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Exhibit 99.1
AGREEMENT
This Agreement made as of the ______ day of _________, 1998, among CEW
Partners and Xxxxxx Trust (together, the "Stockholders") and Xxxxx X. Xxxx
("X. Xxxx") and Xxxxx X. Xxxx ("X. Xxxx") (X. Xxxx and X. Xxxx collectively
being referred to as the "Xxxxx").
A. The Stockholders each own the number of shares of capital stock (the
"Capital Stock") of Specialty Chemical Resources, Inc., a Delaware corporation
(the "Company"), as set forth opposite their names on Schedule I attached hereto
and incorporated herein by reference, which numbers are exclusive of the shares
of stock issuable upon conversion of the Company's 6% Convertible Subordinated
Notes Due 2006 which are not convertible until December 31, 2001 unless there is
a change of control of the Company.
B. Pursuant to a rights offering (the "Rights Offering") of Convertible
Subordinated Notes due 2008 (the "Notes"), to be effected by the Company, the
Stockholders will receive Notes which will be convertible into shares of Common
Stock, $.10 par value, of the Company ("Common Stock"). The shares of Common
Stock acquired by the Stockholders on conversion of the Notes and any other
voting securities of the Company acquired by Stockholders from time to time are
collectively referred to in this Agreement as the "Shares."
C. With a view to the harmonious relationship among the Stockholders
and the Xxxxx with respect to the business and management of the Company, the
Xxxxx and the Stockholders desire to enter into this Agreement regarding the
voting of the Shares and other matters with respect thereto.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
following respective meanings:
(a) "COMMON EQUIVALENT SHARES" shall mean, as of any time, the
aggregate number of shares of Common Stock that would be outstanding if
all outstanding Notes and any other convertible securities were
converted into Common Stock at the conversion prices then in effect.
(b) "PARTY" shall mean the Stockholders and the Xxxxx.
(c) "PROPORTIONATE PERCENTAGE" shall mean the pro rata percentage of
Shares that a Party shall be entitled to purchase pursuant to Section 5
hereof. Such pro rata percentage, as to any Party, shall be the
percentage which expresses the ratio between the number of Common
Equivalent Shares owned by such Party and the number of Common
Equivalent Shares owned by all Parties other than the Selling Security
Holder.
(d) "SECURITIES ACT" shall mean the United States Securities Act of
1933, as amended from time to time.
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(e) "SELLING SECURITY HOLDER" shall mean any Stockholder or any Xxxx
proposing to sell, transfer, assign, distribute, encumber or otherwise
dispose of in any manner all or any portion of Common Shares or Notes
or any Stockholder or any Xxxx who or which has delivered a Notice of
Intention to Sell with respect to all or any portion of his or its
Common Shares or Notes pursuant to Section 3 hereof.
(f) "COMMON SHARES" shall mean shares of Common Stock, now or
hereafter outstanding.
2. VOTING. During the term of this Agreement, the Shares will be voted
by the Stockholders as follows:
(a) Each Stockholder agrees to vote or cause to be voted all Shares
beneficially owned by it in connection with any action to be taken by
the Company's stockholders in accordance with the written
recommendation of the Xxxxx, or absent such recommendation, in
accordance with the recommendation of the Board of Directors of the
Company (the "Board"); provided, however, that each Stockholder shall
have no such obligation in connection with actions to be taken by the
Company's stockholders with respect to (i) a business combination
transaction between the Company and, or the transfer of all or
substantially all of the Company's assets to, a third party, or (ii)
the issuance of shares of Common Stock or securities convertible into
Common Stock (other than options to acquire Common Stock or awards of
restricted Common Stock to directors, officers, or employees of the
Company) if the effect thereof would be to reduce the ratio of the
number of Common Equivalent Shares owned by such Stockholder and the
total number of Common Equivalent Shares outstanding; and
(b) In favor of the election to the Board of the nominees for the
Board recommended in writing by the Xxxxx, or absent such
recommendation, for the Company's nominees, and, in each case, no
others.
3. COVENANTS.
(a) Unless in any such case specifically authorized in writing to do
so by the Xxxxx or otherwise set forth in this Agreement, a Stockholder
shall not, nor shall it permit any present or future affiliates to, in
each case directly or indirectly:
(i) acquire, offer to acquire or agree to acquire by purchase,
by joining a partnership, limited partnership, syndicate or other
"group" (as such term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), such term to
have such meaning throughout this Agreement) (any such act being
hereinafter, to "acquire"), any securities of the Company entitled
to vote generally in the election of directors, or securities
convertible into or exercisable or exchangeable for such securities
(to be included herein in the defined term "Shares") if any such
acquisition is pursuant to a tender or exchange offer made by a
person which has not been approved by the Xxxxx.
