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Exhibit 10.2
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
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THIS AMENDED AND RESTATED SHAREHOLDERS AGREEMENT (the "Agreement") is
entered into as of July 31, 1998, by and between GEO Specialty Chemicals Inc.
(the "Company"), an Ohio corporation, Charter Oak Partners and Charter Oak
Capital Partners, Connecticut partnerships (together, "Charter Oak"), GEO
Chemicals, Ltd. ("GEO Chemicals"), an Ohio limited liability company and
successor-in-interest by merger to Chemical Specialties Enterprises, L.P.
("CSE"), Xxxxxx X. Xxxxxx ("Xxxxxx"), Xxxxxxx X. Xxxxxx ("Xxxxxx"), Xxxxxx X.
Xxxx, Xx. ("Xxxx") and A. Xxxxxxx Xxxxxx ("Xxxxxx"). Charter Oak, GEO Chemicals,
Xxxxxx, Xxxx and Xxxxxx as of the date of this Agreement are all of the
shareholders of the Company and are hereinafter sometimes referred to as the
"Shareholders." Xxxxxx and Xxxxxx are hereinafter sometimes referred to as the
"Managers." This Agreement amends and restates the Shareholders Agreement, dated
March 25, 1997 (the "1997 Shareholders Agreement"), entered into by and among
the Company, Charter Oak, CSE, Xxxxxx and Xxxxxx.
RECITALS
WHEREAS, at the time of the 1997 Shareholders Agreement, the shares of
the Company's Class A Common Stock, $1.00 par value per share (the "Common
Shares") were held by the following shareholders in the following percentages:
Shareholder No. of Common Shares Percentage
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Charter Oak Partners 82.31 79.00%
Chemical Specialty Enterprises, L.P. 21.88 21.00%
WHEREAS, subsequent to the execution and delivery of the 1997
Shareholders Agreement, Charter Oak transferred (i) 0.466 and 0.137 Common
Shares to Xxxx and Xxxxxx, respectively, each of whom is a Charter Oak designee
serving on the Board of Directors of the Company (hereinafter sometimes referred
to together as the "Charter Oak Designees"); and (ii) 1.646 Common Shares to
Xxxxxx, as a result of the exercise by Xxxxxx of an option held by him from
Charter Oak (the "Charter Oak Transfers");
WHEREAS, in connection with the acquisition by the Company of the
TRIMET Technical Products Division of Mallinckrodt, Inc., the shareholders of
the Company and Charter Oak Capital Partners made an aggregate equity
contribution of $6,000,000 (the "Equity Contribution"), on a pro rata basis
assuming that an 8% equity interest had been granted to Charter Oak pursuant to
its warrant agreement with the Company, and received in exchange therefor an
aggregate of 31.646 Common Shares;
WHEREAS, as a consequence of the Charter Oak Transfers and the Equity
Contribution, the Common Shares are now held by the following shareholders in
the following percentages:
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Shareholder No. of Common Shares Percentage
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Charter Oak Partners 85.431 62.89%
Charter Oak Capital Partners 21.478 15.81%
GEO Chemicals, Ltd. 25.994 19.14%
Xxxxxx X. Xxxxxx 2.146 1.58%
Xxxxxx X. Xxxx, Xx. 0.608 0.45%
A. Xxxxxxx Xxxxxx 0.178 0.13%
WHEREAS, the Company, Charter Oak, CSE, Xxxxxx and Xxxxxx, along with
Charter Oak Capital Partners, Xxxx and Xxxxxx, desire to amend and restate the
1997 Shareholders Agreement to include Xxxx and Xxxxxx within its provisions and
to reflect the changes in the ownership of the Common Shares of the Company
effected since March 25, 1997.
In consideration of the premises and mutual covenants contained herein,
the parties hereby agree as follows:
ARTICLE 1 DEFINITIONS
When used in this Agreement, the following terms in all of their tenses
and cases have the meanings assigned to them below or elsewhere in this
Agreement as indicated below:
"Adjusted Book Value" shall mean the book value per share of Common
Shares, calculated by dividing (A) the shareholders' equity reflected
in the Company's most recent quarterly or year-end consolidated
financial statements by (B) the Shares of the Company outstanding plus
the Shares subject to options of the Company (provided that such
options shall only be considered outstanding if the fair market value
of the Shares subject thereto exceeds the exercise price thereof), plus
total outstanding dilutive stock options. For purposes of this
calculation: (i) Shares underlying the warrants of the Company granted
in favor of Charter Oak Partners and GEO Chemicals, Ltd., pursuant to
separate Amended and Restated Warrant Agreements entered into as of the
date hereof, shall not be deemed to be outstanding; and (ii) stock
options shall be considered dilutive if the exercise price per share is
less than per share Adjusted Book Value calculated without regard to
outstanding stock options.
"Affiliate" means with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common
control with such Person. A Person shall be deemed to control another
Person if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of the
"controlled" Person, whether through ownership of voting securities, by
contract, or otherwise.
"Cause" shall mean that any one of the following events has occurred:
(i) The relevant party has been convicted of committing a
felony;
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(ii) The relevant party has committed a theft or
embezzlement from the Company, or any other crime
against the Company, or dishonesty in connection with
Company matters;
(iii) The relevant party for himself or any other person,
firm, corporation or other entity, (A) solicits
business from customers of the Company, (B) diverts
or attempts to divert any business from the Company,
or otherwise interferes with the business or
employment relationship between the Company and any
customers, employee or sales representative thereof,
or (C) discloses or furnishes to any competitor or
any person, firm, corporation or other entity, or
uses on his own behalf, any confidential or secret
information or data of or relating to the Company; or
(iv) The Company provides notice of (A) any act of gross
negligence or corporate waste to the Company which
adversely affects the business of the Company and
which is not cured by the relevant party within 30
days of receipt of such notice, or is repeated by the
relevant party after the receipt of such notice, (B)
any material breach of this Agreement not cured
within 30 days after receipt of notice, or (C) any
other intentional act or course of conduct which may
have an adverse affect on the business of the Company
such as, by way of example only, intentionally
causing the Company to violate federal, state or
local environmental, labor, antitrust, or other
similar laws, or sexual or other illegal harassment
of employees.
"Charter Oak Sale Amount" is defined in Section 6.1.
"Charter Oak Thirty Day Period" is defined in Section 4.4(d).
"Company" is defined in the Recitals.
"Common Shares" is defined in the recitals.
"Company Option" is defined in Subsection 3.2.1.
"Company Thirty Day Period" is defined in Section 4.4(d).
"Complete Disability" means, at the election of the Company, any
disability of a Manager or Charter Oak Designee, which, for purposes
hereof, shall mean the inability of such person for a continuous period
of six (6) months to, in the case of a Manager, perform the essential
functions of his position hereunder on an active full time basis and,
in the case of a Charter Oak Designee, to perform the essential
functions of a director of the Company, in each case with or without
reasonable accommodations and by reason of disability or impairment of
health. A certificate from a physician acceptable to both the Company
and the Manager or the Charter Oak Designee, as applicable, to the
effect that the Manager or the Charter Oak Designee is or has been
disabled and incapable of performing the essential functions of his
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position with or without reasonable accommodations for the Company as
previously performed shall be conclusive of the fact that the Manager
or the Charter Oak Designee is incapable of performing such reasonable
services and is or has been disabled for the purposes of this
Agreement.
"Drag-Along Closing" is defined in Section 6.1.
"Drag-Along Notice" is defined in Section 6.1.
"Drag-Along Pro-Rata Amount" is defined in Section 6.1.
"Excess Portion" is defined in Section 4.4(d).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holders" is defined in Section 4.1.
"Loan Agreements" is defined in Section 4.1.
"Notes" is defined in Section 4.4(d).
"Offer Price" is defined in Section 3.1.
"Offered Shares" is defined in Section 3.1.
"Offer Terms" is defined in Section 3.1.
"Other Shareholders" is defined in Subsection 3.3.1.
"Per Share Appraised Value" is defined in Section 4.4(a).
