EXHIBIT 99.C(2)
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (the "Agreement") is entered into as of
____________, 1998 by and among Intelligent Controls, Inc., a Maine
corporation (the "Company"), Xxxx Xxxxx, Xxxxx X. Xxxxx, Xxxx Xxxxx as
custodian for Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx XX, Trustee, the Xxxxxx X.
Xxxxx Trust dated December 4, 1994, Xxxx X. Xxxxx, Xxxxx Brothers, a general
partnership, Xxxxx X. Xxxxxx, Ampersand Specialty Materials and Chemicals
III Limited Partnership, a Delaware limited partnership (the "ASMC-III
Fund"), Ampersand Specialty Materials and Chemicals III Companion Fund
Limited Partnership, a Delaware limited partnership (together with the ASMC-
III Fund, the "Investors"), and those stockholders of the Company who
subsequently become parties to this Agreement as provided herein.
Introduction
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The Company has entered into an Investment Agreement dated as of March
26, 1998 (the "Investment Agreement") with the Investors providing for the
purchase of shares of common stock of the Company by the Investors and
certain other matters. The Investors' obligation to purchase such shares of
common stock from the Company is conditioned upon the Company and the other
parties hereto entering into this Agreement for the purpose of providing for
the governance and continuity of management of the Company and restricting
the transfer of Company stock. The parties hereto acknowledge that the
restrictions on transfer contained in this Agreement are reasonable and in
the Company's best interests.
Xxxx Xxxxx has also agreed to grant to the Investors an option (the
"Option") to purchase an aggregate of 100,000 shares of common stock of the
Company currently held by him.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01. Certain Definitions. As used herein, the following
terms have the meanings set forth below:
"Affiliate" means, with respect to any person, any person or entity
that, directly or indirectly, through one or more intermediaries, controls
or is controlled by, or is under common control with, such person, and, with
respect to any natural person, also includes any Immediate Family Member of
such person.
"Board" means the Board of Directors of the Company.
"Common Stock" means the Company's common stock, no par value, and any
replacement class of stock.
"Immediate Family Member" means, with respect to any natural person,
his or her spouse, children or their issue, parents or siblings.
"Proportionate Percentage" means, with respect to any Stockholder, a
fraction, the numerator of which is the number of shares of Common Stock
held by such Stockholder and the denominator of which is the total number of
shares of Common Stock held by all Stockholders, excluding those held by the
Transferring Stockholder (as defined in Section 3.02 below).
"Public Sale" means any sale of Common Stock by a Stockholder on the
Emerging Company Market of the American Stock Exchange or on any national
securities exchange or over-the-counter market.
"Restricted Period" means the five-year period commencing on the date
of this Agreement.
"Securities" means all outstanding capital stock of the Company,
including any securities convertible into or exchangeable for capital stock
of the Company, or any right, warrant or option to acquire capital stock of
the Company or such convertible or exchangeable securities.
"Stockholder" means any person other than the Company who is or
hereafter becomes a holder of Securities of the Company and who is or
hereafter becomes a party to this Agreement as provided herein.
ARTICLE II
BOARD OF DIRECTORS; VOTING
Section 2.01. Board Size. At all meetings (and written actions in
lieu of meetings) of stockholders of the Company at which the number of
directors of the Company is to be determined, each Stockholder shall vote
all of such Stockholder's Securities to fix the number of directors of the
Company at five, subject, however, to the provisions of Section 2.03.
Section 2.02. Election of Directors. At all meetings (and written
actions in lieu of meetings) of stockholders of the Company at which
directors are to be elected, each Stockholder shall vote all of such
Stockholder's Securities to elect, as directors of the Company, the
following: (a) two nominees designated by the Investors, one of whom shall
be neither an Affiliate of the Investors nor a current or former employee
of, or consultant to, the Company, which nominees shall initially be Xxxxxxx
X. Xxx and Xxxxxx X. Xxxxxxx, (b) Xxxx Xxxxx, for as long as he shall own at
least 300,000 shares (such number to be appropriately adjusted for stock
splits, stock dividends, combinations, recapitalizations and similar events
affecting the Common Stock) of Common Stock, (c) the Chief Executive Officer
of the Company, and (d) one nominee designated by Xxxx Xxxxx, who shall be
neither a current or former employee of, or consultant to, the Company nor
an Immediate Family Member of Xxxx Xxxxx, and who shall be reasonably
acceptable to the Investors, which nominee shall initially be Xxxx X. Xxxxx.
