other Principal Stockholder, and
without first offering the shares to the other Principal
Stockholder. The provisions of this Section 1.2 shall apply to
each Related Transferee of Xxxxxxxxx as if Xxxxxxxxx hereunder,
and shall apply to each Related Transferee of Failing as if
Failing hereunder.
1.3. At any time, or from time to time, if after the Common
Stock is listed on a national or regional securities exchange or
quoted or traded in the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), all of the Stockholders and
their respective Related Transferees may Transfer shares of the
Common Stock in brokers' transactions (as defined in Rule 144
under the Act) without the consent of either Principal
Stockholder, and without first offering the shares to either
Principal Stockholder.
1.4. If Xxxxxxxxx or any of his Related Transferees or
Failing or any of his Related Transferees has a bona fide offer to
purchase any or all of his shares of Common Stock and if such
Stockholder desires to accept the offer, he will give prompt
notice, if Xxxxxxxxx or his Related Transferees, to Failing, or
if Failing or his Related Transferees to Xxxxxxxxx, which notice
(referred to hereinafter as the "Notice of Offer") will contain
(i) a true and correct copy of the offer setting forth the name
and address of the proposed purchaser; (ii) the number of shares
of Common Stock which such Stockholder (the "Selling Stockholder")
owns and wishes to sell; (iii) the proposed purchase price and all
other terms and conditions of the offer; and, if appropriate, (iv)
the Selling Stockholder's estimate of the fair market value of any
non-cash consideration offered by the proposed purchaser. The
date on which the Notice of Offer is received is referred to
hereinafter as the "Notice Date." The Notice of Offer will be
deemed an irrevocable offer to sell to Failing and his Related
Transferees, on a pro rata basis, if Xxxxxxxxx or any Related
Transferees is the Selling Stockholder, or to sell to Xxxxxxxxx
and his Related Transferees, on a pro rata basis, if Failing or
any Related Transferee is the Selling Stockholder, on the terms
set forth in the Notice of Offer, the shares which the Selling
Stockholder desires to sell. For purposes of this Section 1.4, an
offer to sell shares of Common Stock will be deemed to be made
whenever Xxxxxxxxx or his Related Transferees or Failing or his
Related Transferees proposes to sell all or any part of his shares
or any beneficial interest therein, whether by contract to sell,
transfer, exchange or other disposition thereof for value, or
grant of an option or right to purchase the shares or any
beneficial interest therein. A pledge of shares to a bank or
other lending institution as security for a loan will not be
deemed an offer to sell the shares for purposes of this Section
1.4 provided that the bank or other lending institution agrees in
writing to be bound by the provisions of this Agreement applicable
to the pledgor as if the pledgee were a party hereto; however, any
foreclosure or other sale of the pledged shares will be deemed to
be an offer to sell the shares hereunder.
1.4.1. Within 20 days following the Notice Date, the
non-selling stockholders will notify the Selling Stockholder as to
whether they elect to purchase all, but not less than all, of the
shares specified in the Notice of Offer (the notification is
referred to hereinafter as the "Non-Seller's Acceptance"). If the
Selling Stockholder does not receive the Non-Seller's Acceptance
within the 20-day period, the non-selling stockholders will be
deemed to have declined to purchase the Selling Stockholder's
shares. The Non-Seller's Acceptance will be deemed to be an
irrevocable commitment to purchase from the Selling Stockholder
the number of shares set forth in the Non-Seller's Acceptance.
1.4.2. The purchase price for any shares of Common
Stock sold to the non-selling stockholders, pursuant to this
Section 1.4, will be the purchase price contained in the Notice of
Offer if the entire purchase price contained therein was for cash.
If all or a portion of the consideration for which the Selling
Stockholder proposes to sell his shares is other than cash, and if
the non-selling stockholders agree with the valuation specified in
the Notice of Offer, the non-selling stockholders will have the
right to purchase the shares for cash in an amount equal to the
sum of the cash portion of the consideration proposed to be
received by the Selling Stockholder plus an additional amount of
cash equal to the agreed upon value of the non-cash consideration.
At the non-selling stockholders' election, they will be entitled
to obtain and pay to the Selling Stockholder property
substantially identical to the non-cash consideration for purposes
of payment of the non-cash portion of the purchase price for the
shares proposed to be sold. If the non-selling stockholders do
not agree with the Selling Stockholder's estimate of the fair
market value of the non-cash consideration, the Selling
Stockholder will negotiate with the non-selling stockholders in
good faith for the purpose of attempting mutually to agree upon
the fair market value of the non-cash consideration. If an
agreement is not reached within 10 days after the expiration of
the 20-day notice period specified in Section 1.4.1, thereafter,
the Selling Stockholder and the non-selling stockholders will
obtain from the appraiser (as described in Section 3.1), an
appraisal as to the fair market value thereof within 20 days after
the expiration of the 10 days. The fair market value of the
non-cash consideration as so determined will be binding on the
Selling Stockholder and the non-selling stockholders.
1.4.3. If the non-selling stockholders do not elect to
purchase all of the shares of the Selling Stockholder available
for purchase under this Section 1.4, the Selling Stockholder,
within a period of 90 days from the Notice Date, may sell the
shares only to the third party specified in the Notice of Offer at
a price not less than 95% of the price set forth in the Notice of
Offer. If the Selling Stockholder does not complete the sale
within the 90 day period, the provisions of this Section 1.4 will
again apply, and no sale of shares of Common Stock will be made
otherwise than in accordance with the terms of this Agreement.