"Permitted Transferee" is defined in Section 2.6.
"Person" means an individual, trust, corporation, partnership, joint
venture or other entity.
"Public Offering" means the sale of securities of the Company pursuant
to a Registration Statement under the Securities Act (other than on
Form S-8 or S-4 or any successor thereto) made pursuant to a firm
commitment underwriting.
"Purchase Offer" is defined in Section 6.1.
"Purchase Price" is defined in Section 6.1.
"Purchase Terms" is defined in Section 6.1.
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"Securities Act" means the Securities Act of 1933, as amended.
"Secondary Option" is defined in Subsection 3.3.1.
"Selling Shareholder" is defined in Section 3.1.
"Shares" means the Common Shares (whether presently or hereafter
issued) now or hereafter owned, legally or beneficially, by any
Shareholder, and any securities issued in connection therewith or as a
result of the conversion or exchange or such Shares (i.e., via merger,
share split, share dividend, recapitalization or similar event) except
as may be released from the restrictions contained in this Agreement
pursuant to the provisions hereof.
"Shareholder" means Charter Oak, GEO Chemicals, Xxxxxx, Xxxx and Xxxxxx
and each Person who becomes bound by this Agreement as of and after the
date hereof and any executor, administrator, guardian, custodian, or
other legal representative of a Person who obtains legal or beneficial
ownership of any Shares and the ability to transfer the same in the
event of another's death, Complete Disability or other incapacity;
provided, in any event, that a Person who no longer owns any Shares
shall be deemed not to be a "Shareholder."
"Tag-Along Notice" is defined in Section 6.2.
"Tag-Along Pro Rata Amount" is defined in Section 6.2.
"Termination" shall mean, when used to refer to the employment of
either of the Managers, or either of the Managers' ceasing to be
regularly employed by the Company.
"Transfer" means sell, give, assign, pledge, bequeath, exchange,
dispose of, hypothecate, or otherwise transfer whether by testamentary
disposition, survivorship arrangement or otherwise, encumber in any
respect, or grant any interest in (whether voluntarily or involuntarily
or by operation of law and whether with or without consideration), and
specifically includes all transfers upon divorce, in bankruptcy or by
way of execution, seizure, or sale by legal process.
"Transfer Notice" is defined in Section 3.1.
ARTICLE 2 RESTRICTIONS ON TRANSFER
2.1 IN GENERAL. Each Shareholder agrees not to Transfer any Shares
except in compliance with the provisions of this Agreement. Any attempt to
Transfer any Shares other than in accordance with this Agreement shall be void.
The Company shall not make any transfer of record of any Shares other than in
accordance with the provisions of this Agreement.
2.2 PROHIBITION ON TRANSFER TO COMPETITORS. To protect the competitive
advantage of the Company, under no circumstances may Shares be transferred to
any Person who is, or is employed
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by or affiliated in any way with a Person who is, engaged in business or other
activities directly or indirectly in competition with the Company; except and
unless in connection with a sale of a majority of the outstanding shares of
capital stock of the Company to any such Person.
2.3 AGREEMENT LEGENDS. Each Shareholder shall promptly deliver to the
Company any certificates representing Shares for placement thereon of the
legends set forth as follows:
THIS CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE ONLY UPON
COMPLIANCE WITH, THE PROVISIONS OF AN AMENDED AND RESTATED SHAREHOLDERS
AGREEMENT DATED AS OF JULY 31, 1998 BY AND BETWEEN GEO SPECIALITY
CHEMICALS, INC. (THE "COMPANY"), CHARTER OAK PARTNERS, CHARTER OAK
CAPITAL PARTNERS, GEO CHEMICALS, LTD., XXXXXX X. XXXXXX, XXXXXX X.
XXXX, XX. AND A. XXXXXXX XXXXXX. A COPY OF THE ABOVE REFERENCED
SHAREHOLDERS AGREEMENT IS ON FILE AT THE OFFICE OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
THE HOLDER HEREOF, BY PURCHASING THESE SECURITIES, AGREES FOR THE
BENEFIT OF THE COMPANY THAT THESE SECURITIES ONLY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO ANY OTHER EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT, PROVIDED AN OPINION OF
COUNSEL IS FURNISHED REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO
THE COMPANY, STATING THAT AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES.
2.4 PLACEMENT OF RESTRICTIVE LEGENDS. All certificates representing
Shares hereafter issued to any Shareholder during the term of this Agreement
shall bear the legends set forth in Section 2.3, except for any certificates
representing Shares which are released from the restrictions hereof pursuant to
the provisions of this Agreement.
2.5. REMOVAL OF RESTRICTIVE LEGENDS. If, for any reason, any of the
Shares are no longer subject to the provisions hereof, the Company shall
promptly issue a new certificate for such Shares without the applicable legends
set forth in Section 2.3 upon the request of the record owner thereof and the
surrender to the Company of the certificate containing such legends.
2.6. PERMITTED TRANSFERS. The Shareholders shall be permitted to
Transfer Shares as follows, which is illustrated in the table set forth in
Exhibit B hereto: (a) with respect to Charter Oak,
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GEO Chemicals, Xxxxxx and Xxxxxx, to the Company or its Affiliates, (b) with
respect to Charter Oak, to any of its Affiliates (excluding any of its operating
companies) and, in an aggregate amount of up to twenty percent (20%) of the
fully-diluted outstanding equity of the Company, to any outside director(s) of
the Company designated by Charter Oak, (c) with respect to GEO Chemicals, to
Xxxxxx or Xxxxxx and as otherwise permitted by the GEO Chemicals Operating
Agreement, entered into as of the date hereof, which shall not be amended, (d)
with respect to Xxxxxx and Xxxxxx, to the respective Manager's parents,
siblings, spouse or issue (including, without limitation, adopted issue), or to
a trust or partnership for the exclusive benefit of any one or more of the
respective Manager, his parents, siblings, spouse or issue, and as otherwise
permitted by the GEO Chemicals Operating Agreement, which shall not be amended
without the consent of Charter Oak, and (e) with respect to the Charter Oak
Designees, to Charter Oak or to each other. Each of the persons referenced in
clauses (b), (c) or (d) of the preceding sentence is sometimes hereinafter
referred to as a "Permitted Transferee." Each Permitted Transferee shall be (a)
bound by this Agreement with the same effect as if the Permitted Transferee were
a Shareholder hereunder and (b) obligated to Transfer all Shares owned by the
Permitted Transferee to the Company when the Shareholder who transferred the
Shares to the Permitted Transferee becomes obligated to Transfer all Shares
owned by that Shareholder pursuant to the provisions of this Agreement. To
memorialize the provisions of the foregoing sentence, each Permitted Transferee
shall sign either a duplicate counterpart of this Agreement or, if requested by
the Company, a modified version reflecting only the particular rights and
obligations applicable to the Permitted Transferee.
ARTICLE 3 RIGHTS OF FIRST REFUSAL
3.1 IN GENERAL. If a Shareholder desires to Transfer any Shares other
than as provided in Section 2.6 or in Article 6, then such Shareholder (the
"Selling Shareholder") shall notify the Company and all other Shareholders of
the Company (whether or not parties to this Agreement) in writing (the "Transfer
Notice") of (a) the number of Shares to be Transferred (the "Offered Shares"),
(b) the identity of the proposed transferee, (c) the price per Share to be paid
by the proposed transferee (the "Offer Price"), and (d) the terms of the
proposed Transfer, including the payment terms (the "Offer Terms"), which
Transfer Notice may not be withdrawn during any of the time periods set forth in
Sections 3.2 and 3.3.
3.2 OPTION OF COMPANY.
3.2.1. CONDITIONS GIVING RISE TO OPTION. When the Transfer
Notice is given to the Company, the Company shall have the option (the "Company
Option") to purchase all, but not less than all, of the Offered Shares.
3.2.2. EXERCISE OF OPTION. If the Company desires to exercise
the Company Option, it shall give written notice to that effect to the Selling
Shareholder within fifteen (15) days after the Transfer Notice is given to the
Company. The Company Option shall be exercisable at the Offer Price per Share
and on the payment and other Offer Terms set forth in the Transfer Notice.