Section 2.03. Default. Notwithstanding Sections 2.01 and 2.02, if
for whatever reason (including insufficient legally available funds) the
Company fails to repurchase on the Repurchase Date (as defined in the
Investment Agreement) all Securities that it is required to repurchase under
Section 5.11 of the Investment Agreement, then the Stockholders shall
immediately take all necessary action to increase the number of directors of
the Company to seven, and to elect as directors to fill the seats thus
created two persons designated by the Investors (in addition to the two
directors the Investors are entitled to designate pursuant to Section
2.02(a)).
Section 2.04. Removal. Each Stockholder agrees to vote such
Stockholder's Securities at all meetings (and written actions in lieu of
meetings) of stockholders of the Company to remove any director, if so
requested by the person entitled to designate such director under Section
2.02 or 2.03 or if such director no longer fulfills the criteria for
designation of such director set forth in Section 2.02. Each Stockholder
agrees not to vote such Stockholder's Securities in favor of the removal of
any director other than in accordance with the preceding sentence.
Section 2.05. Vacancies. Each Stockholder agrees to vote such
Stockholder's Securities at all meetings (and written actions in lieu of
meetings) of stockholders of the Company to fill any vacancy on the Board
caused by the resignation or removal of any director with a nominee selected
by the person entitled to designate such director under Section 2.02 or
2.03.
Section 2.06. Meetings. The Board will meet not less often than
quarterly. Each director shall be given at least five days' prior notice of
any meeting and will be permitted to participate in any meeting by
telephone. Any director may call a meeting of the Board.
Section 2.07. Subsidiaries. The Company will cause the board of
directors of any subsidiaries of the Company to have the same composition as
the Board, as provided in this Article II, except with respect to INCON
International FSC, Inc. to the extent required to comply with applicable
laws, and to cause all such subsidiaries to be in compliance with the terms
of this Article II as if each such subsidiary was subject to the provisions
hereof to the same extent as the Company.
Section 2.08. Protective Provisions. If at any time the Company
proposes to undertake any of the following actions and, pursuant to the
Company's Bylaws or otherwise, approval of the stockholders of the Company
is required with respect thereto, each Stockholder shall, at the request of
the Investors, vote all Securities held by such Stockholder against such
proposed action:
(a) merge or consolidate with any person, sell or lease or otherwise
dispose of all or substantially all of its assets, sell or otherwise dispose
of any of its capital stock, enter into any reorganization or
recapitalization, or enter into any joint venture, partnership or similar
arrangement;
(b) engage in any line of business other than the business in which
the Company is currently engaged;
(c) (i) make any acquisition of stock, limited liability company
interests, partnership interests or other securities of any other person,
(ii) make any acquisition of assets of any other person, other than in the
ordinary course of the Company's business, or (iii) make any loan or advance
to any person or make any investment in or with any other person, other than
in the ordinary course of business;
(d) amend or restate its Articles of Incorporation or Bylaws;
(e) enter into or materially modify any debt financing arrangement
involving borrowed money, capital leases, installment purchases or
guarantees, in excess of $5,000,000 in each case;
(f) purchase, redeem or otherwise acquire any shares of its capital
stock or options, warrants, convertible securities or other rights to
acquire any such capital stock, other than (i) redemptions of capital stock
held by employees of the Company in connection with the termination of their
employment at a price per share equal to or less than the fair market value
thereof and (ii) acquisitions of stock in connection with "cashless"
exercises of employee stock options;
(g) enter into any transaction which results in the liquidation of
the Company; or
(h) buy, sell or lease any assets, borrow or lend any money, or deal
with or enter into or modify any other transactions or agreements (other
than bona fide employment arrangements entered into in the ordinary course
of business) with any director, officer or stockholder of the Company, or
any of their relatives or Affiliates, other than (i) as expressly
contemplated by this Agreement or (ii) those that are fully disclosed in
advance to the Company's Board of Directors and approved by a disinterested
majority of the Board of Directors, including at least one director
designated by the Investors.
