Exhibit 10.25
STOCKHOLDERS' AGREEMENT
AGREEMENT dated as of the 5th day of January, 2000, by and among the
persons, firms and other entities set forth on Schedule A hereto (hereinafter
sometimes called collectively the "Shareholders" and individually a
"Shareholder").
W I T N E S S E T H:
WHEREAS, each of Xxxxxx Corporation and Xxxxxx Pharmaceutical, Inc.
(collectively, "Xxxxxx") is a debtor in proceedings for a reorganization under
Chapter 11 of the Bankruptcy Code currently pending in the United States
Bankruptcy Court for the Eastern District of New York (the "Bankruptcy Court"),
Case Nos. 94 B 42808 and 94 B 42809 (collectively, the "Case"); and
WHEREAS, Philipp Brothers Chemicals, Inc. ("PBC"), together with
Xxxx XxXxxxxxx (the "Trustee"), the chapter 11 trustee of Xxxxxx, and Xxxxxx,
are joint proponents of the Plan of Reorganization dated September 30, 1999 (as
amended and resubmitted to the Bankruptcy Court from time to time, the "Plan")
and have submitted a related Disclosure Statement pursuant to ss.1125 of Title
11 of the United States Code to all holders of claims in order to solicit
acceptances or rejections of the Plan; and
WHEREAS, in connection with the Plan, PBC has entered into an Escrow
Agreement (the "Escrow Agreement") dated September 7, 1999 with the Trustee,
pursuant to which PBC deposited with the escrow agent thereunder the sum of
$500,000 as xxxxxxx money (the "Deposit"); and
WHEREAS, at a hearing on January 5, 2000, the Bankruptcy Court
confirmed the Plan, awarding Xxxxxx to PBC or a designee; and
WHEREAS, the Shareholders have agreed to capitalize Xxxxxx Holding
Company, a Delaware corporation (the "Corporation"), in order to be the
purchaser under, and fulfill the purchaser's funding obligations in accordance
with, the Plan, and in connection therewith, the Shareholders have agreed to
purchase from the Corporation the number of shares of each class and series of
capital stock of the Corporation set forth on Schedule A hereto; and
WHEREAS, the Shareholders desire to maintain ownership and control
of the Corporation between themselves for the purpose of insuring the continuity
of the management and policies of the Corporation and, in furtherance thereof,
to provide for the orderly disposition of the shares of the Corporation now
owned or hereafter acquired by each of them under certain circumstances;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Effective Date. This Agreement shall not become effective unless and
until a counterpart is executed and delivered by Shareholders investing in the
Corporation at least
$4,500,000 (including the Deposit). In the event the acquisition (the
"Acquisition") by the Corporation contemplated by the Plan is not consummated by
March 7, 2000, and this Agreement shall theretofore have become effective by
reason of the acceptance by the Corporation of a stock subscription and
counterpart of this Agreement on behalf of Shareholders investing the requisite
amount, the Corporation, at the request of any Shareholder, shall take such
actions as shall effect as soon as practicable the return to each contributing
Shareholder of all amounts contributed by such Shareholder to the capital of the
Corporation or held by the Corporation as a contribution by such Shareholder to
such capital, with any interest earned thereon. Since the Plan is subject to
numerous terms and conditions, no representation or warranty is made that (a)
the transactions contemplated by the Plan will actually be consummated or (b) if
such transactions are consummated, that there will be no changes in, or waivers
of, any of the terms or conditions of the Plan.
2. Subscription for and Purchase of Shares. (a) Each Shareholder hereby
agrees, solely as between the Shareholders (and not for the benefit of the
Corporation, Xxxxxx, the Trustee, the official committee (the "Creditors'
Committee") of unsecured creditors appointed by the Bankruptcy Court in the
Case, or any other third party), to invest in the Corporation (to the extent it
has not already done so), whether as initial share purchase price, additional
capital contributions or, if and upon such terms as the Corporation and the
Shareholders holding, in the aggregate, a majority interest in the Corporation
shall mutually determine, equipment or subordinated loans, in the amounts
specified therefor in Schedule A as its "Basic Commitment" plus PBC's rights as
a proponent of the Plan.
(b) Upon signing this Agreement, each Shareholder shall deliver to
counsel to the Corporation to be held, until disbursed under the Plan or until
the closing under the Plan, in an escrow account for the benefit of the
Shareholders (the "Account") such Shareholder's Basic Commitment in full, as
specified in Schedule A, of which $500,000 of PBC's Basic Commitment has been
used as the xxxxxxx money deposit required to be made by the Corporation
pursuant to the Plan, and other funds have been used to conduct diligence and to
fund certain pre-closing disbursements under the Plan.
(c) In furtherance thereof, the Shareholders have subscribed for the
number of shares of the Corporation, and agreed to pay $1,000.00 per share of
Preferred Stock and $9.84 per share of Common Stock or the aggregate amount
therefor, set forth on Schedule A in respect of their respective Basic
Commitments; provided, however, Xxxx Xxxxxxxxxxxxxx has agreed to pay $1.00 per
share of Common Stock and to enter into a certain Consulting Agreement with the
Corporation in consideration thereof. In the event a Shareholder shall fail to
satisfy in full its Basic Commitment, without limiting any other right or remedy
of any other Shareholder, such non-contributing Shareholder shall not be
entitled to ownership of any securities of the Corporation, and the Corporation
shall have the right, for a period of ninety days, to repurchase such
Shareholder's shares of Preferred Stock and Common Stock at cost, without any
increase due to a dividend or for any other reason.
(d) The Corporation shall not have any rights or remedies with
respect to the failure of a Shareholder to fulfill its Basic Commitment, such
obligations and all provisions of
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this Agreement with respect thereto being solely an agreement among the
Shareholders, enforceable solely by them against the others and not otherwise.
(e) The Corporation will pay or reimburse a Shareholder or affiliate
of a Shareholder for pre-incorporation expenses incurred by it in connection
with the organization of the Corporation, due diligence with respect to and the
acquisition of Xxxxxx, and related expenses, including such expenses of PBC
included in the Plan or Disclosure Statement and other such expenses upon
submission of vouchers or expense statements reasonably evidencing such
expenses. If, in connection with the initial funding of the Company required to
consummate the Plan, a Shareholder shall advance to the Company more than his or
its allocation specified in Schedule A, such Shareholder shall be entitled to
reimbursement of such over-advance, without interest.
3. Management of the Corporation.
(a) Each of the Shareholders agrees, from and after the date hereof,
so long as they shall own (or be deemed to own) shares of the Corporation, to
vote all of the shares of the Corporation now or hereafter owned and/or held of
record by such Shareholder so as to use their best efforts to elect and
thereafter for the term of this Agreement to continue in office a Board of
Directors of the Corporation, consisting of three (3) persons, designated as
follows (so long as such designating party shall own (or be deemed to own) at
least one-half of the aggregate shares of Common Stock heretofore and hereafter
from time to time issued to them, respectively):
One person to be designated by PBC and Xxxx X. Xxxxxxxx (by the
decision of the holder or holders of a majority of the shares of Common Stock
owned by them); and
One person to be designated by Xxxxx Xxxxxx; and
One person to be designated by Xxxxxx Xxxxxxx.
The initial Board of Directors shall be comprised of the following
persons:
Xxxx X. Xxxxxxxx
Xxxxx Xxxxxx
Xxxxxx Xxxxxxx
Xxxx X. Xxxxxxxx shall be Chairman of the Board of Directors,
as long as he and PBC shall own (or be deemed to own) at least one-half of the
aggregate shares of Common Stock heretofore or hereafter issued to them. Each of
the Shareholders agrees that the following persons shall be officers of the
Corporation, and that the other officers of the Corporation shall be determined
by the Board of Directors, each to hold such office or offices and to serve
until their respective successors shall have been elected and qualified, and
subject to removal at any time in accordance with the By-laws of the
Corporation:
Xxxxxx Xxxx President
Xxxxxx X. Xxxxxxxxxxx Treasurer and Secretary
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The President , if not also a director, shall also be entitled to observe
meetings of the Board of Directors as the Board shall deem advisable.