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3.2.3. CONSUMMATION OF PURCHASE. Upon the giving of notice of
exercise of the Company Option pursuant to Subsection 3.2.2, a purchase and sale
agreement shall be deemed to have been created between the Company, as
purchaser, and the Selling Shareholder, as seller, providing for the purchase
and sale of the Offered Shares consistent with the provisions of Subsection
3.2.2. Such purchase and sale shall be consummated not later than thirty (30)
days after the giving of notice of exercise of the Company Option pursuant to
Subsection 3.2.2.
3.3 OPTION TO SHAREHOLDERS.
3.3.1 CONDITIONS GIVING RISE TO OPTION. The occurrence of the
earlier to occur of (a) the refusal of the Company to exercise the Company
Option (by written notice to the Selling Shareholder with copies to all of the
Shareholders (whether or not parties to this Agreement)) or, (b) the failure of
the Company to give notice of exercise of the Company Option within the 15-day
period after the Transfer Notice is given to the Company, shall give to the
Shareholders (other than the Selling Shareholder) (the "Other Shareholders") the
option (the "Secondary Option") to purchase the Offered Shares.
3.3.2 EXERCISE OF OPTION. Within fifteen (15) days after the
Secondary Option arises, any Other Shareholder desiring to purchase any of the
Offered Shares shall give written notice to the Selling Shareholder (with a copy
to the Company) indicating the number of Offered Shares which the Other
Shareholder desires to purchase.
3.3.3 CONSUMMATION OF PURCHASE. If, within thirty (30) days
after the Secondary Option arises, the Other Shareholders collectively have
given written notice of a desire to purchase ALL, but not less than all, of the
Offered Shares, then a purchase and sale agreement shall be deemed to have been
created among the Other Shareholders giving written notice of a desire to
purchase the Offered Shares, as purchasers (each such Other Shareholder
individually purchasing the number of Shares indicated in such Other
Shareholder's written notice of exercise), and the Selling Shareholder, as
seller, providing for the purchase and sale of the Offered Shares, at the Offer
Price per Share and on the Offer Terms. Notwithstanding the provisions of the
preceding sentence, if the notices from the Other Shareholders indicate a desire
to purchase, in the aggregate, more than the number of the Offered Shares, then,
unless the Other Shareholders who gave notice of a desire to purchase any of the
Offered Shares unanimously agree among themselves as to a different allocation,
each such Other Shareholder shall purchase that number of the Offered Shares (up
to the number indicated in such Other Shareholder's written notice of exercise)
which bears the same ratio to the total number of Offered Shares as the number
of Shares owned by such Other Shareholder bears to the total number of Shares
owned by all Other Shareholders who gave written notice of exercise. The
provisions of the preceding sentence will be reapplied as necessary (excluding
Other Shareholders who have been allocated the number of Shares they indicated
their desire to purchase in their written notice) until all of the Offered
Shares have been allocated (with the Company having the right in such allocation
to eliminate fractional shares) among the Other Shareholders who gave notice of
a desire to purchase any of the Offered Shares. Such purchase and sale shall be
consummated not later than forty-five (45) days after the Secondary Option
arises.
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3.3.4 COMPANY PURCHASE OF BALANCE OF SHARES. Notwithstanding
the requirement of Subsection 3.3.3 that the Other Shareholders must agree to
purchase all of the Offered Shares, if at least one Other Shareholder agreed to
purchase at least one Offered Share, then the Company, by written notice to the
Selling Shareholder, within fifteen (15) days after the Secondary Option arises
may instead agree to purchase the balance of the Offered Shares which the Other
Shareholders declined to purchase, in which case a purchase and sale agreement
shall be deemed to have been created in accordance with the provisions of
Subsection 3.3.3, except that the Company shall be the purchaser of the balance
of the Offered Shares which the Other Shareholders declined to purchase, and the
purchase and sale shall be consummated not later than forty-five (45) days after
the Secondary Option arises.
3.4 SELLING SHAREHOLDER DELIVERIES UPON A PURCHASE AND SALE. If a
purchase and sale obligation arises under the provision of Section 3.1, then
upon the consummation of such purchase and sale, the Selling Shareholder shall
be required to make the deliveries specified under Section 5.1 hereof, and the
purchaser(s) shall be required to make the deliveries specified under Section
5.2 hereof.
3.5 TRANSFER UPON LAPSE OF OPTIONS. If the parties granted the options
to purchase pursuant to this Article 3 do not elect to exercise such options
within the time periods provided herein, then at the expiration of all of the
respective option periods pursuant to this Article 3 (or, if earlier, at such
time as all the parties entitled to exercise such options have given written
notice to the Selling Shareholder that they do not intend, in the aggregate, to
purchase all of the Offered Shares), the Selling Shareholder shall be entitled
for a period of ninety (90) days (but not thereafter without first again having
complied with the provisions of this Article 4) to Transfer all but not less
than all the Offered Shares to the proposed transferee identified in the
Transfer Notice at the same price and on the same terms as set forth in the
Transfer Notice.
3.6 CONSEQUENCE OF TRANSFER. Upon a Transfer of any Shares pursuant to
the provisions of Section 3.5, the Shares so Transferred shall continue to be
subject to the rights and restrictions set forth in this Agreement and upon
receipt of the certificates for such Shares for transfer, the Company shall
issue a new certificate bearing the restrictive legends provided for in Section
2.3. To memorialize the provisions of this Section 3.6., the transferee shall
sign either a duplicate counterpart of this Agreement or, if requested by the
Company, a modified version reflecting only the particular rights and
obligations applicable to the transferee.
3.7 OTHER TRANSFERS. In the event that the Selling Shareholder proposes
or is required to sell or Transfer all or any portion of the Shares other than
pursuant to a Permitted Transfer or Transfer subject to Article 4, the
notification, rights of first refusal and all other provisions of this Article 3
shall apply to such proposed sale or transfer including, without limitation, any
gift, transfer by operation of law, transfer by way of bankruptcy, hypothecation
or seizure and sale by legal process; provided that the purchase price per Share
under this Section 3.7 shall be as determined pursuant to Subsection 4.4(a).
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ARTICLE 4 TRANSFER OF SHARES UPON DEATH, DISABILITY
OR OTHER TERMINATION OF EMPLOYMENT
4.1 PUT OPTION OF GEO CHEMICALS AND THE MANAGERS IN EVENT OF DEATH OR
DISABILITY. Subject to (i) any financing agreements or any other instruments,
agreements or indentures of the Company from time to time in effect restricting
(including indirectly through restrictions of dividend payments by the Company)
or otherwise governing the purchase or retirement of shares of the Company's
capital stock (the "Financing Arrangements") or (ii) applicable law, at any time
during the term of this Agreement upon the death or Complete Disability of
either or both Xxxxxx and Xxxxxx, the following options shall be exercisable for
a period of up to ninety (90) days at a purchase price determined in accordance
with Section 4.4: (a) GEO Chemicals shall have the option, or in the event of a
permitted transfer under Section 2.6(c) to the respective Manager or his
Permitted Transferees, the Holders of Xxxxxx'x or Xxxxxx'x Shares (as
hereinafter defined), as applicable, shall have the option, to put to the
Company sixty-two percent (62%) of the Shares held by GEO Chemicals or the
Holders of Xxxxxx'x Shares, as applicable, in the case of the death or Complete
Disability of Xxxxxx, or thirty-eight percent (38%) of the Shares held by GEO
Chemicals or the Holders of Xxxxxx'x Shares, as applicable, in the case of the
death or Complete Disability of Xxxxxx; and (b) Xxxxxx and Xxxxxx, as
applicable, shall have the option to put to the Company the respective Shares
held by them.