Each Stockholder hereby irrevocably constitutes and appoints the
Investors the true and lawful attorneys of such Stockholder, with full power
of substitution, in the place and stead of such Stockholder and in the name
of such Stockholder, to vote all Securities held by such Stockholder,
whether at a meeting or pursuant to a written consent, in accordance with
the provisions of this Section 2.08.
ARTICLE III
TRANSFER RESTRICTIONS;
CO-SALE RIGHTS
Section 3.01. No Transfer. No Stockholder may sell, pledge, give,
assign, distribute, hypothecate, mortgage or transfer (all hereinafter
referred to as "transfer") any Securities owned by such Stockholder,
directly or indirectly, to any other person or entity, except upon
compliance with the other provisions of this Article III.
Section 3.02. Right of First Refusal. If any Stockholder desires to
transfer any of such Stockholder's Securities, such Stockholder (a
"Transferring Stockholder") will give each other Stockholder notice of the
proposed transfer (the "Offer Notice"). The Offer Notice will identify the
Securities which the Transferring Stockholder proposes to transfer (the
"Offered Securities"), the proposed transferee of such Securities (if such
transfer is not a Public Sale) and the price and other terms and conditions
upon which such Stockholder wishes to transfer the Offered Securities. Such
Offer Notice will also include an offer (the "Offer") to transfer to each
other Stockholder such other Stockholder's Proportionate Percentage of the
Offered Securities at the price and on the other terms and conditions as are
proposed for such transfer, which Offer by its terms shall remain open for a
period of 20 days from the date of such Offer Notice.
Section 3.03. Acceptance. Each other Stockholder shall give notice
to the Transferring Stockholder of his, her or its intention to accept the
Offer within 20 days after the date of the Offer Notice. The notice from
each other Stockholder shall set forth the portion of the Offered Securities
which such other Stockholder elects to purchase and shall specify the
maximum number of additional Offered Securities such Stockholder will
purchase if any other Stockholders decline to purchase their full
Proportionate Percentage of the Offered Securities. If any Stockholder
fails to subscribe for such Stockholder's full Proportionate Percentage of
the Offered Securities, the other subscribing Stockholders shall be entitled
to purchase such Offered Securities as are not subscribed for by such
Stockholder, up to the number of additional Offered Securities specified in
their notice in the same relative proportion in which they were initially
entitled to purchase the Offered Securities. The Transferring Stockholder
shall notify each Stockholder within five days following the expiration of
the 20-day period described above of the amount of Offered Securities which
each Stockholder will purchase pursuant to the foregoing sentence. Upon
such notice (the "Settlement Notice") by the Transferring Stockholder of the
Securities to be acquired by each other Stockholder, each such other
Stockholder shall be deemed to have accepted the Offer.
Section 3.04. Payment. If any of the Offered Securities are
subscribed for, the Settlement Notice shall specify the place, time and date
for the closing of the purchase and sale of the Offered Securities, which
date shall be the 40th day (60th day if the price proposed to be paid for
all of the Offered Securities, as specified in the Offer Notice, exceeds
$500,000) following the date of the Settlement Notice or such other place,
time and date as the parties may mutually agree. Upon the closing of any
such transfer, the subscribing Stockholders shall acquire from the
Transferring Stockholder, and the Transferring Stockholder shall transfer to
such Stockholders, the Offered Securities subscribed for by such
Stockholders at the price and on the terms specified in the Offer. The
Transferring Stockholder shall not be obligated to transfer any of the
Offered Securities to any such Stockholder at the closing if such
Stockholder defaults on his, her or its obligation to acquire such
Securities.