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(ii) encourage, solicit or in any way participate in the
formation of any "person" (as such term is defined in Section
13(d)(3) of the Exchange Act, such term to have such meaning
throughout this Agreement) which owns or seeks to acquire beneficial
ownership of, or otherwise acts in respect of, the Shares;
(iii) conduct, encourage, solicit or in any way participate in,
any "solicitation" of "proxies" (as such terms are defined or used
in Regulation 14A under the Exchange Act, such terms to have such
meanings throughout this Agreement) or conduct, encourage, solicit
or in any way participate in any election contest with respect to
the Company;
(iv) initiate, encourage, solicit, execute, or in any way
participate in the execution or solicitation of, any written consent
in lieu of a meeting of the Company's stockholders, unless such
consent is solicited by the Company;
(v) initiate, propose or otherwise solicit the Company's
stockholders for the approval of one or more stockholder proposals
with respect to the Company or encourage, induce or attempt to
induce any other person to initiate any stockholder proposal;
(vi) seek to place a representative on the Board or seek the
removal of any director of the Company (except as provided in
Section 3(f) below);
(vii) call or seek to have called any meeting of the
stockholders of the Company;
(viii) deposit any Shares in a voting trust or subject them to a
voting agreement or other agreement or arrangement with respect to
the voting of such Shares, other than this Agreement;
(ix) encourage, solicit, propose, seek to effect or negotiate
with any other person with respect to any form of business
combination transaction with the Company or any affiliate thereof,
or any restructuring, recapitalization or similar transaction with
respect to the Company or any affiliate thereof;
(x) encourage, solicit, make, propose, seek to effect or
negotiate with any other person with respect to, or announce an
intent to make, any tender offer or exchange offer for any Shares,
or disclose an intent, purpose, plan or proposal with respect to the
Company or any Shares inconsistent with the provisions of this
Agreement, or assist, or in any way participate in, facilitate,
encourage or solicit any effort or attempt by any person to do or
seek to do any of the foregoing;
(xi) otherwise act, directly or indirectly, alone or in concert
with others, to seek to influence or control, or make any disclosure
or public statement critical of or in opposition to, the management,
Board, policies or affairs of the Company; and
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(xii) encourage or render advice to or make any recommendation
or proposal to any person or other entity to engage in any of the
actions covered by this Agreement.
Nothing in this Section 3(a) is intended or shall be deemed to restrict
the right or ability of a Stockholder or its Affiliates (as defined
below) to (i) acquire or hold any Shares in any transaction that does
not violate Section 3(a)(i), or (ii) discuss any matters relating to
the business of the Company with the members of the Board and/or
X. Xxxx.
(b) Each Stockholder agrees that, from and after the date hereof, he
will not, individually or in the aggregate, sell, assign, transfer,
grant an option with respect to or otherwise dispose of any interest in
any Notes or Shares (or enter into an agreement or understanding with
respect to the foregoing) (collectively, a "Disposition") to any person
or group (i) which has theretofore filed (or which to any Stockholder's
knowledge intends to file) a Scheduled 13D or 13G with the Securities
and Exchange Commission with respect to any class of shares of Capital
Stock of the Company even if, at the time of the Disposition, such
Schedule 13D or 13G reflects beneficial ownership of less than 5% of
any class of Shares or (ii) known to any Stockholder to be accumulating
stock on behalf of or acting in concert with any person or group
contemplated by clause (i) above.
(c) Notwithstanding Section 3(b) above, any Stockholder may make a
Disposition:
(i) pursuant to a tender or exchange offer made by a person
other than a Stockholder or any Affiliate of a Stockholder and
approved by the Xxxxx (a "Third-Party Offer");
(ii) pursuant to a brokers' transaction but subject to volume
limitations not to exceed those described in Section e(i) and (ii)
of Rule 144 under the Securities Act;
(iii) pursuant to a bona fide pledge of Shares by Stockholders
as security for bona fide indebtedness for money borrowed to a major
brokerage firm or financial institution or an affiliate thereof not
affiliated with any Stockholder;
(iv) to the Company; or
(v) to any Affiliate of any Stockholder or to an institution
qualified under Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, so long as a condition to such Disposition such
Affiliates or institution agrees in a writing satisfactory to the
Xxxxx to be a party to this Agreement and the Notes or Shares so
transferred are made subject to this Agreement.
