Exhibit D
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (herein the "Agreement") is made
and entered into this 2nd day of May, 2000, by and among the
following parties (referred to herein collectively as the
"parties" or individually as a "Party"):
(i) Environmental Opportunities Fund, L.P., Environmental
Opportunities Fund II, L.P., Environmental Opportunities Fund II
(Institutional), L.P. and Environmental Opportunities Fund
(Cayman), L.P., as holders of all of the issued and outstanding
shares of the Series B Convertible Preferred Stock of the
Corporation (collectively, the "Series B Preferred
Shareholders");
(ii) Hanseatic Americas, LDC, as the holder of all of the
issued and outstanding shares of Series C Convertible Preferred
Stock of the Corporation (the "Series C Preferred Shareholder");
(iii) Hanseatic Americas, LDC, Environmental
Opportunities Fund II, L.P. and Environmental Opportunities Fund
II (Institutional), L.P., as the holders of the all of the issued
and outstanding shares of Series D Convertible Preferred Stock of
the Corporation (collectively, the "Series D Preferred
Shareholders," and together with the Series B Preferred
Shareholders and the Series C Preferred Shareholders, the
"Preferred Shareholders" and individually as a "Preferred
Shareholder");
(iv) Xxxxxx Xxxxxx, an individual residing at 0000 XX 000xx
Xxxxxx, Xxxxxxxxx, Xxxxxxx 00000 ("Xxxxxx" and together with the
Preferred Shareholders, the "Shareholders"); and
(v) Xxxxxx Industries Inc., a Florida corporation (the
"Corporation").
W I T N E S S E T H:
WHEREAS, the Preferred Shareholders are presently the
holders of record of all of the issued and outstanding shares of
the Series B, Series C and Series D Convertible Preferred Stock
of the Corporation; and
WHEREAS, in connection with the Corporation's sale and
delivery of the Series D Preferred Stock, the Corporation and
Xxxxxx have agreed to enter into this Agreement; and
WHEREAS, the Shareholders desire to make certain provisions
as to the governance of the Corporation;
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt of which is
hereby acknowledged, the Shareholders and the Corporation have
agreed, and they do agree, as follows:
Article 1.
Definitions
Section 1.1. Defined Terms. For purposes of this
Agreement, the terms hereinafter set forth shall have the
following definitions unless otherwise specifically stated.
"Affiliate" shall mean any person or entity controlling,
controlled by or under common control with the subject
referenced.
"Articles" shall mean the Corporation's Amended and Restated
Articles of Association, as from time to time amended, including
all Certificates of Designation of Preferred Stock, respectively.
"GAAP" shall mean generally accepted accounting principles,
applied on a consistent basis.
"Indebtedness" of any Person means all obligations,
contingent or otherwise, which in accordance with GAAP should be
classified upon a Person's balance sheet as liabilities and shall
include, in any event and without limitation, (i) indebtedness
for borrowed money, (ii) indebtedness incurred or assumed in
connection with the acquisition of assets, (iii) liabilities
secured by any Lien on property owned or acquired by such Person,
whether or not the liability secured thereby shall have been
assumed by such Person, (iv) capitalized lease obligations and
(v) all guarantees by such Person of Indebtedness of another
Person.
"Person" (whether or not such term is capitalized) means any
individual, partnership, corporation, joint venture, trust,
business trust, governmental entity, union, association,
instrumentality, commission or other entity.
"Shareholder's Stock" shall mean Stock referred to as being
owned by a Shareholder at any point in time.
"Stock" shall mean the shares of the Corporation's capital
stock, of whatever class, that may be issued and outstanding from
time to time.
"Subsidiaries" means the Persons in which the Corporation
shall at any time, directly or indirectly, beneficially own an
equity interest equal to or more than 50%, or which the
Corporation shall, at any time, directly or indirectly control.
Article 2.
Governance of the Corporation
Section 2.1. Officers and Directors of the Corporation.
