SECOND AMENDMENT TO
EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT is made
and entered as of the 1st day of March, 2004 (the
"Amendment"), by and among MDI Technologies, Inc., a Delaware
corporation ("MDI-Del"), MDI Technologies, Inc., a Missouri
corporation (formerly known as Management-Data, Inc.) ("MDI-
Mo") and Xxxx Xxxxxx, an individual ("Employee").
WHEREAS, Employee currently is an officer of both MDI-
Del and MDI-Mo and an employee of MDI-Mo; and
WHEREAS, Employee and MDI-Mo previously have entered
into an Employment Agreement effective as of August 23, 2000,
which was amended on January 31, 2003 (as amended, the
"Employment Agreement"); and
WHEREAS, Employee and MDI-Del also previously have
entered into a Shareholder Agreement dated as of October 20,
2003 (the "Shareholder Agreement"), by which MDI-Del and
Employee made certain agreements relating to shares of MDI-
Del stock owned by Employee; and
WHEREAS, the parties now desire to rescind the
Shareholder Agreement and to amend the Employment Agreement
to provide Employee with certain benefits and to provide MDI-
Del and MDI-Mo (collectively, the "Company") with certain
covenants concerning Employee's stock;
NOW, THEREFORE, IN CONSIDERATION of the premises and
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
A. A new Section 12 hereby is added to the Employment
Agreement to read in its entirety as follows:
12. Covenants Related to Employee's Stock.
a. Shareholder Agreement. The Shareholder
Agreement is rescinded and is void ab initio.
b. Transfer Restrictions. Employee shall
not, other than as expressly permitted by this Section 12,
transfer directly or indirectly any or all shares of the
Company's common stock that the Employee now owns of record
of beneficially and all shares of the Company's common stock
that Employee at any time hereafter acquires of record or
beneficially (collectively, the "Shares"). The following
transfers of Shares are permitted: (i) to a trust for
Employee's sole benefit, of which Employee is the sole
grantor and a trustee, which is revocably by Employee at any
time or as to which Employee is able at any time to revest in
his name title to the Shares transferred to such trust; (ii)
to anyone if the specific transfer (or plan of transfer) is
approved by the Company's Board of Directors or a duly
constituted committee of the Board; and (iii) to anyone in a
sale conducted
through a licensed securities broker on the public securities
markets so long as (A) the number of Shares sold on any given
day does not exceed 10% of the Company's average daily
trading volume as reported on the Company's principal
securities exchange or quotation service for the 20 trading
days ending ono the last trading day of the calendar month
preceding the proposed transfer, (B) the number of Shares
sold, when added together with all previous sales of Shares
by Employee during the preceding three months, does not
exceed 200% of the Company's average weekly trading volume as
reported on the Company's principal securities exchange or
quotation service for the 50 trading days (10 weeks
consisting of 5 trading days each) ending on the last trading
day of the calendar month preceding the proposed transfer,
and (C) all applicable securities laws and rules (such as
federal Rule 144) are complied with, in the opinion of legal
counsel for the Company. Employee shall have the burden of
demonstrating to the Company that the foregoing numerical
limits are observed. For this purpose, a "week" shall
consist of five consecutive trading days, even if those days
occur in different calendar weeks. Employee shall not own
Shares in "street name" or other nominee accounts, and all
certificates representing Shares shall prominently bear the
following legend on the face or reverse thereof: "The shares
evidenced by this certificate are subject to substantial
restrictions on transfer under an Employment Agreement with
the issuer, and may not be transferred except in accordance
therewith." For purposes of this paragraph, Shares are
beneficially owned if they would require to be included in a
report of ownership by Employee on federal Schedule 13D
(whether or not Employee then is required to make such a
report). The transfer restrictions imposed by this Section
12 shall continue to apply to any trust or other person who
obtains Shares pursuant to clauses (i) or (ii) of this
paragraph, and any certificates representing such Shares
shall continue to bear the legend specified above and shall
continue to be treated as Shares owned by Employee for all
purposes of this Section 12 and the Trust mentioned below.