1.4.4. The closing of the purchase of the Selling
Stockholder's shares of Common Stock by the non-selling
stockholders pursuant to this Section 1.4 will take place within
30 days after the termination of the later of the 20-day period
following the Notice Date or the date of the final determination
of the fair market value of any non-cash consideration offered, if
applicable, at 11:00 a.m. at the principal offices of the Company,
or at another time or place as the parties may agree. At the
closing, the Selling Stockholder will sell, convey, transfer and
deliver to the non-selling stockholders, on a pro rata basis in
proportion to the shares owned by such persons (or in such other
proportion as the non-selling shareholders may agree among
themselves), full right, title and interest in and to the shares
so purchased, free and clear of all liens, security interests or
adverse claims of any kind and nature (except the transfer
restrictions set forth herein), and will deliver to the
non-selling stockholders a certificate or certificates
representing the shares sold, in each case duly endorsed for
transfer or accompanied by appropriate stock transfer powers with
signatures guaranteed by a commercial bank, trust company or
registered broker dealer, and with all necessary transfer tax
stamps affixed thereto at the expense of the Selling Stockholder;
each of the non-selling stockholders will deliver to the Selling
Stockholder, in full payment of the purchase price of the shares
purchased, the non-cash consideration offered, if any, together
with a certified or bank check payable to the order of the Selling
Stockholder in the amount of the cash portion of the purchase
price.
2. Tag-Along Rights.
2.1. If Xxxxxxxxx and his Related Transferees, collectively,
or Failing and his Related Transferees, collectively, at any time
or from time to time, in one or in a series of related
transactions, enter into an agreement (whether oral or written) to
Transfer, directly or indirectly, (a "Tag-Along Sale") shares of
Common Stock to any person or entity (the selling stockholders,
collectively, also are referred to as the "Selling Stockholder")
in a sufficient amount to transfer control to a third party, then
the non-selling stockholders, collectively, will have the right,
but not the obligation, to participate, on a pro rata basis in
proportion to the shares owned by such persons (or in such other
proportion as the non-selling stockholders may agree among
themselves), in the Tag-Along Sale by selling up to the number of
shares of Common Stock (the "Non-Seller's Total Allotment) equal
to the product of (i) the total number of shares of Common Stock
proposed to be sold in the proposed Tag-Along Sale times (ii) a
fraction, the numerator of which is equal to the aggregate number
of shares of Common Stock owned by the non-selling stockholders
immediately prior to the Tag-Along Sale and the denominator of
which is equal to the sum of the aggregate number of shares of
Common Stock owned by the Selling Stockholder and the aggregate
number of shares of Common Stock owned by the non-selling
stockholders, immediately prior to the Tag-Along Sale. Any sales
by the non-selling stockholders will be on the same terms and
conditions as the proposed Tag-Along Sale by the Selling
Stockholder; provided, however, that the non-selling stockholders
may be required to make any representation and warranty in
connection with the Tag-Along Sale only to the "best knowledge" of
such non-selling stockholder (other than as to each stockholder's
ownership and authority to sell, free of liens, claims and
encumbrances, the shares of Common Stock proposed to be sold by
him, which shall be made only by each such stockholder as to his
own shares), and each non-selling stockholder will be required to
bear his proportionate share, up to but in no event in excess of
the net proceeds received by the stockholder for the shares of
Common Stock sold by him in the Tag-Along Sale, of any escrows,
holdbacks, adjustments in purchase price or liabilities of the
Selling Stockholder for any representations and warranties made by
the Selling Stockholder (other than representations and warranties
as to the ownership and authority to sell, free of liens, claims
and encumbrances, the shares of Common Stock proposed to be sold
by the Selling Stockholder) under the terms of the agreement
relating to the Tag-Along Sale.
2.2. The foregoing notwithstanding, the provisions of this
Section 2 will not apply to any Transfer of shares of Common Stock
among Xxxxxxxxx and his Related Transferees or among Failing and
his Related Transferees (except that the shares of Common Stock
will continue to be subject to this Agreement).
2.3. Each of Xxxxxxxxx and his Related Transferees,
collectively, or Failing and his Related Transferees,
collectively, if participating in a Tag-Along Sale, will promptly
provide the non-selling stockholders with written notice prior to
the Tag-Along Sale. The notice will set forth: (i) the name and
address of the proposed transferee or purchaser of the shares of
Common Stock in the Tag-Along Sale; (ii) the name of the Selling
Stockholder and the number of shares proposed to be Transferred;
(iii) the proposed amount and form of consideration to be paid for
the shares and the terms and conditions of payment offered by the
proposed transferee or purchaser; (iv) based upon the information
to be provided by the Company, the aggregate number of shares of
Common Stock held of record as of the date of the notice (the
"Tag-Along Notice Date") by the non-selling stockholders to whom
the notice is sent; (v) the aggregate number of shares of Common
Stock held of record as of the Tag-Along Notice Date by the
Selling Stockholder; (vi) based upon the foregoing, the number of
shares each non-selling stockholder is entitled to include in the
Tag-Along Sale (computed in accordance with Section 2.1); and
(vii) that the proposed transferee or purchaser has been informed
of the "tag-along rights" provided for in Section 2.1 above and
has agreed to purchase shares of Common Stock in accordance with
the terms thereof. The non-selling stockholders, collectively,
will provide written notice (or oral notice confirmed in writing)
(the "Tag-Along Notice") to the Selling Stockholder within 20 days
of the date the notice specified in the preceding sentence is
received by the non-selling stockholders. The Tag-Along Notice
will set forth the number of shares of Common Stock, if any, the
non-selling stockholders, collectively, elect to include in the
Tag-Along Sale, which will not exceed the Non-Seller's Total
Allotment. The Tag-Along Notice given by the non-selling
stockholders will constitute their binding agreement to sell their
shares on the terms and conditions applicable to the sale
(including the requirements of this Section 2). In the event that
the proposed transferee or purchaser does not purchase the shares
of the non-selling stockholders on the same terms and conditions
applicable to the Selling Stockholder, then the proposed Tag-Along
Sale by the Selling Stockholder to the proposed purchaser or
transferee will be invalid. If the Tag-Along Notice is not
received by the Selling Stockholder from the non-selling
stockholders within the 20-day period specified above, the Selling
Stockholder will have the right to sell or otherwise transfer the
Common Stock to the proposed purchaser or transferee without any
participation by the non-selling stockholders but only on the
terms and conditions stated in the notice to the non-selling
stockholders or on terms and conditions no more favorable to the
transferor and only if a definitive and binding agreement to sell
or otherwise transfer the Common Stock is entered into not later
than 30 days after the end of the 20-day period specified above.