(a) The Corporation and the Shareholders agree that the
Board of Directors of the Corporation shall consist of five (5)
natural persons. It is agreed that immediately following the
execution of this Agreement and thereafter during the Term (as
hereinafter defined) of this Agreement, the Shareholders shall
vote, and shall cause their respective Affiliates to vote, their
shares of Stock, and those shares beneficially owned by them,
respectively (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934), and the Corporation shall take
all such other action, to elect or appoint two (2) directors
nominated by written instruction delivered by Series D Preferred
Shareholders holding two-thirds or more of the outstanding shares
of Series D Preferred Stock of the Corporation (the "Required
Preferred Shareholders") as members of the Corporation's Board of
Directors (the "Preferred Shareholder Directors"), and to elect
or appoint as successors thereto, respectively, solely those
replacements nominated as aforesaid.
(b) Without limiting any other provision contained in
paragraph (a) immediately preceding, in the event that the
Preferred Shareholder Directors have not been elected or
appointed prior to June 30, 2000, the Required Preferred
Shareholders shall have the right, exercisable by written notice
to the Corporation, forthwith to require the Corporation to
expand its Board of Directors to consist of nine natural persons,
four of whom shall be nominated by the Required Preferred
Shareholders (who shall be the Preferred Shareholder Directors
hereunder) and who shall serve until compliance in full with
paragraph (a) immediately preceding.
(c) The Board of Directors, may appoint such committees as
they deem appropriate, with the authority to act on all matters
delegated to such committee in accordance with the Bylaws or the
Florida Business Corporation Act. The Shareholders and the
Corporation agree that immediately following the execution of
this Agreement and thereafter during the Term, such committees
shall be created and shall include (i) an executive committee,
(ii) an audit and finance committee and (iii) a compensation
committee. The duties and functions of such committees shall be
set forth in the Bylaws or in the action of the Board of
Directors creating such committees; provided that the mandate of
each such committee shall be subject to approval by each of the
Preferred Shareholder Directors. Each of the Preferred
Shareholder Directors shall have the right to serve on each of
the committees; provided, however, that a majority of the
directors serving on such committees shall be independent
directors.
Section 2.2. Change in Control Event. Notwithstanding
anything in Section 2.1 to the contrary, in the event the
Corporation fails to achieve certain target results of operations
during the third quarter of 2000 (a "Change in Control Event"),
which targets are set forth on Schedule 2.2 hereto, the Required
Preferred Shareholders may notify Xxxxxx of their intent to
effect a change in control of the Corporation. If the Required
Preferred Shareholders notify Xxxxxx of their intention to effect
a change in control, the Corporation and its Board of Directors
and the Shareholders will obtain the immediate resignation of a
standing independent director from the Board of Directors,
failing which the Board of Directors shall forthwith be expanded
by two. The vacancy or vacancies in the Board of Directors
resulting from the resignation of such standing independent
director (other than the Preferred Shareholder Directors) or such
expansion shall be filled by a nominee of the Required Preferred
Shareholders. During the Term of this Agreement, the
Shareholders agree to vote, and shall cause their respective
Affiliates to vote, their shares of Stock, and those shares
beneficially owned by them, respectively, to elect and reelect
the director nominees of the Required Preferred Shareholders and
any replacements therefor.
Section 2.3. Actions of Board of Directors and
Shareholders.
(a) Except as otherwise expressly provided herein, by law
or in the Articles or Bylaws as in effect on the date hereof, all
actions of the Board of Directors or shareholders of the
Corporation shall be taken upon or pursuant to a majority vote of
the Board of Directors or of the votes held by beneficial owners
of shares of Stock entitled to vote, respectively, who are
present in person or by proxy at the corresponding meeting
(provided a quorum exists).