4.2 CALL OPTION OF THE COMPANY IN EVENT OF DEATH OR DISABILITY. Unless
the put option in Section 4.1 shall have been exercised, subject to (i) any
Financing Arrangements or (ii) applicable law, at any time during the term of
this Agreement upon the death or Complete Disability of either or both Xxxxxx or
Xxxxxx, the Company shall have the option, exercisable for a period of ninety
(90) days following the expiration of the put option set forth in Section 4.1
above to purchase at the purchase price determined in accordance with Section
4.4 from Xxxxxx and Xxxxxx, as applicable, the respective Shares held by them
and from GEO Chemicals sixty-two percent (62%) of the Shares held by GEO
Chemicals in the case of the death or Complete Disability of Xxxxxx or
thirty-eight percent (38%) of the Shares held by GEO Chemicals in the event of
the death or Complete Disability of Xxxxxx, or, if there previously has been a
permitted transfer under Section 2.6(c), from either Xxxxxx or Xxxxxx, as
applicable, or their respective estates, heirs or personal representatives (in
the case of death), and/or Xxxxxx'x or Xxxxxx'x Permitted Transferees
(collectively, the "Holders" of Xxxxxx'x or Xxxxxx'x Shares), all the Shares
held by such Holders. The Shares available for purchase pursuant to the options
granted to the Company pursuant to this Section 4.2 and Section 4.5 from Xxxxxx,
Xxxxxx and either GEO Chemicals or the Holders of Xxxxxx'x or Xxxxxx'x Shares,
shall collectively be referred to as the "Xxxxxx Redemption Shares" or "Xxxxxx
Redemption Shares," as applicable. If the Company exercises its call option
under this Section 4.2, it shall be obligated to purchase all of the Xxxxxx
Redemption Shares or Xxxxxx Redemption Shares, as applicable.
4.3 CALL OPTION OF SHAREHOLDERS IN EVENT OF DEATH OR DISABILITY. Unless
the put option in Section 4.1 or the call option in Section 4.2 shall have been
exercised with respect to all of the Xxxxxx Redemption Shares or the Xxxxxx
Redemption Shares, as applicable, the Shareholders shall have the option on a
pari passu basis, for a period of ninety (90) days following the expiration of
the Company's option granted in Section 4.2 above, to purchase all of the Xxxxxx
Redemption Shares
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or Xxxxxx Redemption Shares, as applicable, at the price determined in
accordance with Section 4.4.
4.4 PURCHASE PRICE. (a) The purchase price per Share for the Shares
purchased pursuant to Sections 4.1, 4.2, 4.3 and 4.7 shall be the appraised
value of one Share (the "Per Share Appraised Value"), as valued by a nationally
known appraisal firm chosen by the Company. Such appraiser shall value the
Company based on the total fair market value of the Company (free of all
liabilities for borrowed money) divided by the number of Shares outstanding, and
no minority discount shall be used in such calculation. If any Shareholder
objects to the valuation of the Company's Per Share Appraised Value as
calculated by the first appraiser, the objecting Shareholder shall select and
the Company shall appoint a second appraiser, which shall be a nationally known
appraisal firm, which shall determine the Per Share Appraised Value in
accordance with the provisions of this Agreement. If any Shareholder objects to
the valuation of the Per Share Appraised Value as calculated by the second
appraiser, the first appraiser and the second appraiser shall together select
and the Company shall appoint a third appraiser, which shall be an nationally
known appraisal firm, which shall determine the Per Share Appraised Value in
accordance with the provisions of this Agreement. The determination of the third
appraiser as to the Per Share Appraised Value shall be binding on the applicable
parties for purposes of this Section 4.4. The fees and other costs of the second
and third appraiser shall be borne by the objecting Shareholder, as applicable.
All purchases under Sections 4.3 and 4.6 shall be made in cash, and all
purchases under Sections 4.1, 4.2, 4.5 and 4.7 shall be made in cash except as
set forth in Section 4.4(c) and 4.4(d).
(b) The purchase price per Share for the Shares purchased
pursuant to Sections 4.5. and 4.6 shall be determined based on the Company's
Adjusted Book Value, which shall be determined by the Company's independent
auditors using accounting principles then in effect and as applied by the
Company's independent auditors and shall be accompanied by a letter from the
Company's independent auditors stating that the calculations made by them have
been made in accordance with the applicable provisions of this Agreement. If any
Shareholder objects to the valuation of the Company's Adjusted Book Value as
calculated by the Company's independent auditors, the objecting Shareholder
shall select and the Company shall appoint a second appraiser, which shall be an
independent, nationally recognized, valuation firm, which shall determine the
Company's Adjusted Book Value in accordance with the applicable provisions of
this Agreement, using accounting principles then in effect, and shall render a
written report of their opinion thereon. If any Shareholder objects to the
valuation of the Company's Adjusted Book Value as calculated by the second
appraiser, the second appraiser and the Company's independent auditors shall
together select and the Company shall appoint a third appraiser, which shall be
an independent, nationally recognized, valuation firm, which shall determine the
Company's Adjusted Book Value in accordance with the applicable provisions of
this Agreement, using accounting principles then in effect, and shall render a
written report of their opinion thereon. The determination of the third
appraiser as to the Company's Adjusted Book Value shall be binding on the
applicable parties for purposes of Section 4.5 and 4.6. The fees and other costs
of the second and third appraiser shall be borne by the objecting Shareholder,
as applicable.
(c) If any portion of the cash purchase price payable for any
shares purchased pursuant to Sections 4.2 and 4.5 above may not be paid as a
result of direct or indirect restrictions
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imposed by the Financing Arrangements or by applicable law, such portion shall,
subject to the Financing Arrangements and to applicable law, be payable by the
delivery of notes in the principal amount of such portion (at an interest rate
of eight percent (8%) per annum); PROVIDED, FURTHER, that, notwithstanding any
direct or indirect restrictions imposed by the Financing Arrangements or by
applicable law, the Company and the other parties to this Agreement shall use
their respective best efforts to enable the Company to pay the full amount of
the cash purchase price payable for any shares purchased pursuant to Section 4.2
and 4.5 above, including, without limitation, taking necessary measures to
create sufficient surplus and/or to obtain the consent of any parties to the
Financing Arrangements, and through the use of then existing life insurance
policies, and, in any event, the Company shall pay that portion of the cash
purchase price payable for any shares purchased pursuant to Section 4.2 and 4.5
above which was not paid as a result of direct or indirect restrictions imposed
by the Financing Arrangements or by applicable law as soon as the Company may
pay such amount in cash without violating the terms of any Financing
Arrangements or applicable law.
(d) With respect to any Shares put to the Company pursuant to
Sections 4.1 and 4.7, the following terms shall apply. The Company shall be
obligated, for purposes of purchasing the Shares put to it pursuant to Section
4.1, to utilize the proceeds received by the Company from any life insurance
policies maintained by the Company insuring the lives of Xxxxxx or Xxxxxx, as
applicable, net of: (i) fifteen percent (15%) of any such proceeds to be used by
the Company for expenses incurred in connection with the death of Xxxxxx or
Xxxxxx, as applicable, and (ii) the use of any such proceeds to retire
indebtedness of the deceased employee owing to the Company. The Company shall be
obligated to purchase in cash the Shares put to it pursuant to Sections 4.1 or
4.7 within thirty (30) days (the "Company Thirty Day Period") from the exercise
of such put option to the fullest extent permitted by any Financing Arrangements
and applicable law. The Company and the other parties to this Agreement shall
use their respective best efforts to enable the Company to pay the full amount
of the cash purchase price payable for any Shares put to the Company pursuant to
Sections 4.1 and 4.7, including, without limitation, taking necessary measures
to create sufficient surplus and/or to obtain the consent of the parties to any
Financing Arrangements. Any portion of such Shares that the Company is unable,
by reason of any Financing Arrangements or applicable law, to purchase within
the Company Thirty Day Period (the "Excess Portion") shall be purchased by the
Company, subject to any Financing Arrangements and applicable law, through the
delivery of notes (the "Notes"), in form and substance reasonably satisfactory
to the lender(s) and/or the trustee under any Financing Arrangements, in the
principal amount of the purchase price of the Excess Portion (at an interest
rate of eight percent (8%) per annum), which Notes shall be accompanied by the
grant by the Company of a first priority purchase money security interest on the
Excess Portion; PROVIDED, HOWEVER, that with respect to the Excess Portion, the
following rights shall apply after the expiration of the Company Thirty Day
Period and, if exercised, shall supersede the Company's obligation to purchase
the Excess Portion through the issuance of the Notes: (i) Charter Oak shall have
the option, exercisable for a period of thirty (30) days (the "Charter Oak
Thirty Day Period"), to purchase from GEO Chemicals, Xxxxxx, Xxxxxx and/or the
Holders of Xxxxxx'x or Xxxxxx'x Shares, as applicable, all, but not less than
all, of the Excess Portion at a per Share purchase price equal to the Per Share
Appraised Value; and (ii) GEO Chemicals, Xxxxxx, Xxxxxx and the Holders of
Xxxxxx'x and Xxxxxx'x Shares, as applicable, if the applicable party or parties
choose to not accept the Notes from the Company for the Excess Portion, shall
have the option,
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exercisable at any time after the expiration of the Charter Oak Thirty Day
Period, to sell any of the Excess Portion to any third party, subject to Section
2.2 and Article 3 of this Agreement.