2.4. The provisions of this Section 2 will apply regardless
of whether the consideration received in the Tag-Along Sale is
cash, equity securities, property-in-kind, or any combination
thereof.
3. Xxxxxxxxx Option.
3.1 Upon the death or permanent incapacity of Failing,
but in no event earlier than February 1, 1995, Xxxxxxxxx, or, if
Xxxxxxxxx so elects, the Company (provided the Company, in its
sole discretion, accepts the assignment thereof), will have the
right, but not the obligation, to purchase all of Failing's and
his Related Transferees' Common Stock at a purchase price equal to
the fair market value of the shares as of the exercise date as
determined by the appraiser. Xxxxxxxxx (or the Company, if
Xxxxxxxxx'x assignee as aforesaid) must notify Failing, or
Failing's legal representative, in writing within the three-month
period after Failing's death or permanent incapacity whether he
(or the Company) will exercise his purchase right pursuant to this
Section 3.1. If Failing, or Failing's legal representative, does
not receive a written notice from Xxxxxxxxx (or the Company, as
the case may be) within the three-month period, Xxxxxxxxx (and the
Company) will be deemed to have declined to exercise the purchase
right pursuant to this Section 3.1.
3.2 The closing of the purchase of Failing's and his
Related Transferees' Common Stock will take place within 30 days
after such written notice of exercise of the purchase right
pursuant to this Section 3.1 The closing will take place at 11:00
a.m. at the principal offices of the Company or at another time or
place as Xxxxxxxxx (or the Company, if Xxxxxxxxx'x assignee as
aforesaid) and Failing, or Failing's representative, may agree.
At the closing, Failing, or Failing's representative, and his
Related Transferees will sell, convey, transfer and deliver to
Xxxxxxxxx, or the Company, as the case may be, full right, title
and interest in and to all of Failing's and his Related
Transferees' Common Stock, free and clear of all liens, security
interests or adverse claims of any kind and nature (but if the
Company is not the purchaser subject to the transfer restrictions
set forth herein), and will deliver to Xxxxxxxxx or the Company,
as the case may be, a certificate or certificates representing the
shares sold, in each case duly endorsed for transfer or
accompanied by appropriate stock transfer powers with signatures
guaranteed by a commercial bank, trust company or registered
broker dealer and with all necessary transfer tax stamps affixed
thereto at the expense of Failing and his Related Transferees; if
Xxxxxxxxx is the purchaser, then Xxxxxxxxx will deliver to each of
Failing and his Related Transferees, in full payment of the
purchase price of the shares purchased, a certified or bank check
payable to the order of Failing and his Related Transferees, as
the case may be, in an amount equal to the fair market value of
their shares of Common Stock so purchased; if the Company is the
purchaser, the Company will deliver to each of Failing and his
Related Transferees in full payment of the purchase price of the
shares so purchased, a certified or bank check payable to the
order of Failing or his Related Transferee, as the case may be, in
an amount equal to one-third of the fair market value of their
shares of Common Stock so purchased together with a promissory
note for the balance of the purchase price payable in equal
installments on the first and second anniversary of the closing.
The Company's promissory note shall accrue interest on the
outstanding principal balance at an annual rate of 1/2 of 1% over
the "Prime Rate" as published from time to time in the eastern
edition of The Wall Street Journal and shall be in substantially
the form attached as Exhibit A hereto. Xxxxxxxxx shall, to the
fullest extent of his legal ability, cause the Company to comply
with the covenants set forth in Section 5 of such promissory note.
The fair market value of Failing's and his Related Transferees'
Common Stock will be determined by the appraiser.
4. Certain Definitions
4.1. Appraiser. For purposes of this Agreement, the term
"appraiser" means Xxxxx Xxxxxxx (unless Xxxxxxxxx or Failing
objects in writing to the other party hereto) or an independent
appraiser with respect to equity securities or other property
being valued, as the case may be, as mutually agreed upon by
Xxxxxxxxx and Failing. If Xxxxxxxxx and Failing cannot agree upon
an independent appraiser then each of Xxxxxxxxx and Failing will
pick an appraiser and Xxxxxxxxx'x and Failing's appraiser
designees will mutually agree upon an appraiser for purposes of
this Agreement.
4.2. Common Stock. For purposes of this Agreement, the term
"Common Stock" means the Company's outstanding voting common stock
and includes, without limitation, the Common Stock, and any
security received as a dividend on, or in connection with a split
of, the Common Stock or exchangeable or exchanged for Common Stock
or exchangeable or exchanged for Common Stock in any transaction,
including a merger, consolidation or other corporate
reorganization or similar situation, including an exchange of
securities for Common Stock which was subject to this Agreement.