(b) During the Term, the Corporation, the Board of
Directors (including any committee or subcommittee thereof) and
the Shareholders shall not take any of the actions, enter into
any commitment to take any of the actions, or otherwise agree to
take any of the actions, specified below unless such action has
been first approved by all of the Preferred Shareholder
Directors:
(i) the entering into or approval by the Corporation
of any joint venture, partnership or merger plan or similar
transaction;
(ii) the making by the Corporation, within any twelve
month period beginning on the date hereof, of any material
acquisitions or sales of any material assets (other than
sales of inventory or superseded or obsolete equipment in
the ordinary course of business) or significant businesses;
(iii) the issuance of capital stock or convertible
securities of the Corporation, in a single transaction or in
a series of related transactions within any twelve month
period (other than issuances of capital stock pursuant to
(a) the exercise of options granted or to be granted under
the corporation's 1996 Executive Incentive Compensation
Plan, (b) the conversion of the Corporation's outstanding
8.25% Convertible Subordinated Notes due 2003 (the "Notes")
pursuant to the terms of the Notes as they exist as of the
date hereof, and (c) upon the exercise of warrants and other
convertible securities outstanding as of the date hereof or
issuable pursuant to the Articles as in effect on the date
hereof);
(v) the incurrence, in a single transaction or in a
series of related transactions within any twelve month
period beginning on the date hereof, of any Indebtedness by
the Corporation in an amount exceeding $250,000 in the
aggregate (other than Indebtedness which constitutes
financing for commitments of the Corporation or any
Subsidiary thereof existing as of the date hereof, the
refinancing or successive refinancing of Indebtedness of the
Corporation or any Subsidiary (other than the Notes)
existing as of the date hereof, and Indebtedness which
constitutes vendor financing or otherwise incurred by the
Corporation in the ordinary course of business);
(vi) the employment of a chief executive officer, chief
operating officer or chief financial officer of the
Corporation or of senior management personnel having
substantially similar responsibilities; and
(c) The Preferred Shareholders agree that the exercise of
rights granted to it under Section 2.3(b) above shall be made in
good faith and subject to fiduciary obligations owed to the
corporation and its shareholders.
Section 2.4. Dealings in Good Faith; Best Efforts. Each
Shareholder agrees to act in good faith with respect to the other
parties hereto in exercising its rights and discharging its
obligation under this Agreement. Each party further agrees to
use its best efforts to ensure that the purposes of this
Agreement are realized during the Term.
Article 3.
The Giving of Notices Required by This Agreement
Section 3.1. Addresses. The addresses of the Corporation
and the Shareholders, which shall be considered to be their last
known addresses unless subsequently changed in accordance with
the provisions of this Agreement, are as follows:
To the Corporation:
Xxxxxx Industries Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxx
with copies to:
Xxxxxxxxx Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxx, Esq.
To the Series B
Shareholders:
x/x Xxxxxxx Xxxxxx Xxxxxx
0000 Xxxxx Tower
000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. XxXxxxx
To the Series C
Shareholders:
Hanseatic Americas LDC
000 Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxxx
with copies to:
Krugman & Kailes LLP
Park 00 Xxxx - Xxxxx Xxx
Xxxxxxxxxxx, Xxx Xxxxxx
00000
Attn: Xxxxxx Xxxxxx, Esq.
To the Series D
Shareholders:
At their respective
addresses as listed
above.
Any Party may change its address for the purposes of this
Agreement by giving notice of such change of address to the other
Parties in the manner herein provided for giving notice.
Section 3.2. Form of Notice. Any notice or communication
hereunder must be in writing, and may be personally delivered or
given by reputable overnight courier, or by telecopier. Any
notice so given shall be effective upon receipt if personally
delivered or telecopied, or one day after delivery to nationally
recognized courier for next-day delivery. Any party may change
the address to which notices are to be sent by giving written
notice of such change of address to the other parties in the
manner herein provided for giving notice.
Section 3.3. Failure to Notify of Changed Address. It
shall be the responsibility of each of the Parties to this
Agreement to notify all other Parties of their respective
addresses and any changes thereof, and any objections to the
performance of any act required hereunder based upon a failure to
receive a notice mailed in conformity with the provisions of this
Agreement shall be meritless.
Article 4.
Termination or Modification of the Agreement
Section 4.1. Termination. This Agreement shall terminate,
in whole or in part, in accordance with the following provisions
(the period of duration of the applicable provisions of this
Agreement to be referred to herein as the "Term").
(a) Bankruptcy. The Agreement and all provisions hereof
shall terminate upon the dissolution of the Corporation or upon
the filing of a voluntary or involuntary petition by or against
the Corporation under Chapter 7 or Chapter 11 of the Bankruptcy
Code upon the appointment of a receiver for the Corporation.