The Corporation's By-laws shall provide that any director may be
removed for cause by the Shareholders and that directors, other than the initial
directors specified above, may be removed without cause by the Shareholders. A
quorum for meetings of the Board of Directors shall consist of a majority of the
directors then in office.
The obligations of the Shareholders to vote in accordance with the
terms of this paragraph 3(a) shall continue after a distribution of equity
securities of the Corporation unless and until there shall have been completed a
Qualified Distribution. For purposes of this Agreement, a "Qualified
Distribution" means an underwritten public offering by the Corporation of shares
of its equity securities in which the aggregate gross proceeds received by the
Corporation shall equal or exceed $10,000,000.
(b) If there is a vacancy in the Board of Directors of the
Corporation during the period of time a Shareholder shall own (or be deemed to
own) at least one-half of the aggregate number of shares of Common Stock
heretofore and hereafter from time to time issued to such Shareholder, and such
vacancy shall be due to the death, removal or resignation of a director
designated by such Shareholder, such Shareholder shall be entitled to designate
a person to fill such vacancy in the Board of Directors, and each Shareholder
agrees to vote all of the shares of the Corporation owned and/or held of record
by such Shareholder in favor of the person designated by the Shareholder
entitled to designate the person whose directorship has been terminated.
(c) Each of the Shareholders agrees to cause the persons designated
as directors by such Shareholder to resign as a director of the Corporation and
of the Corporation's subsidiaries, if any, in the event and at the time that
such Shareholder ceases to own (or be deemed to own) at least one-half of the
aggregate number of shares of Common Stock heretofore and hereafter from time to
time issued to such Shareholder, and, if necessary, to cause the shares of the
Corporation owned (and deemed owned) by such Shareholder to be voted for the
removal of any such director who refuses to resign.
(d) In order to effectuate the foregoing voting agreements of the
parties hereto with respect to the election of directors of the Corporation, the
Shareholders grant to, and are deemed to have executed in favor of, each other
(and their respective permitted successors and assigns), an irrevocable proxy,
coupled with an interest, to vote all of the shares of the Corporation owned by
the grantor of the proxy in accordance with the voting agreements contained in
this paragraph, by a written consent of stockholders without a meeting or at a
meeting of the stockholders of the Corporation held to vote upon and elect such
directors.
(e) Without the approval of Shareholders owning or holding of record
at least sixty percent (60%) of the then outstanding shares of Common Stock of
the Corporation, the Corporation shall not be permitted to take any of the
following actions:
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(i) sell substantially all of the assets of the Corporation for a
purchase price which would yield, after accounting for outstanding
indebtedness of the Corporation, total consideration, the proportionate
share of which for a Shareholder would be less than the aggregate amount
paid by such Shareholder for each share of the Corporation owned by him at
the time of such proposed sale; provided however, that no such approval by
a Shareholder shall be necessary if such proposed sale is to occur after
the fifth anniversary of the date of the closing of the Acquisition;
(ii) enter into business or businesses not related or incidental to
the ownership or operation of a business that manufactures or imports
opium or derivatives, or other narcotics or controlled substances, or
crude amphotericin slurry ("CAS");
(iii) enter into any agreement for the sale or purchase of assets
by, or the provision of services by or to, the Corporation with any of the
Shareholders or any entity controlled by, controlling or under common
control with any of the Shareholders upon terms less favorable than those
then generally available from or with unrelated third parties;
(iv) by reclassification or recapitalization of its capital stock,
including combination of the outstanding shares of its Preferred Stock or
Common Stock into a smaller number of shares, or by merger of the
Corporation with or into an entity controlled by, under common ownership
or control with or controlling one or more of the then-shareholders of the
Corporation, reduce or increase the relative interest of any one
Shareholder disproportionately to that of the other Shareholders;
(v) remove any director, or fill any vacancy on the Board of
Directors, or elect or remove any officer of the Corporation;
(vi) purchase or redeem any outstanding shares of the Corporation
(other than pursuant to the provisions of this Agreement);
(vii) merge, consolidate, liquidate or dissolve the Corporation; or
(viii) amend the certificate of incorporation or by-laws of the
Corporation.
4. Restrictions on Transfer of Shares.
(a) During the term of this Agreement and so long as there shall not
have been consummated a Qualified Distribution, no Shareholder, either directly
or indirectly, shall (whether by operation of law or otherwise) sell, assign,
mortgage, hypothecate, transfer, pledge, create a security interest in or lien
upon, encumber, give, place in trust, or otherwise voluntarily or involuntarily
dispose of (hereinafter collectively called "transfer") any or all of the shares
of the Corporation (or any right or interest therein) now owned or hereafter
acquired or owned by such Shareholder, except as hereinafter provided.
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(b) Notwithstanding the provisions of subparagraph 4(a) above, but
in each case subject to the provisions of paragraph 6 hereof,
(i) Each member of a Family Group (as set forth on Schedule B
hereto) shall be under no restrictions (other than restrictions imposed by
federal and state securities laws) as to the transfer by them of their
shares of the Corporation to one or more other members of the same Family
Group or to their respective permitted transferees specified in clause
(ii) below; and
(ii) a Shareholder (including a shareholder who shall become a
Shareholder after having been a permitted transferee of a Shareholder)
shall have the right (subject to compliance with the provisions of
subparagraph 4(c) below) at any time during the term of this Agreement to
make the following transfers:
(A) if such Shareholder shall be a corporation or other
non-individual, to individuals and entities which are and thereafter
continue to be, controlled by, controlling or under common ownership and
control with, such Shareholder or in the event of the liquidation or
dissolution of such Shareholder, to its shareholders or other owners of
the equity interests in such Shareholder;
(B) if such Shareholder shall be an individual, (1) to
entities controlled by such individual Shareholder, (2) to the
then-current spouse, parents or lineal descendants of such individual
Shareholder or to trusts or custodianships established for or entities
controlled by any of such persons, (3) by operation of law, (4) by
disposition pursuant to the terms of such individual Shareholder's will,
or (5) to such individual Shareholder's estate;
(C) in accordance with the provisions of paragraph 5
hereof; or
(D) any shares effectively registered under the
Securities Act of 1933, as amended (the "Securities Act"), in accordance
with the intended method of disposition by the seller or sellers thereof
set forth in the registration statement, or of any Shares previously
effectively registered under the Securities Act and sold or otherwise
disposed of in accordance with the intended method of disposition by the
seller or sellers thereof set forth in such applicable registration
statement.
(c) Any transfer by a Shareholder to such a permitted transferee
referred to in clause (ii) (A) or (B) of subparagraph 4(b) of all or any part of
such Shareholder's shares of the Corporation (or in the event of any subsequent
permitted transfer by any such permitted transferee to another permitted
transferee) may be made provided that at the time of any such transfer, each
such transferee agrees in writing to be bound by all of the provisions of this
Agreement applicable to the transferor, and provides a copy thereof to each
Shareholder. In such event, such permitted transferees (including subsequent
permitted transferees hereunder) shall receive, hold and vote such shares
subject to the terms of this Agreement and the rights and obligations hereunder
of the Shareholder from whom such shares were originally transferred as though
such shares were still owned (and for purposes of this Agreement such shares
shall still
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be deemed owned) by such Shareholder, and such Shareholder (together with all of
his permitted transferees) shall continue to be deemed a single Shareholder for
purposes of paragraphs 2 and 3 hereof (the rights of which under this Agreement
shall be exercised by a majority in interest thereof) and in the case of such a
transfer by a Shareholder prior to the death of such Shareholder, the permitted
transferees thereof shall not be deemed Shareholders for the purpose of this
Agreement, except as otherwise expressly provided in this Agreement. Upon a
transfer of such Shareholder's shares of the Corporation by will, or by the laws
of descent and distribution, as permitted by this Agreement, such recipients
shall be deemed for all further purposes hereof to be Shareholders hereunder and
parties hereto provided that each such permitted transferee complies with the
provisions of this subparagraph. There may be further transfers of such shares
by a permitted transferee to permitted transferees of such permitted transferee.