4.3. Fair Market Value. For purposes of this Agreement, the
term "fair market value" on a particular date with respect to a
share of Common Stock means (i) in the event the Common Stock is
not listed on a national or regional securities exchange or quoted
or traded in NASDAQ, the value determined in good faith (without
regard to discounting for minority shareholdings or adding
premiums for controlling shareholdings and without regard to the
effects of this Agreement) by the appraiser, which determination
will be conclusive, (ii) in the event the Common Stock is listed
on a national or regional securities exchange, the closing sales
price per share of the Common Stock on the exchange on the date,
or, if there has been no sale on that date, on the last preceding
date on which a sale or sales were so reported (the "Sale Date")
or (iii) if the Common Stock is quoted or traded in NASDAQ, the
mean between the highest closing bid and lowest closing asked
price for the Common Stock as reported by NASDAQ on the Sale Date.
The parties shall use their best efforts to cause the Company to
give the appraiser access during normal business hours to all of
the Company's properties, personnel, books, financial statements,
tax returns, contracts, records, projections, business plans and
any additional documents and information with respect to the
Company's business and affairs as the appraiser from time to time
reasonably may request. The parties shall use their best efforts
to cause the Company to cause its accountants to permit the
appraiser to examine all records and work papers relating to the
preparation, review and audits, if any, of the Company's financial
statements and tax returns.
4.4. Permanent Incapacity. For purposes of this Agreement,
the term "permanent incapacity" means that the person is unable to
participate actively in the business of the Company as a result of
physical or mental disability and such inability continues for a
period of 3 consecutive months during the term hereof.
4.5 Transfer Control. For purposes of this Agreement, the
term "transfer control" or "transfer of control" means that the
purchaser or transferee of shares of Common Stock together with
its affiliates (as defined in Rule 405 of the Act), immediately
after the purchase or transfer, becomes directly or indirectly the
beneficial owner of more than 50% of the outstanding shares of
Common Stock.
5. Board of Directors. As stockholders of the Company,
Xxxxxxxxx and Failing will vote all of their shares of Common
Stock, and/or use their best efforts to cause their Related
Transferees to vote, at all times during the term of this
Agreement to provide that there will be no more than 7 directors
of the Company and will vote for the election as directors of 6
persons designated by Xxxxxxxxx and Failing, in proportion to the
respective holdings of shares of Xxxxxxxxx and his Related
Transferees and Failing and his Related Transferees, and this
division of directors will be maintained in the case of directors'
vacancies, deaths, disabilities or other events. Either Xxxxxxxxx
or Failing may designate himself as one of the directors.
6. Miscellaneous.
6.1. Entire Agreement. This Agreement contains the entire
agreement among the parties in respect of the subject matter
contained herein and supersedes any prior agreements (written or
oral) with respect thereto.
6.2. Binding Nature. This Agreement and all the provisions
are binding upon and inure to the benefit of the parties and their
respective heirs, successors, assigns and legal representatives.
This Agreement is not intended to confer, and will not confer, any
rights or remedies to any person or entity not a party hereto
except as otherwise specifically provided herein.
6.3. Waivers and Amendments. The waiver by any party of a
breach of any provision of this Agreement will not operate or be
construed as a waiver of any subsequent breach. This Agreement may
be amended, modified or supplemented only by written agreement of
the parties.
6.4. Headings. The headings of the sections of this Agreement
are inserted for convenience only and will not constitute a part
hereof.
6.5. Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of Delaware
without giving effect to the conflict of laws provisions thereof.
6.6. Notices. All notices, requests, demands and other
communications which are required or may be given pursuant to this
Agreement will be in writing and will be deemed to have been duly
given: (a) when delivered by hand or (b) 3 business days after
being deposited in the mail, certified or registered, with postage
prepaid, or (c) when telecopied (receipt confirmed), in any case,
to the parties at their respective addresses set forth on Schedule
1 or to another address as any party may specify by notice to the
other party.
6.7. Invalidity or Unenforceability. The invalidity or
unenforceability of any provision of this Agreement in any
jurisdiction will not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity
or enforceability of this Agreement, including that provision, in
any other jurisdiction.
6.8. Counterparts. This Agreement may be executed in
counterparts, each of which will be an original, but all of which
together will constitute one and the same Agreement.
6.9. Specific Performance. The parties hereby acknowledge
that it is impossible to measure, in money, the damages which will
accrue to a party hereto or, to the personal representative
thereof, by reason of a failure to perform any the obligations
under this Agreement. Therefore, if any party hereto, or the
personal representative thereof, constitutes any action or
proceeding to enforce the provisions any person against whom an
action or proceeding is brought hereby waives the claim or defense
therein that the party, or personal representative, has an
adequate remedy at law, and the person will not urge in any action
or proceeding the claim or defense that a remedy at law exists.
