Exhibit 10.17
THE GSI GROUP, INC.
STOCK RESTRICTION AND BUY-SELL AGREEMENT
NON-VOTING SHARES
THIS STOCK RESTRICTION AND BUY-SELL AGREEMENT is made as of the 1st day of
January, 1997 by and between The GSI Group, Inc., a Delaware corporation (the
"Corporation"), Xxxx X. Xxxxx ("Xxxxx"), Xxxxx Xxxxxxx ("Xxxxxxx"), Xxxx Xxxx
("Xxxx") and Xxxxxx Xxxxxxx ("Xxxxxxx") (Sloan, Andrade, Funk and Buffett are
hereinafter referred to collectively as the "Voting Shareholders"), and the
persons identified on Exhibit A attached hereto (the "Non-Voting Shareholders").
R E C I T A L S
---------------
The Voting Shareholders are owners and holders of all of the issued and
outstanding voting shares ("Voting Shares") of common stock of the Corporation.
The Non-Voting Shareholders are owners and holders of issued and
outstanding non-voting shares ("Shares") of common stock of the Corporation.
The parties hereto believe that in the interest of their continued success,
it is desirable to maintain continuity in the management, policies and ownership
of the Corporation, provide for the purchase of Shares upon the occurrence of
certain contingencies and provide certain other agreements as more fully set
forth herein.
NOW, THEREFORE, for and in consideration of the above premises and the
mutual covenants and agreements hereinafter contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE
1
INCORPORATION OF RECITALS AND DEFINITIONS
-----------------------------------------
1.1 Incorporation of Recitals. The Recitals are incorporated herein and
constitute covenants, representations and warranties of the Shareholders.
1.2 Definitions. For purposes of this Agreement:
(a) The term "and/or" shall mean one or the other or both, or any one
or more or all, of the things or persons in connection with which the
conjunction is used.
(b) The term "Approved Sale" shall mean the sale of the Corporation to
an Independent Third Party (whether by merger, consolidation, sale of all or
substantially all of its assets or sale of a majority of the Voting Shares)
approved by the Corporation's Board of Directors and/or the Controlling
Shareholders.
(c) The term "Controlling Shareholders" shall mean the Voting
Shareholders owning more than fifty percent (50%) of the outstanding voting
shares of the Corporation's stock.
(d) The term "Independent Third Party" means any person who,
immediately prior to the contemplated transactions, does not own in excess of 5%
of the Voting Shares, who is not controlling, controlled by or under common
control with any such 5% owner of the Voting Shares, and who is not the spouse
or descendant (by birth or adoption) of any such 5% owner.
(e) The term "Non-Voting Shareholder" shall mean any person or entity
that at any time may become a party hereto by reason of his, her or its
ownership of Shares.
(f) The term "Shares" shall mean all shares of the Corporation's non-
voting common stock now owned or hereafter acquired by any Shareholder,
including but not limited to, newly authorized non-voting shares, non-voting
shares issued out of authorized but unissued stock, non-voting shares issued or
credited in connection with any stock dividend, stock split, or other capital
readjustment, as well as any voting trust certificates (there being none at this
date) representing any non-voting shares issued by the Corporation and owned by
the Non-Voting Shareholder which are part of any voting trust or similar
agreement.
(g) The term "Shareholders" and/or "Shareholder" shall mean the Voting
Shareholders, Non-Voting Shareholders and/or any other person or entity that at
any time may become a party hereto by reason of his, her or its ownership of
Shares and/or voting shares of the Corporation's stock.
(h) The term "Voting Shareholder" shall mean any person or entity that
is the record owner of Voting Shares.
ARTICLE
2
RESTRICTION ON SHARES
---------------------
2.1 Prohibition on Transfer. Except as (i) expressly permitted herein; or
(ii) provided under a certain pledge agreement between LaSalle National Bank and
the Shareholders (the "LaSalle Pledge Agreement"), and pledge agreements between
the Shareholders and each of Xxxxx Xxxxx, Xxxxxx X. Xxxxx and Xxxxx X. Xxxxx
(collectively, the "Xxxxx Pledge Agreements"), none of the Non-Voting
Shareholders shall at any time sell, pledge, hypothecate, transfer, encumber,
assign, give away or in any way dispose of any Shares now owned or
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hereafter acquired by him, nor shall such Shares be transferable, voluntarily or
involuntarily, by operation of law or otherwise, except in strict compliance
with the covenants, terms and conditions set forth in this Agreement. Any
attempt to do so in violation of this Agreement shall not be recognized by the
Corporation and shall be null and void and of no force or effect whatsoever.
The Shareholders acknowledge and agree that the rights afforded Xxxxx pursuant
to the terms of any documents and/or agreements pertaining to the sale of Shares
by Xxxxx to any given Non-Voting Shareholder shall, with respect to the Shares
acquired by such Non-Voting Shareholder from Xxxxx, supersede the rights and
obligations of the parties hereunder.
2.2 Restriction on Certificates. The Corporation shall cause to be placed
on each certificate of its Shares which may now or hereafter be issued to a Non-
Voting Shareholder (except certificates evidencing Shares sold free of the
restrictions of this Agreement), a notice in the following form:
"The shares of stock evidenced by this Certificate are subject to the terms
and conditions of a certain Stock Restriction and Buy-Sell Agreement, dated
as of January 1, 1997 ("Agreement"), between the Corporation and the
Shareholders. A copy of the Agreement is on file at the offices of the
Corporation, reference to all the terms and conditions thereof being hereby
made. No sale or transfer of the Shares evidenced hereby may be effected,
except pursuant to the terms and conditions of the Agreement."
If such legend is placed on the reverse side rather than the face of any such
certificate, there shall be placed on the face of such certificate a legend in
the following form:
"For restrictions on transfer, see notice on reverse side hereof."