(b) Sale of Stock.
(i) Sections 2.2 and 2.3 of this Agreement shall
terminate on the date on which (x) the Preferred
Shareholders in the aggregate beneficially own less than 50%
of the shares of Stock owned by them as of the date hereof
or (y) the Preferred Shareholders in the aggregate
beneficially own shares of Stock entitling them to cast
votes totaling less than 20% of all votes cast by shares of
Stock entitled to vote or (z) there have occurred one or
more Early Conversion Events under Section 5(b) of the
Certificates of Designation of the Corporation's Series B
Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock with respect to shares totaling in the
aggregate at least 50% of the shares of Stock owned by the
Preferred Shareholders as of the date hereof.
(ii) This Agreement and all provisions hereof shall
terminate on the date on which (x) the Preferred
Shareholders in the aggregate beneficially own less than 50%
of the shares of Stock owned by them as of the date hereof
and the Preferred Shareholders in the aggregate beneficially
own shares of Stock entitling them to cast votes totaling
less than 20% of all votes cast by shares of Stock entitled
to vote or (y) there have occurred one or more Early
Conversion Events under Section 5(b) of the Certificates of
Designation of the Corporation's Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock with
respect to shares totaling in the aggregate at least 50% of
the shares of Stock owned by the Preferred Shareholders as
of the date hereof.
(c) Specific Shareholder. This Agreement shall terminate
as to any specific Shareholder upon the date such Shareholder
ceases to own any shares of Stock
Section 4.2. Modification. This Agreement may be
modified, in whole or in part, by amendment upon the agreement of
a majority of the directors of the Corporation and eighty percent
(80%) in voting interest of the signatory Shareholders to this
Agreement; provided, however, that no such amendment may create
any additional obligation for any Shareholder without his written
concurrence.
Article 5.
Miscellaneous
Section 5.1. Successors. This Agreement shall be binding
upon the Parties hereto, their heirs, administrators, successors,
executors and assigns, and the Parties hereto do covenant and
agree that they themselves and their respective heirs, executors,
successors, administrators and assigns will execute any and all
instruments, releases, assignments and consents that may be
reasonably required of them to more fully execute the provisions
of this Agreement. Notwithstanding the foregoing: (i) Xxxxxx
shall not assign or transfer any interest in the Corporation
(other than sales pursuant to Rule 144 promulgated by the
Securities and Exchange Commission including paragraph (k)
thereunder, and other than in a public offering pursuant to an
effective registration statement) unless the transferee shall
agree in writing acceptable to the Required Preferred
Shareholders to be bound by the provisions hereof as if Xxxxxx,
(ii) the Preferred Shareholders, and any of them, may assign or
transfer any interest in the Corporation, including any rights,
benefits and privileges under this Agreement, it being
acknowledged that no duties or obligations hereunder shall
thereby be assumed by any person not controlling, controlled or
under common control with such Preferred Shareholder, and (iii)
the Corporation may not assign or transfer any rights or
obligations hereunder.
Section 5.2. Counterparts. This Agreement may be executed
in several counterparts, each of which shall serve as an original
for all purposes, but all copies of which shall constitute but
one and the same Agreement.
Section 5.3. Headings. All headings set forth in this
Agreement are intended for convenience only and shall not control
or affect the meaning, construction or effect of this Agreement
or of any of the provisions thereof.
Section 5.4. Governing Law. This Agreement shall be
governed by and shall be construed and enforced in accordance
with the laws of the State of Florida.
Section 5.5. Waiver. The waiver by any Party hereto of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any Party.
Section 5.6. Entire Agreement. This Agreement constitutes
the entire Agreement of the Parties hereto with respect to the
transactions contemplated hereby, and it is hereby agreed that
any prior oral or written agreements concerning the sale or
disposition of Stock shall be null and void.
Section 5.7. Severability. If any provision of this
Agreement shall be held to be illegal or unenforceable, such
illegality or unenforceability shall extend to that provision
solely, and the remainder of this Agreement shall be enforced as
if such illegal or unenforceable provision were not incorporated
herein.