6.10. Arbitration. Any claim, dispute, controversy or other
matter in question arising out of, or relating to, this Agreement
or the breach thereof shall be submitted to binding arbitration in
New York, New York in accordance with the Commercial Rules of the
American Arbitration Association (the "Rules"). This submission
and agreement to arbitrate shall be specifically enforceable. Upon
any such claim, dispute, controversy or other matter in question
arising, either party may request the appointment of an arbitrator
by notice to the other party and the American Arbitration
Association given in accordance with the Rules and the notice
provisions of this Agreement. If the parties fail for any reason
to agree upon the appointment of a single arbitrator with 30 days
from the date of such notice, the party requesting arbitration
shall request that a single arbitrator be appointed in accordance
with Rule 13 of the Rules. Any arbitrator appointed hereunder
shall be appointed only on condition that the arbitration hearing
commence not more than 30 days after the appointment of the
arbitrator, and that the award in arbitration be rendered not more
than ten days after completion of the arbitration hearing. The
parties hereby agree that they and their counsel will be available
for the arbitration proceedings within said 30 days. In addition,
the arbitration award shall include the arbitrator's written
findings of facts and conclusions. If an arbitrator appointed by
the parties pursuant to this Section 6.10 fails to comply strictly
with the procedural provisions hereof, any award rendered by such
arbitrator shall nevertheless be binding upon the parties. The
arbitration award shall not be admissible into evidence in any
subsequent legal proceeding relating to the same claim, dispute or
controversy, except in connection with an action seeking to
enforce an arbitration award rendered pursuant to this Section
6.10.
6.11. Arbitration and Attorneys' Fees. Should this Agreement
become the subject of arbitration or litigation to resolve a claim
of breach or default by any party, the substantially prevailing
party shall be entitled to his attorneys' reasonable fees,
expenses, and arbitration or court costs from the other party.
6.12. Further Assurances. The parties hereto shall do and
perform, or cause to be done and performed, all further acts and
things and will execute and deliver all other agreements,
certificates, instruments and documents as any other party or
parties hereto may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and
consummation of the transactions contemplated hereby.
6.13. Term. The term of this Agreement will be for a ten year
period ending on the tenth anniversary of the date hereof. The
parties hereto also agree that the term of this Agreement shall be
extended for an additional ten year term if either Xxxxxxxxx or
Failing notifies the other party in writing of his desire to
continue this Agreement, no sooner than the 60th day prior to the
end of the initial term and no later than the 30th day prior to
the end of the initial term whereupon, this Agreement will
continue in effect at the end of the initial term for an
additional ten years term, unless the other party objects in
writing to the extension of the term of this Agreement no later
than the 10th day prior to the end of the initial term whereupon
this Agreement will terminate at the end of the initial term.
Notwithstanding the foregoing, this Agreement will terminate if
Xxxxxxxxx and Failing and their Related Transferees have in fact
been unable to elect at least a majority of the Board of Directors
of the Company or if either Xxxxxxxxx and his Related Transferees,
on the one hand, or Failing and his Related Transferees, on the
other hand, own less than 10% of the outstanding shares of Common
Stock. If this Agreement is terminated, pursuant to this Section
6.13, all obligations of the parties hereunder will terminate
except for the obligations set forth in Sections 1.4, 1.4.1,
1.4.2, 1.4.4., 2 (to the extent the Tag-Along Sale was entered
into prior to the termination date), 3 (to the extent Failing has
died or became permanently incapacitated prior to the termination
date) and this Section 6.13. Notwithstanding the foregoing, the
penultimate sentence of Section 3.2 shall survive the termination
of this Agreement so long as any promissory note created pursuant
to such Section remains outstanding and unpaid.
6.14. Stockholder Representatives. For all purposes of this
Agreement, Xxxxxxxxx and his Related Transferees will be
represented by, and bound by, Xxxxxxxxx until his death or
permanent incapacity and thereafter by the person designated by
Xxxxxxxxx'x legal representative and Related Transferees
(collectively holding a majority of the shares of Common Stock
held by such persons); similarly Failing and his Related
Transferees will be represented by, and bound by, Failing until
his death or permanent incapacity and thereafter by the person
designated by Failing's legal representative and Related
Transferees (collectively holding a majority of the shares of
Common Stock held by such persons).
IN WITNESS WHEREOF, this Agreement has been duly executed by
each of the parties to be effective as of the date first-above
written.
s/Norton Xxxxxxxxx
-------------------------------
Norton Xxxxxxxxx
THE G/N XXXXXXXXX TRUST
By s/Norton Xxxxxxxxx
-----------------------------
Norton Xxxxxxxxx, Trustee
s/Xxxxx X. Failing, Jr.
--------------------------------
Xxxxx X. Failing, Jr.
THE FAILING TRUST
By s/Xxxxx X. Failing
-----------------------------
By s/Xxxxxxxxx X. Failing
-----------------------------
s/Xxxxxxxxx X. Failing
-------------------------------
Xxxxxxxxx X. Failing
Schedule 1
Name and Address
Xxxxx X. Failing, Jr.
000 Xxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Norton Xxxxxxxxx
0000 Xxxxx Xxxxx Xxxxxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
The Failing Trust
c/o Leigh Failing, Trustee
000 Xxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
The G/N Xxxxxxxxx Trust
c/o Norton Xxxxxxxxx, Trustee
0000 Xxxxx Xxxxx Xxxxxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Xxxxxxxxx X. Failing
000 Xxxx 00xx Xxxxxx
Xxxxxxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
EXHIBIT A TO STOCKHOLDERS
AGREEMENT
$____________________ Wilton, Connecticut
Date: ___________, 1993
FOR VALUE RECEIVED, Electronic Retailing Systems
International, Inc., a Delaware corporation (hereinafter referred
to as the "Maker"), does hereby promise to pay to the order of
__________________________ (the "Payee") the principal amount of
_________________________________________________________ DOLLARS
($______________) (the "Loan Amount") on the dates and in the
amounts specified below, together with interest on the unpaid
principal amount hereof from the date hereof as specified below.
