STOCKHOLDERS STOCK OPTION AGREEMENT
STOCKHOLDERS STOCK OPTION AGREEMENT, dated as of October 30,
1995, among XXXXXXX-XXXXXX COMPANY, a Delaware corporation ("AC CO."), and each
other entity and person listed on the signature pages hereof (each, a
"Stockholder").
WHEREAS, as of the date hereof, each Stockholder owns (either beneficially
or of record) the number of shares of common stock, par value $.01 per share
("St. Ives Common Stock"), of St. Ives Laboratories, Inc., a Delaware
corporation ("St. Ives"), set forth opposite such Stockholder's name on Exhibit
A hereto (all such shares and any share hereafter acquired by any Stockholder
prior to the termination of this Agreement being referred to herein as the
"Shares");
WHEREAS, AC CO., AC CO.'s wholly-owned subsidiary, AC Acquiring Co., a
Delaware corporation ("ACACQ CO.") and St. Ives propose to enter into an
Agreement and Plan of Merger, dated as of the date hereof (as the same may be
amended from time to time, the "Merger Agreement"), which provides, upon the
terms and subject to the conditions thereof, for the merger (the "Merger") of
ACACQ CO. with and into St. Ives; and
WHEREAS, as a condition to the willingness of AC CO. to enter into the
Merger Agreement, AC CO. has requested that each Stockholder agree, and, in
order to induce AC CO. to enter into the Merger Agreement, each Stockholder has
agreed, severally and not jointly, to grant AC CO. an option to purchase such
Stockholder's Shares and to grant AC CO. certain voting rights and enter into
certain other agreements with respect thereto;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
ARTICLE I
THE OPTION
SECTION 1.01. Grant of Option. The Stockholders hereby grant to AC CO.
an irrevocable option (the "Option") to purchase the Stockholders' Shares at a
price per Share equal to $15.00 (the "Purchase Price") during the term of the
Option as provided in Section 1.03 hereof.
SECTION 1.02. Exercise of Option. AC CO. may exercise the Option, in
whole but not in part, at any time following termination of the Merger
Agreement (other than a termination pursuant to Section 7.3(b) thereof) until
the expiration of the Option, provided that each of the following conditions is
satisfied at the time of exercise: (a) at the time of exercise of the Option
there exists an Alternative Proposal (as defined in the Merger Agreement) with
respect to St. Ives; (b) to the extent necessary, any applicable waiting
periods (and any extension thereof) under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvement Act of 1976 and the rules and regulations promulgated thereunder
(the "HSR Act") with respect to the exercise of the Option shall have expired
or been terminated; and (c) no preliminary or permanent injunction or other
order, decree or ruling issued by any court or governmental or regulatory
authority, domestic or foreign, of competent jurisdiction prohibiting the
exercise of the Option or the delivery of Shares shall be in effect. In the
event that the Option is exercisable and AC CO. wishes to exercise it, AC CO.
shall give written notice (the date of such notice being herein called the
"Notice Date") to the Stockholders specifying a place and date (not later than
ten Business Days (as defined below) and not earlier than three Business Days
following the Notice Date) for closing such purchase (the "Closing"). For the
purposes of this Agreement, the term "Business Day" shall mean a day other than
a Saturday, a Sunday or a day on which banks are not required or authorized by
law or executive order to be closed in the City of Chicago.
SECTION 1.03. Expiration of Option. The Option shall expire if not
exercised prior to the close of business on the 120th day following termination
of the Merger Agreement. The Option shall also immediately expire if the
Merger Agreement is terminated pursuant to Section 7.3(b) thereof.
SECTION 1.04. Payment for and Delivery of Certificates. At the Closing,
(a) AC CO. shall pay the aggregate Purchase Price for the Shares being
purchased from the Stockholder by wire transfer in immediately available funds
of the total amount of the Purchase Price for the Shares to accounts designated
by the Stockholders by written notice to AC CO., and (b) the Stockholders shall
deliver to AC CO. certificates evidencing the Shares, and the Stockholders
agree that the Shares shall be transferred free and clear of all liens. All
such certificates shall be duly endorsed in blank, or with appropriate stock
powers, duly executed in blank, attached thereto, in proper form for transfer,
with the signature of the Stockholders thereon guaranteed, and with all
applicable taxes paid or provided for.