Section 3.05. Transfer to Third Parties. If the other Stockholders
do not subscribe for or acquire all of the Offered Securities, and if the
transfer proposed in the Offer Notice is a Public Sale, the Transferring
Stockholder shall have 180 days from the end of the foregoing 20-day period
to transfer all of the Offered Securities not purchased by the other
Stockholders at a price and on terms and conditions which are no more
favorable to the transferees than those set forth in the Offer. If the
transfer proposed in the Offer Notice is not a Public Sale, the Transferring
Stockholder shall have 180 days from the end of the foregoing 20-day period
to transfer all of the Offered Securities not purchased by the other
Stockholders to the person(s) and in the amounts set forth in the Offer
Notice, at a price and on terms and conditions which are no more favorable
to such person(s) than those set forth in the Offer. The Transferring
Stockholder may not transfer any of the Offered Securities to persons or in
amounts not set forth in the Offer Notice without first offering such
Offered Securities to the other Stockholders in accordance with the
provisions of this Article III.
Section 3.06. Co-Sale Rights. In addition to the other rights set
forth in this Article III, in connection with any proposed transfer pursuant
to this Article III which is not a Public Sale, each other Stockholder shall
have the right, by giving notice thereof to the Transferring Stockholder
within 20 days after receipt of the Offer Notice, to include in the proposed
transfer by the Transferring Stockholder the same proportion of its holdings
of each class of Securities as the Transferring Stockholder transfers of its
holdings of each class in such transaction. The Transferring Stockholder
will not transfer any Securities in a transaction covered by this Section
3.06 unless the transferee also acquires any Securities requested by the
other Stockholders pursuant to the preceding sentence to be included in such
transfer, at the respective price and terms specified in the Offer Notice,
and as to which the other Stockholders comply with the following paragraph.
The Transferring Stockholder shall have 180 days after the close of the 20-
day period specified above to transfer the Securities described in the Offer
Notice at the price and on the terms specified therein, together with any
additional Securities to be included in such transfer pursuant to the
preceding paragraph.
Any Stockholder whose Securities are being transferred pursuant
hereto, in order to be entitled to have such Securities transferred, shall
deliver on no less than 15 days notice from the Transferring Stockholder, at
the time and place specified by the Transferring Stockholder, certificates
representing the Securities to be transferred, duly endorsed for transfer to
the transferee designated by the Transferring Stockholder, free and clear of
all liens, restrictions, claims and encumbrances, except as provided in this
Agreement and under applicable securities laws.
Section 3.07. Exceptions to Restrictions. Notwithstanding any other
provision of this Agreement, the following transfers of Securities may be
consummated without restriction:
(a) transfers of Securities of a Stockholder, representing an
aggregate of not more than 10% of the Securities of any class held by such
Stockholder, to the trustees of a trust revocable by such Stockholder alone,
the beneficiaries of which consist solely of the Stockholder and transferees
enumerated in clause (d) below;
(b) transfers of Securities between a Stockholder and such
Stockholder's guardian or conservator;
(c) transfers of Securities of a deceased Stockholder to the
Stockholder's executors or administrators or to trustees under the
Stockholder's will and thereafter to transferees enumerated in clause (d)
below;
(d) transfers of Securities of a Stockholder, representing an
aggregate of not more than 10% of the Securities of any class held by such
Stockholder, to any Immediate Family Member of the Stockholder (or to
custodians for the benefit of any Immediate Family Member of the
Stockholder);
(e) Public Sales of less than 10,000 shares of Common Stock in the
aggregate (such number to be appropriately adjusted for stock splits, stock
dividends, combinations, recapitalizations and similar events affecting the
Common Stock) by a Stockholder in any twelve-month period;
(f) charitable gifts of less than 5,000 shares of Common Stock in the
aggregate (such number to be appropriately adjusted for stock splits, stock
dividends, combinations, recapitalizations and similar events affecting the
Common Stock) by a Stockholder in any twelve-month period; and
(g) the grant of the Option by Xxxx Xxxxx to the Investors and the
transfer of shares of Common Stock to the Investors upon exercise thereof;
provided, however, that (i) all Securities transferred pursuant to
clauses (a), (b), (c) and (d) of this Section 3.07 shall remain subject to
the restrictions contained herein in the hands of the transferee, (ii) no
transfer under any of such clauses may be effected or shall be deemed to
have occurred unless the transferee has complied with Section 5.05 and (iii)
such Securities may not be further transferred by the transferees under
clauses (a), (b), (c) and (d) above.