(d) If any Stockholder or any affiliate thereof acquires any Shares
or other securities in violation of this Agreement, he or it will
immediately dispose of such Shares or other securities to persons which
are not Stockholders or affiliates of Stockholders in a
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manner permitted by Section 2(c) above; provided, however, that the
Xxxxx may also pursue any other available remedy to which it may be
entitled as a result of such violation.
(e) If the Xxxxx give notice to the Stockholders not less than ten
days prior to the date on which a vote by the stockholders of the
Company is to be taken with respect to the election of members of the
Board of the Company and such notice recommends that the Stockholders
and their Affiliates vote for one or more proposed nominees specified
in such notice, the Stockholders will vote all of their Shares and
cause each Affiliate of the Stockholders to vote any of the Common
Shares then owned by such Affiliate for the election of such nominees
specified in such notice; provided, however, that two of such proposed
nominees so specified shall be the person designated by the
Stockholders pursuant to Section 3(f) below.
(f) So long as the Xxxxx and any Affiliate of either of them (the
"Xxxx Group") owns any Common Shares, the Xxxxx will vote such Common
Shares and any other voting capital stock of the Company owned by them,
and cause each Affiliate thereof (other than the Company) to vote such
securities owned by it or them for two persons reasonably satisfactory
to the Xxxxx and designated in writing to the Xxxxx by the Stockholders
in any election of the Board. The Stockholders agree that, until
otherwise so designated, such persons shall be Xxxxxxx Xxxxxxx and
Xxxxxxxx X. Xxxxxx.
(g) The term "Affiliate" as used herein with respect to any person
or entity shall mean (i) any person, corporation or other organization
which, directly or indirectly, controls, is controlled by or is under
common control with such person or entity, (ii) any trust or other
estate in which such person, corporation or other organization has a
beneficial interest or as to which such person, corporation or other
organization serves as a trustee or any similar fiduciary capacity,
(iii) any spouse of such person and any lineal descendants and
ancestors of such person and such spouse and the spouses of any such
lineal descendants and ancestors, and (iv) any trust solely for the
benefit of the spouse and/or the lineal descendants and ancestors of
such person.
4. TERM. This Agreement will be effective upon the issuance of the
Notes and will continue until the earliest of (A) March 31, 2000, or (B) upon
notice from the Stockholders to the Xxxxx, X. Xxxx no longer being chief
executive officer of the Company or (C) the mutual written agreement of the
parties.
5. RIGHT OF FIRST REFUSAL.
(a) If a Stockholder wishes to sell all or any portion of the Shares
or Notes owned by such Stockholder (other than pursuant to Section 3(c)
hereof) such Stockholder (or the legal representative of such
Stockholder, as the case may be) (the "Selling Stockholder") shall
promptly deliver a notice of intention to sell (a "Notice of Intention
to Sell") to the Xxxxx, which notice shall set forth, in such
Stockholder's good faith belief, the number of Shares or amount of
Notes to be sold (the "Subject Securities") and the proposed purchase
price therefor and terms of sale. Upon receipt of a Notice of Intention
to Sell, the Xxxxx, on a pro
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rata basis based upon their Proportionate Percentage or as they
otherwise agree, shall have the right and option to elect to purchase
all of said Subject Securities at the purchase price and on the terms
stated in the Notice of Intention to Sell, such election to be made by
the Xxxxx by written notice to the Selling Stockholder within 10
business days after receipt by the Xxxxx of such Notice of Intention to
Sell from the Selling Stockholder. If the terms stated in the Notice of
Intention to Sell involve consideration other than cash, the value of
the non-cash consideration shall be determined by agreement of the
Xxxxx and the Selling Stockholder or, absent such agreement, by an
appraiser mutually acceptable to the Xxxxx and the Selling Stockholder,
in which event the Xxxxx and the Selling Stockholder each shall bear
one half of the costs of compensating such appraiser.