4.5 CALL OPTION OF THE COMPANY IN EVENT OF TERMINATION FOR CAUSE.
Subject to (i) any Financing Arrangements or (ii) applicable law, at any time
during the term of this Agreement upon Termination of either Xxxxxx'x or
Xxxxxx'x employment by the Company for Cause (a "Termination With Cause"), the
Company shall have the option, exercisable for a period of ninety (90) days to
purchase from Ahearn, Eckman, GEO Chemicals and/or, if there previously has been
a permitted transfer under Section 2.6(c), to the respective Manager and/or his
Permitted Transferees, from the Holders of Xxxxxx'x or Xxxxxx'x Shares, as
applicable, all the Xxxxxx Redemption Shares or Xxxxxx Redemption Shares, as
applicable, at a purchase price per Share equal to the Adjusted Book Value of a
Share. The Company shall be under no obligation to purchase such Shares;
however, if the Company exercises its call option under this Section 4.5, it
shall be obligated to purchase all of the Xxxxxx Redemption Shares or Xxxxxx
Redemption Shares, as applicable.
4.6 CALL OPTION OF SHAREHOLDERS IN EVENT OF TERMINATION FOR CAUSE.
Unless the call option in Section 4.5 shall have been exercised with respect to
all of the Xxxxxx Redemption Shares or Xxxxxx Redemption Shares, as applicable,
the Shareholders shall have the option on a pari passu basis, for a period
ninety (90) days following the expiration of the Company's option granted in
Section 4.5 above, to purchase all of the Xxxxxx Redemption Shares or Xxxxxx
Redemption Shares, as applicable, at a purchase price per Share equal to the
Adjusted Book Value of a Share.
4.7 PUT OPTION OF GEO CHEMICALS IN EVENT OF TERMINATION WITHOUT CAUSE.
Subject to (i) any Financing Arrangements or (ii) applicable law, at any time
during the term of this Agreement upon Termination of either or both Xxxxxx'x or
Xxxxxx'x employment by the Company without Cause (a "Termination Without
Cause"), the following options shall be exercisable for a period of up to ninety
(90) days at a purchase price determined in accordance with Section 4.4: (a) GEO
Chemicals shall have the option to put to the Company sixty-two percent (62%) of
the Shares held by GEO Chemicals in the case of a Termination Without Cause of
Xxxxxx or thirty-eight percent (38%) of the Shares held by GEO Chemicals in the
case of a Termination Without Cause of Xxxxxx, or, if there previously has been
a Permitted Transfer under Section 2.6(c) to the respective Manager and/or his
Permitted Transferees, the Holders of Xxxxxx'x or Xxxxxx'x Shares, as
applicable, have the option to put the Company all of the Xxxxxx Redemption
Shares or Xxxxxx Redemption Shares, as applicable; and (b) Xxxxxx and Xxxxxx, as
applicable, shall have the option to put to the Company the respective Shares
held by them.
4.8 PURCHASE OF THE SHARES OF THE CHARTER OAK DESIGNEES BY CHARTER OAK.
At any time during the term of this Agreement, upon the death or Complete
Disability of Xxxx or Xxxxxx or at such time as Xxxx or Xxxxxx shall cease to be
directors of the Company, Charter Oak shall be obligated within ninety (90) days
to purchase from Xxxx or Xxxxxx, as applicable, all, but not less than all, of
the Shares held at such time by Xxxx or Xxxxxx, as applicable. The purchase
price for such Shares shall be determined as follows. Upon the death or Complete
Disability of either Xxxx or Xxxxxx, or the termination of either Xxxx or Xxxxxx
as a director voluntarily or by the Shareholders of the Company without Cause,
the purchase price per Share for the Shares purchased pursuant to this Section
4.8 shall be the Per Share Appraised Value. Upon the termination of Xxxx
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or Xxxxxx as a director by the Shareholders of the Company with Cause, the
purchase price per Share shall be equal to the lesser of: (i) the cost per Share
paid by Xxxx or Xxxxxx, as applicable; and (ii) a per Share amount based on the
Company's Adjusted Book Value, which shall be determined by the Company's
independent auditors using accounting principles then in effect and as applied
by the Company's independent auditors and shall be accompanied by a letter from
the Company's independent auditors stating that the calculations made by them
have been made in accordance with the applicable provisions of this Agreement.
Upon the failure of Charter Oak to purchase all of the Shares of Xxxx or Xxxxxx,
as applicable, in accordance with the terms of this Section 4.8, the Company
shall have the option for a period of ninety (90) days after such failure to
purchase all, but not less than all, of the Shares held by Xxxx or Xxxxxx, as
applicable, at the same purchase price that applied to the purchase of such
Shares by Charter Oak under this Section 4.8.
ARTICLE 5 DELIVERIES UPON A PURCHASE AND SALE
If a purchase and sale obligation arises under the provisions of this
Agreement, then upon consummation of such purchase and sale, the Selling
Shareholder or Holder, as applicable, and the Company, at a Closing to be held
at the Company's offices, shall be required to make the deliveries herein below
specified:
5.1 BY THE SELLING SHAREHOLDER OR HOLDER:
(a) Certificates representing the Shares which are being
sold and purchased, which certificates shall be duly
endorsed in blank and accompanied by stock powers
endorsed in blank with signatures guaranteed and
otherwise in proper form for transfer; and
(b) Representations and warranties of such Selling
Shareholder or Holder, as applicable, and Permitted
Transferees to the effect that (i) such Person is the
record and beneficial owner of the Shares being sold
and purchased, has good and marketable title thereto
and the absolute right to transfer same, and upon
transfer, the Shares will be free and clear of all
claims, liens, pledges, restrictions (other than any
restrictions imposed by this Agreement) or
encumbrances of any nature whatsoever, and (ii) such
Person has full power and capacity to perform the
terms of this Agreement relating to such sale and
purchase.
5.2 BY THE COMPANY.
(a) The purchase price for the Shares, by bank, cashier,
or certified check, unless a different form of
consideration is set forth in the Transfer Notice or
agreed to by the Selling Shareholder or Holder, as
applicable, and/or his or her Permitted Transferees,
as applicable.
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ARTICLE 6 DRAG-ALONG/TAG-ALONG RIGHTS
Notwithstanding anything contained in this Article 6 to the contrary,
Charter Oak's rights to transfer for value any Shares representing more than
fifty percent (50%) of the capital stock or voting power of the Company are
subject (i) until March 25, 1999, to the unanimous approval of the Company's
Board of Directors of such contemplated sale or (ii) after March 25, 1999 and
thereafter, the approval of at least four (4) of the five (5) Directors of the
Company of such contemplated sale.