(d) As used in this Agreement, the term "Permitted Transferee" shall
mean any transferee pursuant to clause (i) or, subject to subparagraph (c)
above, clause (ii)A or (B) of subparagraph 4(b), and the term "shares" shall
have reference to and also include Preferred Stock, Common Stock, certificates
therefor, script representing fractional shares thereof, options and warrants
for Preferred Stock, Common Stock or any other shares, as well as shares
received by way of dividend, additional issuance or upon an increase, reduction,
substitution or reclassification of shares or upon any merger or reorganization
of the Corporation.
5. Sale of Shares.
(a) If any Shareholder (the "Selling Shareholder") desires to
dispose (other than a transfer to a Permitted Transferee, or pursuant to a
merger or reorganization transaction to which the Corporation is a party), in a
bona fide arm's-length third-party transaction, of any or all of his shares of
the Corporation (the "Offered Shares"), pursuant to a written offer (the
"Offer") received from a proposed third-party purchaser, at any time after to
the earlier of (i) the fifth anniversary of the date of the closing of the
Acquisition and (ii) the consummation of a Qualified Distribution, the Selling
Shareholder shall promptly furnish written notice (the "Notice") to the
Corporation and to each other Shareholder (provided that such other Shareholder
then owns or is deemed to own shares of the Corporation). Each such notice shall
be accompanied by a photocopy of the original or most recent third-party offer,
setting forth in reasonable detail the terms and conditions of the Offer and the
name, address and telephone number of the party or parties marking the Offer.
The Notice shall constitute both:
(i) an offer to sell, at the same price per share and upon the
same terms and conditions as set forth in the Offer (except as
otherwise provided in subparagraph (5(j) below), all, but not less
than all, of the Offered Shares to (A) the other Shareholders, pro
rata based on the relative number of shares of Common Stock owned of
record or which would be owned of record upon conversion of
preferred shares by each of them on the date of the Offer or in such
other proportions as the other Shareholders may agree, and (B) the
Corporation, to the extent only of any shares of Common Stock that
the other Shareholders do not agree to purchase; and
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(ii) in the alternative, an offer for the other Shareholders
to participate in the Offer on the same term as, and pro rata with,
the Selling Stockholder.
Any determination of the number of shares of Common Stock to be offered to each
other Shareholder on the pro rata basis described above shall be made by the
Corporation and any such determination shall be binding on all of the
Stockholders. To be deemed to be a "bona fide offer" within the meaning of this
paragraph, an offer must be signed by the maker of such offer, who must be
financially capable of carrying out the terms of the offer and who must not be
an offeror prohibited from becoming a transferee by reason of paragraph 6 below
(a "Qualified Offeror").
(b) Each of the other Shareholders shall have a period of 60 days
form the date of the Notice to notify the Selling Shareholder, the remaining
other Shareholders and the Corporation that such Shareholder agrees either to
(i) purchase all or a portion of the Offered Shares offered to such Stockholder
on the terms set forth in the Offer or (ii) to participate in the Offer on the
same terms as, and pro rata with, the Selling Shareholder. If one, but not all,
of the other Shareholder elects to participate in the Offer with the Selling
Shareholder, the election of the remaining other Shareholders to purchase the
Offered Shares shall take precedence and the provisions of paragraph 4(c) shall
govern.
(c) Any Offered Shares which any of the other Shareholders do not
agree in writing within such 60-day period to purchase shall be deemed to be
re-offered for sale to the remaining other Shareholders who had agreed to them,
on the terms set forth in the Offer, pro rata based on the relative number of
Offered Shares that each of them had previously agreed to purchase or in such
other proportions as they may agree, and such remaining other Shareholders shall
have an additional five days to agree in writing to purchase such Offered
Shares. Any such Offered Shares which the remaining other Shareholders do not
agree in writing within such five-day period to purchase shall be deemed to be
re-offered for sale to the Corporation on the terms set forth in the Offer, and
the Corporation shall have an additional five days to agree in writing to
purchase such Offered Shares. If the other Shareholders and the Corporation have
agreed within such total 20-day period to purchase all of the Offered Shares
among them, the parties shall proceed to consummate such purchases not later
than the 90th day following the date of the Notice.
(d) If all of the other Shareholders timely agree in writing to
participate in the Offer with the Selling Shareholder, the parties shall proceed
together to consummate such transaction with the third party identified in the
Notice. The total number of Shares to be sold in the transaction shall be
divided among the participating Shareholders in proportion to their then
respective percentage shareholdings in the Corporation, notwithstanding that the
Offer was originally made only to the Selling Shareholder. The Shareholders
shall share all costs in connection with the transaction equally. The
Shareholders shall consummate the transaction simultaneously and no
participating Shareholder shall consummate such transaction without the other.
(e) If the other Shareholders and the Corporation do not agree in
writing within 70 days after the date of the Notice either to purchase all of
the Offered Shares among
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them or, in the case only of the other Shareholders, to participate in the
Offer, the Selling Shareholder shall have the right to sell to the Qualified
Offeror identified in the Offer all of the Offered Shares for a period of 60
days following such 60th day, such sale to be at no less favorable price and
upon terms and conditions no less favorable to the Selling Shareholder than as
set forth in the Offer. All shares so sold to such Qualified Offeror shall
thereupon become subject to the restrictions of this Agreement, except that no
such Qualified Offeror shall be entitled to any of the rights of a Shareholder
set forth in or under paragraph 3 or 5(a)(ii) hereof. If the Selling Shareholder
fails to sell the Offered Shares to such party on such terms and conditions
within such 60-day period, the Offered Shares shall again be subject to the
provisions of this paragraph 5.
(f) If the Qualified Offeror makes one or more new bona fide offers
at a lower price or upon terms which are more favorable to such Qualified
Offeror than those previously offered by the offeror to the other Shareholders
and the Corporation, then each new bona fide offer shall be treated as a new
bona fide offer subject to the provisions set forth in this paragraph 5, except
that the sixty (60) day offering period provided in subparagraph (b) above shall
be thirty (30) days; provided, however, that if any such thirty (30) day period
would terminate on a date prior to the date on which such period would have
terminated without giving effect to the new bona fide offer, then such period
shall continue until the original period's termination date.
(g) For purposes hereof, a "third-party transaction" shall not
include, and a "third-party purchaser" does not refer to, any person or entity
that is a Shareholder or could be a Permitted Transferee of the offeror pursuant
to subparagraph 4(b) above or is controlled by, controlling or under common
control with, the offeror.
(h) In the event that any Shareholder offers or is deemed to have
offered his or her shares of the Corporation for sale pursuant to this paragraph
5 (such Shareholder being referred to as "First Offeror" herein) and during the
offering periods applicable to such shares another Shareholder offers or is
deemed to have offered his or her shares of the Corporation for sale (such other
Shareholder being referred to as "Second Offeror" herein), the offering periods
with respect to the shares of the Second Offeror shall not commence until the
last offer of the First Offeror is accepted or expires hereunder. In such event,
the Second Offeror shall not be entitled to purchase or receive any further
offers with respect to any shares of the First Offeror and all prior offers made
to such Second Offeror shall be deemed cancelled and terminated.