The Company shall remove the foregoing legend from any
certificate representing Shares sold in conformity with
clause (iii) of this paragraph. The Company may ignore any
transfers purported to be taken in contravention of this
Agreement; the Company may elect to recognize any such
purported transfer on a case-by-case basis, but only if the
purported transferee executes and delivers an instrument
satisfactory to the Company which causes the transferee to be
bound by this Section 12 and the VTA.
c. Life Insurance. During Employee's life,
the Company shall obtain and shall maintain a life insurance
policy (the "Life Policy") on Employee's life payable to
Employee's estate or to any trust or other person designated
by the Employee to the Company in a writing signed and dated
by Employee with his signature notarized. The Life Policy
shall pay a $4 million cash benefit to its beneficiary upon
Employee's death. The initial Life Policy shall be mutually
agreeable to the Company and Employee. Employee shall own
the Life Policy and, with the Company's consent, may amend,
adjust, or replace it (and may replace the insurance
underwriter) from time to time. The Company and the Employee
shall provide each other with a copy of the Life Policy as it
is in effect from time to time.
d. Voting Trust. Upon Employee's death or
legal incapacity, all of Employee's Shares shall be placed
into a voting trust (the "Trust") as promptly as possible.
Employee and/or all persons holding Shares of record that are
beneficially owned by Employee and/or Employee's executor,
representative, attorney-in-fact, trustee, or other
persons(s) ("Executor") empowered to act for Employee and/or
Employee's estate and/or revocable trust and/or testamentary
trust and/or other entity (whichever may own Shares)(the
"Estate") shall executed and deliver to the Company and the
voting trustee (the "Trustee") the Voting Trust Agreement
("VTA") substantially in the form attached hereto as Exhibit
A. If the Estate distributes Shares prior to execution of the
VTA, the Estate shall cause the distributees to execute and
deliver the VTA. During his life Employee shall take all
steps necessary to cause his Estate and any persons holding
Shares of record beneficially for him to be subject to this
Agreement and to execute and deliver the VTA upon his death
or incapacity. The initial Trustee shall be designated by
the Company's Board of Directors; thereafter, successor
Trustees (if any) shall be appointed in accordance with the
VTA. The Executor or Estate may transfer or distribute
interests in the VTA to Employee's legatees, heirs,
beneficiaries, or other persons entitled to some or all of
the Shares absent this Agreement, all in accordance with the
VTA. The term of the Trustee shall be 20 years, and the
Trust in all respects shall be governed by the VTA.
Notwithstanding the foregoing, the VTA shall not be executed,
and this Section 12(d) shall no longer apply, if at the time
of Employee's death or incapacity one of the events has
occurred which, under the terms of the VTA, would require the
VTA to terminate.
e. Buy-Sell; Secondary Offering. After
Employee's death, the VTA will provide that the Trust shall
sell Shares in an underwritten secondary offering of Shares
conducted by the Company if, and to the extent that, such an
offering is conducted under the terms specified in the VTA.
Correspondingly, the VTA will require the Company
periodically to consult with a competent underwriter to
determine the efficacy, within the requirements of the VTA,
of conducting a secondary offering without substantial and
adversely affecting either he stock price of the Company's
common stock or the Company's capital plans and, if such an
offering is efficacious, the Company shall cause that
offering to occur as provided in the VTA.
