Shareholders' Agreement
This Shareholders' Agreement (the "Agreement") is made as of this 7th
day of April, 1997, by and among Noble International, Ltd., a Michigan
corporation ("Noble"), Utilase, Inc., a Michigan corporation ("Utilase"), Xxxxxx
X. Xxxxxxxxxxx ("Skandalaris"), and Xxxxx Xxxxxx Xxxxxxxxx, III ("Xxxxxxxxx").
Utilase and Xxxxxxxxx are referred to in this Agreement individually as a
"Shareholder" and collectively as the "Shareholders."
Background
X. Xxxxx, Utilase, Inc., a Michigan corporation ("Utilase") and
the shareholders of Utilase, have entered into that certain
Stock Purchase Agreement dated as of April 7, 1997, pursuant
to which Noble will acquire all of the outstanding stock of
Utilase (the "Purchase Agreement").
X. Xxxxxxxxxxx is the owner of approximately 60% of the issued
and outstanding Noble Common Shares, as that term is defined
below.
In consideration of the mutual covenants set forth in this Agreement,
the parties agree as follows:
Agreement
1. Definitions.
(a) "Noble Shares" shall mean shares of the common stock of
Noble.
(b) "Skandalaris Shares" shall mean Noble Shares now owned or
subsequently acquired, directly or indirectly, by Skandalaris.
(c) "Shareholders' Shares" shall mean Noble Shares now owned
or subsequently acquired by the Shareholders including the Escrow Shares (as
that term is defined in the Purchase Agreement) acquired by Utilase pursuant to
the terms of the Purchase Agreement.
2. Sales by Skandalaris.
(a) If Skandalaris proposes to sell, transfer or dispose of in
any way any Skandalaris Shares, including any redemption of such shares by Noble
("Skandalaris Share Transfer"), then Skandalaris shall promptly give written
notice (the "Skandalaris Notice") to the Shareholders at least 30 days prior to
the closing of a Skandalaris Share Transfer. The Skandalaris Notice shall
describe in reasonable detail the proposed Skandalaris Share Transfer,
including, without limitation, the number of Skandalaris Shares to be sold or
transferred, the nature of such sale
or transfer, the consideration to be paid, and the name and address of each
prospective purchaser or transferee. In the event that the proposed Skandalaris
Share Transfer is being made pursuant to the provisions of Sections 4(a) or 4(b)
of this Agreement, the Skandalaris Notice shall state under which section the
sale or transfer is being made.
(b) Each Shareholder shall have the pro rata right, based upon
the aggregate number of Noble Shares then held by each Shareholder, exercisable
upon written notice to Skandalaris within 15 days after receipt of the
Skandalaris Notice, to participate in such Skandalaris Share Transfer on the
same terms and conditions (the "Sale Option"). To the extent the Shareholders
exercise the Sale Option in accordance with the terms and conditions set forth
in Section 2(c) below (i) the number of Skandalaris Shares that Skandalaris may
sell shall be correspondingly reduced, and (ii) each Shareholder shall receive
its corresponding pro rata share of the aggregate consideration paid, directly
or indirectly, to Skandalaris by such purchasers or transferees.
(c) The Shareholders may sell all or any part of the
Shareholders' Shares equal to the product of (i) the aggregate number of
Skandalaris Shares covered by the Skandalaris Notice multiplied by (ii) a
fraction, the numerator of which is the number of Noble Shares owned by the
Shareholders at the time of the sale or transfer and the denominator of which is
the total number of Noble Shares owned by Skandalaris and the Shareholders at
the time of transfer.
(d) Each Shareholder shall effect its participation in the
sale by promptly delivering to Skandalaris for transfer to the prospective
purchaser one or more certificates, properly endorsed for transfer, which
represent the type and number of Shareholders' Shares that the Shareholder
elects to sell.
(e) The stock certificate or certificates that the
Shareholders deliver to Skandalaris pursuant to Section 2(d) shall be
transferred to the prospective purchaser upon consummation of the Skandalaris
Share Transfer pursuant to the terms and conditions specified in the Skandalaris
Notice, and Skandalaris shall concurrently therewith remit to the Shareholders
that portion of the sale proceeds to which the Shareholders are entitled by
reason of their participation in such sale. To the extent that any prospective
purchaser or purchasers prohibit such assignment or otherwise refuse to purchase
Shareholders' Shares from the Shareholders, Skandalaris shall not sell to such
prospective purchaser or purchasers any Skandalaris Shares unless and until
Skandalaris has purchased from the Shareholders the number of Shareholders'
Shares that the Shareholders are entitled to sell under this Agreement on the
terms and subject to the conditions in the Skandalaris Notice.