(i) As used in this paragraph 5, the requirement that any purchase
of the offeror's shares by the Corporation and/or any offeree Shareholder
pursuant to this paragraph 5 be at the "same price per share and upon the same
terms and conditions" as the offer to purchase such shares by a proposed
third-party purchaser may be met in accordance with the rules and guidelines set
forth in Appendix A hereto.
(j) The offeror shall, at the request of a majority in voting
interest of the other Shareholders, take such action as is necessary and lawful
(i) to permit the Corporation's decision with respect to its acceptance of any
offer made to it under this paragraph 5 (to be decided by a majority in voting
interest of the other Shareholders) and (ii) to enable the Corporation to accept
such offer to the extent desired by a majority in voting interest of the other
Shareholders to the
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fullest extent permitted by law, including, but not limited to, the creation of
corporate debt and the creation of legally available surplus (whether by
reduction of capital, revaluation of assets or otherwise).
(k) The options and rights granted under this paragraph 5 shall be
assignable among members of the same Family Group, and the rights and
obligations of the Corporation may be assigned by the Corporation, provided that
the Corporation may not assign such rights to a Shareholder without the
unanimous approval of the Board of Directors.
6. Certain Prohibited Transfers. Any transfer of shares of the Corporation
otherwise permitted under this Agreement shall require prior approval of the
Board of Directors of the Corporation if such transfer is to any individual or
entity (other than a Shareholder) which is any of the following: (i) a
competitor of the Corporation or any subsidiary thereof; (ii) any company which
has a class of securities registered with the Securities and Exchange
Commission; (iii) an individual or entity that would cause, by its ownership or
voting of such shares, a default under any loan documentation to which the
Corporation or any subsidiary thereof or any Shareholder then is a party or by
which the Corporation or any subsidiary thereof or any Shareholder is bound or
would adversely affect the ability of the Corporation or any subsidiary thereof
to maintain any license or permit or comply with any law, rule or regulation
applicable to the Corporation or any subsidiary; (iv) an entity controlled
directly or indirectly by any government or political subdivision thereof; (v)
an individual or entity for which such ownership or voting of shares would
conflict with, or result in a breach or violation of any law, rule or regulation
applicable to the Corporation or any subsidiary thereof, or would require prior
approval of any governmental department, entity, bureau, commission,
administration or other body, which approval has not been obtained; (vi) any
individual or entity controlled by, controlling or under common control with any
of those persons or entities described in clauses (i) - (v) immediately above.
7. Drag Along Rights.
(a) If the Company or a Shareholder receives a bona fide arm's
length outside offer (the "Outside Offer") from a third party to purchase all of
the shares of the Corporation, which at least sixty percent (60%) in interest of
the Shareholders (the "Initiating Shareholders") desire to accept, the
Initiating Shareholders may give the other Shareholders written notice (an
"Outside Offer Notice") setting out the following details of the proposed
purchaser, namely (i) the full name and address of the proposed purchaser and
(ii) the full terms and conditions of the proposed offer, including the price
payable per share.
(b) If the Outside Offer is a bona fide arms-length offer from a
third party purchaser unconnected with any Shareholder then, provided that the
net proceeds resulting from such sale payable to the holders of preferred shares
of the Corporation or in respect of their preferred shares shall exceed the
outstanding liquidation preference (including accrued dividends) on such
preferred shares and be payable in cash in freely convertible currency at the
closing of such sale, the Initiating Shareholders shall be entitled to require
the other Shareholders, which shall be obliged, to join with them in accepting
the Outside Offer and to sell
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the shares of the Corporation held by them to the said third party purchaser
upon the terms and conditions of the Outside Offer, by written notice to that
effect (a "Drag-Along Notice"), which notice may be the Outside Offer Notice. In
such event, the Shareholders shall do all things necessary to consummate such
sale as soon as practicable, but in any event within sixty days of the date of
the Drag-Along Notice.
8. Reports to Shareholders.
(a) At all times during the term of this Agreement, the Shareholders
shall keep or cause to be kept true and correct books of account, in which shall
be entered fully and accurately each transaction of the Corporation and its
subsidiaries. Such books of account shall at all times be maintained at the
principal office of the Corporation and shall be open to the reasonable
inspection and examination of the Shareholders or their duly authorized
representatives during normal business hours.
(b) Annual financial reports of the Corporation and its
subsidiaries, in such form and subject to such a compilation, review or audit by
the Corporation's regularly engaged public accountants as the Board of Directors
shall determine, shall be transmitted to each of the Shareholders not later than
four (4) months after the end of each fiscal year of the Corporation. Quarterly
and other reports will be prepared in such form and in such detail (but not to
be audited) as the Board of Directors shall determine, and promptly transmitted
to each of the Shareholders.
9. Unrelated Business Interests. The Shareholders agree amongst themselves
(without affecting the Corporation) that each Shareholder and the officers,
directors and shareholders thereof may engage in other activities unrelated to
the Corporation, and may engage in or possess an interest in other business
ventures of any nature and description, independently or with others, including
but not limited to the ownership, financing, leasing, operation, management,
manufacturer and marketing of specialty chemicals, the manufacture or
importation of opium or derivatives or other narcotics or controlled substances,
and of investment, brokerage and financial services activities, subject to
general principles of fiduciary duty and corporate opportunity that may be
applicable. Neither the Corporation nor any of the Shareholders shall have any
rights, by virtue of this Agreement, in or to any such independent activities or
ventures of the others. Except as provided in subparagraph 3(e)(iii) above, the
fact that a Shareholder, or any person or entity controlling, controlled by or
under common control with such Shareholder, is employed by, or directly or
indirectly is interested in or connected with, any person, firm or corporation
employed by the Corporation to render or perform a service, or from whom the
Corporation may buy or sell merchandise or other property, or to or from whom
the Corporation may lease or sell any of its assets, shall not prohibit the
Shareholders or the Corporation from executing any agreement or engaging in any
transaction with, or employing, such person, firm or corporation or from
otherwise dealing with him or it, and neither the Corporation nor any of the
Shareholders, as such, shall have any rights in or to any income or profits
derived therefrom; provided, however, that no Shareholder shall directly
participate in or recommend any such agreement, transaction or dealings, or
permit any of its affiliated persons or entities to engage therein, unless such
agreement, transaction or dealings is or
11
are in all respects on bona fide, arm's-length terms no less favorable to the
Corporation than terms obtainable by it from or with unrelated persons or
entities.
10. Application of Agreement to After-Acquired Shares. All of the
provisions of this Agreement shall apply to all of the shares of the Corporation
now owned or which may be issued or transferred hereafter to a Shareholder or to
his transferees in consequence of any additional issuance, purchase, exchange or
reclassification of shares, corporate reorganization, or any other form of
recapitalization, or consolidation, or merger, or share split, or share
dividend, or which are acquired by a Shareholder in any other manner.
11. Specific Performance. Inasmuch as the shares of the Corporation are
closely held and the market therefor is limited, irreparable damage would result
if this Agreement is not specifically enforced. Therefore, the rights and
obligations to offer for sale shares of the Corporation, and to vote shares of
the Corporation, as provided herein, shall be enforceable in a court of equity
by a decree of specific performance and appropriate injunctive relief may be
applied for and granted in connection therewith (in each case, without any
showing of actual damages or that monetary relief would not provide an adequate
remedy), without any bond or other security being required. Such remedies shall,
however, be cumulative and not exclusive and shall be in addition to any other
remedies which any party may have under this Agreement or otherwise.