f. Survival. This Section 12 shall survive
until the VTA is executed by all parties thereto and all
Shares are duly deposited with the Trustee in the Trust,
notwithstanding: anything else in this Agreement to the
contrary other than this Section 12(f); the termination of
Employee's employment for any reason under any circumstances;
Employee's disability, incapacity, or retirement; a merger,
consolidation, or other similar event involving the Company;
the termination of this Agreement for any reason under any
circumstances; or, any act or omission of Employee or the
Company. Paragraphs (b) through (e) of this Section 12 shall
not survive any mutual agreement of the parties in writing
that expressly specifies that this Section 12 shall be
terminated or abandoned; however, nothing the parties do
shall restore the Shareholder Agreement except pursuant to
the last sentence of this paragraph. If the VTA is not
executed by the parties because it is not required to be (or
because all parties at that time agree not to do so), then
paragraphs (a), (b), (c), and (f) of this Section 12 shall
survive until Employee's death in lieu of the execution of
the VTA and the deposit of the Shares. If the Company ceases
to have a class of equity security registered under the
Securities Exchange Act of 1934, as amended (if it "goes
private"), then the parties agree to renegotiate this Section
12 in good faith based on the circumstances then prevailing.
If the Company has negotiated in good faith and if such
negotiations
nevertheless reach an impasse, the Company may choose either
to affirm and maintain Section 12 (including the requirements
to maintain insurance and execute the VTA) in its entirety,
or to rescind Section 12 in its entirety (including paragraph
(a), which would reinstate the Shareholder Agreement), in the
Company's sole discretion.
B. Section 11(g) hereby is amended to read in its
entirety as follows:
11. Miscellaneous.
g. This Agreement shall be subject to and
governed by the substantive laws of the State of Missouri,
without regard to choice of law principles.
C. MDI-Del is made an additional party to the
Employment Agreement. MDI-Del assumes each and every
obligation of MDI-Mo under the Employment Agreement.
Employee agrees that MDI-Del has all of the rights of MDI-Mo
under the Employment Agreement. As used in the Employment
Agreement, the term "Company" shall mean both MDI-Del and
MDI-Mo unless the context requires otherwise.
D. Except as set forth herein, all of the terms and
conditions of the Employment Agreement shall remain
unmodified and in full force and effect.
E. Nothing herein contained shall be deemed to or shall
in any manner amend or impair any other agreement between the
Employee and the Company except that any MDI-Del stock issued
by MDI-Del to Employee under a stock option agreement or
other stock plan or program shall be subject to Section 12 of
the Employment Agreement.
F. This Amendment shall be binding upon and enure to
the benefit of the parties hereto and their respective heirs,
legatees, executors, personal representatives, successors and
assigns.
G. This Amendment shall be subject to and governed by
the substantive laws of the State of Missouri, without regard
to choice of law principles.
IN WITNESS WHEREOF, the parties have executed and
delivered this Amendment as of the day and year first above
written.
MDI TECHNOLOGIES, INC. MDI TECHNOLOGIES, INC.
(Missouri) (Delaware)
By:_____________________ By:___________________________
Title:__________________ Title:________________________
______________________________
Xxxx Xxxxxx, Employee
SPOUSAL AGREEMENT AS TO SECTION 12:
The undersigned represents, warrants, and agrees: (1) that
she is the spouse of the Employee named in the Employment
Agreement amended by this instrument; and (2) that in order
to induce the Company to provide the benefits set forth in
Section 12 of such Employment Agreement, she agrees to be
bound by all of the provisions of said Section 12 as if she
were the Employee provided, however, that the VTA shall be
executed only upon the death of Employee, not upon the death
of the undersigned.
______________________________
Xxxxxx Xxxxxx
As of March 1, 2004
EXHIBIT A
Form of Voting Trust Agreement
VOTING TRUST AGREEMENT
This Voting Trust Agreement (the "Agreement") is made
and entered into as of this _____ day of _______________,
20___, by and among _________________________, as Trustee
(hereinafter, together with any successor, referred to as the
"Trustee"), MDI Technologies, Inc., a Delaware corporation
(the "Company"), and
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
as Beneficiaries (hereinafter, together with their successors
and assigns, referred to individually as a "Beneficiary" and
collectively as the "Beneficiaries").
