SHAREHOLDERS AGREEMENT
THIS AGREEMENT is made as of the 22nd day of August, 1994, by and among
XXXXXX X. XXXXX, residing at 0 Xxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000, XXXXXXX X.
XXXXX, residing at 0 Xxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000, XXXXX XXXXXX,
residing at Xxxxxxx Xxxxx Xxxx, Xxxxxx, Xxx Xxxxxx 00000, and XXXXX X. XXXXXX,
residing at 00 Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxxxx 00000 (hereinafter referred to
individually as "Shareholder" and collectively as the "Shareholders"), and ARC
SLIDE TECHNOLOGIES LTD., a New Jersey corporation with its principal place of
business at 000 Xxxxxxxxxx Xxxxxx, Xxxxxx Xxxxx, Xxx Xxxxxx 00000 (hereinafter
referred to as the "Corporation").
WITNESSETH:
WHEREAS, the Shareholders own all of the total issued and outstanding
shares (hereinafter the "Shares") of the Corporation as set forth on SCHEDULE A
annexed hereto; and
WHEREAS, the Shareholders are actively engaged in the management and
control of the Corporation and further desire to provide for the continued
operation, management and control of the Corporation and to provide for the
method of disposition of the Shares of the Corporation after the withdrawal or
death of a Shareholder.
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1 - TRANSFER RESTRICTIONS
1.1 - No Shareholder shall, at any time during the term of this Agreement,
either directly or indirectly sell, assign, transfer by gift or otherwise,
bequeath, pledge, mortgage, hypothecate or create a security interest in or lien
on, encumber, or otherwise dispose of (hereinafter "transfer") any of his Shares
in the Corporation now owned or hereafter acquired, without the prior written
consent of the other Shareholders, except as otherwise provided in this
Agreement. Any purported transfer of Shares in violation of the terms of this
Agreement shall be considered void and of no effect.
1.2 - Notwithstanding anything herein contained to the contrary, any
Shareholder, including the estate of a deceased Shareholder, shall have the
right at any time to transfer his/her Shares in the Corporation free of the
terms and conditions of this Agreement to (a) as to all Shareholders, to such
Shareholder's immediate family member (which term shall be defined as siblings,
spouses and children) or another Shareholder, and (b) as to Xxxxx Xxxxxx only,
to Xxxxxx Xxxxxxxx, Xxxxx Xxxxx, Xxxxxx Xxxxxxx or Xxxxxxxx Xxxx; provided,
however, that any transfer pursuant to this Section 1.2 shall be subject to and
shall conform with any provisions contained in any loan agreement, mortgage or
other financing arrangement of the Corporation and applicable laws, providing
for restrictions on transfer.
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1.3 - With respect to any transfers pursuant to Section 1.2 above, any such
transferee shall at the time of transfer of the Shares to the transferee execute
an amendment to this Agreement agreeing to abide by all terms, conditions and
restrictions contained herein. Subsequent transfers shall be subject to all
restrictions on transfer set forth in this Article 1.
ARTICLE 2 - TRANSFER OF SHARES
2.1 - Offer Notice. In the event of the death, legal incapacity, or
bankruptcy of a Shareholder, or in the event that a Shareholder desires to sell
his/her Shares ("Selling Shareholder"), such Selling Shareholder shall be
required to offer to sell all of his/her Shares to the other Shareholders or the
corporation as hereinafter provided. Such Selling Shareholder (or his/her legal
representative) shall serve written notice upon all the other Shareholders and
the Corporation of his/her offer to transfer his/her Shares within sixty (60)
days following the triggering event or decision to offer such Shares for sale
("Offer Notice").
2.2 - Option to Purchase.
2.2.1 - First Option. Each of the other Shareholders shall have the first
option to purchase a "proportionate share", as herein defined, of all of the
Shares so offered for a period of sixty (60) days from the receipt of the Offer
Notice and
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determination of the Purchase Price as defined in Article 6 herein.
2.2.2 - Second Option. In the event that a Shareholder fails or refuses to
exercise the option to purchase a proportionate share of all of the Selling
Shareholder's Shares within the sixty (60) day option period, the Selling
Shareholder shall notify the other Shareholders in writing of the availability
of said Shares ("Second Offer Notice") and the other Shareholders shall have the
second option for a period of fifteen (15) days after the receipt of the Second
Offer Notice to purchase a "proportionate share" of all of the Selling
Shareholder's Shares remaining.