12. Legend.
(a) Each certificate representing shares of the Corporation of which
a Shareholder is a record or beneficial owner shall have stamped, printed or
typed thereon the following legend:
"The securities represented by the certificate have not been
registered under the Securities Act of 1933, as amended, or under
any applicable state securities laws, and may only be sold or
transferred in compliance with such Act and such state securities
laws. The sale, assignment, transfer, pledge or hypothecation of the
shares represented by this certificate is subject to a certain
Stockholders' Agreement, dated as of January 5, 2000 and any
amendments thereto, a signed counterpart of which is on file at the
office of the Corporation."
(b) The Corporation shall not at any time permit any transfer to be
made on its books or records of the certificates representing the shares of any
of the parties hereto unless such transfer is made pursuant to and is in
accordance with the terms and conditions of this Agreement.
13. Complete Agreement; Waivers. This Agreement constitutes the complete
understanding among the parties hereto, and no modification or amendment of any
of the terms and provisions hereof shall be valid unless made pursuant to an
instrument in writing signed by each of said parties. No waiver of any breach or
default hereunder shall be considered valid unless in writing, and no such
waiver shall be deemed a waiver of any subsequent breach or default of the same
or similar nature. Anything in this Agreement to the contrary
12
notwithstanding (and without limiting the rights of the owners of all of the
then outstanding shares to amend, modify or terminate this Agreement), any
modification, amendment or termination of this Agreement, and any waiver,
consent or other instrument under or pursuant to this Agreement, by a written
agreement signed by a "Shareholder" as defined in the introductory paragraph of
this Agreement, shall be valid and binding upon any and all persons or entities
(other than the Corporation) who may, at any time, have or claim any rights
under or pursuant to this Agreement in respect of the shares originally acquired
by such Shareholder to the extent that such modification, amendment or
termination would have been binding upon such Shareholder if he had owned such
shares at the time thereof.
14. Reduction of Capital to Create Surplus. In the event that at any time
the Corporation's surplus shall be insufficient to enable the Corporation to
purchase or to make any payment due with respect to shares which it elects or
agrees to purchase, the Shareholders (for themselves and their respective heirs,
successors, personal representatives and assigns) agree that they shall
forthwith take appropriate steps to effect a sufficient reduction of the stated
capital of the Corporation to enable such purchase or payments to be made;
provided, however, that if a Shareholder, other than the seller, so desires, he
may (but shall not be obligated to) in lieu of effecting a reduction of the
stated capital of the Corporation, elect to contribute to the Corporation a
sufficient amount of cash to enable the Corporation to purchase such shares or
to make any payment or payments due hereunder. Solely for the purpose of
effecting such reduction in stated capital, the Shareholders grant to, and are
hereby deemed to have executed in favor of each other (and their respective
permitted successors and assigns):
(i) an irrevocable proxy to vote all of the shares of the
Corporation owned by the grantor of the proxy in favor of a reduction in
stated capital by a written consent of stockholders without a meeting or
at a meeting of the stockholders of the Corporation held to vote upon and
authorize such reduction in stated capital; and
(ii) an irrevocable power of attorney to sign and file any and all
papers required to be signed and filed by the grantor of the power of
attorney in order to effect the requisite reduction in stated capital.
15. Termination. This Agreement shall terminate:
(i) upon the mutual consent in writing of all of the then
Shareholders; or
(ii) upon the consummation of a Qualified Distribution, except for
paragraph 6 which shall survive; or
(iii) upon the sale as herein permitted of all of the outstanding
shares of the Corporation held by all but one of the then Shareholders.
Nothing contained in this paragraph 15 shall effect or impair any rights or
obligations arising prior to the time of the termination of this Agreement as
herein provided, or which may arise by an event causing the termination of this
Agreement.
13
16. Successors and Assigns. All of the terms and provisions of this
Agreement shall inure to the benefit of and shall be binding upon the heirs,
personal representatives, successors and assigns of the respective parties
hereto; provided, however, that nothing contained herein shall be construed as
granting any Shareholder the right to transfer any of his shares except as
permitted by this Agreement.
17. Governing Law. This Agreement has been made in and shall be governed
by and construed and enforced in accordance with the laws of the State of New
York.
18. Notices. All notices, offers, acceptances, and other communications
permitted or required hereunder shall be sufficiently given and shall be deemed
effective on receipt if personally delivered (by courier or otherwise) or sent
by air mail, postage prepaid, or by facsimile or telex (with confirmed
answerback), if to any or all of the Shareholders, to each such party's address
set forth at the head of this Agreement and with a copy to the Corporation at
its then principal office. Any party hereto may change the address to which each
such notice or communication shall be sent, or may request that a copy thereof
be sent to another person, by giving written notice as aforesaid to all of the
other parties hereto of such address or person.
19. Paragraph Headings. The paragraph headings contained in this Agreement
are for convenience of reference only and shall not affect the meaning or
interpretation hereof.
20. Severability. In the event that any provision of this Agreement would
be held to be invalid, prohibited or unenforceable in any jurisdiction for any
reason, unless narrowed by construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of this
Agreement would be held to be invalid, prohibited or unenforceable in any
jurisdiction for any reason, such provision, as to such jurisdiction, shall be
ineffective to the extent of such invalidity, prohibition or unenforceability,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
21. Further Action. Each party hereto shall cooperate and shall take such
further action and shall execute and deliver such further documents as may be
reasonably requested by any other party in order to carry out the provisions and
purposes of this Agreement.
22. Pronouns. Pronouns used herein shall be deemed to be and include
pronouns of the male, female and/or neuter gender whenever applicable. Words in
the singular shall be read and construed as though in the plural and words in
the plural shall be read and construed as though in the singular in all cases
where they would so apply.
23. Several Liabilities. The obligations of the Shareholders hereunder are
several and not joint.
24. Counterparts. This Agreement may be executed in one or more
counterparts which, when taken together, shall constitute one complete, executed
Agreement.
14
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date and year first above written.
PHILIPP BROTHERS CHEMICALS, INC. PBCI LLC
By: /s/ By: /s/
-------------------------------- -------------------------------------
/s/ /s/
----------------------------------- ----------------------------------------
/s/ /s/
----------------------------------- ----------------------------------------
/s/ /s/
----------------------------------- ----------------------------------------
/s/ /s/
----------------------------------- ----------------------------------------
/s/ /s/
----------------------------------- ----------------------------------------
/s/ /s/
----------------------------------- ----------------------------------------
15
Appendix A
Rules and Guidelines
for determining
Price, Terms and Conditions of Offers
1. If a proposed third-party purchaser offers to pay the entire purchase
price in cash or by check upon the transfer of all of the shares of the
Corporation to be purchased thereby, or in one or more installments payable from
time to time (collectively referred to as "Money"), such requirement may be met
by the offeree(s) hereunder offering and paying the selling Shareholder the
exact same sum as that offered by the proposed third-party purchaser, in cash or
by check, and/or by the delivery of instruments of indebtedness in the
proportionate share of each offeree upon the same date or dates and at the same
rate of interest, if any.
2. If a proposed third-party purchaser offers payment in whole or in part
with property other than Money, such requirement may be met by each offeree
hereunder paying the selling Shareholder his proportionate share of the "cash
equivalent" (as hereinafter defined) of such other consideration, valued as at
the end of the calendar month immediately preceding the month in which the offer
or sale is first made to the Corporation (the "Determination Date").
3. If a proposed third-party purchaser offers collateral and/or
third-party guarantees in connection with the unpaid portion of the purchase
price, if any, such requirement may be met by the offeree(s) hereunder pledging
in lieu thereof the shares purchased pursuant to such offer as collateral
security for and until the full payment of the purchase price therefor.