2.3 Wrongful Transfer. Subject to Sections 2.1, no sale, pledge,
hypothecation, transfer, encumbrance, assignment, gift or other disposition by a
Non-Voting Shareholder of any of his Shares shall be effective, unless and
until: (i) he has first complied with all the provisions of this Agreement, and
(ii) such transferee shall take such Shares subject to the terms of this
Agreement, shall agree in writing to become a party to this Agreement and to be
bound by all of the terms, conditions and provisions hereof. If a Non-Voting
Shareholder fails to comply with this Agreement, the Voting Shareholders and/or
the Corporation shall have the right to compel such Non-Voting Shareholder or
any transferee to transfer and deliver his or its Shares in accordance with the
provisions of this Agreement.
2.4 Maintenance of S Corporation Status.
(a) Each Non-Voting Shareholder agrees that he will take all action
necessary to permit the Corporation to retain its tax status an S Corporation
("S Corporation") under Subchapter S (Section 1361 et seq.) of the Internal
Revenue Code of 1986, as amended (the "Code"), including but not limited to, the
execution and delivery of any and all consents and other documents required at
any time for the continuance of S Corporation status, or required to carry out,
effectuate, implement or exercise any and all other elections available to, or
powers
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exercisable by, a corporation having elected S Corporation status. Unless and
until the Controlling Shareholders direct otherwise in writing, the Non-Voting
Shareholders shall not take any action which will cause the Corporation not to
be taxed as an S Corporation.
(b) Subject to the limitations of the Delaware General Corporation Law
("DGCL"), as long as the Corporation remains an S Corporation, each Shareholder
agrees to take all actions necessary to cause the Board of Directors of the
Corporation to declare and pay to the Shareholders dividends each year in an
amount not less than all federal and state income taxes, including but not
limited to estimated tax payments, payable by the Shareholders each year with
respect to the income of the Corporation, based upon the maximum marginal
federal and state individual income tax rates applicable to any Shareholder.
(c) Upon any transfer of the Shares permitted hereunder, the
Corporation may require arrangements reasonably satisfactory to it to assure
that any transferee shall take any and all action necessary to maintain the
election under Section 1362(a) of the Code.
2.5 Take-along Rights. The Controlling Shareholders agree that if they
sell or transfer, in the aggregate, a majority of the Voting Shares to a third
party, they will first give written notice (the "Take-along Notice") to the Non-
Voting Shareholders stating all of the material terms of the offer. Each of the
Non-Voting Shareholders may then participate pro rata in such transfer based on
his proportionate holdings of Shares in relation to the total number of
outstanding shares (both voting and non-voting) of the common stock of the
Corporation. If a Non-Voting Shareholder wishes to participate in such
transaction, he will give the Corporation and the Voting Shareholders written
notice within five (5) days of receipt of the Take-along Notice, and the sale
transaction will not close prior thereto. The foregoing notwithstanding, the
provisions of this Section 2.5 shall not apply to (i) any transfers of Voting
Shares among or between the Voting Shareholders and/or their respective family
members, in trust or otherwise, either during their lifetimes or after their
deaths, and (ii) the pledge or hypothecation of Voting Shares.
2.6 Drag-A-Long Rights. In the event of an Approved Sale, each of the
Non-Voting Shareholders agrees to sell his Shares on the terms and conditions
approved by the Corporation's Board of Directors and/or the Controlling
Shareholders. Each Non-Voting Shareholder will not exercise any statutory
dissenters' rights with regard to an Approved Sale and will take all necessary
and desirable actions in connection with the consummation of the Approved Sale.
The foregoing notwithstanding, the right of the Corporation and/or the
Controlling Shareholders to consummate any Approved Sale structured as a sale of
common stock is subject to the satisfaction of the condition that, upon the
consummation of the Approved Sale, each Non-Voting Shareholder will receive the
same form and amount of consideration per Share as the Voting Shareholders
receive for their Voting Shares, or if the Voting Shareholders are given an
option as to the form and amount of consideration to be received, the Non-Voting
Shareholders will be given the same option.
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ARTICLE
3
PURCHASE OF SHARES - RIGHT OF FIRST OFFER
-----------------------------------------
3.1 Notice of Transfer. If a Non-Voting Shareholder ("Offering
Shareholder") receives during his lifetime a bona fide offer ("Offer") to sell
or otherwise transfer any or all of his Shares ("Offered Shares") to any other
Non-Voting Shareholder, the Offering Shareholder shall give at least sixty (60)
days prior written notice to the Corporation and the Voting Shareholders of his
intention to so transfer his Shares (the "Notice"). The Notice shall state (i)
the number of Offered Shares; (ii) the name of the Non-Voting Shareholder who is
the proposed transferee (the "Transferee"); (iii) whether or not the transfer is
for valuable consideration and, if so, the consideration (the "Offered Price");
(iv) the date upon which the proposed transfer to the Transferee is to be
consummated; and (v) all other material terms of the proposed transfer. A copy
of any written agreement (whether executed or not) evidencing the Offer shall be
attached to the Notice.
3.2 Rights of First Offer. From and after the date of the Notice
("Notice Date"), the Voting Shareholders and the Corporation shall have options
to purchase the Offered Shares, upon the terms set forth in Section 3.3 hereof,
exercisable in the order of priority and within the time periods set forth
below:
(a) Within twenty-one (21) days after the Notice Date (the "Xxxxx'x
Option Period"), Xxxxx shall have the option to acquire all or any portion of
the Offered Shares ("Xxxxx'x Option"). Xxxxx shall exercise Xxxxx'x Option, if
at all, by giving written notice to that effect to the Offering Shareholder, the
other Voting Shareholders and the Corporation within Xxxxx'x Option Period.