SECTION 1.05. Purchase Price for Option. If the Merger is consummated in
accordance with the terms of the Merger Agreement, AC CO. shall pay to the
Stockholders, pro rata according to the number of Shares set forth opposite
each Stockholder's name on Exhibit A hereto, the sums determined in accordance
with the terms set forth on Exhibit B hereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Each Stockholder, severally and not jointly, hereby represents and
warrants to AC CO. as follows:
SECTION 2.01. Due Organization. Such Stockholder (if it is a
corporation, partnership, trust or other legal entity) is duly organized and
validly existing under the laws of the jurisdiction of its incorporation or
organization. Such Stockholder has full power and authority (corporate or
otherwise) to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action (corporate or otherwise) on the part of the
Stockholder. This Agreement has been duly executed and delivered by or on
behalf of the Stockholder and, assuming its due authorization, execution and
delivery by AC CO., constitutes a legal, valid and binding obligation of the
Stockholder, enforceable against the Stockholder in accordance with its terms.
SECTION 2.02. No Conflicts; Required Filings and Consents. (a) The
execution and delivery of this Agreement by such Stockholder do not, and the
performance of this Agreement by such Stockholder will not, (i) conflict with
or violate the Certificate of Incorporation or By-Laws or Trust Agreement or
similar organizational document of such Stockholder (if such Stockholder is a
corporation, partnership, trust or other legal entity), (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to such
Stockholder or by which it or any of its properties is bound or affected, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or encumbrance on any of the property or
assets of such Stockholder or (if such Stockholder purports to be a
corporation) any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which such Stockholder is a party or by which the
Stockholder or any of its properties is bound or affected, except for such
breaches, defaults or other occurrences that would not cause or create a
material risk of non-performance or delayed performance by such Stockholder of
its obligations under this Agreement.
(b) The execution and delivery of this Agreement by such Stockholder do
not, and the performance of this Agreement by such Stockholder will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
except (i) for applicable requirements, if any, of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder (the "Exchange
Act"), and the HSR Act and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay the performance by the Stockholder of its
obligations under this Agreement.
SECTION 2.03. Title to Shares. At the Closing, such Stockholder will
deliver good and valid title to its Shares free and clear of any pledge, lien,
security interest, charge, claim, equity, option, proxy, voting restriction,
right of first refusal or other limitation on disposition or encumbrance of any
kind, other than pursuant to this Agreement. Subject to Permitted Liens (as
defined below), which will be eliminated prior to or at the Closing, such
Stockholder has full right, power and authority to sell, transfer and deliver
the Shares pursuant to this Agreement. Upon delivery of such Shares and
payment of the Purchase Price therefor as contemplated herein, AC CO. will
receive good and valid title to such Shares, free and clear of any pledge,
lien, security interest, charge, claim, equity, option, proxy, voting
restriction or encumbrance of any kind.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AC CO.
AC CO. hereby represents and warrants to each Stockholder as follows:
SECTION 3.01. Due Organization. AC CO. is a corporation duly organized
and validly existing under the laws of the State of Delaware. AC CO. has all
necessary corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby by AC CO. have been duly authorized by all necessary
corporate action on the part of AC CO. This Agreement has been duly executed
and delivered by AC CO. and, assuming its due authorization, execution and
delivery by such Stockholder, constitutes a legal, valid and binding obligation
of AC CO., enforceable against AC CO. in accordance with its terms.
SECTION 3.02. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by AC CO. do not, and the performance
of this Agreement by AC CO. will not, (i) conflict with or violate the
Certificate of Incorporation or By-laws of AC CO., (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to AC
CO. or by which AC CO. or any of its properties is bound or affected, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or encumbrance on any of the property or
assets of AC CO. pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which AC CO. is a party or by which it or any of its properties is bound or
affected, except for any such breaches, defaults or other occurrences that
would not cause or create a material risk of non-performance or delayed
performance by AC CO. of its obligations under this Agreement.
(b) The execution and delivery of this Agreement by AC CO. do not, and
the performance of this Agreement by AC CO. will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Exchange Act and the HSR Act and
(ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
the performance by AC CO. of its obligations under this Agreement.