Section 5.8. Specific Performance. The rights conferred
by this Agreement are hereby declared by the Parties hereto to be
unique rights, the loss of any of which is not susceptible to
monetary quantification. Consequently, the Parties hereto agree
that an action for specific performance of the obligations
created by this Agreement is a proper remedy for the breach of
its provisions. If the Parties to this Agreement are forced to
institute legal proceedings to enforce their rights in accordance
with the provisions of this Agreement, they shall be entitled to
recover their reasonable attorneys' fees and court costs incurred
in enforcing such rights.
Section 5.9. Business Days. Whenever the terms of this
Agreement call for the performance of a specific act on a
specified date, which date falls on a Saturday, Sunday or legal
holiday, the date for the performance of such act shall be
postponed to the next succeeding regular business day following
such Saturday, Sunday or legal holiday.
IN WITNESS WHEREOF, the Parties to this Agreement have
hereunto set their names on this, the 2nd day of May, 2000.
SERIES B PREFERRED SHAREHOLDERS:
ENVIRONMENTAL OPPORTUNITIES
FUND II, L.P.
By: Fund II Mgt. Co., LLC
Its General Partner
Per: s/Xxxxx X. XxXxxxx
-------------------------
Name: Xxxxx X. XxXxxxx
Title: Manager
ENVIRONMENTAL OPPORTUNITIES
FUND II (INSTITUTIONAL),
L.P.
By: Fund II Mgt. Co., LLC
Its General Partner
Per: s/Xxxxx X. XxXxxxx
-------------------------
Name: Xxxxx X. XxXxxxx
Title: Manager
SERIES C PREFERRED SHAREHOLDERS:
HANSEATIC AMERICAS LDC
By: Hansabel Partners LLC
By: Hanseatic Corporation
By: s/Xxxx X. Xxxxxxxxx
--------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President
SERIES D PREFERRED SHAREHOLDERS:
ENVIRONMENTAL OPPORTUNITIES
FUND II, L.P.
By:Fund II Mgt. Co., LLC
Its General Partner
Per: s/Xxxxx X. XxXxxxx
------------------------
Name: Xxxxx X. XxXxxxx
Title: Manager
ENVIRONMENTAL OPPORTUNITIES
FUND II (INSTITUTIONAL),
L.P.
By:Fund II Mgt. Co., LLC
Its General Partner
Per: s/Xxxxx X. XxXxxxx
-------------------------
Name: Xxxxx X. XxXxxxx
Title: Manager
HANSEATIC AMERICAS LDC
By: Hansabel Partners LLC
By: Hanseatic Corporation
By: s/Xxxx X. Xxxxxxxxx
------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President
XXXXXX INDUSTRIES INC.:
By: s/Xxxx X. Xxxxxx
-----------------------
Name: Xxxx X. Xxxxxx
Title: Chief Executive
Officer
S/Xxxxxx Xxxxxx
--------------------------
XXXXXX XXXXXX
ADDENDUM
The undersigned Required Preferred Shareholders hereby agree
with each other and instruct the Corporation in accordance with
Section 2.1(a) of the foregoing agreement that, until further
instruction by the Required Preferred Shareholders, the Preferred
Shareholder Directors shall be Xxxx X. Xxxxxxxxx and Xxxxxxx X.
Xxxxx.
IN WITNESS WHEREOF, the Required Preferred Shareholders have
hereunto set their names on this 2nd day of May, 2000.
ENVIRONMENTAL OPPORTUNITIES
FUND II, L.P.
By: Fund II Mgt. Co., LLC
By: s/Xxxxx X. XxXxxxx
---------------------------
ENVIRONMENTAL OPPORTUNITIES
FUND II (INSTITUTIONAL, L.P.)
By: Fund II Mgt. Co., LLC
By: s/Xxxxx X. XxXxxxx
--------------------------
HANSEATIC AMERICAS LDC
By: Hansabel Partners LLC
By: Hanseatic Corporation
By: s/Xxxx X. Xxxxxxxxx
----------------------
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