4. Each Shareholder acknowledges that a comparison of an offer to purchase
shares of the Corporation made by a proposed third-party purchaser, on the one
hand, and the Corporation and/or another Shareholder, on the other hand, which
is payable in one or more deferred payments may involve an assessment of the
credit risk with respect to a particular payor. Each Shareholder further
acknowledges that an offer may involve additional terms (including, without
limitation, a pledge of collateral or guarantee by or on behalf of a proposed
purchaser, or management or insurance or reinsurance arrangements) the value of
which may be difficult to ascertain. Each of the Shareholders, being fully aware
of the foregoing, hereby waives any and all right to claim that an offer is not
at the "same price per share and upon the same terms and conditions" due to
differences in the creditworthiness of a proposed third-party purchaser and an
offeree, the quality of collateral offered, if any, or due to any such other
terms or conditions; provided, however, that the offeree or offerees hereunder
shall have complied with the provisions of subparagraphs (1), (2) and/or (3)
above to the extent applicable.
5. For the purposes hereof, "cash equivalent" shall mean the fair market
value, in cash, as of the Determination Date of the consideration other than
Money offered by the proposed purchaser.
1
6. Notwithstanding anything contained in this Agreement to the contrary,
if the Corporation and each other Shareholder receive a notice (the date of the
receiving of such notice being herein called the "notice date") from a
Shareholder of an offer from a proposed third-party purchaser payable, in whole
or in part, in consideration other than Money, the period of time from the
notice date to the date on which the cash equivalent of such consideration is
determined shall be excluded in determining all applicable offering periods
provided for in paragraph 5. Upon receipt by the Corporation of such a notice,
the Corporation and the selling Shareholder giving such notice shall use their
best efforts to determine and agree upon the fair market value, in cash (and
assuming payment in full at the closing) of the portion of the consideration not
payable in Money. If the fair market value of such consideration cannot be
resolved to the satisfaction of the Corporation and the selling Shareholder
within five (5) business days after the notice date, application shall be made
promptly thereafter by either the Corporation or the selling Shareholder to the
President of the American Arbitration Association, who shall appoint an
appraiser. The determination by such appraiser of the fair market value of such
consideration shall be made, at the expense of the selling Shareholder, as of
the applicable Determination Date and shall be final, conclusive and binding
upon the Corporation and the selling Shareholder. Such appraiser shall, as soon
as possible after receiving a written request from either the Corporation or the
selling Shareholder, make a determination of the fair market value of such
consideration and shall furnish a certificate setting forth such determination
to the Corporation. The Corporation shall promptly forward a copy of such
certificate to each other Shareholder and the selling Shareholder.
0
XXXXX XX XXXXXXXX
XXXXXXXXX XX XXXXX
DIVISION OF CORPORATIONS
FILED 09:00 AM 11/18/1999
991493652 - 3128346
CERTIFICATE OF INCORPORATION
OF
XXXXXX HOLDING COMPANY
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the
"corporation") is:
Xxxxxx Holding Company
SECOND: The address, including street, number, city and county, of
the registered office of the corporation in the State of Delaware is 1013 Centre
Road, in the City of Wilmington, County of Xxx Xxxxxx, Xxxxx xx Xxxxxxxx
00000-0000; and the name of the registered agent of the corporation in the State
of Delaware at such address is Corporation Service Company.
THIRD: The nature of the business and the purposes to be conducted
and promoted by the corporation is:
to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of the State of Delaware.
FOURTH: (a) The total number of shares of stock which the
corporation shall have the authority to issue is 25,000, which are divided into
10,000 shares of Common Stock, par value $.0001 per share, and 15,000 shares of
Preferred Stock, par value $.0001 per share.
(b) The Board of Directors is hereby expressly granted
authority to authorize, from time to time in accordance with law, the issue of
one or more series of Preferred Stock and with respect to any such series to fix
by resolution or resolutions the numbers, powers, designations, preferences and
relative, participating, optional or other special rights of such series and the
qualifications, limitations or restrictions thereof, including, but without
limiting the generality of the foregoing, the following:
(i) The number of shares to constitute such series and
the distinctive designations thereof;
(ii) The dividend rate to which such shares shall be
entitled and the restrictions, limitations and conditions upon the
payment of
such dividends, whether dividends shall be cumulative, the date or
dates from which dividends (if cumulative) shall accumulate and the
dates on which dividends (if declared) shall be payable;
(iii) Whether or not the shares of such series shall be
redeemable and, if so, the terms, limitations and restrictions with
respect to such redemption, including without limitation the manner
of selecting shares for redemption if less than all shares are to be
redeemed, and the amount, if any, in addition to any accrued
dividends thereon, which the holders of shares of such series shall
be entitled to receive upon the redemption thereof, which amount may
vary at different redemption dates and may be different with respect
to shares redeemed through the operation of any purchase, retirement
or sinking fund and with respect to shares otherwise redeemed;
(iv) The amount in addition to any accrued dividends
thereon which the holders of shares of such series shall be entitled
to receive upon the voluntary or involuntary liquidation,
dissolution or winding up of the corporation, which amount may vary
at different dates and may vary depending on whether such
liquidation, dissolution or winding up is voluntary or involuntary;
(v) Whether or not the shares of such series shall be
subject to the operation of a purchase, retirement or sinking fund
and, if so, the terms, limitations and restrictions with respect
thereto, including without limitation whether such purchase,
retirement or sinking fund shall be cumulative or non-cumulative,
the extent to and the manner in which such fund shall be applied to
the purchase, retirement or redemption of the shares of such series
for retirement or to other corporate purposes and the terms and
provisions relative to the operation thereof;
(vi) Whether or not the shares of such series shall have
conversion privileges and, if so, prices or rates of conversion and
the method, if any, of adjusting the same;
(vii) The voting powers, if any, of such series; and
(viii) Any other relative rights, preferences and
limitations pertaining to such series.
-2-
FIFTH: The name and the mailing address of the incorporator are as
follows:
Xxxxxxx X. Xxxxxx, Esq.
Golenbock, Eiseman, Assor & Xxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
SIXTH: The corporation shall have the power to indemnify and advance
expenses to any person to the full extent permitted from time to time by the
General Corporation Law of the State of Delaware.
The indemnification and advancement of expenses provided by this
Article shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in such person's official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
SEVENTH: To the fullest extent permitted by the General Corporation
Law of the State of Delaware, as the same exists or may hereafter be amended, a
director shall not be liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as director.
EIGHTH: The corporation is to have perpetual existence.
NINTH: In furtherance and not in limitation of the powers conferred
upon the stockholders by statute, the board of directors of the corporation is
expressly authorized to make, alter or repeal the by-laws of the corporation,
subject to the power of the stockholders to alter or repeal the by-laws made or
altered by the board of directors.
TENTH: Except as otherwise required in the by-laws of the
corporation, election of directors need not be by written ballot.
Signed at New York, New York on November 18, 1999.
/s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx,
Incorporator
-3-
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 1/04/2000
001003926 - 3128346
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A REDEEMABLE
CUMULATIVE PREFERRED STOCK
OF
XXXXXX HOLDING COMPANY
XXXXXX HOLDING COMPANY, a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), DOES
HEREBY CERTIFY THAT:
Pursuant to authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation") and pursuant to the provisions of ss.151 and ss.141 of the
Delaware General Corporation Law, the Board of Directors, by unanimous written
consent dated January 3, 2000, adopted the following resolution providing for
the designation, preferences and relative, participating, optional and other
rights, and the qualifications, limitations and restrictions of the Series A
Redeemable Cumulative Preferred Stock;
WHEREAS, the Certificate of Incorporation of the Corporation
provides for two classes of shares, one known as common stock, $.001 par value
per share (the "Common Stock"), and one known as preferred stock, $.001 value
per share (the "Preferred Stock"); and
WHEREAS, the Board of Directors of the Corporation is authorized by
the Certificate of Incorporation to provide for the issuance of the shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in such series and to fix the designation,
preferences and rights of the shares of each such series and the qualifications,
limitations and restrictions thereof.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors deems it
advisable to, and hereby does, designate a Series A Redeemable Cumulative
Preferred Stock and fixes and determines the rights, preferences,
qualifications, limitations and restrictions relating to the Series A Redeemable
Cumulative Preferred Stock as follows:
1. Designation; Ranking. The shares of such series of Preferred Stock
shall be designated "Series A Redeemable Cumulative Preferred Stock" which shall
be senior to all other capital stock of the Corporation with respect to
dividends, redemption and distributions upon the liquidation, dissolution or
winding-up of the Corporation (referred to herein as the "Series A Preferred
Stock").