6.1 DRAG-ALONG RIGHTS.
(a) Notwithstanding the provisions contained in Article 3
of this Agreement, at any time that Charter Oak shall
have received a bona fide offer and Charter Oak
intends to transfer for value any Shares representing
more than fifty percent (50%) of the capital stock or
voting power of the Company, in any one transaction
or series of related transactions entered into at
arm's length, to any Person that is not (i) an
Affiliate of Charter Oak or any of the Charter Oak
Designees (unless waived in writing by each of GEO
Chemicals, Xxxxxx and Xxxxxx), or (ii) if Charter Oak
is a Shareholder hereunder, a Permitted Transferee of
Charter Oak, then, if Charter Oak desires to require
the other Shareholders to sell certain of their
Shares to such offeror, Charter Oak shall give to the
Company and the other Shareholders at least twenty
(20) days advance written notice (hereinafter called
a "Drag-Along Notice"):
(i) Attaching a copy of such offer (hereinafter
called the "Purchase Offer"), identifying
the offeror thereof, and the aggregate
number of Shares to be sold by Charter Oak
(the "Charter Oak Sale Amount"), and stating
Charter Oak's desire to sell such Shares and
to require all of the other Shareholders to
sell the Drag-Along Pro Rata Amount (as
hereinafter defined) of Shares owned of
record by such other Shareholders to such
offeror at the price per Share (hereinafter
called the "Purchase Price") and on the
terms (hereinafter called the "Purchase
Terms") set forth in the Purchase Offer
including the time and place for the
consummation ("Drag-Along Closing") of the
Transfer of the Charter Oak Sale Amount; and
(ii) Stating that the other Shareholders shall be
required to participate in such sale by
selling their Drag-Along Pro Rata Amount, at
the Purchase Price and on the Purchase Terms
at the Drag-Along Closing.
(b) In connection with and upon the delivery by Charter
Oak of any Drag-Along Notice, the Shareholders shall
have the right to be represented by a nationally
recognized investment banking firm, at the sole
expense of the Company, to assist such Shareholders
in assessing the transaction contemplated by such
Drag-Along Notice.
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(c) At the Drag-Along Closing, each of the other
Shareholders shall be obligated to deliver and sell
the Drag-Along Pro Rata Amount of the Shares owned of
record by such Shareholder and in connection
therewith, each Shareholder shall be required to make
the deliveries otherwise provided for in Article 5
hereof.
(d) For purposes of this Agreement, a Shareholder's
Drag-Along Pro Rata Amount shall mean the aggregate
number of Shares owned of record by such Shareholder
multiplied by a fraction, the numerator of which is
the Charter Oak Sale Amount and the denominator of
which is the aggregate number of Shares owned of
record by Charter Oak.
6.2 TAG-ALONG RIGHTS.
(a) Notwithstanding the provisions contained in Article 3
of this Agreement, at any time that Charter Oak shall
have received a bona fide offer and Charter Oak
intends to transfer for value any Shares representing
more than fifty percent (50%) of the capital stock or
voting power of the Company in any one transaction or
series of related transactions, to any Person that is
not (i) then a Shareholder of the Company or any
Affiliate of a Shareholder, unless as a result of any
such transfer, the transferee thereof (together with
the transferee's Affiliates) would be a holder of
record or beneficial owner of a greater number of
Shares of the Company than Charter Oak, or (ii) if
Charter Oak is a Shareholder hereunder, a Permitted
Transferee of Charter Oak, but does not desire to
issue a Drag-Along Notice, then Charter Oak shall
give to the Company and the other Shareholders at
least twenty (20) days advance written notice
(hereinafter called a "Tag-Along Notice"):
(i) Attaching a copy of the Purchase Offer,
identifying the offeror thereof, the Charter
Oak Sale Amount, the Purchase Price, the
Purchase Terms set forth in the Purchase
Offer and stating that Charter Oak desires
to sell such Shares; and
(ii) Stating that the other Shareholders shall
have the right to participate in such sale
by selling their Tag-Along Pro Rata Amount
(as hereinafter defined) at the Purchase
Price and on the Purchase Terms including
the time and place for the consummation (the
"Tag-Along Closing") of the Transfer of that
Charter Oak Sale Amount.
(b) For a period of ten (10) days after the giving of the
Tag-Along Notice each of the other Shareholders shall
have the right exercisable by written notice to
Charter Oak and the Company, to sell at the Tag-Along
Closing up to the Tag-Along Pro Rata Amount to the
Person making the Purchase Offer (at the Purchase
Price and on the Purchase Terms).
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(c) For purposes of this Agreement, a Shareholder's
Tag-Along Pro Rata Amount shall be equal to (i) the
total number of Shares proposed to be sold to the
Person making the Purchase Offer, multiplied by (ii)
a fraction, the numerator or which is the aggregate
number of Common Shares owned of record by such
Shareholder, and the denominator of which is the
aggregate total of (x) all of the Shares owned of
record by Charter Oak, plus (y) all of the Shares
owned of record by all of the other Shareholders
desiring to exercise their Tag-Along rights. At the
Tag-Along Closing, the Shareholders desiring to
exercise their Tag-Along rights hereunder and who
have properly given notice thereof under Section
6.2(b) shall be required to make the deliveries in
connection with the sale of their Shares hereunder
that are otherwise provided for in Article 6 hereof.
6.3 EXCEPTIONS TO DRAG-ALONG AND TAG-ALONG RIGHTS. Notwithstanding the
foregoing, Sections 6.1 and 6.2 shall not apply to any merger or consolidation
of the Company with or into another Person or sale of all or substantially all
of the assets or stock of the Company followed by a dissolution, provided that
all the Shares and all Shareholders (regardless of percentages) are treated the
same in such transaction.
ARTICLE 7 REGISTRATION RIGHTS
7.1 "PIGGYBACK" REGISTRATION. Each time the Company shall determine to
proceed with the actual preparation and filing of a registration statement under
the Securities Act in connection with the proposed offer and sale for money of
any of it securities by it or any of its security holders (other than on Form
S-4 or Form S-8 promulgated under the Securities Act or any successor or similar
form), the Company will give written notice of its determination to the
Shareholders or any Holder of Shares subject to this Agreement, if applicable.
Upon the written request of such a Holder given to the Company within thirty
(30) days after the mailing of any such notice by the Company, the Company will
cause all Shares of the same class of securities which the Company has
determined to register, which such holder has requested to have registered, to
be included in such registration statement; PROVIDED, HOWEVER, that if the
managing underwriter, in the case of an underwritten public offering, determines
and advises in writing that in its opinion the inclusion in the registration
statement of all Shares proposed to be included by such holders would interfere
with the successful marketing of the securities proposed to be registered by the
Company, then the number of such Shares to be included in the registration
statement shall be reduced pro rata among all of such holders requesting
registration hereunder.
7.2 EXPENSES. With respect to each inclusion of Shares in a
registration statement pursuant to Section 7.1, the Company shall bear the
following fees, costs and expenses; all printing expenses, fees and
disbursements of counsel, accountants, underwriters (excluding discounts or
commissions) and other persons retained by the Company, all legal fees and
disbursements and other expenses of complying with state securities or blue sky
laws of any jurisdictions in which the securities to be offered are to be
registered or qualified, and the expenses and fees for any listing of the
securities to be registered on such securities exchange (or the Nasdaq National
Market) on which
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similar securities issued by the Company are then listed. Fees and disbursements
not expressly included above shall be borne by the holders participating in such
registration.
ARTICLE 8 PREEMPTIVE RIGHTS
8.1 LIMITED PREEMPTIVE RIGHTS.
(a) If the Company authorizes the issuance or sale of any
of its securities to any person not a party to this
Agreement, the Company shall offer to sell each
Shareholder a portion of such shares or securities
equal to the quotient determined by dividing (A) the
number of Shares of held by such Shareholder by (B)
the total number of Shares (including in each case
any fully-diluted Common Shares). Each Shareholder
shall be entitled to purchase such shares or
securities at the most favorable price and on the
most favorable terms as such shares or securities are
to be offered to such person.
(b) In order to exercise its purchase rights hereunder,
each Shareholder must within thirty (30) days after
receipt of written notice from the Company describing
in reasonable detail the share or securities being
offered, the purchase price thereof, the payment
terms and such Shareholder's percentage allotment,
deliver a written notice to the Company describing
its election hereunder.