(b) Within twenty one (21) days following the first to occur of (i)
the expiration of Xxxxx'x Option Period without Xxxxx exercising his option or
(ii) Xxxxx'x written notice to the Offering Shareholder, the other Voting
Shareholders and the Corporation that he will not purchase any or all of the
Offered Shares (the "Voting Shareholders' Option Period"), the Voting
Shareholders, other than Xxxxx, shall have the option to acquire all of the
Offered Shares not being purchased by Xxxxx (the "Voting Shareholders' Option").
In the event that one or more of such Voting Shareholders elects to purchase the
Offering Shareholder's Shares, then unless otherwise agreed, each electing
Voting Shareholder must purchase that percentage of the Shares offered by the
Offering Shareholder as is equal to his proportionate ownership of all of the
electing Voting Shareholders' Voting Shares. The Voting Shareholders shall
exercise the Voting Shareholders' Option, if at all, by giving written notice to
that effect to Xxxxx, the Corporation and the Offering Shareholder within the
Voting Shareholders' Option Period.
(c) Within fourteen (14) days following the first to occur of (i) the
expiration of the Voting Shareholders' Option Period without Xxxxx and/or the
other Voting Shareholders exercising their options; or (ii) written notice to
the Corporation that neither Xxxxx nor the other Voting Shareholders intend to
purchase all of the Offered Shares (the "Corporation's Option"),
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the Corporation shall have the option to acquire all of the Offered Shares not
being purchased by Xxxxx or the other Voting Shareholders. The Corporation shall
exercise the Corporation's Option, if at all, by giving written notice to that
effect to the Offering Shareholder and the Voting Shareholders within the
Corporation's Option Period.
The exercise of the aforesaid options must, in the aggregate, include all
of the Offered Shares or the exercise of such option(s) shall be null and void.
3.3 Purchase Price and Terms. In the event Xxxxx'x Option, the Voting
Shareholders' Option and/or the Corporation's Option is exercised, the
party(ies) exercising such option(s) shall purchase the Offered Shares at the
lower of (i) the Offered Price or (ii) the Purchase Price (as hereinafter
defined) determined in accordance with Section 5.5 hereof, upon the same terms
and conditions provided in the Notice. The Closing of such purchase shall occur
in the mariner described in Section 7.2(a) hereof.
3.4 Failure to Exercise Rights of First Offer Options. If Xxxxx, the
Voting Shareholders and/or the Corporation fail to exercise their respective
Options in accordance with Section 3.2 hereof to purchase in the aggregate all
of the Offered Shares, the Offered Shares may be transferred to the Transferee
as provided in the Notice. The effectiveness of such transfer is conditioned
upon the Transferee then being a Non-Voting Shareholder immediately prior to
such transfer and his reaffirming in writing his agreement to be bound by all of
the terms, conditions and provisions hereof. If the transfer does not occur in
accordance with the terms disclosed in the Notice, such transfer shall be
automatically null and void without any further action being required on the
part of the Corporation or the Voting Shareholders, and any attempt to transfer
the Offered Shares thereafter without first complying with the terms of this
Article 3 shall be deemed a wrongful transfer within the meaning of Section 2.3
hereof.
ARTICLE
4
PURCHASE OF SHARES
------------------
4.1 Purchase Upon Death, Permanent Disability or Termination of
Employment of Non-Voting Shareholder. If a Non-Voting Shareholder dies (the
"Decedent"), becomes Permanently Disabled (as defined below) (the "Disabled
Shareholder"), or his employment by the Corporation terminates (the "Terminating
Shareholder") (a Decedent, Disabled Shareholder or Terminating Shareholder is
sometimes hereinafter referred to as a "Departed Shareholder"), the Shares owned
by the Departed Shareholder, shall be subject to the following rights and
obligations, and the Non-Voting Shareholders, for themselves and their
respective heirs, successors, representatives and assigns, agree as follows:
(a) Within sixty (60) days following: (i) the date of the Decedent's death,
(ii) the Effective Date of Permanent Disability (as defined below) of the
Disabled Shareholder, or (iii) the last date of employment of the Terminating
Shareholder, as the case may be ("Xxxxx'x
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Purchase Option Period"), Xxxxx shall have the option to acquire all or any
portion of the Shares owned by the Departed Shareholder ("Xxxxx'x Purchase
Option"), at the price and on the terms set forth in Articles 5, 6 and 7 hereof.
Xxxxx shall exercise Xxxxx'x Purchase Option, if at all, by giving written
notice to that effect to the Departed Shareholder, the other Voting Shareholders
and the Corporation within Xxxxx'x Purchase Option Period.
(b) Within thirty (30) days following the first to occur of (i) the
expiration of Xxxxx'x Purchase Option Period without Xxxxx exercising his option
or (ii) Xxxxx'x written notice to the Departed Shareholder, the other Voting
Shareholders and the Corporation that he will not purchase any or all of the
Departed Shareholder's Shares (the "Voting Shareholders' Purchase Option
Period"), the Voting Shareholders, other than Xxxxx, shall have the option to
acquire all of the Departed Shareholder's Shares not being purchased by Xxxxx
(the "Voting Shareholders' Purchase Option"), at the price and on the terms set
forth in Articles 5, 6 and 7 hereof. In the event that one or more of such
Voting Shareholders elects to purchase the Departed Shareholder's Shares, then,
unless otherwise agreed, each electing Voting Shareholder must purchase that
percentage of the Departed Shareholder's Shares as is equal to his proportionate
ownership of all of the electing Voting Shareholders' Voting Shares. The Voting
Shareholders shall exercise the Voting Shareholders' Purchase Option, if at all,
by giving written notice to that effect to Xxxxx, the Corporation and the
Departed Shareholder within the Voting Shareholders' Purchase Option Period.