2.2.3 - Third Option. In the event that the options to purchase the Shares
of the Selling Shareholder set forth in Sections 2.2.1 and 2.2.2 above expire
unexercised, the Selling Shareholder shall notify the Corporation in writing of
the availability of said Shares ("Third Offer Notice") and the Corporation shall
have the option for a period of forty-five (45) days after the receipt of the
Third Offer Notice to purchase all of the Selling Shareholder's Shares
remaining.
2.3 - Option Exercise. An option to purchase the Shares of a Selling
Shareholder under this Article 2 shall be exercised by either a Shareholder or
the Corporation, as the case may be, by delivering written notice to that effect
to the Selling Shareholder within the time specified in the relevant option
period.
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2.4 - Terms. The Purchase Price of any purchase of Shares under this
Article 2 shall be payable and the transaction shall close in accordance with
the terms and conditions as provided in Articles 5 and 6 herein.
2.5 - Proportionate Share. The term "proportionate share" as used herein
means that portion of the Shares of the Corporation offered for sale or intended
to be transferred which the Shares of the Corporation then owned by a
non-Selling Shareholder bear to all the outstanding Shares of the Corporation,
excluding those offered for sale or otherwise intended to be transferred. In
addition, if any of the Shares offered for sale are not purchased by the
Shareholder first entitled thereto, the term "proportionate share" shall include
that portion of the Shares of the Corporation not purchased by the Shareholder
first entitled thereto which the Shares of the Corporation owned by a
Shareholder bear to the Shares of the corporation (other than those offered for
sale or intended to be transferred) owned by all Shareholders, other than the
Shareholder first entitled to purchase.
2.6 - In the event that the Shares offered for sale under this Article 2
remain unpurchased after the expiration of the options provided for in Section
2.2.1 through 2.2.3, inclusive, then the Selling Shareholder shall be free to
transfer all but not less than all of such Shares provided, however, that any
transfer of Shares by the Selling Shareholder to a third party shall be at a
purchase
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price which is at least equal to or in excess of the Purchase Price set forth in
Article 6 herein.
ARTICLE 3 - CLOSING.
3.1 - If an option to purchase Shares has been exercised pursuant to
Article 2 herein, the purchaser shall, contemporaneously with the exercise of
the purchase option, notify the Selling Shareholder in writing that the closing
of such purchase and sale shall take place at a specified time and date no later
than thirty (30) days after the date of option exercise at the principal offices
of the Corporation or at such other date, time and place as may be mutually
agreed upon by the parties thereto.
ARTICLE 4 - PAYMENT OF PURCHASE PRICE.
4.1 - The purchasing Shareholder or Corporation, as the case may be
(sometimes referred to collectively herein as "purchaser"), shall have the
option to either pay to the Selling Shareholder or personal representative as
the case may be (sometimes hereinafter referred to collectively as
"transferor"), the Purchase Price in full or in installments.
4.1.1 - If the purchaser elects to pay the Purchase Price in full at
closing, the purchaser shall tender at closing to the transferor either cash or
certified or cashiers check for the full Purchase Price. Simultaneously, the
transferor shall endorse and
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deliver the Shares to the purchaser. As soon thereafter as may be practical, the
Corporation will issue a new share certificate to the purchaser reflecting the
Shares purchased.
4.1.2 - In the event that the purchaser elects to pay the Purchase Price in
installments, the purchaser shall pay to the transferor twenty (20%) percent of
the purchase price in cash or by certified or cashiers check at the closing. The
balance of the purchase price shall be evidenced by a promissory note (the
"Note") executed by the purchaser and delivered to the transferor at closing,
which shall be payable in equal monthly installments over a period of five (5)
years, beginning with the date of closing and which shall bear interest at a
rate equal to the "prime" rate determined or set by The Chase Manhattan Bank,
N.A., from time to time, plus one (1%) percent. Further, the Note shall provide
(a) that the maker shall have the privilege to prepay all or any portion of the
Note, at any time, without penalty; (b) that default in any payment when due
after thirty (30) days advance written notice of such default shall cause the
remaining unpaid balance to be immediately due and payable; (c) the obligation
of the maker under the Note shall be fully recourse; (d) that the maker shall
pay all costs and expenses of collection, including reasonable attorney's fees.