SECTION 3.03. Investment Intent. The purchase of Shares from any
Stockholder pursuant to this Agreement is for the account of AC CO. (with
authority to transfer only to ACACQ CO.) for the purpose of investment and not
with a view to or for sale in connection with any distribution thereof within
the meaning of the Securities Act, and the rules and regulations promulgated
thereunder.
ARTICLE IV
TRANSFER AND VOTING OF SHARES
SECTION 4.01. Transfer of Shares. During the term of the Option, and
except as otherwise provided herein, each Stockholder shall not (a) sell,
pledge (other than Permitted Liens (as defined below)) or otherwise dispose of
any of its Shares, (b) deposit its Shares into a voting trust or enter into a
voting agreement or arrangement with respect to its Shares or grant any proxy
with respect thereto or (c) enter into any contract, option or other
arrangement or undertaking with respect to the direct or indirect acquisition
or sale, assignment, transfer or other disposition of any St. Ives Common
Stock. Exercise of rights or remedies pursuant to bona fide pledges of Shares
to banks or other financial institutions ("Permitted Liens") are not restricted
by this Agreement; provided that in the case of Permitted Liens granted after
the date of this Agreement, such Shares continue to be subject to the Options.
SECTION 4.02. Voting of Shares; Further Assurances. (a) Each
Stockholder, by this Agreement, with respect to those Shares that it owns of
record, does hereby constitute and appoint AC CO., or any nominee of AC CO.,
with full power of substitution, until termination of the Merger Agreement,
during such periods as the Option is exercisable, as its true and lawful
attorney and proxy, for and in its name, place and stead, to vote each of such
Shares as its proxy, at every annual, special or adjourned meeting of the
stockholder of St. Ives, or any action by written consent in lieu of a meeting
of the stockholders of St. Ives pursuant to Section 228 of the Delaware General
Corporation Law (including the right to sign its name (as stockholder) to any
consent, certificate or other document relating to AC CO. that the law of the
State of Delaware may permit or require) (i) in favor of the adoption of the
Merger Agreement and approval of the Merger and the other transactions
contemplated by the Merger Agreement, (ii) against any proposal for any
recapitalization, merger, sale of assets or other business combination between
St. Ives and any person or entity (other than the Merger) or any other action
or agreement that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of St. Ives under the Merger
Agreement or which could result in any of the conditions to St. Ives's
obligations under the Merger Agreement not being fulfilled, and (iii) in favor
of any other matter relating to consummation of the transactions contemplated
by the Merger Agreement. Each Stockholder further agrees to cause the Shares
owned by it beneficially to be voted in accordance with the foregoing. Each
Stockholder acknowledges receipt and review of a copy of the Merger Agreement,
and that the proxy and voting authority created hereby are coupled with an
interest in the Shares and irrevocable until termination of the Merger
Agreement.
(b) If AC CO. shall exercise the Option in accordance with the terms of
this Agreement, and without additional consideration, the Stockholders shall
execute and deliver further transfers, assignments, endorsements, consents and
other instruments as AC CO. may reasonably request for the purpose of
effectively carrying out the transactions contemplated by this Agreement and
the Merger Agreement, including the transfer of any and all of the
Stockholder's Shares to AC CO. or ACACQ CO. and the release of any and all
liens, claims and encumbrances covering the Shares.
(c) Each Stockholder shall perform such further acts and execute such
further documents and instruments as may reasonably be required to vest in AC
CO. or ACACQ CO. the power to carry out the provisions of this Agreement.
ARTICLE V
GENERAL PROVISIONS
SECTION 5.01. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like changes of address) or sent by electronic transmission to the
telecopier number specified below:
(a) if to AC CO.
Xxxxxxx-Xxxxxx Company
0000 Xxxxxxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention of Chief Executive Officer, and, separately, of General
Counsel
Telecopier No.: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxx
Xxxx, Xxxx & Xxxxx
Three First Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Telecopier No.: (000) 000-0000
(b) If to a Stockholder, to the address set forth on that Stockholder's
name on the signature page hereof.
with a copy to:
Xxxx X. Xxxxxx, Esq.
Xxxxxxx, Philegler & Xxxxxxxx
Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
SECTION 5.02. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 5.03. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 5.04. Entire Agreement. This Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or any of them, with respect to the
subject matter hereof.