(c) Subject to Section 4.2 hereof, the Corporation shall purchase, and the
Departed Shareholder or his legal representative shall sell, all of the Shares
owned by the Departed Shareholder which are not purchased by Xxxxx and/or the
other Voting Shareholders pursuant to Sections 4.1(a) or (b) above, at the price
and on the terms set forth in Articles 5, 6 and 7 hereof.
(d) Notwithstanding the foregoing provisions of this paragraph 4.1 but
subject in all events, however, to the rights and obligations to sell Shares
otherwise set forth herein, any Senior Terminating Shareholder (as defined
below) who resigns prior to January 1, 2002, may irrevocably elect to defer the
purchase and sale of his Shares (due to such termination of employment), such
that with respect to determining the Purchase Price for such Senior Terminating
Shareholder's Shares, the Event (as defined in paragraph 5.1 hereof) shall be
deemed to have occurred either on January 1, 2002 or on the fifth (5th)
anniversary of the last day of such Senior Terminating Shareholder's employment
by the Corporation. The Senior Terminating Shareholder shall give written
notice of such election to the Voting Shareholders and the Corporation within
thirty (30) days following the last day of his employment, which notice shall
express such irrevocable election and shall specify whether the Event shall be
deemed to occur on January 1, 2002 or on the fifth (5th) anniversary of the last
date of his employment. In such circumstance, Xxxxx'x Purchase Option Period,
the Voting Shareholder's Purchase Option Period and the respective rights and
obligations of the Voting Shareholders, the Corporation and such Senior
Terminating Shareholder with respect to the purchase and sale of his Shares
shall pertain as if the date designated by such Senior Terminating Shareholder
for the Event was the last day of his employment. As used herein, the term
"Senior Terminating Shareholder" means a Terminating Shareholder who was either
(i) 62 years of age, or
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(ii) employed by the Corporation for a period of at least twenty (20) years, at
the time he first acquired Shares.
4.2 Termination of Employment for Cause. Notwithstanding the terms of
Section 4.1(c) above, if the Terminating Shareholder's employment by the
Corporation is terminating for Cause (as defined below), then the Corporation
shall not be obligated to purchase the Terminating Shareholder's Shares, and in
lieu of any such obligation, the Corporation shall have the option to acquire
all or any portion of the Terminating Shareholder's Shares not being purchased
by Xxxxx or the other Voting Shareholders pursuant to their respective options
as set forth above, on the terms set forth in Articles 5, 6 and 7 hereof. The
Corporation shall exercise such option, if at all, by giving written notice to
that effect to the Terminating Shareholder and the Voting Shareholders within
one hundred eighty (180) days following the first to occur of (i) the expiration
of Xxxxx'x Purchase Option and the Voting Shareholders' Purchase Option without
them having exercised such options or (ii) Xxxxx'x and the other Voting
Shareholders' written notice to the Corporation and the Terminating Shareholder
stating that they will not purchase the Terminating Shareholder's Shares. In the
event that neither Xxxxx, the other Voting Shareholders nor the Corporation
exercise their respective options to purchase the Shares of a Terminating
Shareholder whose employment is terminated for Cause, the Terminating
Shareholder, or his heirs, representatives, successors and assigns, shall hold
such Shares not so purchased subject to the terms, conditions and provisions of
this Agreement.
4.3 Definition of Permanent Disability. A Non-Voting Shareholder shall be
deemed to be "Permanently Disabled" upon the first to occur of the following
events:
(a) if by reason of injury, sickness or other incapacity he is unable,
for a period of six (6) consecutive months or for six (6) months during any nine
(9) consecutive month period, to discharge his regular duties and
responsibilities as an employee and/or officer of the Corporation. If the
parties shall at any time be unable to agree on whether a Non-Voting Shareholder
is or has been so disabled, the Corporation and the Non-Voting Shareholder shall
promptly and jointly appoint a medical doctor or if they are unable to so agree,
they shall each promptly appoint a medical doctor to make such determination,
and the collective decision of such medical doctors shall be binding on all
parties hereto. If such doctors are unable to agree, they shall promptly
appoint a third medical doctor to make such determination, and the decision of
such third medical doctor shall be binding on all parties hereto; or
(b) the failure or refusal of a Non-Voting Shareholder to submit to
any examination or to appoint a medical doctor pursuant to subsection (a) of
this Section 4.3 within sixty (60) days after the date on which the Non-Voting
Shareholder receives a notice from the Voting Shareholders and/or the
Corporation to do so; or
(c) the adjudication of such Non-Voting Shareholder as an incompetent
or a disabled person by a court of competent jurisdiction.
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4.4 Definition of Effective Date of Permanent Disability. If a Non-Voting
Shareholder is deemed to be Permanently Disabled pursuant to Section 4.3 hereof,
then the "Effective Date of Permanent Disability" shall be the first to occur of
the following:
(a) the date upon which the examining doctor(s) shall determine that
the Non-Voting Shareholder is Permanently Disabled; or
(b) the sixtieth (60th) day immediately succeeding the day on which
the Non-Voting Shareholder receives a notice from the Voting Shareholders and/or
the Corporation to submit to an examination pursuant to Section 4.3(a) hereof,
if the Non-Voting Shareholder fails or refuses to submit to such examination or
fails or refuses to appoint a medical doctor; or
(c) the sixtieth (60th) day immediately succeeding the date of the
adjudication described in Section 4.3(c) hereof unless prior to the expiration
of such period the adjudication has been reversed; or
(d) the first day of the seventh (7th) consecutive month or the first
day of the seventh (7th) month during any nine (9) consecutive month period of
the Non-Voting Shareholder's inability to perform his regular duties and
responsibilities as an employee and/or officer of the Corporation.