ARTICLE 5 - SECURITY FOR PAYMENT.
5.1 - Escrow. If the purchaser elects to pay the Purchase
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Price for the Shares in installments, the transferor shall deposit with a
mutually acceptable escrow agent the certificates evidencing the Shares to be
transferred, together with the appropriate stock powers, duly endorsed in blank
for transfer. Further, the transferor hereby appoints the escrow agent his
attorney-in-fact to transfer the Shares on the books of the Corporation to the
name of the purchaser.
5.2 - Duties of Escrow Agent. The escrow agent shall hold such Shares as
security for payment in full by the purchaser of the Purchase Price, and said
Shares shall not be encumbered or disposed of, except as otherwise provided in
this Agreement. Upon payment of the last installment due under the Note, the
escrow agent shall, upon receipt of written acknowledgement of "payment in full"
by the transferor, deliver the share certificates to the purchaser and shall
thereupon be relieved of its duties as escrow agent with respect to that
particular transaction.
5.3 - Voting Rights. As long as a purchaser under this Agreement is not in
default with respect to any payments due under the Note, the purchaser shall
have the right to vote the Shares on deposit with the escrow agent.
ARTICLE 6 - PURCHASE PRICE.
6.1 - The purchase price ("Purchase Price") for Shares sold to another
Shareholder or the corporation pursuant to Article 2 above
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shall be the fair market value of such Shares as determined by two certified
public accountants ("C.P.A.") (one chosen by the Selling Shareholder, and the
other chosen by the purchaser(s), using such valuation methods as such
accountants deem appropriate and customary under the circumstances. If the
higher of such valuations shall not exceed 110% of the lower of such valuations,
then the valuations shall be averaged, and the average shall be he fair market
value. If the higher valuation is more than 110% of the lower valuation, then
the two CPA's shall mutually agree upon a third C.P.A. Upon completion of the
third valuation, if the third valuation is between the two prior valuations,
then the third valuation shall be the fair market value. If the third valuation
exceeds the higher of the prior valuations, then the higher prior valuation
shall be the fair market value. If the third valuation is less than the lower
prior valuation, then the lower prior valuation shall be the fair market value.
The cost of the valuations shall be shared equally by the Selling Shareholder
and the purchasers. All valuations shall be completed within thirty (30) days
after the appointment of each C.P.A.
ARTICLE 7 -DEFAULT.
7.1 - Purchaser Default. If a purchaser hereunder defaults in any payments
due under the Note, and such default is not cured within thirty (30) days after
written notice thereof has been given by the transferor to the purchaser, the
transferor may elect one of the following remedies: (i) the transferor may, upon
written demand
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made upon the escrow agent, obtain the return of all such Shares as to which a
default has occurred and the purchaser shall have no further right, title or
interest in and to such Shares and the purchase transaction shall thenceforth be
deemed null and void; (ii) any other rights and remedies available to a secured
party under Article 9 of the Uniform Commercial Code, as in effect in the State
of New Jersey.
ARTICLE 8 - NOTATION.
8.1 - The Shareholders agree, immediately after execution of this
Agreement, to present the certificates representing the Shares in the
Corporation presently owned to the Secretary of the Corporation and cause the
Secretary to stamp on each certificate the following notation in a conspicuous
manner:
"The shares represented by this certificate are subject to an agreement
dated August 22, 1994 a copy of which is on file at the principal office of
the corporation, and these shares may not be transferred, assigned,
pledged, hypothecated, or otherwise disposed of except in strict accordance
with the terms of that agreement."
8.2 - In addition, the Shares shall contain any other legends required by
federal or state securities laws.
ARTICLE 9 - MISCELLANEOUS.
9.1 - Equitable Remedies. In the event any party hereto breaches the
covenants or conditions herein provided, any other party may enforce his/its
rights hereunder against such party by injunction as well as by other remedies,
the parties agreeing that remedies at law alone for the breach of any of the
aforesaid
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provisions and conditions are inadequate.
9.2 - Complete Agreement.