2. Authorized Number. The number of shares constituting the Series A
Preferred Stock shall be 12,000.
3. Dividends. (a) The holders of record of shares of Series A, Preferred
Stock shall be entiled to receive regular cash dividends, when and as declared
by the Board of Directors, at the annual rate of $85 per share, all of which
dividends shall be cumulative and shall be deemed to accrue from and after the
date of the issuance of such shares, whether or not earned or declared and
whether or not there be funds legally available therefor; provided, however,
that upon the occurrence of a Corporate Transaction (as defined in Section 4(b)
below), the right to such dividends shall terminate and cease to accrue as of
the date of original issue. All dividends shall be payable in cash upon the
earlier to occur of a Liquidation (as defined in Section 4(a) below) or a
Corporate Transaction, except that in lieu of cash, such dividends shall be
payable in shares of Series A Preferred Stock, the number of shares being
determined pursuant to subparagraph (c) hereof , if agreed to by holders of at
least a majority in interest of the Series A Preferred Stock then outstanding.
Any written instructions or determination delivered to the Corporation and
purporting to be the agreement of the holders of such requisite percentage of
the Series A Preferred Stock outstanding shall be final, conclusive and binding
upon the holders of all of the Series A Preferred Stock outstanding shall be
final, conclusive and binding upon the holders of all of the Series A Preferred
Stock. If the Corporation does not receive written direction as to whether such
holders desire to receive Series A Preferred Stock or cash for any dividend by
the date such dividend shall be payable, Series A Preferred Stock shall be
issued.
(b) If, for any dividend accrual period, dividends at the rate
hereinabove specified are not declared and paid or set aside for payment, the
amount of accrued but unpaid dividends shall accumulate, and shall be added to
the dividends payable for subsequent dividend accrual periods. If the funds
legally available for the payment of such dividends are insufficient to pay in
full the dividends payable on all outstanding shares of Series A Preferred
Stock, the total available funds may be paid in partial dividends to the holders
of the outstanding shares of Series A Preferred Stock ratably in proportion to
the full dividends to which they are entitled. No dividend or distribution in
cash or other property (other than a stock dividend payable solely in shares of
Common Stock) on any other class of stock of the Corporation shall be declared
or paid or set apart for payment unless dividends on the Series A Preferred
Stock have been paid in full and then only if the Corporation shall not be in
default in respect of any redemption or purchase obligation pursuant to this
resolution. Any reference to "distributions" in this paragraph 3 shall not be
deemed to include any distribution made in connection with any liquidation,
dissolution or winding-up of the Corporation, whether voluntary or involuntary.
Dividends shall cease to accumulate in respect of shares of Series A Preferred
Stock on the day prior to their redemption unless the Corporation shall have
failed to pay the relevant redemption price on the date fixed for redemption.
(c) If pursuant to subparagraph (a) hereof, a dividend is to be paid
in shares of Series A Preferred Stock, then the holders of shares of Series A
Preferred Stock shall receive and the Corporation shall issue and deliver or,
failing such actual issuance
2
and delivery, shall be deemed to have issued and delivered, to each holder of
record of Series A Preferred Stock that number of fully paid and non-assessable
shares of Series A Preferred Stock of the Corporation as shall be equal to the
aggregate amount payable in respect of such dividend payment not theretofore
paid on all outstanding shares of Series A Preferred Stock of each holder of
Series A Preferred Stock as if a dividend was payable in shares,. and the
Corporation shall be deemed to have issued and delivered such Series A Preferred
Stock, quarterly from and after the date of original issue, divided by the
Original Issue Price (as hereinafter defined). Fractional shares of Series A
Preferred Stock may be issued in respect of dividends hereon.
(d) The Corporation will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation but will at all times in good
faith assist in the carrying out of all the provisions of this paragraph 3 and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of holders of Series A Preferred Stock to receive the
dividends specified herein.
4. Preference on Liquidation, etc.
(a) In the event of any voluntary or involuntary liquidation,
distribution of assets (other than the payment of dividends), dissolution or
winding-up of the Corporation (a "Liquidation"), before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of shares of Common Stock, the holders
of shares of Series A Preferred Stock shall be entitled to receive the
following, as a Liquidation Preference: (i) in the case of a Liquidation, an
amount in cash equal to one thousand dollars ($1,000) per share (the "Original
Issue Price"), plus accrued and unpaid dividends to such date or (ii) in the
case of a Corporate Transaction (as defined in Section (b) below), an amount in
cash equal to the Original Issue Price without dividends, all of which shall
terminate and cease to accrue as of the date of original issue, but in either
such situation they shall be entitled to no further payment with respect to such
Series A Preferred Stock. After setting apart or paying in full the Liquidation
Preference, the remaining assets (whether stated capital or surplus), if any,
or, in the event of a Corporate Transaction, all consideration received by the
Corporation in excess of the applicable Liquidation Preference shall be
distributed exclusively to the holders of record of the issued and outstanding
Common Stock. If, upon any liquidation, distribution of assets, dissolution or
winding-up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of shares of Series A Preferred Stock
shall be insufficient to pay the Liquidation Preference in full to the holders
of Series A Preferred Stock, then such assets or the proceeds thereof shall be
distributed among such holders ratably in accordance with the respective
liquidation amounts which would be payable on such shares if all amounts payable
thereon were paid in full. The Liquidation Preference shall be payable to the
holders of the Series A Preferred Stock upon the occurrence of a Liquidation, or
the closing of a transaction giving rise thereto, or a Corporate Transaction,
notwithstanding any delay in
3
the receipt of funds by the Corporation in connection therewith by virtue of any
escrow arrangement, promissory note, deferred payment of proceeds or otherwise.
(b) (i) For purposes of this Section 4, a Corporate Transaction
shall be treated as a Liquidation and shall entitle the holders of Series A
Preferred Stock to receive, upon the consummation of such Corporate Transaction,
consideration in the same form as is to be provided in such Corporate
Transaction (whether cash, securities, other property or any combination
thereof), having a fair market value (determined in good faith by the board of
directors of the Corporation) equivalent to the amounts to which such holders of
Series A Preferred Stock would otherwise have been entitled pursuant to Section
4 (a) assuming such Corporate Transaction had constituted a Liquidation within
the meaning of said Section 4(a); provided, however, that the right to dividends
shall terminate and cease to accrue as of the date of original issue.
(ii) As used herein, "Corporate Transaction" means (A) any
consolidation or merger of the Corporation, other than any merger or
consolidation resulting in the holders of the capital stock of the Corporation
entitled to vote for the election of directors holding a majority of the capital
stock of the surviving or resulting entity entitled to vote for the election of
directors, (B) any person or entity (including any affiliates thereof) becoming
the holder of a majority of the capital stock of the Corporation entitled to
vote for the election of directors, (C) any sale or other disposition by the
Corporation of all or substantially all of its assets, or (D) the consummation
by the Corporation of an underwritten public offering of equity securities of
the Corporation registered under the Securities Act of 1933, as amended, the net
proceeds of which to the Corporation shall be at least $10,000,000.