4.5 Definition of Cause. As used herein "Cause" shall mean one or more of
the following as determined by the Board of Directors in its sole discretion:
(i) commission of any dishonest act by a Non-Voting Shareholder in connection
with his employment by the Corporation or any act of willful misconduct which
has affected or can be reasonably expected to affect the business or reputation
of the Corporation in a materially adverse manner; or (ii) diversion of any
material corporate opportunity of the Corporation for the Non-Voting
Shareholder's direct or indirect benefit.
ARTICLE
5
DETERMINATION OF THE PURCHASE PRICE
-----------------------------------
5.1 Purchase Price. The parties hereto recognize the problems relative to
determining the value of the Corporation. As a result, the parties hereto agree
that subject to the terms of Section 5.5 hereof, the purchase price ("Purchase
Price") for each Share to be purchased pursuant to Articles 3 or 4 hereof shall
be the greatest of the following amounts:
(i) Six and 34/100 Dollars ($6.34) per Share;
(ii) two (2) times the Book Value (as defined below) of the
Corporation divided by the total number of shares (both voting and non-
voting) of the Corporation's
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stock outstanding as of the date of the event which triggers the purchase
and sale hereunder (the "Event"); and
(iii) an amount equal to: (a) five (5) times the Corporation's EBITDA
(as defined below), minus (b) the principal balance of the Corporation's
interest bearing debt as of the date of the Event, divided by (c) the total
number of shares (both voting and non-voting) of the Corporation's stock
outstanding as of the date of the Event.
The Purchase Price determined in the manner set forth above shall be conclusive
and binding on the parties hereto.
5.2 Book Value. As used herein, the term "Book Value" of the Corporation
means the total Shareholder's equity as reflected on the Corporation's balance
sheet as of the last day of the Corporation's fiscal year immediately preceding
the Event, determined by the certified public accounting firm regularly engaged
by the Corporation ("Public Accountants") in accordance with generally accepted
accounting principles applied on a basis consistent with that of prior years and
using the FIFO method of accounting for inventories. The Book Value when
certified in writing by the Public Accountants shall be binding and conclusive
on all parties concerned.
5.3 EBITDA. As used herein, the term "EBITDA" shall mean an amount equal
to the average net income of the Corporation for the Fiscal Period (as defined
below) (i) using the FIFO method of accounting for inventories; and (ii) before
deducting interest, income taxes, depreciation and amortization. The term
"Fiscal Period" shall mean (y) if the Event which triggers the purchase and sale
hereunder occurs during the first eight (8) months of any given fiscal year of
the Corporation, the three (3) consecutive fiscal years of the Corporation
immediately preceding the fiscal year in which the Event Date occurs, and (z) if
the Event occurs during the last four (4) months of any given fiscal year of the
Corporation, the three (3) consecutive fiscal years of the Corporation ending
with the fiscal year in which the Event occurs.
5.4 Changes in EBITDA Multiplier. On or about each anniversary of the
date hereof, or at such other time as is agreeable to them, the Corporation
shall review the multiplier stated in Section 5.1(iii) hereof to determine
whether or not such multiplier should be amended as determined by vote of the
Board of Directors of the Corporation, it being the intention of the parties
that the formula accurately reflects the fair value of the Corporation based
upon all relevant facts and circumstances at the time such matter is being
considered. The parties agree that such multiplier shall be changed from time
to time in a manner consistent with any changes to a similar multiplier, if any,
set forth in any buy-sell agreement(s) between the Voting Shareholders and the
Corporation governing the purchase and sale of Voting Shares among them.
5.5 Purchase Price of Shares Upon Happening of Certain Events.
Notwithstanding the terms of Section 5.1 hereof, the Purchase Price to be paid
for the Shares to be purchased upon (i) the exercise of rights of first offer
under Section 3.2 hereof; (ii) the voluntary resignation of a Terminating
Shareholder, other than a Senior Terminating Shareholder who elects to defer the
Event pursuant to paragraph 4.1(d) hereof, occurring prior to January 1, 2002;
or (iii) the termination of a Terminating Shareholder for Cause, shall be an
amount equal to Six and 34/00
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Dollars ($6.34) per Share. The parties expressly acknowledge that the Purchase
Price for Shares purchased following the voluntary resignation of a Terminating
Shareholder occurring from and after January 1, 2002, shall be determined in
accordance with Section 5.1 hereof.
ARTICLE
6
PAYMENT OF THE PURCHASE PRICE AND OTHER MATTERS
-----------------------------------------------
6.1 Payment. The Purchase Price for the Shares purchased hereunder shall
be paid in full in cash at the closing, except that at the option of each
purchasing party, up to sixty percent (60%) of the Purchase Price may be
deferred as provided herein, provided that at least forty (40%) of the Purchase
Price is paid in cash at closing.
6.2 Promissory Note. The deferred portion of the Purchase Price shall be
evidenced by a promissory note ("Note") of the purchasing party made payable to
the order of the selling party. The Note shall be in the form of Exhibit "B"
attached hereto and shall be dated as of the closing. Except as otherwise set
forth below, the principal balance shall be paid over a time not exceeding sixty
(60) months and each installment of the principal balance shall include
interest, accruing from the date of the Note, at a rate announced from time to
time by the LaSalle National Bank as its prime rate (the "Interest Rate").
ARTICLE
7
THE CLOSING
-----------
7.1 Location. Unless otherwise agreed by the parties, the closing of the
sale and purchase of the Shares under Article 3 or 4 hereof shall take place at
such location as the parties to such sale shall agree upon.
7.2 Time.
(a) Article 3 Transfer. In the case of a purchase under Article 3,
the closing shall take place in accordance with the terms of the Notice,
provided that such closing shall not occur earlier than thirty (30) days after
the expiration of (i) Xxxxx'x Option Period if Xxxxx elects to purchase the
Shares, (ii) the Voting Shareholders' Options Period if the Shares are to be
purchased by the other Voting Shareholders in addition to or in place of Xxxxx,
or (iii) the Corporation's Option Period if the Shares, or any of them, are to
be purchased by the Corporation.