This Agreement constitutes the complete agreement and understanding among
the parties hereto with respect to the matters set forth herein, and supersedes
and terminates any and all prior existing agreements or understandings between
or among any of the parties hereto with respect to such matters. No alteration,
amendment or modification of any of the terms and provisions hereof shall be
valid unless made pursuant to an instrument in writing signed by each of the
parties. The failure of any party at any time to enforce his rights hereunder
shall in no manner affect the right of such party at a later time to enforce the
same. No waiver by any party of any condition, or breach of any provision, term,
covenant, representation or warranty contained herein, whether by conduct or
otherwise, shall be deemed to be or be construed as a further or continuing
waiver of any such condition or of the breach of any other provision, term,
covenant, representation or warranty hereof.
9.3 - Interpretation of Syntax and Headings. All references made and
pronouns used in this Agreement shall be construed in the singular or plural,
and in such gender as the sense and circumstances require. Section headings are
for convenience only and shall not affect nor be used in construing this
Agreement.
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9.4 - Notice. Whenever under the provisions of this Agreement notice is
required to be given, it shall be deemed given when either served personally,
sent by recognized courier service, or mailed, return receipt requested, to the
party noticed at the address set forth herein. All notices shall be effective
upon receipt or refusal thereof.
9.5 - Benefit. This Agreement shall be binding upon, and shall inure to the
benefit of the respective parties hereto and their heirs, executors,
administrators, successors and assigns.
9.6 - Invalidity. If any of the terms or provisions of this Agreement shall
be declared invalid or illegal, then notwithstanding such invalidity or
illegality, the remaining terms and provisions of the Agreement shall remain in
full force and effect in the same manner as if the invalid or illegal terms or
provisions had not been contained therein.
9.7 - Governing Law.
9.7.1 This Agreement shall be construed and governed in accordance with the
laws of the State of New Jersey.
9.7.2 Each of the Shareholders acknowledges that the Shares have not been
registered under the Securities Act of 1933 or under the securities laws of any
state or other jurisdiction. The Shareholders understand that, as a consequence
of the foregoing, in addition to the provisions of this Agreement, they may be
restricted from reselling or otherwise transferring or disposing of
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their Shares under federal and state securities laws. Accordingly,
notwithstanding anything to the contrary set forth in this Agreement, any sale
or other transfer of Shares hereunder shall be subject to compliance with all
applicable federal and state securities laws. Any sale or other transfer in
violation of any such federal or state securities laws shall be null and void.
9.8 - After-Acquired Securities.
All of the provisions of this Agreement shall apply to all securities of
the Corporation now owned or that may be issued or transferred hereafter to a
Shareholder as a result of any additional issuance, purchase, exchange or
reclassification of securities, corporate reorganization or any other form of
capitalization, consolidation, merger, share split, or share dividend, or which
are acquired by a Shareholder in any other manner. In addition, all of the
provisions of this Agreement shall apply to all securities of the Corporation
acquired by any other person pursuant to Article 2 of this Agreement.
9.9 - Arbitration and Specific Performance.
(a) Any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, shall be resolved by binding arbitration by a panel of
three (3) arbitrators in accordance with the Rules of the American Arbitration
Association then prevailing, and such arbitration shall be held in the State of
New Jersey or other place mutually agreeable to the parties. The
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decision of such panel shall be enforceable in any court having jurisdiction.
Pursuant to this provision, arbitration shall be a condition precedent to the
commencement of any other proceeding or litigation. The panel can enter an ex
parte order if a Shareholder fails or refuses to participate in the arbitration
proceeding.
IN WITNESS WHEREOF, the undersigned executed this Agreement on the day and
year first above written.
/s/ XXXXXX X. XXXXX
--------------------------------------
XXXXXX X. XXXXX
/s/ XXXXXXX X. XXXXX
--------------------------------------
XXXXXXX X. XXXXX
/s/ XXXXX XXXXXX
--------------------------------------
XXXXX XXXXXX
/s/ XXXXX X. XXXXXX
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XXXXX X. XXXXXX
ATTEST: ARC SLIDE TECHNOLOGIES LTD.
/s/ XXXXX XXXXXX By: /s/ XXXXXX X. XXXXX
------------------------------------- ---------------------------------
XXXXX XXXXXX, Secretary XXXXXX X. XXXXX, President
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SCHEDULE A
SHAREHOLDER NUMBER OF SHARES
----------- ----------------
XXXXXX X. XXXXX 427,500
XXXXXXX X. XXXXX 427,500
XXXXX XXXXXX 855,000
XXXXX X. XXXXXX 90,000