SECTION 5.05. Assignment. This Agreement shall not be assigned by
operation of law or otherwise, except that AC CO. may assign all or any part of
its right to purchase or vote Shares hereunder to ACACQ CO. without the consent
of any Stockholder.
SECTION 5.06. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
SECTION 5.07. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to obtain an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in the courts of the State of
Illinois located in Chicago, Illinois or of the United States for the Northern
District of Illinois, this being in addition to any other remedy to which such
party may be entitled at law or in equity. By each party's execution and
delivery hereof, such party hereby irrevocably submits to the jurisdiction of
any such court in connection with any such suit or proceeding, irrevocably
waives any objection, including any objection to the laying of venue or based
on the grounds of forum non conveniens, which it may now or hereafter have to
the bringing of any action or proceeding in such jurisdiction in respect of
this Agreement, and each party irrevocably waives personal service of any
summons, complaint or other process which may be made by any other means
permitted by Illinois law, and irrevocably consents to service pursuant to the
notice provisions of Section 5.01 hereof. EACH PARTY HERETO FURTHER HEREBY
IRREVOCABLY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING BROUGHT
HEREUNDER.
SECTION 5.08. Governing Law. Except to the extent that Delaware Law is
mandatorily applicable to the rights of the stockholders of St. Ives, this
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Illinois applicable to contracts executed and to be performed
entirely within that state, without regard to the conflicts of laws principles
thereof.
SECTION 5.09. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 5.10. Amendments. This Agreement may not be amended except by an
instrument in writing signed by or on behalf of each of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
XXXXXXX-XXXXXX COMPANY
By (s) X. X. Xxxxxxx
-----------------
Name: X. X. Xxxxxxx
Title: President
(s) Xxxx X. Worth (s) Xxxx X. Worth, Trustee
----------------- -------------------------
Xxxx X. Worth Xxxx X. Worth and Xxxxxx Worth, Trustees of
The House of Worth Trust dated July 9, 1982,
as amended
(s) Xxxx X. Worth (s) Xxxx X. Worth, Trustee
----------------- --------------------------
Xxxx X. Worth Xxxx X. Worth and Xxxx Worth as Co-trustees
of the Worth Family Trust Under Agreement
dated November 24, 1990
WORTH FAMILY PARTNERSHIP, L.P.
By (s) Xxxx X. Worth
-----------------
General Partner
EXHIBIT A
List of Stockholders
Name and Address of Stockholder Number of Shares
------------------------------- ----------------
Xxxx X. Worth
Century Plaza Hotel - Towers
2025 Avenue of the Stars, Xxxx 0000
Xxx Xxxxxxx, XX 00000
(000) 000-0000
Telecopier No.: (000) 000-0000 15,000
Xxxx X. Worth and Xxxxxx Worth,
Trustees of The House of Worth Trust
dated July 9, 1982, as amended
c/o Xxxx X. Worth, at above address 1,810,178
Xxxx X. Worth and Xxxx Worth as Co-trustees
of the Worth Family Trust Under Agreement
dated November 24, 1990
c/o Xxxx X. Worth, at above address 357,792
Worth Family Partnership, L.P.
c/o Xxxx X. Worth, at above address 156,800
Xxxx X. Worth
X.X. Xxx 0X
Xxxxxx, Xxxx, XX 00000
Telecopier No.: (000)000-0000 75,000
Total 2,414,770
EXHIBIT B
This Exhibit B is attached to and shall constitute a part of the
Stockholders Stock Option Agreement, with terms defined therein having the same
meaning herein.
AC CO. will pay to the Stockholders one-half of one percent (0.5%) of the
reported net consolidated sales of branded St. Ives products, and of any other
toiletries or health and beauty aid products developed by Xxxx X. Worth, one of
the Stockholders ("GW"), or by a development team with which GW has significant
involvement during the Payment Period (as defined below), sold by AC CO. or any
of its subsidiaries, including St. Ives, on a worldwide basis, in each calendar
quarter beginning with the calendar quarter in which the Merger is effected
(from the date of the Merger, in the case of the first calendar quarter)
through the end of the nineteenth calendar quarter following the calendar
quarter in which the Merger is effected (the "Payment Period"). Sales shall be
net of discounts, returns and allowances, and shall include sales at the first
level of distribution only (e.g., sales from St. Ives as a manufacturer to AC
CO.'s Xxxxx Beauty division shall be included, but not sales of those products
by that division to its customers). Sales shall not include custom label
products manufactured for others at St. Ives's Chatsworth, California facility.