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(b) Article 4 Transfer. In the case of a purchase of Shares under
Article 4, the closing shall take place within ninety (90) days after the
determination of the Purchase Price of the Departing Shareholder's Shares.
7.3 Execution and Delivery of Documents. Upon the closing of the sale and
purchase, the selling Non-Voting Shareholder and the purchasing party shall
execute and deliver to each other the various documents which shall be required
to carry out their undertakings hereunder including without limitation, the
payment of cash and the execution and delivery of the Note and any collateral
instruments.
7.4 Resignation as Officer. Upon the closing of the sale and purchase,
the selling Non-Voting Shareholder shall resign as an officer of the
Corporation, if he holds any such position.
ARTICLE
8
TERMINATION OF AGREEMENT
------------------------
8.1 Events Causing Termination. This Agreement and all restrictions on
transfer created hereby shall terminate on the occurrence of any of the
following events:
(a) Upon the adoption of a plan of dissolution of the Corporation,
provided said plan is carried out diligently and all assets remaining after
payment of or provision for liabilities are distributed to the Shareholders
within a reasonable time thereafter; or
(b) The execution of a written instrument to that effect signed by the
Controlling Shareholders and the Corporation; or
(c) Permanent cessation of the business of the Corporation; or
(d) The sale of substantially all of the assets or business of the
Corporation; or
(e) The Voting Shareholders becoming the legal and beneficial owner of
all then issued and outstanding Shares; or
(f) The consummation of a firm underwritten public offering (a "Public
Offering") of securities of the Corporation.
8.2 Effect of Termination. The termination of this Agreement for any
reason shall not effect any accrued right or remedy existing hereunder prior to
the effective date of such termination.
12
ARTICLE
9
MISCELLANEOUS
-------------
9.1 Piggyback Registration Rights. The Corporation agrees that at any
time during the term of this Agreement, if the Corporation shall seek a Public
Offering, each Non-Voting Shareholder shall be notified and shall be entitled to
elect to have included in such proposed registration, without cost or expense,
such number of Shares as the underwriter for the offering shall permit;
provided, however, that in the event the underwriter shall permit less than all
of the Shares to be registered the number of Shares included in such
registration shall be reduced on a pro rata basis among the Non-Voting
Shareholders (the "Piggy-Back Rights"). In the event of such a proposed
registration, the Corporation shall furnish the Non-Voting Shareholders with no
less than thirty (30) days written notice prior to the proposed filing of the
registration statement. Such notice shall continue to be given by the
Corporation to such Non-Voting Shareholders for each proposed registration by
the Corporation until such time as all of the Shares have been registered. Such
Non-Voting Shareholders shall exercise their Piggy-Back Rights by giving written
notice within twenty (20) days of the receipt of the Corporation's notice of
intention to file a registration statement.
9.2 Restrictive Covenants.
(a) Each of the Non-Voting Shareholders agree that during the Non-
Voting Shareholder's employment and for a period of eighteen (18) months after
the termination of his employment for any reason whatsoever or for no reason,
whether voluntary or involuntary, the Non-Voting Shareholder will not, except on
behalf of the Corporation:
(i) directly or indirectly, contact, solicit or direct any person,
firm or corporation to contact or solicit, any of the Corporation's
customers or prospective customers (as hereinafter defined) for the purpose
of selling or attempting to sell, any products and/or services that are the
same as or similar to the products and services provided by the Corporation
to its customers. In addition, each Non-Voting Shareholder will not
disclose the identity of any such customers or prospective customers to any
person, firm, corporation, association, or other entity for any reason or
purpose whatsoever; and
(ii) directly or indirectly, whether as an investor (excluding
investments representing less than one percent (1%) of the common stock of
a public company), lender, owner, stockholder, officer, director,
consultant, employee, agent, salesperson or in any other capacity, whether
part-time or full-time, become associated with any business involved in the
design, manufacture, marketing, sale, or servicing of products then
constituting one percent (1%) or more of the annual sales of the
Corporation; and
(iii) solicit or accept if offered to him, with or without
solicitation, on his own behalf or on behalf of any other person, the
services of any person who is an employee of
13
the Corporation, nor solicit any of the Corporation's employees to
terminate employment with the Corporation; and
(iv) act as a consultant, advisor, officer, manager, agent, director,
partner, independent contractor, owner, or employee for or on behalf of any
of the Corporation's customers or prospective customers (as hereinafter
defined), with respect to or in any way with regard to any aspect of the
Corporation's business and/or any other business activities in which the
Corporation engages during the term of the Non-Voting Shareholder's
employment with the Corporation.
(b) As used herein, "customer" shall be defined as any person, firm,
or entity that purchased any type of product and/or service from the Corporation
or is or was doing business with the Corporation within the twelve (12) month
period immediately preceding termination of the Non-Voting Shareholder's
employment; and "prospective customer" shall be defined as any person, firm, or
entity contacted or solicited by the Corporation or the Non-Voting Shareholder
(whether directly or indirectly) or who contacted the Corporation or the Non-
Voting Shareholder (whether directly or indirectly) within the twelve (12) month
period immediately preceding termination of the Non-Voting Shareholder's
employment for the purpose of having such persons, firms, or entities become a
customer of the Corporation.
(c) Each of the Non-Voting Shareholders acknowledges and agrees that
any violation of the terms of the Confidentiality Agreement between him and the
Corporation, including without limitation such Non-Voting Shareholder's
divulging or imparting any confidential information of the Corporation to any
competitor of the Corporation or any third party, or using such confidential
information for himself, shall afford the Corporation all of the rights and
remedies set forth in paragraph 9.2(d) hereof.