WHEREAS, the Beneficiaries are the record owners of
________________________ (_______________) shares (the
"Shares") of the issued and outstanding shares of the common
stock of the Company, having obtained such Shares directly or
indirectly from Xxxx X. Xxxxxx ("Xxxxxx") prior to or upon
his death or legal incapacity; and
WHEREAS, the Company and Xxxxxx previously entered into
an Employment Agreement (as amended, the "Employment
Agreement") pursuant to which Xxxxxx agreed that all shares
of Company stock owned by him of record or beneficially at
the time of his death or legal incapacity would be placed in
trust under this Agreement; and
WHEREAS, in furtherance and pursuant to the Employment
Agreement, the Company and the Beneficiaries believe that it
is advisable and in the best interests of the Company and of
the Beneficiaries to enter into this Agreement for the
purpose of creating a trust (the "Trust") and uniting the
voting power of the Beneficiaries in order to secure, so far
as is practicable, continuity, consistency, and efficiency of
management of the Company, and for the further purpose of
allowing the Beneficiaries to dispose of the Shares in an
orderly and efficient manner without unduly disturbing the
market for the Company's common stock.
NOW THEREFORE, in consideration of the mutual covenants
and agreements herein contained, the parties hereto covenant
and agree as follows:
ARTICLE I
DEPOSIT OF STOCK AND ISSUANCE
OF VOTING TRUST CERTIFICATES
Section 1.01. Deposit of Stock.
(a) Concurrently with the execution of this Agreement,
the Beneficiaries have delivered to the Trustee certificates
for all shares of stock of the Company owned by the
Beneficiaries having any right to vote, whether absolute,
contingent, or otherwise, other than shares that were not
owned by Xxxxxx of record or beneficially at the time of his
death or legal incapacity. All such Shares are duly endorsed
for transfer or accompanied by duly executed instruments of
transfer.
(b) Each Beneficiary is required to deposit under this
Agreement all shares of the Company's common stock that are
owned by the Beneficiary and were owned by Xxxxxx of record
or beneficially at the time of his death or legal incapacity.
No other shares of Company common stock that the Beneficiary
may own are subject to this Agreement. If, at any time prior
to the expiration or termination of this Agreement, any
Beneficiary obtains any additional shares of stock of the
Company that Xxxxxx owned at the time of his death or legal
incapacity, whether by legal process or otherwise (other than
a purchase/sale using the public stock markets), such
additional shares shall be deemed "Shares" under this
Agreement, shall be transferred and delivered immediately by
such Beneficiary to the Trustee in the form specified in
Section 1.01(a), and shall immediately become subject to this
Agreement and all provisions hereof.
(c) Promptly upon receipt of certificates representing
such Shares of the Company's stock, the Trustee shall cause
such certificates to be surrendered to the Company and
canceled and new certificates therefor issued to and in the
name of, the Trustee and shall cause the Trustee's ownership
at Trustee pursuant to this Agreement to be entered in the
stock transfer records of the Company. The Trustee shall
cause such new certificates to bear a legend on the face
thereof in the form specified in Section 2.04.
Section 1.02. Issuance of Voting Trust Certificates.
The Trustee shall issue and deliver to each of the
Beneficiaries a Voting Trust Certificate (a "Certificate") in
respect of the Shares deposited with and held by the Trustee
for the benefit of such Beneficiary under this Agreement, or
which are or become subject to this Agreement, in the form
set forth in Exhibit A hereto. Each such Certificate shall
be registered in the name of the respective Beneficiary and
signed by the Trustee.
Section 1.03. Duplicate Certificates.
If a Certificate shall be lost, stolen, mutilated or
destroyed, the Trustee, in his or her discretion, may issue a
duplicate of such Certificate upon receipt of evidence of
such fact satisfactory to the Trustee, upon receipt of
indemnity satisfactory to the Trustee, upon receipt of the
existing Certificate, if mutilated, and upon receipt of any
fees and expenses applicable thereto or to such transfer.