Payment shall be made within 45 days after the end of the relevant calendar
quarter, and shall be paid by wire transfer to the accounts designated by the
Stockholders. In the event that AC CO. shall fail to make any payment required
under this paragraph on or prior to the date on which it shall otherwise have
been due, the Stockholders shall be entitled to recover from AC CO. the costs
and expenses actually incurred by the Stockholders (including, without
limitation, reasonable fees and expenses of counsel) in connection with
collection under and enforcement of this paragraph, together with interest on
such unpaid amount, commencing on the first date such amount became due, at a
rate of 12% per annum. The net sales base amount contemplated by this
paragraph shall be calculated in accordance with United States generally
accepted accounting principles applied on a basis consistent with those
principles and assumptions applied by St. Ives prior to the Merger, provided
that for purposes of converting foreign currencies to U.S. dollars,
calculations shall be made as of the last day of each quarter using the
exchange rate in effect on that date, as reported in The Wall Street Journal.
Concurrently with each required quarterly payment, AC CO. shall provide the
Stockholders with a schedule, in reasonable detail, setting forth a product
line breakdown of the components of the net sales base amount for such
quarter's payment. In addition, the Stockholders shall be provided with a
summary of net sales on an ongoing monthly basis. To facilitate the
calculation of net sales for purposes of this Agreement, AC CO. shall maintain
a system of accounting during the Payment Period that will permit the tracking
of net sales without substantial difficulty or material delay. In order to
verify from time to time the accuracy and completeness of the calculation of
net sales, GW shall be permitted to commission an audit of such calculation by
an independent accounting firm of his choice; provided, however, that no more
than one such audit may be performed with respect to payments due any
Stockholder during any twelve consecutive month period. Any such audit of net
sales shall be at the sole cost and expense of the Stockholders, unless such
audit shall reveal that net sales for the period examined in the audit shall
have been understated by 10% or more, in which event the cost and expenses
incurred in connection with such audit shall be borne by AC CO. In connection
with any such audit, AC CO. shall (i) allow all designated accountants and
other representatives of the Stockholders (the "Representatives") reasonable
access at all reasonable times to the offices and relevant financial records
and files of AC CO. and its subsidiaries, including St. Ives, (ii) furnish to
the Representatives such financial and operating data and other data as such
persons may reasonably request for purposes of the audit, (iii) instruct its
employees, counsel and independent accountants to cooperate with the
Representatives for purposes of the audit, and (iv) make its management
personnel available for discussions with the Representatives, provided the
Representatives enter into appropriate confidentiality agreements with AC CO.
In the event there is a dispute between AC CO. and the Stockholders regarding
the application or effect of this paragraph and the payments to be made
hereunder, they shall first attempt to negotiate in good faith to reach a
mutually satisfactory agreement. If AC CO. and the Stockholders shall be
unable to resolve the dispute through such good faith negotiations within 30
days of the commencement thereof, they agree that the dispute shall then be
referred to a "Big Six" accounting firm jointly selected by the independent
accountants of AC CO. and the Stockholders (the "Arbitrating Firm") for
resolution. The Arbitrating Firm shall be retained by AC CO. and the
Stockholders to review the work performed by each of AC CO. and the
Stockholders with respect to the calculation of net sales for the relevant
periods and resolve any issues remaining in dispute. The determination of the
Arbitrating Firm shall be final, conclusive and binding on the parties, and may
be submitted to court as an enforceable order. Each party shall pay its own
costs with respect to the foregoing procedure, except to the extent provided
above in this paragraph, and except that any fee payable to the Arbitrating
Firm shall be paid by AC CO. or the Stockholders, according to which side such
firm disagrees with, or with which such firm disagrees to the greatest extent.
If the Arbitrating Firm shall agree equally with AC CO. and the Stockholders,
such fee shall be divided equally between AC CO. and the Stockholders. In no
event shall AC CO. have any right of offset hereunder with respect to any
payments that might otherwise be owing under this Agreement.