(d) It is agreed that any breach or anticipated or threatened breach
of any of the Non-Voting Shareholder's covenants contained in this paragraph 9.2
will result in irreparable harm and continuing damages to the Corporation and
its business and that the Corporation's remedy at law for any such breach or
anticipated or threatened breach will be inadequate and, accordingly, in
addition to any and all other remedies that may be available to the Corporation
at law or in equity in such event, any court of competent jurisdiction may issue
a decree of specific performance or issue a temporary and permanent injunction,
without the necessity of the Corporation posting bond or furnishing other
security and without proving special damages or irreparable injury, enjoining
and restricting the breach, or threatened breach, of any such covenant. In
addition to, and not in lieu of, the foregoing rights and remedies, the
Corporation shall be entitled to receive from the breaching Non-Voting
Shareholder an amount equal to the unpaid balance, if any, of the Purchase Price
due to the breaching Non-Voting Shareholder (as of the date such breach first
occurred) with respect to the purchase of his Share, and such amount may be set
off from any monies due such breaching Non-Voting Shareholder by the
Corporation, which amount shall constitute liquidated damages and not a penalty.
In the event the maker of the Note is someone other than the Corporation, the
breaching Non-Voting Shareholder shall be deemed to have irrevocably assigned to
the Corporation all of his right, title and interest in and to the Note,
including without limitation the balance of any and all amounts remaining unpaid
14
thereunder, and no additional amounts shall be owed to such breaching Non-Voting
Shareholder under the Note.
(e) Anything contained in this paragraph 9.2 to the contrary
notwithstanding, a Terminating Shareholder (i) whose employment is terminated by
the Corporation at any time other than for Cause; or (ii) whose employment
terminates (including without limitation, upon his resignation) on or after
January 1, 2002 other than for Cause, shall have the right and option to be free
of the restrictive covenants imposed by paragraph 9.2(a) of this Agreement
following his employment, provided such Terminating Shareholder elects to
receive, in lieu of the Purchase Price determined in accordance with paragraph
5.1 hereof, an amount for his Shares equal to the amount the Terminating
Shareholder paid to acquire such Shares. The Terminating Shareholder shall
irrevocably make such election by giving written notice thereof to the Voting
Shareholders and the Corporation within thirty (30) days following the last date
of such Terminating Shareholder's employment, which notice must expressly state
that the Terminating Shareholder has irrevocably elected to receive an amount
for his Shares equal to the amount such Terminating Shareholder paid to acquire
same in lieu of the Purchase Price determined in accordance with paragraph 5.1
of this Agreement. In such event, such Terminating Shareholder shall be deemed
to be released from the restrictive covenants set forth in paragraph 9.2 hereof,
provided that such Terminating Shareholder proceeds to sell his Shares in strict
accordance with the other terms of this Agreement. The Non-Voting Shareholders
acknowledge that the foregoing right and option shall not be available to any
Non-Voting Shareholder whose employment terminates (i) due to his resignation
prior to January 1, 2002, or (ii) at any time for Cause.
9.3 Effect of Improper Transfer. If a transfer or attempted transfer
violates any provision of this Agreement or if the transferor, after the
transfer, reacquires all or any portion of the transferred Shares, such
transfers or attempted transfers shall be null and void and the Shares
transferred or attempted to be transferred shall remain subject to this
Agreement as if no transfer had been made.
9.4 Entire Agreement. The terms, conditions and covenants contained
herein are the full and complete terms of the agreement between the parties
hereto regarding the subject matter hereof and supersede any and all prior
agreements by and among the Corporation and the Shareholders concerning the
ownership, sale or other disposition of the Shares. No alterations, amendments
or modifications of such terms shall be binding on the parties hereto unless
reduced to writing and approved by the Board of Directors of the Corporation.
9.5 Binding Effect. This Agreement shall be binding not only upon the
parties hereto, but upon their respective heirs, legal representatives,
successors and assigns. All persons bound hereby shall execute such instruments
and perform such acts as may be reasonably necessary or desirable to effectuate
the terms and provisions of this Agreement.
9.6 Adoption by Corporation. The Voting Shareholders will cause the Board
of Directors to adopt appropriate minutes and resolutions recognizing,
confirming, ratifying and adopting the terms of this Agreement and any
amendments to the By-Laws consistent with the provisions herein.
15
9.7 Reference in Will. Each Non-Voting Shareholder shall make reference
to this Agreement in any Will or Codicil that he may hereafter execute and shall
direct the executor therein to comply with all of its terms and provisions.
9.8 Notices. Any and all notices given in connection with this Agreement
shall be deemed adequately given only if in writing and personally delivered,
sent by first class registered or certified mail, postage prepaid, return
receipt requested; sent by telefacsimile, provided a hard copy is mailed on that
date to the party for whom such notices are intended or sent by other means at
least as fast and reliable as first class mail. A written notice shall be
deemed to have been given to the recipient party on the earlier of (i) the date
it shall be delivered to the address required by this Agreement; (ii) the date
delivery shall have been refused at the address required by this Agreement;
(iii) with respect to notices sent by mail, the date as of which the postal
service shall have indicated such notice to be undelivered at the address
required by this Agreement, or (iv) with respect to a telefacsimile, the date on
which the telefacsimile is sent. Any and all notices referred to in this
Agreement, or which any party desires to give to the other, shall be addressed
as follows:
Name Address
---- -------
To the Corporation The GSI Group, Inc.