(f) The exercise or non-exercise of the Shareholders' rights
under this Agreement to participate in one or more sales of Skandalaris Shares
shall not adversely affect their rights to exercise their Sale Option in
subsequent Skandalaris Share Transfers.
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3. Sales by the Shareholders.
(a) If the Shareholders propose to sell, transfer or dispose
of in any way any Shareholders' Shares ("Shareholders Share Transfer"), then the
Shareholders shall promptly give written notice (the "Shareholders Notice") to
Skandalaris at least 30 days prior to the closing of a Shareholders Share
Transfer. The Shareholders Notice shall describe in reasonable detail the
proposed Shareholders Share Transfer, including, without limitation, the number
of Shareholders' Shares to be sold or transferred, the nature of such sale or
transfer, the consideration to be paid, and the name and address of each
prospective purchaser or transferee. In the event that the proposed Shareholders
Share Transfer is being made pursuant to the provisions of Sections 4(a) or 4(b)
of this Agreement, the Shareholders Notice shall state under which section the
sale or transfer is being made.
(b) Skandalaris shall have the right, but not the obligation,
exercisable upon written notice to the Shareholders within 15 days after receipt
of the Shareholders Notice, to purchase not less than all of the Shareholders'
Shares subject to the proposed transfer at the price of the proposed transfer
and on the terms of the proposed transfer.
4. Exempt Transfers.
(a) The provisions of Section 2 shall not apply to (i) any
pledge of Skandalaris Shares made pursuant to a bona fide loan transaction that
creates a mere security interest, or (ii) any transfer to the ancestors,
descendants or spouse of Skandalaris or to trusts for the benefit of such
persons; provided that (A) Skandalaris shall inform the Shareholders of such
pledge or transfer prior to effecting it and (B) the pledgee or transferee shall
furnish the Shareholders with a written agreement to be bound by and that
complies with all provisions of Section 2 of this Agreement. The provisions of
Section 3 shall not apply to (i) any pledge of Shareholders' Shares made
pursuant to a bona fide loan transaction that creates a mere security interest,
or (ii) any transfer to a successor, parent, subsidiary, assignee, ancestor,
descendant or spouse of the Shareholders or to trusts for the benefit of such
persons; provided that (A) the Shareholders shall inform Skandalaris of such
pledge or transfer prior to effecting it and (B) the pledgee or transferee shall
furnish Skandalaris with a written agreement to be bound by and that complies
with all provisions of Section 3 of this Agreement. Such transferred Noble
Shares shall remain "Skandalaris Shares" or "Shareholders' Shares," as
applicable, under this Agreement, and such pledgee or transferee shall be
treated as "Skandalaris" or a "Shareholder," as applicable, for purposes of this
Agreement.
(b) The provisions of Sections 2 and 3 shall not apply to the
sale of any Skandalaris Shares or Shareholders' Shares to the public pursuant to
a registration statement filed with, and declared effective by, the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the "1933
Act").
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5. Prohibited Transfers.
(a) In the event Skandalaris should sell any Noble Shares in
contravention of the rights of the Shareholders under this Agreement (a
"Prohibited Transfer"), the Shareholders, in addition to such other remedies as
may be available at law, in equity or under this Agreement, shall have the put
option provided below, and Skandalaris shall be bound by the applicable
provisions of such option.
(b) In the event of a Prohibited Transfer, the Shareholders
shall have the right to sell to Skandalaris the number of Noble Shares equal to
the number of shares each such Shareholder would have been entitled to transfer
to the purchaser had the Prohibited Transfer been effected pursuant to and in
compliance with the terms of this Agreement. Such sale shall be made on the
following terms and conditions:
(i) The price per share at which the Shareholders'
Shares are to be sold to Skandalaris shall be equal to the price per
share paid by the purchaser to Skandalaris in the Prohibited Transfer.
(ii) Within 60 days after the date on which the
Shareholders became aware of the Prohibited Transfer, the Shareholders
shall, if exercising the option created hereby, deliver to Skandalaris
the certificate or certificates representing Noble Shares to be sold,
each certificate to be properly endorsed for transfer.
(iii) Skandalaris shall, upon receipt of the
certificate or certificates for the shares to be sold by the
Shareholders, pursuant to this Section 5(b), pay the aggregate purchase
price therefor as specified in Section 5(b)(i), in immediately
available funds or by other means acceptable to the Shareholders.
(iv) Notwithstanding the foregoing, any attempt by
Skandalaris to transfer Noble Shares in violation of Section 2 of this
Agreement shall be void and Noble agrees it will not effect such a
transfer nor will it treat any alleged transferee as the holder of such
shares without the written consent of the Shareholders.