(c) Upon the expiration of the offering period described
above, the Company shall be entitled to sell such
shares or securities which the Shareholders have not
elected to purchase during the ninety (90) days
following such expiration on terms and conditions no
more favorable to the purchasers thereof than those
offered to Shareholders. Any shares or securities
offered or sold by the Company after such 90-day
period must be reoffered to each Shareholder pursuant
to the terms of this paragraph.
(d) In the event of an acquisition requiring an
additional equity investment by the Shareholders,
Charter Oak hereby agrees to use its best efforts to
loan sufficient funds to GEO Chemicals or the
Managers (if they have become Permitted Transferees
under Section 2.6), as applicable, to enable GEO
Chemicals or the Managers, as applicable, to maintain
their percentage ownership of the Company in
accordance with the pre-emptive rights provisions
contained in this Section 8.1. Notwithstanding the
foregoing, Charter Oak shall have no obligation to
fund the purchase of GEO Chemicals or the Managers,
as applicable, described above, if any of the
Managers has sufficient liquidity (as agreed upon in
good faith by Charter Oak and such Manager) to fund
such purchase of Common Shares.
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ARTICLE 9 GOVERNANCE
9.1 COMPOSITION OF THE BOARD OF DIRECTORS. The Shareholders each hereby
agree to take any and all action necessary (including, without limitation,
voting their Shares, executing and delivering written actions of shareholders in
lieu of a meeting, and calling special shareholders' meetings) to cause the
Board of Directors of the Company to be comprised as follows:
(a) The number of Directors on the Board of Directors
shall initially be five. The Directors shall include:
(i) three individuals designated in writing by
Charter Oak, which shall initially be
Xxxxxxx X. Xxxx, Xxxxxx X. Xxxx, Xx. and A.
Xxxxxxx Xxxxxx;
(ii) Xxxxxx, so long as Xxxxxx is President and
Chief Executive Officer of the Company or,
in the event Xxxxxx is terminated by the
Company without Cause, so long as GEO
Chemicals remains a Shareholder and Xxxxxx
retains an ownership interest in GEO
Chemicals; and
(iii) Xxxxxx, so long as Xxxxxx is Executive Vice
President and Chief Financial Officer of the
Company.
(b) In the event any Director who is elected to the Board
of Directors pursuant to clause (i) or (iii) of
Section 9.1(a) resigns or otherwise ceases to serve
on the Board of Directors for whatever reason, the
vacancy shall be filled, in the case of clause (i),
with an individual designated by Charter Oak, and in
the case of clause (iii), for so long as Xxxxxx is
President and Chief Executive Officer of the Company,
with an individual designated by Xxxxxx, and the
Shareholders hereby agree to call a special
shareholders' meeting and to vote all of their Shares
at such meeting or to execute a written action of
shareholders in lieu of a meeting in order to effect
such election.
ARTICLE 10 ACQUIRING COMPETING COMPANIES
Each of the Shareholders agrees, for so long as the Shareholder is a
party to this Agreement, that the Shareholder will not acquire a majority
ownership interest in any corporation, partnership or other business entity that
is a direct competitor of the Company in paper chemicals, water treatment and
construction and process chemicals business, inorganic chemicals or fine
chemicals for the bulk active medicinal market, without the prior approval of
the other Shareholders, which approval shall not be unreasonably withheld.
Charter Oak shall have no further obligations under this Article 11 upon the
death or Complete Disability of Xxxxxx or Xxxxxx or Termination of either
Xxxxxx'x or Xxxxxx'x employment by the Company, with Cause.
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ARTICLE 11 TERM OF AGREEMENT
11.1 TERMINATION OF THIS AGREEMENT. This Agreement shall
remain in effect until terminated by (i) written agreement of the Company's
Board of Directors, Charter Oak, the Managers and the Charter Oak Designees,
(ii) cessation of the Company's business and winding up of its affairs, (iii)
any merger or consolidation of the Company in which the Company is not the
surviving corporation, unless such merger or consolidation is with another
entity that is controlled by, under the control of or in common control with,
the Company, or (iv) the later of (A) a closing of a Public Offering, or (B) 10
years from the date of this Agreement.
11.2 REMOVAL OF RESTRICTIVE LEGENDS. Upon termination of this
Agreement, each Shareholder shall surrender to the Company any certificates
representing Shares bearing the restrictive legends referenced in Section 2.3,
and the Company shall issue a new certificate in lieu thereof for an equal
number of Shares without such restrictive legend.
ARTICLE 12 MISCELLANEOUS
12.1 NOTICES. All notices pursuant to this Agreement shall be
in writing, delivered as follows:
(a) If to the Company, to:
Xx. Xxxxxx X. Xxxxxx
President
GEO Specialty Chemicals, Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
(b) If to Charter Oak Partners or Charter Oak
Capital Partners, to:
Xx. Xxxxxxx X. Xxxx
Charter Oak Partners
00 Xxxxxx Xxxxxx
Xxxxxxxx X
P. O. Box 5147
Westport, CT 06880
(c) If to Xxxxxx X. Xxxxxx, to:
Xx. Xxxxxx X. Xxxxxx
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
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(d) If to Xxxxxxx X. Xxxxxx, to:
Xx. Xxxxxxx X. Xxxxxx
Executive Vice President
GEO Chemicals, Inc.
000 Xxxxx Xxxxxx
Xxxxx 0X
Xxxxxxxxx, XX 00000
(e) If to GEO Chemicals, Ltd.:
Xx. Xxxxxx X. Xxxxxx
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
(f) If to Xxxxxx X. Xxxx, Xx.:
Xx. Xxxxxx X. Xxxx, Xx.
00 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
(g) If to A. Xxxxxxx Xxxxxx:
Xx. X. Xxxxxxx Xxxxxx
00000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
(h) In each case with a copy to:
Xxxxx X. Xxxxxxxx, Esq.
Xxxxxxxx Xxxx & Xxxxx LLP
0000 Xxx Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
If to any other Shareholder, to the address for such Shareholder listed in the
shareholder records of the Company or to such address as may have been
designated by such Shareholder in a prior notice to the Company.
Notices delivered by registered mail or a national overnight air
courier service shall be deemed to have been given three business days and one
business day, respectively, after the day of registration or documented
acceptance by the national overnight air courier service, as the case may be,
and otherwise notices shall be deemed to have been given when received.
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12.2 FURTHER ASSURANCES. From time to time after the date
hereof, upon reasonable notice and without further consideration, each
Shareholder shall execute and deliver any other document or instrument and shall
take any other action as may be advisable and reasonable to give effect to the
provisions of this Agreement.
12.3 INSURANCE. The Company shall have the right to obtain
insurance on the life of any Shareholder, whenever, in the opinion of the
Company, insurance may be required for the benefit of the Company or to enable
it to carry out its obligations hereunder. Each Shareholder shall submit to any
medical examination requested by the Company for the purpose of obtaining or
maintaining any such policy. No Shareholder shall have any rights in or to any
such policy, and the Company shall be free at any time to dispose of or retain
any such policy in any manner it desires.
12.4 ASSIGNMENT. No Shareholder may assign rights or delegate
duties or obligations hereunder without the prior written consent of all other
parties, and any assignment or delegation of any right, duty, or claim arising
hereunder without such consent shall be void.
12.5 INJUNCTIVE RELIEF. Each Shareholder acknowledges that it
will be impossible to measure in money the damage to the Company and to the
other Shareholders if there is a failure to comply with this Agreement. It is
therefore agreed that the Company or any other Shareholder, in addition to any
other rights or remedies which they may have, shall be entitled to immediate
injunctive relief and to specific performance to enforce this Agreement and that
if any action or proceeding is brought in equity to enforce it, no party will
urge, as a defense, that there is an adequate remedy at law.
12.6 EQUITY CONTRIBUTION VALUATION. The price of the Common
Shares issued in connection with the Equity Contribution shall not constitute a
binding valuation of the Common Shares of the Company for any other purpose
under this Agreement.