Section 3.08. Legends. All certificates or instruments representing
Securities issued to any party to this Agreement shall bear substantially
the following legend:
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND OTHER OBLIGATIONS CONTAINED IN A STOCKHOLDERS AGREEMENT
BETWEEN THE COMPANY AND CERTAIN OF ITS STOCKHOLDERS, A COPY OF WHICH
IS ON FILE WITH THE COMPANY AND WILL BE FURNISHED WITHOUT COST TO THE
HOLDER HEREOF UPON WRITTEN REQUEST TO THE CLERK.
ARTICLE IV
STANDSTILL
Section 4.01. Proxy Solicitation. During the Restricted Period, no
Stockholder shall, directly or indirectly, take, or cause any of its or his
Affiliates to take, any of the following actions without the prior written
consent of the Board, (i) make or in any way participate in any
"solicitation" of "proxies" (as such terms are used in the proxy rules of
the Securities and Exchange Commission) to vote, or seek to advise or
influence any person with respect to the voting of any voting securities of
the Company or any of its Affiliates or make any communication exempted from
the definition of "solicitation" by Rule 14a-1(l)(2)(iv) under the
Securities and Exchange Act of 1934, as amended (the "1934 Act"), (ii) form,
join or in any way participate in a "group" (within the meaning of Section
13(d)(3) of the 0000 Xxx) with respect to any voting securities of the
Company or any of its Affiliates, (iii) grant any proxy or enter into any
voting trust or voting agreement or any other arrangement of a similar
effect, (iv) seek election to the Board, (v) disclose any intention, plan or
arrangement inconsistent with any of the foregoing, or (vi) advise, assist
or encourage any other persons in connection with any of the foregoing.
Section 4.02. Open-Market Purchases. During the Restricted Period,
no Stockholder shall purchase, or cause any of its or his Affiliates to
purchase, any shares of Common Stock on the Emerging Company Market of the
American Stock Exchange or on any national securities exchange or over-the-
counter market without the prior written consent of the Board.
Section 4.03. Exception. Notwithstanding anything contained herein
to the contrary, if for whatever reason (including insufficient legally
available funds) the Company fails to repurchase on the Repurchase Date (as
defined in the Investment Agreement) all Securities that it is required to
repurchase under Section 5.11 of the Investment Agreement, the provisions of
Sections 4.01 and 4.02 of this Agreement shall thereupon cease to apply to
the Investors.
ARTICLE V
GENERAL PROVISIONS
Section 5.01. Notices. Any notice or other communication given
pursuant to this Agreement shall be in writing and shall be personally
delivered, sent by nationally recognized overnight courier, or mailed by
first class certified or registered mail, postage prepaid, return receipt
requested as follows:
(a) If to any Stockholder other than the Investor, at the
address of such Stockholder on the Company's stock records
(b) If to the Investor:
c/o Ampersand Ventures
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxx
with a copy to:
Xxxxxx, Xxxx & Xxxxxxx
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
(b) If to the Company:
Intelligent Controls, Inc.
00 Xxxxxxxxxx Xxxx Xxxx
P. O. Xxx 000
Xxxx, XX 00000
Attn: President
with a copy to:
Verrill & Xxxx, LLP
Xxx Xxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
or to such other address as the parties shall have designated by
notice to the other parties.
Section 5.02. Binding Effect and Benefit. This Agreement shall be
binding upon, and inure to the benefit of, the Company and the Stockholders
and their respective heirs, legal representatives, successors and assigns.