6. Legend.
(a) Each certificate representing Skandalaris Shares or
Shareholders' Shares issued to any person in connection with a transfer pursuant
to Section 4(a) of this Agreement shall be endorsed with the following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS
OF A CERTAIN SHAREHOLDERS' AGREEMENT BY AND AMONG THE CORPORATION,
XXXXXX X. XXXXXXXXXXX, AND CERTAIN HOLDERS OF
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STOCK OF THE CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION."
(b) Skandalaris agrees that Noble may instruct its transfer
agent, if applicable, to impose transfer restrictions on the shares represented
by certificates bearing the legend referred to in Section 6(a) to enforce the
provisions of this Agreement and Noble agrees to promptly do so. The legend and
any stop transfer notations shall be removed upon termination of this Agreement.
7. Restricted Transfers.
(a) If Noble closes the initial public offering described in
the Purchase Agreement (the "IPO"), Skandalaris shall not, without the prior
joint written consent of the Shareholders, sell, transfer or dispose of in any
way any Skandalaris Shares on or before the second anniversary of the closing of
the IPO. Except as otherwise set forth in this Agreement, after the second
anniversary of the IPO, Skandalaris shall not, without the prior joint written
consent of the Shareholders, engage in such a transfer involving more than 20%
in the aggregate of the Skandalaris Shares so long as any Series A Preferred
Stock (as that term is defined in the Purchase Agreement) remains outstanding;
provided, however, that Skandalaris shall not engage in such a transfer if there
exists an Event of Default (as that term is defined in the designation (the
"Designation") of the Series A Preferred Stock contained in the Noble Articles
of Incorporation).
(b) If Skandalaris proposes such a transfer pursuant to
Section 7(a), then he shall promptly give written notice (the "Restricted
Transfer Notice") to each Shareholder at least 30 days prior to the closing of
such a transfer. The Restricted Transfer Notice shall describe in reasonable
detail the proposed transfer, including, without limitation, the number of
Skandalaris Shares to be sold or transferred, the nature of such sale or
transfer, the consideration to be paid, and the name and address of each
prospective purchaser or transferee. In the event that the proposed transfer is
being made pursuant to the provisions of Section 7(c) of this Agreement, the
Restricted Transfer Notice shall state under which section the sale or transfer
is being made.
(c) Notwithstanding the foregoing, the provisions of this
Section 7 shall not apply to (i) any pledge of Skandalaris Shares made pursuant
to a bona fide loan transaction that creates a mere security interest, or (ii)
any transfer to the ancestors, descendants or spouse of Skandalaris or to trusts
for the benefit of such persons; provided, however, that (A) Skandalaris shall
inform each Shareholder of such pledge or transfer prior to effecting it and (B)
the pledgee or transferee shall furnish the Shareholders with a written
agreement to be bound by and that complies with all provisions of this
Agreement. Such transferred Skandalaris Shares shall remain "Skandalaris Shares"
under this Agreement, and such pledgee or transferee shall be treated as
"Skandalaris" for purposes of this Agreement.
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8. Miscellaneous.
(a) Arbitration. In the event that the Company and the
Shareholders cannot agree as to the disposition of any claim raised under this
Agreement, the unresolved matter shall be resolved by arbitration if a request
for arbitration, as provided in this Section 8(a), is given. Arbitration shall
be initiated by either party making a written demand on the other party and
simultaneously filing copies of the demand, together with the required fees,
with the Detroit Regional Office of the American Arbitration Association
("AAA"). Within 15 days after receipt of such demand, each party shall designate
one arbitrator. These two arbitrators shall, within 15 days after their
appointment, select a third arbitrator, who shall be experienced in the subject
matter of the claim for which resolution is sought. In the event that the first
two arbitrators are unable to agree upon a third arbitrator, then the
arbitrators shall apply to the AAA to designate and appoint a person who meets
these criteria as the third arbitrator. In the event the party upon whom the
original arbitration demand was served shall fail to designate its arbitrator,
the arbitrator designated by the party requesting arbitration shall act as the
sole arbitrator and shall be deemed to be single, mutually approved arbitrator
to resolve the matter. Final arbitration of the dispute shall occur within six
months of the giving of the notice of arbitration. The place of arbitration
shall be Troy, Michigan. Arbitration shall be conducted under the auspices of
the AAA and the AAA Rules shall govern all proceedings unless otherwise provided
in this Section 8(a). In the case of conflict between the AAA Rules and this
Agreement, the provisions of this Agreement shall govern. The arbitrators' sole
power shall be to interpret the provisions of this Agreement and they shall have
no power to change or modify any provision of this Agreement. The parties shall
have the right to discovery in accordance with the Federal Rules of Civil
Procedure except that discovery may commence immediately upon the service of the
demand for arbitration and except that discovery shall be limited to document
requests and depositions of not more than two people per party, and must occur
within three months of the date of such service of notice of the complaining
party. A party's unreasonable refusal to cooperate in discovery shall be deemed
to be a refusal to proceed with arbitration and, until the arbitration panel is
complete, the parties may enforce their rights (including the right of
discovery) in the circuit courts of the State of Michigan. Such enforcement in
the courts shall not constitute a waiver of a party's right to arbitration. Upon
the completion of the appointment of the arbitration panel, the arbitrators
shall have the power to enforce the parties' discovery rights. It is expressly
agreed that material subject to discovery shall include written documents that
must be created from information that currently exists only in machine-readable
form.