ARTICLES 13 REPRESENTATIONS AND WARRANTIES
13.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants that:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio. This
Agreement has been duly authorized, executed and delivered by the
Company, and is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(b) The execution, delivery and performance of this Agreement
by the Company will not result in any violation of, or be in conflict
with or constitute a default under, its Articles of Incorporation or
Code of Regulations, or any agreement, instrument, judgment, decree or
order to which the Company is subject, or result in the creation of any
mortgage, lien, charge or encumbrance upon any of the properties or
assets of the Company.
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(c) The Company, Key Equity Capital Corporation and Key Equity
Partners I have executed a Sale and Purchase Agreement for the
redemption by the Company of all the capital stock of the Company held
by Key Equity Capital Corporation and Key Equity Partners I.
13.2 REPRESENTATIONS AND WARRANTIES OF CHARTER OAK AND CHARTER
OAK CAPITAL PARTNERS. Charter Oak and Charter Oak Capital Partners represent and
warrant that:
(a) Charter Oak and Charter Oak Capital Partners are each duly
organized, validly existing and in good standing under the laws of the
State of Connecticut. This Agreement has been duly authorized, executed
and delivered by Charter Oak and Charter Oak Capital Partners, and is a
valid and binding obligation of Charter Oak and Charter Oak Capital
Partners, enforceable against them in accordance with its terms.
(b) The execution, delivery and performance of this Agreement
by Charter Oak and Charter Oak Capital Partners will not result in any
violation of, or be in conflict with or constitute a default under,
their respective partnership agreements, or any agreement, instrument,
judgment, decree or order to which Charter Oak or Charter Oak Capital
Partners, as applicable, is subject, or result in the creation of any
mortgage, lien, charge or encumbrance upon any of the properties or
assets of either of them.
13.3 REPRESENTATIONS AND WARRANTIES OF THE MANAGERS. Each of
the Managers represents and warrants:
(a) This Agreement has been duly authorized, executed and
delivered by the Managers, and is a valid and binding obligation of
each of the Managers, enforceable against each of the Managers in
accordance with its terms.
(b) Each of the Managers is aware of and familiar with the
restrictions imposed on the transfer by each of the Managers of any of
the Shares, including, without limitation, the restrictions contained
in this Agreement. Each of the Managers is aware that, except as
expressly provided in this Agreement, they will have no right to
require registration of their Shares and must bear the economic risk of
their investment therein.
(c) Each of the Managers separately acknowledge that the
Company and Charter Oak are entering into this Agreement in reliance
upon the representations and warranties of each of the Managers
contained in this Agreement, including, without limitation, those set
forth in this Section 13.3(c).
13.4 REPRESENTATIONS AND WARRANTIES OF GEO CHEMICALS. GEO
Chemicals represents and warrants that:
(a) GEO Chemicals is a limited liability company duly
organized, validly existing and in good standing under the laws of the
state of Ohio. This Agreement has been duly authorized, executed and
delivered by GEO Chemicals, and is a valid and binding
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obligation of GEO Chemicals, enforceable against GEO Chemicals in
accordance with its terms.
(b) The execution, delivery and performance of this Agreement
by GEO Chemicals will not result in any violations of, or be in
conflict with or constitute a default under its Articles of
Organization or Operating Agreement, or any agreement, instrument,
judgment, decree or order to which GEO Chemicals is subject, or result
in the creation of any mortgage, lien, charge or encumbrance upon any
of the properties or assets of GEO Chemicals.
ARTICLE 14 CONSTRUCTION
14.1 ENTIRE AGREEMENT. This Agreement constitutes the
exclusive statement in the agreement of the Company and the Shareholders
concerning rights and restrictions on matters contained herein this Agreement
and supersedes all other agreements, oral or written, among or between any of
them concerning rights and restrictions contained herein this Agreement. All
negotiations among or between any of the Company and the Shareholders with
respect to the subject matter hereof are superseded by this Agreement, and there
are no representations, promises, understandings, or agreements, or written, in
relation thereto among or between any of them other than those incorporated
herein.
14.2 MODIFICATION AND WAIVER. No amendment, modification, or
waiver of this Agreement shall be effective unless made in a written instrument
which specifically references this Agreement and which is signed by the Company
and the holders of a ninety percent (90%) majority of the outstanding Shares.
Except as expressly provided herein, the failure of the Company or any
Shareholder to enforce at any time, or for any period of time, any provision of
this Agreement shall not be construed as a waiver of any provision or the right
of any such Person to enforce each and every provision of this Agreement.
14.3 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the Shareholders, their Permitted Transferees,
successors-in-interest, legal representatives and permitted assigns and shall be
binding upon and inure to the benefit of the Company, its successors and
assigns.
14.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio without giving effect
to the conflict of law provisions thereof.
14.5 SEVERABILITY AND REFORMATION. If any provision of this
Agreement, or the application thereof to any Person or circumstance should, for
any reason and to any extent, be invalid or unenforceable, the remainder of this
Agreement and the application of such provision to other Persons or
circumstances shall not be affected thereby, but rather shall be enforced to the
greatest extent permitted by law. In addition, if any of the Share Transfer
restrictions contained herein should ever be found by a court of competent
jurisdiction to be invalid or unenforceable, such court is hereby authorized by
the Company and the Shareholders to reform such provision for the purpose
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of imposing reasonable and enforceable restrictions on the Transfer of Shares so
as to carry out the intentions of the Company and the Shareholders in imposing
Transfer restrictions designed to ensure unity and continuity in the ownership
of the Company and to afford the remaining Shareholders a reasonable degree of
discretion and control over the admission of Persons substituted as Shareholders
of the Company.
14.6 HEADINGS. The Article and Section headings contained
herein are intended solely for convenience of reference and shall not be
considered in interpreting this Agreement.
14.7 GENDER AND NUMBER. Whenever the context requires herein,
the masculine gender includes the feminine or neuter, and the singular number
includes the plural.
14.8 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same document.
14.9 THIRD PARTIES. Nothing expressed or implied in this
Agreement is intended or shall be construed to confer on any Person, other than
the Company and the Shareholders, any rights hereunder.
14.10 EXHIBITS. The Exhibits referenced in this Agreement
constitute an integral part of this Agreement as if fully rewritten herein.
14.11 TIME PERIODS. Any action required hereunder to be taken
within a certain number of days shall be taken within that number of calendar
days; provided, however, that if the last day for taking such action falls on a
Saturday, Sunday, or a holiday observed by the Company, the period during which
such action may be taken shall be automatically extended to the next business
day.
[signature page to follow]
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INTENDING TO BE LEGALLY BOUND, the parties hereto have executed this
Agreement or have caused this Agreement to be executed by their duly authorized
representatives as of the day first above written.
GEO SPECIALTY CHEMICALS, INC. XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------- -------------------------
By: Xxxxxx X. Xxxxxx
------------------------------------------------
Title: President and Chief Executive Officer
--------------------------------------------- XXXXXXX X. XXXXXX
/s/ Xxxxxxx X. Xxxxxx
------------------------
CHARTER OAK PARTNERS
/s/ Xxxxxxx X. Fine
---------------------------------------------------
By: Xxxxxxx X. Fine XXXXXX X. XXXX, XX.
------------------------------------------------
Title: Managing Partner of Fine Partners, L.P.,
--------------------------------------------- /s/ Xxxxxx X. Xxxx, Xx.
the Managing Partner of Charter Oak Partners -------------------------
---------------------------------------------
GEO CHEMICALS, LTD.
/s/ Xxxxxx X. Xxxxxx A. XXXXXXX XXXXXX
---------------------------------------------------
By: Xxxxxx X. Xxxxxx
------------------------------------------------
Title: Member /s/ A. Xxxxxxx Xxxxxx
--------------------------------------------- -------------------------
CHARTER OAK CAPITAL PARTNERS
/s/ Xxxxxxx X. Xxxx
---------------------------------------------------
By: Xxxxxxx X. Xxxx
------------------------------------------------
Title: General Partner
---------------------------------------------
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