1. Manner and Place of Payment. Payments of principal and
interest are to be made in lawful money of the United States of
America at the address of the Payee specified in Section 9 or at
such other place as the holder hereof shall designate, and shall
be payable at 11:00 A.M., New York City time, on the day when due.
If any payment is due on a Saturday, Sunday or legal holiday, such
payment shall be made on the next succeeding day not a Saturday,
Sunday or legal holiday, any extension of the due date to be
reflected in the calculation of interest to be paid.
2. Principal. One-half of the Loan Amount shall be due and
payable on the first anniversary date of the date hereof and the
balance of the Loan Amount shall be due and payable on the second
anniversary date of the date hereof.
3. Interest. Interest shall be payable on the unpaid
principal amount hereof (and, to the extent permitted by
applicable law, on any overdue installment of principal or
interest) at the rate per annum equal to 1/2 of 1% plus the rate
set forth opposite the caption "Prime Rate" as published from time
to time in the eastern edition of the Wall Street Journal or any
successor publication, which interest shall be payable in arrears
on the last day of each month, commencing first full month after
the date hereof, 199_, until the principal amount hereof shall
have been paid in full.
4. Prepayment. The Maker may prepay all or any part of the
unpaid principal amount hereof, together with accrued interest, at
any time without penalty or premium.
5. Covenants. Without the prior written consent of the holder
hereof, and so long as this Note remains outstanding and unpaid,
the Maker will not:
(a) Declare or pay any dividend or make any
distribution on any class of its capital stock (other than
dividends payable in capital stock of the Maker) or purchase,
redeem or otherwise acquire or retire for value any capital stock
of the Maker; provided, however, that the Maker may declare and
pay dividends or make distributions in an amount which, together
with payments and distributions pursuant to clause (b) below (with
non-cash assets valued at fair market value), does not exceed
$__________* in any calendar year.
(b) Make any payments or distribute any assets
(including, without limitation, the payment of any purchase price
for goods or services, compensation, salary or consulting fee or
the repayment of any loan) to (i) any Affiliate of the Maker, (ii)
any relative of any Affiliate of the Maker or (iii) any entity in
which any of the persons or entities described in clauses (i) or
(ii) has a material economic interest; provided, however, that the
Maker may make payments and distributions in an amount which,
together with dividends and distributions pursuant to clause (a)
above (with non-cash assets valued at fair market value), does not
exceed $_____________* in any calendar year. The term "Affiliate"
means, as to the Maker, (i) any person or entity which directly or
indirectly controls, or is controlled by, or is under common
control with, the Maker, (ii) any person or entity which directly
or indirectly beneficially owns or holds five percent or more of
any class of voting stock (or equivalent) of the Maker or (iii)
any entity five percent or more of any class of voting stock
(or-equivalent) of which is directly or indirectly beneficially
owned or held by the Maker. The term "control" means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of an entity,
whether through the ownership of voting securities, by contract or
otherwise.
(c) Consolidate with or merge into any other person or
entity or sell, assign, convey, transfer or lease its properties
and assets as an entirety or substantially as an entirety to any
person or entity, or permit any person or entity to consolidate
with or merge into the Maker.
(d) Create or suffer to exist any subsidiary of the
Maker.
(e) Create or suffer to exist any indebtedness for
borrowed money or for the deferred purchase price of property or
services (including, without limitation, (i) in connection with
any agreement to purchase, redeem, exchange or convert into debt
securities or otherwise acquire any capital stock of the Maker or
any rights or options with respect thereto, (ii) any indebtedness
created or arising under any conditional sale or other title
retention agreement with respect to property acquired by the
____________________________
* An amount equal to 1.5 times the total cash compensation paid
by the Maker to Norton Xxxxxxxxx and his "affiliates" or
"associates" (as such terms are defined in Rule 405 under the
Securities Act of 1933, as amended) in the last full fiscal
year of the Maker prior to the issuance of this Note.
Maker, (iii) any capitalized lease obligation, (iv) any guarantee
by the Maker of any indebtedness, (v) any letters of credit issued
for the account of the Maker and (vi) any non-recourse
indebtedness with respect to any assets of the Maker), except (w)
indebtedness incurred in the ordinary course of the business of
the Maker consistent with past practices in an aggregate amount
not to exceed $______________**, (x) trade accounts for services
in the ordinary course of business, (y) deferred payment for
services in the ordinary course of business relating to employees
of the Maker and (z) in connection with the indorsement of
negotiable instruments for deposit or collection in the ordinary
course of business.
6. Default. If one or more of the following events shall
occur and be continuing (a "Default"), namely that:
(a) The Maker shall fail to pay any part of the
principal amount hereof when due, or fail to pay any part of any
installment of interest due hereunder within three days after any
such interest becomes due; or
(b) The Maker shall default in the performance or
observance of any of the covenants contained in Section 4; or
(c) A decree or order by a court having jurisdiction in
the premises shall have been entered adjudging the Maker a
bankrupt or insolvent, or approving as properly filed a petition
seeking liquidation, reorganization, readjustment, arrangement,
composition or similar relief for the Maker or ordering relief
against the Maker under the federal bankruptcy laws or any other
similar applicable federal, state or other law, or a decree or
order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, trustee or assignee in
bankruptcy or insolvency of the Maker or of a substantial part of
the property of the Maker, or for the winding up or liquidation of
its affairs shall have been entered; or
(d) The Maker shall institute proceedings to be
adjudicated a voluntary bankrupt, or shall consent to the filing
of a bankruptcy proceeding against it, or shall file petition or
answer or consent seeking liquidation, reorganization,
readjustment, arrangement, composition or similar relief under the
federal bankruptcy laws or any other similar applicable federal,
state or other law, or shall consent to the filing of any such
petition, or shall consent to the appointment of a receiver,
liquidator, trustee or assignee in bankruptcy or insolvency of it
or of a substantial part of its property or shall make an
assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due, the
_______________________________
** An amount equal to the greatest amount of indebtedness
outstanding to a person or entity which is not an Affiliate
of the Maker in the last three full fiscal years of the Maker
prior to the issuance of this Note.