(c) Written notice of a liquidation, dissolution or winding-up
(including the transactions described in subparagraph (b) above), stating a
payment date, the estimated amount of the Liquidation Preference, and the place
where said amounts shall be payable shall be given by mail, postage prepaid, not
less than 30 days prior to the payment date stated therein, to each holder of
record of Series A Preferred Stock at his post office address as shown by the
records of the Corporation.
5. Voting
(a) General. Except as any provision of law, the Certificate of
Incorporation or this resolution may otherwise require, no share of Series A
Preferred Stock shall entitle the holder thereof to any voting power, to
participate in any meeting of shareholders or to have notice of any meeting of
shareholders. In all cases where the holders of shares of Series A Preferred
Stock have the right to vote separately as a class, such holders shall be
entitled to one vote for each such share held by them, respectively.
(b) Special Class Vote. Without the consent of the holders of at
least a majority in interest of the shares of Series A Preferred Stock then
outstanding, given in writing or by vote at a meeting of such holders called for
such purpose voting together as
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a class, the Corporation will not (i) increase the authorized amount of Series A
Preferred Stock, (ii) create any other class of stock (or a security convertible
into such a class of stock) entitled to a preference prior to or on parity with
the Series A Preferred Stock upon any dividend or distribution or any
liquidation, distribution of assets, dissolution or winding-up of the
Corporation or increase the authorized amount of any such other class, (iii)
amend, alter or repeal any provision of the Certificate of Incorporation so as
to adversely affect the preference, rights or powers of the Series A Preferred
Stock, (iv) merge or consolidate with or into any other person, firm or
corporation, or sell substantially all of its assets or business to another
person, or (v) purchase or otherwise acquire for value any Series A Preferred
Stock other than as provided in paragraph 6 hereof;
6. Redemption.
(a) Optional Redemption. (i) The Corporation, at its option, may
redeem, at any time or from time to time on or after January 1, 2003, out of
funds legally available therefor, the whole or any part of the shares of the
Series A Preferred Stock outstanding on the date fixed for redemption, at a
redemption price per share in the amount of the Original Issue Price plus all
accrued and unpaid dividends on such shares of Series A Preferred Stock to the
redemption date. Such redemption, if for less than all the outstanding shares of
the Series A Preferred Stock, shall be made pro rata in proportion to the number
of shares of Series A Preferred Stock held by each holder as of the date of the
Optional Redemption Notice (as defined below).
(ii) At least thirty (30) but not more than sixty (60) days
prior to the date fixed for any optional redemption of Series A Preferred Stock
(the "Optional Redemption Date"), written notice shall be mailed by mail,
postage prepaid, to each holder of record of Series A Preferred Stock to be
redeemed, at such holder's post office address last shown on the records of the
Corporation, notifying such holder of the election of the Corporation to redeem
such shares, specifying the Optional Redemption Date and calling upon such
holder to surrender to the Corporation, in the manner and at the place
designated, his certificate or certificates representing the shares to be
redeemed (such notice is hereinafter referred to as the "Optional Redemption
Notice"). On or after the Optional Redemption Date, each holder of Series A
Preferred Stock to be redeemed shall surrender his certificate or certificates
representing such shares to the Corporation, in the manner and at the place
designated in the Optional Redemption Notice, and thereupon the redemption price
of such shares shall be payable to the order of the person whose name appears on
such certificate or certificates as the owner thereof and each surrendered
certificate shall be canceled. From and after the Optional Redemption Date,
unless there shall have been a default in payment of the redemption price, all
rights of the holders of such shares to be redeemed as holders of Series A
Preferred Stock (except the right to receive the redemption price without
interest upon surrender of their certificate or certificates) shall cease with
respect to such shares, and such shares shall not thereafter be transferred on
the books of the Corporation or be deemed to be outstanding for any purpose
whatsoever.
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(b) Mandatory Redemption. (i) At any time on or after January 1,
2005, the holders of record of not less than eighty percent (80%) in interest of
shares of Series A Preferred Stock then outstanding may elect to have the
Corporation redeem, out of funds legally available therefor, all or any part of
the outstanding shares of Series A Preferred Stock, and except as provided
below, the Corporation shall, out of funds legally available therefor, redeem
and purchase any such shares upon the exercise of such option, and the holders
of record thereof shall be entitled to receive, out of funds legally available
for such purpose, payment in cash in the amount per share to be redeemed equal
to the Original Issue Price, plus accrued and unpaid dividends thereon to the
Mandatory Redemption Date (as defined below). The election by such holders to
cause the Corporation to redeem shares of Series A Preferred Stock shall be made
by delivering written notice to the Corporation at least ninety days prior to
the date such redemption is to be effected (the "Mandatory Redemption Date").
(ii) At least thirty days prior to the Mandatory Redemption Date,
written notice shall be mailed by mail, postage prepaid, to each holder of
record of Series A Preferred Stock, at such holder's post office address last
shown on the records of the Corporation, notifying such holder of the election
of the holders of not less than eighty percent (80%) in interest of shares of
Series A Preferred Stock then outstanding to cause the Corporation to redeem
such shares, specifying the Mandatory Redemption Date and calling upon such
holder to surrender to the Corporation, in the manner and at the place
designated, his certificate or certificates representing the shares to be
redeemed (such notice is hereinafter referred to as the "Mandatory Redemption
Notice"). On or after the Mandatory Redemption Date, each holder of Series A
Preferred Stock to be redeemed shall surrender his certificate or certificates
representing such shares to the Corporation, in the manner and at the place
designated in the Mandatory Redemption Notice, and thereupon the redemption
price of such shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled. From and after the Mandatory
Redemption Date, unless there shall have been a default in payment of the
redemption price, all rights of the holders of such shares to be redeemed as
holders of Series A Preferred Stock (except the right to receive the redemption
price without interest upon surrender of their certificate or certificates)
shall cease with respect to such shares, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be outstanding for
any purpose whatsoever.
(c) Partial Redemption. Upon the surrender for redemption of only a
portion of the number of shares covered by a certificate surrendered pursuant to
the foregoing provisions of this paragraph 6, the Corporation shall issue and
deliver to or upon the written order of the holder of the certificate so
surrendered, at the expense of the Corporation, a new certificate covering the
number of shares of Series A Preferred Stock representing the unredeemed portion
of the certificate so surrendered.
(d) Retirement of Shares. Shares of Series A Preferred Stock which
have been issued and have been redeemed, repurchased or reacquired in any manner
by
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the Corporation shall be retired and restored to the status of authorized but
unissued shares of Series A Preferred Stock.
7. Business Day. If any payment or redemption shall be required by the
terms hereof to be made on a day that is not a Business Day (as defined below),
such payment or redemption shall be made on the immediately succeeding Business
Day and no further dividends shall accumulate after the day payment was
required. "Business Day" means a day other than a Saturday, Sunday, national or
New York State holiday or other day on which commercial banks in New York City
are authorized or required by law to close.
8. Headings of Subdivisions. The headings of various subdivisions hereof
are for convenience of reference only and shall not affect the interpretation of
any of the provisions hereof.
9. Notice to the Corporation All notices and other communications required
or permitted to be given to the Corporation hereunder shall be made by
first-class mail, postage prepaid, to the Corporation at its principal executive
offices, Attention: President).
10. Limitations. Except as may otherwise be required by law, the shares of
Series A Preferred Stock shall not have any powers, preferences or relative,
participating, optional or other special rights other than those specifically
set forth in this resolution (as such resolution may be amended from time to
time) or otherwise in the Certificate of Incorporation of the Corporation.
IN WITNESS WHEREOF, this Certificate has been signed on this 4th day of
January, 2000.
XXXXXX HOLDING COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Director
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