X.X. Xxx 00
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxx, CEO
with a copy to Xxxx Xxxx,
Executive Vice President and General Counsel
To Xxxxx Xxxx X. Xxxxx
00 Xxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
To Xxxxxxx Xxxxx Xxxxxxx
0000 Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
To Funk Xxxx Xxxx
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
To Buffett Xxxxxx Xxxxxxx
000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
16
To the Non-Voting Shareholders: at their respective addresses as set forth
on Exhibit A attached hereto
with a copy of all notices Xxxxxxxx & Xxxxxx, Ltd.
at the same time to: 00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxx, Esq.
or to such other address as the person to whom notice is to be given may have
furnished to the other in writing in accordance herewith. A communication given
by any other means shall be deemed duly given when actually received by the
addressee.
9.9 Specific Performance. The Shares cannot be readily purchased or sold
in the open market, and for that reason, among others, the parties will be
irreparably damaged in the event that this Agreement is not specifically
enforced. Should any dispute arise concerning whether a proposed sale or
disposition of the Shares would violate this Agreement, the parties agree that
an injunction may be issued restraining any sale or disposition pending the
determination of such controversy. In the event of any controversy concerning
the right or obligation to purchase or sell any of the Shares, such right or
obligation shall be enforceable in a court of equity by a decree of specific
performance. Such remedy shall, however, be cumulative and not exclusive, and
shall be in addition to any other remedy which the parties may have at law, in
equity or otherwise.
9.10 Construction of Terms. Unless otherwise specifically provided, a
reference to a particular "section", "Section", or "Article" shall mean the
section, Section, or Article in this Agreement.
9.11 Governing Law. This Agreement shall be interpreted, governed and
construed in all respects by the internal laws of the State of Illinois, and any
action commenced to enforce any of the provisions hereof shall have as its venue
Christian County, Illinois.
9.12 Payment of Legal Costs and Expenses. In the event any action is
commenced to challenge or enforce the terms and provisions hereof, the party who
is successful in such action based upon a final, unappealable court order, shall
be reimbursed by the unsuccessful party for his fee, costs and expenses
(including without limitation reasonable attorneys' and accountants' fees, costs
and expenses) incurred in connection with the legal proceeding.
9.13 Gender. Unless the context otherwise requires, any pronouns, wherever
used herein, shall include the corresponding masculine, feminine or neuter
pronouns and the plural shall include the singular, and vice versa.
9.14 Headings. Article and paragraph headings are included herein solely
for convenience and shall not be construed to modify or explain any of the
substantive provisions hereof.
17
9.15 Binding Effect. This Agreement is binding upon and inures to the
benefit of the Corporation, its successors, transferees and assigns and to the
Shareholders and their respective heirs, personal representatives, successors,
permitted transferees and permitted assigns. Wherever used in this Agreement,
Non-Voting Shareholder shall refer to the Non-Voting Shareholders originally
named above and any persons who subsequently acquire the Shares for so long as
they shall have any interest in the Shares, and thereafter to his or their
respective heirs, personal representatives, successors, transferees and assigns.
9.16 Counterparts. This Agreement may be executed and delivered in two or
more substantially identical counterparts, each of which shall be an original
document as to the person or persons signing it and all of which together shall
constitute a single binding agreement.
9.17 Invalid Provision. If any provision of this Agreement is finally
determined by any court of competent jurisdiction to be effective only if said
provision is modified to limit its duration, area, scope, or applicability and
if such determination is upheld on appeal or no appeal from such determination
is taken, then the parties hereto agree that they shall amend and modify such
provisions to restrict the duration, area, scope, or applicability thereof to
the minimum extent required to make such provision enforceable, and they further
hereby consent to the entry by a court of an order to so restrict such
provision. If any provision of this Agreement shall be held invalid, the
remainder of this Agreement shall continue in full force and effect.
9.18 No Right to Continued Employment. Nothing contained herein or by
virtue of the ownership of Shares by any or all of the Non-Voting Shareholders
shall create, or be deemed to create, any right of employment in any Non-Voting
Shareholder, limit or restrict the Corporation's or any given Non-Voting
Shareholder's right to terminate such Non-Voting Shareholder's employment or
evidence any agreement or understanding that any given Non-Voting Shareholder
will remain employed by the Corporation for any particular length of time.
18
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed and attested by its duly authorized officers, and the Shareholders have
signed their names, all on the day and year first above written.
The GSI Group, Inc.
By: /s/ Xxxx X. Xxxxx
----------------------------------
Title: CEO
-------------------------------
/s/ Xxxx X. Xxxxx
-------------------------------------
Xxxx X. Xxxxx
/s/ Xxxxx Xxxxxxx
-------------------------------------
Xxxxx Xxxxxxx
/s/ Xxxx Xxxx
-------------------------------------
Xxxx Xxxx
/s/ Xxxxxx Xxxxxxx
-------------------------------------
Xxxxxx Xxxxxxx
Non-Voting Shareholders:
_____________________________________
_____________________________________
19
/s/ Al Deutsch
-------------------------
Al Deutsch
/s/ Xxxxxxx Xxxxxx /s/ Xxxxx xxx Xxxxxx
------------------------- --------------------------
Xxxxxxx Xxxxxx Xxxxx xxx Xxxxxx
/s/ Xxxxx Xxxxxx /s/ Xxxx Xxxxxxx
------------------------- --------------------------
Xxxxx Xxxxxx Xxxx Xxxxxxx
/s/ Xxxx Xxxxxxxx /s/ Xxxxxx Xxxxxx
------------------------- --------------------------
Xxxx Xxxxxxxx Xxxxxx Xxxxxx
/s/ Xxxx Xxxxx /s/ Xxxxx Xxxxx
------------------------- --------------------------
Xxxx Xxxxx Xxxxx Xxxxx
/s/ Xxxx Xxxxx /s/ Xxxxx Xxxxxx
------------------------- --------------------------
Xxxx Xxxxx Xxxxx Xxxxxx
/s/ Xxxx Xxxxx /s/ Xxxx Xxxxxxx
------------------------- --------------------------
Xxxx Xxxxx Xxxx Xxxxxxx
20