Maker shall liquidate or dissolve under any applicable law, or
corporate action shall be taken by the Maker in furtherance of any
of the aforesaid purposes;
then, and in any such event, the holder of this Note may, by
notice given to the Maker, declare the principal of and interest
accrued on this Note to be immediately due and payable (and if an
event referred to in clause (c) or (d) above shall occur, then
without any notice by the holder hereof, the principal of and
interest accrued on this Note shall automatically be immediately
due and payable), whereupon the principal of and interest on this
Note shall become due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby
expressly waived, and the holder hereof may thereupon proceed to
protect and enforce his rights either by suit in equity, or by
action at law, or by other appropriate proceedings.
7. Cost and Expenses. In the case of a Default, the Maker
will pay on demand from time to time such further amounts as shall
be sufficient to cover all costs and expenses of collection and
the enforcement of the holder's rights, powers and remedies
hereunder, including, without limitation, reasonable attorneys'
fees and disbursements.
8. Waiver. Etc. No course of dealing and no failure to
exercise any right, power or remedy by the holder hereof shall
operate as a waiver thereof or otherwise prejudice the holder's
rights, powers or remedies nor shall any single or partial
exercise of any such right, power or remedy preclude any other or
further exercise thereof. No right, power or remedy conferred by
this Note upon the holder hereof shall be exclusive of any other
right, power or remedy now or hereafter available by law, in
equity or otherwise.
9. Replacement. Upon the receipt by the Maker of evidence
reasonably satisfactory to the Maker of the loss, theft or
destruction of this Note, the Maker will execute and deliver a new
Note of like tenor and form.
10. Notice. All notices, waivers and other communications
shall be in writing and mailed, telexed, or telecopied, if to the
Maker at 000 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxx 00000 Attention:
President, and if to Payee at __________________________________
________________________________________________.
All such notices, waiver and communications shall be effective on
the earlier of when received or five days after being deposited
postage prepaid in the mails.
11. Governing Law. This Note shall be governed by, and
construed in accordance with, the laws of the State of Delaware
without giving effect to the choice of law principles thereof. The
Maker acknowledges that it is engaged primarily in commercial
(nonconsumer) pursuits and that the loan evidenced by this Note
will be utilized in the business of the Maker and not for consumer
purposes. If a law, which applies to this loan and which sets
maximum loan charges, is finally interpreted so that the interest
or other loan charges collected or to be collected in connection
with this loan exceed the permitted limits, then: (i) any such
loan charges shall be reduced by the amount necessary to reduce
the charge to the permitted limit; and (ii) any sums already
collected which exceed permitted limits will be refunded to the
Maker. The holder hereof may choose to make this refund by
reducing the principal amount due under this Note or by making a
direct payment to the Maker.
12. Security. This Note shall be secured simultaneously
herewith by the Maker ("Pledgor") pledging to the Holder
("Pledgee") as collateral for this Note, all of the Pledgor's
interest in the capital stock of the Maker being acquired in part
by the execution of this Note (the "Securities"). The Pledgor
shall deposit with, grant a security interest in, and pledge to
the Pledgee, free and clear of all liens, charges and
encumbrances, the Securities, together with all dividends,
property and other distributions in respect of the Securities. The
Pledgor is granting the Pledgee a security interest in the
Securities for its faithful performance of its obligations under
the terms of this Note. The Pledgor shall have the right to vote
said Securities as it pleases, but shall abide by the covenants
set forth in paragraph 4 of this Note. The Pledgee shall hold a
valid and perfected first priority security interest in the
Securities at the time of transfer by the Pledgor. The Pledgee
shall hold the Securities for the payment of this Note and the
payment of any reasonable fees, costs and expenses which the
Pledgee may incur in connection with the enforcement of the
Pledgor's obligations under this Note including the sale or
disposition of the Securities. Upon the full satisfaction of the
Pledgor's obligations under this Note, the Pledgee shall deliver
to the Pledgor all of the Securities free of the lien of this
pledge, provided however, the Pledgee shall have the right to
continue to hold the Securities until the Pledgee is reasonably
satisfied that any payment received by it in reduction of any
obligations hereunder will not be voided under any bankruptcy or
other laws. The Pledgor agrees that any additions to or
substitutions for the Securities shall be promptly delivered to
and be held by the Pledgee under the terms of this pledge in the
same manner as the Securities originally pledged hereunder, and
such additions and substitutions are included in the term
"Securities" as used herein.
Upon the signing of this Note, the Maker shall execute a
UCC-1 security interest form for recording in the office of the
Connecticut Secretary of State evidencing the Holder's security
interest in the Securities.
This Note shall be binding upon and inure to the benefit of
the Maker, the Payee and their respective successors and assigns.
Electronic Retailing Systems
International, Inc.
By:___________________________
Title:
SUPPLEMENT TO STOCKHOLDERS' AGREEMENT
Amendment No. 1 dated as of October 29, 1997 to the
Stockholders' Agreement dated as of March 12, 1993 (the
"Stockholders' Agreement") among Norton Xxxxxxxxx, The G/N
Xxxxxxxxx Trust, Xxxxx X. Failing, Jr., The Failing Trust, and
Xxxxxxxxx X. Failing.