(b) If effective acceptances shall not be received pursuant to
paragraph (a) above in respect of all the Subject Securities, then the
Selling Stockholder may, at its election, either (i) rescind its
original Notice of Intention to Sell, which rescission shall be
effected by notice in writing delivered to the Xxxxx within five
business days after the last date on which the Xxxxx shall be entitled
to make any election pursuant to paragraph (a) above, and sell all (but
not less than all) of the Subject Securities, as originally proposed to
be sold, or (ii) sell such Subject Securities which the Xxxxx have
elected to purchase pursuant to the foregoing provisions of this
Section 5, and sell all (but not less than all) of the remaining
Subject Securities which were the subject of the Notice of Intention to
Sell to an outside purchaser, at a purchase price and upon terms not
more favorable to such purchaser than those stated in the original
Notice of Intention to Sell, at any time within 60 days after the last
date on which the Xxxxx shall be entitled to make any election pursuant
to paragraph (a) above. In the event any such remaining Subject
Securities shall again be subject to the restrictions contained in this
Agreement and shall not thereafter be sold, transferred, assigned,
distributed, encumbered or otherwise disposed of except in compliance
with the applicable provisions of this Agreement.
(c) If either Xxxx wishes to sell any portion of the Common Shares
or Notes owned by him (other than pursuant to Section 3(c) hereof),
such Xxxx shall be able to do so only after having provided a right of
first refusal to the Stockholders on the same terms as the right of
first refusal described in Sections 5(a) and (b) above.
(d) The closing of the sale and delivery of the certificates
representing Subject Securities purchased and sold pursuant to
Section 5 hereof, and payment therefor (the "Closing"), shall be held
on the tenth business day after the last day upon which either any
Stockholder or either Xxxx, as the case may be, can elect to purchase
Subject Securities pursuant to Section 5. Any cash payment shall be
made by certified or official bank check, against delivery to the party
purchasing such Subject Securities of a certificate or instrument
representing the Subject Securities so sold, duly endorsed for transfer
to such party or accompanied by a stock or other transfer power duly
endorsed for transfer, with all signatures guaranteed and all requisite
stock transfer taxes paid and stamps affixed.
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6. RIGHT TO PARTICIPATE IN CO-SALE. Subject to the provisions of
Section 5 above:
(a) If (i) any Party or group of Parties in a substantially
simultaneous transaction proposes to sell, exchange or in any other
manner dispose of Common Shares (other than in a manner permitted by
Section 3 above) then such Party or Parties (the "Transferring Party")
shall give written notice (a "Co-sale Notice") to each other Party
("Other Party") setting forth the terms and conditions of such proposed
transaction. The Co-sale Notice may be provided concurrently with or as
part of the Notice of Intention to Sell. Each Other Party shall have
the right, exercisable upon written notice to the Transferring Party
within 10 business days after receipt by the Other Party of such
Co-sale Notice, to participate in the proposed disposition of Common
Shares (the "Eligible Shares"), on the terms and conditions set forth
in the Co-sale Notice. If Other Party elects to participate in such
proposed disposition (each Party making such election pursuant to this
Section 6, a "Participating Party"), each Participating Party will be
entitled to sell, at the price and otherwise on the same terms as the
Transferring Party, a number of Common Shares equal to a number of
Common Shares equal to the product of (i) the quotient determined by
dividing (A) the number of Common Equivalent Shares held by the
Participating Party, by (B) the sum of (1) the number of Common
Equivalent Shares held by the Participating Party, (2) the number of
Common Equivalent Shares held by the Transferring Party, and (3) the
number of Common Equivalent Shares held by all other Participating
Parties as a group, and (ii) the number of Common Equivalent Shares to
be sold in the proposed disposition.
(b) If (i) any Party or group of Parties in a substantially
simultaneous transaction proposes to sell, exchange or in any other
manner dispose of Notes (other than in a manner permitted by Section 3
above) then such Party (the "Transferring Noteholder") shall give a
Co-sale Notice to each Other Party setting forth the terms and
conditions of such proposed transaction. The Co-sale Notice may be
provided concurrently with or as part of the Notice of Intention to
Sell. Each Other Party shall have the right, exercisable upon written
notice to the Transferring Noteholder within 10 business days after
receipt by the Other Party of such Co-sale Notice, to participate in
the proposed disposition of Notes (the "Eligible Notes"), on the terms
and conditions set forth in the Co-sale Notice. If Other Party elects
to participate in such proposed disposition (each Party making such
election pursuant to this Section 6(b), a "Participating Noteholder"),
each Participating Noteholder will be entitled to sell, at a price and
otherwise on the same terms as the Transferring Noteholder, a principal
amount of Notes equal to the product of (i) the quotient determined by
dividing (A) the number of Common Equivalent Shares held by the
Participating Noteholder, by (B) the sum of (1) the number of Common
Equivalent Shares held by the Participating Noteholder, (2) the number
of Common Equivalent Shares held by the Transferring Noteholder, and
(3) the number of Common Equivalent Shares held by all other
Participating Noteholders as a group, and (ii) the number of Common
Equivalent Shares to be sold in the proposed disposition.