The parties expressly covenant and agree to be bound by the decision of
the arbitration panel and accept any such decision as the final determination of
the matter in dispute. A judgment of any Michigan Circuit Court may be rendered
upon any award made pursuant to this Agreement.
(b) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Michigan, without regard to the
conflict of laws principals of that state.
(c) Amendment. Any provision may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only
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by the written consent of (i) as to Noble, only by Noble, (ii) as to Utilase, by
Xxxxxxxxx, (iii) as to Xxxxxxxxx, by Xxxxxxxxx, and (iv) as to Skandalaris, by
Skandalaris. Any amendment or waiver effected in accordance with clauses (i),
(ii) and (iii) of this Section 8(c) shall be binding upon Noble, Skandalaris,
and the Shareholders and their respective successors, assigns, and legal
representatives.
(d) Assignment of Rights. This Agreement and the rights and
obligations of the parties under this Agreement shall inure to the benefit of,
and be binding upon, their respective successors, assigns and legal
representatives. The rights of Utilase under this Agreement are assignable to an
affiliate of Utilase or to a successor in interest to Utilase.
(e) Term. This Agreement shall terminate in its entirety upon
the earlier of (i) the final redemption by Noble of any outstanding Series A
Preferred Stock and (ii) the closing of Noble's sale of all or substantially all
of its assets or the acquisition of Noble by another entity by means of merger
or consolidation resulting in the exchange of the outstanding Noble Shares for
securities or consideration issued, or caused to be issued, by the acquiring
entity or its subsidiary, so long as the holders of Noble Shares receive, pro
rata, substantially all of the consideration paid, directly or indirectly, by
the acquiring entity in connection with such transaction. Sections 2, 3, 4 and 5
of this Agreement shall terminate and the legends referred to in Section 6 shall
be removed from the applicable certificates on the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the 1933 Act, covering the offer and sale of all or a portion of Noble
Shares at an aggregate offering price to the public of not less than
$10,000,000.
(f) Capitalization. Noble represents and warrants that (i)
there are 60,000 authorized and 11,550 issued and outstanding Noble Shares, (ii)
there are no other issued and outstanding Noble Shares, and (iii) Noble is under
no obligation to issue any Noble Shares except as contemplated by the Purchase
Agreement and the proposed IPO referred to in the Purchase Agreement and stock
option plans for Noble management and directors.
(g) Ownership. Skandalaris represents and warrants that (i) he
is the sole legal and beneficial owner of approximately 60% of the issued and
outstanding Noble Shares.
(h) Notices. All notices or other communications required or
permitted under this Agreement shall be in writing and shall be given by
certified mail, recognized commercial overnight courier or facsimile addressed
as follows.
If to Noble to:
Noble International, Ltd.
00 Xxxxxxxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxx
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with a copy to:
Jaffe, Raitt, Huer & Xxxxx, Professional Corporation
Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Mr. Xxxxx Sugar
If to Skandalaris to:
Xxxxxx X. Xxxxxxxxxxx
00 Xxxxxxxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
with a copy to:
Jaffe, Raitt, Huer & Xxxxx, Professional Corporation
Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Mr. Xxxxx Sugar
If to Utilase to:
Utilase, Inc.
00000 Xxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xx. Xxxxx Xxxxxx Xxxxxxxxx, III
with a copy to:
Xxxxxx Xxxxxxx PLLC
0000 X. Xxxxxxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
(i) Severability. In the event one or more of the provisions
of this Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained in this Agreement.
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(j) Counterparts. This Agreement may be executed in two or
more, counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[this space intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement effective as of the date first set above.
NOBLE INTERNATIONAL, LTD.
By: _________________________________
Name: _________________________________
Title: _________________________________
UTILASE, INC.
By: _________________________________
Xxxxx Xxxxxx Xxxxxxxxx, III,
Chief Executive Officer
_________________________________
Xxxxxx X. Xxxxxxxxxxx
_________________________________
Xxxxx Xxxxxx Xxxxxxxxx, III
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