W I T N E S S E T H:
WHEREAS, the parties hereto are parties to the Stockholders'
Agreement whereunder they have agreed to certain rights and
restrictions with respect to the common stock, $.01 par value, of
Electronic Retailing Systems International, Inc., a Delaware
corporation (the "Company"), held thereby, as well as certain
other obligations with respect to the Company; and
WHEREAS, the Company is contemporaneously herewith entering
into a combination agreement dated this date (the "Combination
Agreement") with Telepanel Systems Inc., pursuant to Section 4.15
of which certain corporate governance arrangements are
contemplated effective at the Effective Time (as defined
thereunder); and
WHEREAS, in furtherance of the Combination Agreement,
effective at the Effective Time, the parties hereto desire to
modify certain terms of the Stockholders' Agreement in accordance
with this Amendment No. 1;
NOW, THEREFORE, in consideration of the mutual premises and
agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1. Effective at the Effective Time and until the second
anniversary thereof, section 5 of the Stockholders' Agreement
is hereby amended by deleting the references to "7" and "6"
therein and inserting in lieu thereof references to "9" and
"5", respectively.
2. Except as set forth or amended herein, the Stockholders'
Agreement shall remain in full force and effect, without
waiver of or abridgment of any rights of any party, and
continue to bind the parties hereto.
3. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment
No. 1 as of the date first above written.
XXXXXXXXX LIMITED PARTNERSHIP
I
By: G.F. Management Corp.
s/Norton Xxxxxxxxx By s/Norton Xxxxxxxxx
--------------------------- ---------------------------
Norton Xxxxxxxxx
THE G/N XXXXXXXXX TRUST XXXXXXXXX LIMITED PARTNERSHIP
II
By: G.F. Management Corp.
By s/Norton Xxxxxxxxx By s/Norton Xxxxxxxxx
------------------------- ---------------------------
Norton Xxxxxxxxx, Trustee
s/Xxxxx X. Failing, Jr.
---------------------------
Xxxxx X. Failing, Jr.
THE FAILING TRUST
By s/Xxxxx X. Failing
-------------------------
Xxxxx X. Failing
By s/Xxxxxxxxx X. Failing
-------------------------
Xxxxxxxxx X. Failing
s/Xxxxxxxxx X. Failing
---------------------------
Xxxxxxxxx X. Failing
AMENDMENT NO. 2 TO STOCKHOLDERS' AGREEMENT
Amendment No. 2 dated as of April 15, 1998 to the
Stockholders' Agreement dated as of March 12, 1993, as amended
October 29, 1997 (the "Stockholders' Agreement"), among Norton
Xxxxxxxxx, The G/N Xxxxxxxxx Trust, Xxxxx X. Failing, Jr., The
Failing Trust, and Xxxxxxxxx X. Failing.
W I T N E S S E T H:
WHEREAS, the parties hereto are parties to the Stockholders'
Agreement, whereunder they have agreed to certain rights and
restrictions with respect to the common stock, $.01 par value, of
Electronic Retailing Systems International, Inc., a Delaware
corporation (the "Company"), held thereby, as well as certain
other obligations with respect to the Company; and
WHEREAS, the parties hereto desire to modify certain terms of
the Stockholders' Agreement in accordance with this Amendment No.
2;
NOW, THEREFORE, in consideration of the mutual premises and
agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1. Paragraph 5 of the Stockholders' Agreement is hereby amended
so that it provides as follows:
5. Board of Directors. As stockholders of the
Company, Xxxxxxxxx and Failing will vote all of
their shares of Common Stock, and/or use their
best efforts to cause their Related Transferees to
vote, at all times during the term of this
Agreement to provide that there will be not more
than 7 directors of the Company and will vote for
the election as directors of 6 persons (or such
lesser number equivalent to the then current
number of directors) designated by Xxxxxxxxx and
Failing, in proportion to the respective holdings
of shares of Xxxxxxxxx and his Related Transferees
and Failing and his Related Transferees, and this
division of directors will be maintained in the
case of directors' vacancies, deaths, disabilities
or other events. Either Xxxxxxxxx or Failing may
designate himself as one of the directors.
2. Except as set forth or amended herein, the Stockholders'
Agreement shall remain in full force and effect, without
waiver of or abridgment of any rights of any party, and
continue to bind the parties hereto.
3. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment
No. 2 as of the date first above written.
XXXXXXXXX LIMITED PARTNERSHIP I
By: G.F. Management Corp.
s/Norton Xxxxxxxxx By s/Norton Xxxxxxxxx
--------------------------- -----------------------------
Norton Xxxxxxxxx
THE G/N XXXXXXXXX TRUST XXXXXXXXX LIMITED PARTNERSHIP II
By: G.F. Management Corp.
By s/Norton Xxxxxxxxx By s/Xxxxxx Xxxxxxxxx
------------------------- -----------------------------
Norton Xxxxxxxxx, Trustee
s/Xxxxx X. Failing, Jr.
---------------------------
Xxxxx X. Failing, Jr.
THE FAILING TRUST
By s/Xxxxx X. Failing
-------------------------
Xxxxx X. Failing
By s/Xxxxxxxxx X. Failing
-------------------------
Xxxxxxxxx X. Failing
s/Xxxxxxxxx X. Failing
---------------------------
Xxxxxxxxx X. Failing
corp\ers\agreemnt\sh-gar.fai 23