(c) Each Party shall use such Party's best efforts to obtain the
agreement of the prospective transferee(s) to the participation of the
Participating Parties in any contemplated transfer, and no Party shall
transfer any of his or its Shares or Notes to the prospective
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transferee(s) if the prospective transferee(s) declines to allow such
participation of any Participating Party.
(d) To the extent that a Party participates in any disposition
pursuant to this Section 6, that Party shall deliver to the Company for
delivery to the proposed acquiror, one or more certificates, properly
endorsed for transfer or accompanied by transfer instruments duly
endorsed for transfer, with all transfer taxes paid and stamps affixed,
which represent the number of Shares and/or amount of Notes that the
Party elects to dispose of pursuant to this Section 6. Except as
expressly provided in this Section 6, the consummation of such proposed
disposition shall be subject to the sole discretion of the Transferring
Party, and such Transferring Party shall have no liability whatsoever
to the Participating Parties other than to obtain for the Participating
Parties the same terms and conditions as those obtained by such
Transferring Parties, as set forth in the Co-sale Notice or any
amendment thereof.
7. LEGEND. The Stockholders agree that in addition to any other legend
set forth on any certificate representing the Shares owned by them, such
certificate will contain a statement that the Shares are subject to the
provisions of this Agreement.
8. OTHER MATTERS. The voting of the Shares pursuant to this Agreement
may be affected in person, by proxy or in any other manner permitted by
applicable law. The Stockholders acknowledge and agree that this Agreement will
be specifically enforceable.
9. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to the
conflict of laws principles thereof.
10. MODIFICATION OR AMENDMENT. This Agreement may be modified or
amended only by a written instrument executed by all parties to this Agreement.
11. PARTIES BOUND. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors, affiliates,
assigns, heirs and personal representations; provided, however, that no party
may assign this Agreement without the prior written consent of the other parties
hereto.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the parties with respect to the transactions contemplated by
it.
13. SEVERABILITY. If any provision of this Agreement is held by a court
of competent jurisdiction to be unenforceable, the remaining provisions shall
remain in full force and effect. It is declared to be the intention of the
parties that they would have executed the remaining provisions without including
any that may be declared unenforceable.
14. NOTICE. All notices, consents, requests, recommendations,
instructions, approvals and other communications relating to this Agreement and
all legal process in regard to this Agreement will be validly given, made or
served, if in writing and delivered personally, by facsimile (which is
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confirmed) or sent by first-class certified, registered or express U.S. mail,
postage prepaid, return receipt requested, if to the Xxxxx at:
c/o Specialty Chemical Resources, Inc.
0000 Xxxxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxx, President and
Chief Operating Officer
Facsimile No.: (000) 000-0000
If to a Stockholder, at the address of such Stockholder last set forth
in the stock records of the Company, or to such other address as specified in
writing by such Stockholder to the Company pursuant to the provisions of this
Section 14.
Notice given (A) by certified, registered or express mail as set forth
above shall be deemed delivered forty-eight (48) hours after the date the same
is deposited in the U.S. first-class mail; (B) by facsimile as set forth above
shall be deemed delivered upon confirmation; and (C) by personal delivery shall
be deemed delivered when so delivered.
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15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original and all of which
shall constitute one instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"STOCKHOLDERS" "XXXXX"
CEW PARTNERS
By:__________________________________ _______________________________________
Xxxxx X. Xxxx
Name:________________________________
Title:_______________________________
_______________________________________
Xxxxx X. Xxxx
XXXXXX TRUST
By:__________________________________
Name:________________________________
Title:_______________________________
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SCHEDULE I
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Specialty Chemical Resources, Inc.
Capital Stock Ownership
Name Common Shares
---- -------------
CEW Partners 232,953
Xxxxxx Trust 232,953
Xxxxx X. Xxxx 674,472
Xxxxx X. Xxxx 101,313