Section 5.03. Waivers, Entire Agreement, Modifications. This
Agreement and the rights and obligations herein may not be waived, amended
or modified except in writing and signed by each of the parties hereto. A
waiver in writing on one occasion shall not be construed as a consent to or
a waiver of any right or remedy on any future occasion. This writing
contains the full, final and exclusive statement of the agreement of the
parties hereto with respect to the matters contained herein. No promises,
agreements or representations with respect to the matters contained herein
shall be binding upon any of the parties unless set forth herein.
Section 5.04. Governing Law, Construction. This Agreement shall be
governed by and construed and enforced in accordance with the internal laws
of the State of Maine. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision hereof shall be prohibited by or
invalid under any such law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating or nullifying
the remainder of such provision or any other provisions of this Agreement.
Section 5.05. Transferees of Stockholders; Additional Stockholders.
Except for transfers consummated in compliance with Sections 3.02 through
3.06 or pursuant to Section 3.07(e) or (f), no Stockholder shall transfer
any Securities (except to the Company) unless the person, firm, corporation
or other entity so acquiring such Securities shall first become a signatory
to this Agreement, by signing a supplemental signature page hereto, agreeing
to be bound by all the terms of this Agreement, and each such transferee
shall thereupon become a party hereto. The Company shall not transfer any
Securities on its books which have been transferred in violation of this
Agreement, or treat as the owner of such Securities, or accord the right to
vote as owner or pay dividends or interest to, any person or entity to which
any Securities shall have been transferred, from and after any transfer of
any Securities made in violation of this Agreement.
Section 5.06. Failure to Deliver Securities. If any Stockholder or
transferee of a Stockholder fails to deliver the Securities to be acquired
by any other Stockholder or by any third party hereunder, the acquiror may
elect to establish a segregated account in the amount of the price to be
paid therefor, such account to be turned over to such Stockholder or
transferee upon delivery of the certificates or instruments representing the
Securities. If a segregated account is so established, the Company shall
take such action as is appropriate to transfer record title to the
Securities from such Stockholder or transferee to the acquiror. Each
Stockholder and each transferee of a Stockholder subject to this Section
5.06 hereby irrevocably grants the Company a power of attorney to effectuate
the purposes of this Section 5.06.
Section 5.07. Counterparts. This Agreement may be executed in one or
more counterparts, and with counterpart signature pages, each of which shall
be an original, but all of which together shall constitute one Agreement.
Section 5.08. Third Party Beneficiaries. Nothing in this Agreement
shall be construed as giving any person, firm, corporation or other entity,
other than the parties hereto and their permitted successors and assigns,
any right, remedy or claim under or in respect of this Agreement or any
provision thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as a sealed instrument as of the date and year first above written.
INTELLIGENT CONTROLS, INC.
By:__________________________ _______________________________
Name: Xxxx Xxxxx
Title:
AMPERSAND SPECIALTY MATERIALS _______________________________
AND CHEMICALS III LIMITED Xxxx X. Xxxxx
PARTNERSHIP
By: ASMC-III Management Company _______________________________
Limited Partnership Xxxxx X. Xxxxxx
By: ASMC-III MCLP LLP, its general _______________________________
partner Xxxxx X. Xxxxx
By:_______________________________ _______________________________
Xxxxxxx X. Xxx, General Partner Xxxx Xxxxx, as custodian for Xxxxxx
X. Xxxxx
AMPERSAND SPECIALTY MATERIALS _______________________________
AND CHEMICALS III COMPANION Xxxxx X. Xxxxx XX, Trustee, the
Xxxxxx
FUND LIMITED PARTNERSHIP X. Xxxxx Trust dated December 4, 1994
By: ASMC-III Management Company LUKAS BROTHERS
Limited Partnership
By:____________________________
By: ASMC-III MCLP LLP, its general Xxxx Xxxxx, General Partner
partner
By:_______________________________
Xxxxxxx X. Xxx, General Partner