Section 1.04. Certificate Book.
The Trustee shall maintain complete and correct records
and books of account of all his or her transactions as
Trustee, and shall maintain a book to be known as the
Certificate Book containing the names of all persons who are
Beneficiaries, showing their places of residence, the number
of Shares represented by the Certificates held by them and
other pertinent information (including tax identification
numbers). Such records and books of account and the
Certificate Book shall be available to the Beneficiaries upon
written request; provided, however, that the Trustee shall
redact any information he or she deems confidential (such as
tax identification numbers, which are confidential per se).
ARTICLE II
TRUSTEE RIGHTS
AS A SHAREHOLDER OF THE COMPANY
Section 2.01. Action by Trustee.
Any action taken hereunder by the Trustee shall be the
act of the holder of record of the Shares, binding on the
Company and the Trust and the Beneficiaries. No Beneficiary
shall have any right to approve any action by the Trustee.
Section 2.02. Trustee's Rights and Powers.
So long as the Trustee shall hold Shares deposited
pursuant to the provisions of this Agreement, the Trustee
shall possess, and in his or her discretion shall be entitled
to exercise in person or by nominees, agents, attorneys-in-
fact, or proxies, all rights and powers of an absolute owner
and holder of all such Shares, including the right to vote
thereon and to take part in and consent to any corporate or
stockholders' action of any kind whatsoever, and to receive
dividends and distributions on all such Shares. The right of
the Trustee to vote shall include the right to vote at any
election of directors and in favor of, or in opposition to,
any resolution or proposed action of any character whatsoever
which may be presented at any meeting or require the consent
of stockholders of the Company. Without limiting the
foregoing, the right of the Trustee to vote shall include the
right to vote the Shares deposited pursuant to this Agreement
in favor of, or in opposition to, any resolution or proposed
action in which he or she is personally interested, and to
receive and waive any notices to stockholders as required by
law or the corporate charter or by-laws of the Company.
Section 2.03. Trustee's Limited Authority to Transfer.
(a) Notwithstanding the provisions of Section 2.02,
except as set forth in this section or in Article IV, the
Trustee shall have no authority to transfer, sell or
otherwise dispose of any of the Shares held in the Trustee's
name or deposited with the Trustee pursuant to the provisions
of this Agreement, or to which the provisions of this
Agreement are or shall become applicable. The Trustee agrees
that, except as otherwise provided in this Section 2.03, he
or she shall take no action, nor shall he or she allow any
action to be taken, by which any Shares shall be sold,
transferred, or otherwise disposed of during the term of this
Agreement. The Trustee agrees that he
or she will not pledge, hypothecate or otherwise create any
lien, claim or encumbrance upon any shares of stock subject
to this Agreement, except that the exercise of voting rights
by the Trustee pursuant to Section 2.02 hereof shall not be
deemed to constitute any such lien, claim or encumbrance.
(b) At any time when an offering is not being conducted
under Article IV, any Beneficiary may request the Trustee to
sell his or her Shares in a sale conducted through a licensed
securities broker on the public securities markets. The
Trustee shall use its commercially reasonable best efforts to
fulfill such request so long as (A) the number of Shares sold
by the Trustee for all Beneficiaries on any given day does
not exceed 10% of the Company's average daily trading volume
as reported on the Company's principal securities exchange or
quotation service for the 20 trading days ending on the last
trading day of the calendar month preceding the proposed
transfer, (B) the number of Shares sold, when added together
with all previous sales of Shares by the Trustee hereunder
during the preceding three months, does not exceed 200% of
the Company's average weekly trading volume as reported on
the Company's principal securities exchange or quotation
service for the 50 trading days (10 weeks consisting of 5
trading days each) ending on the last trading day of the
calendar month preceding the proposed transfer, (C) all
applicable securities laws and rules (such as federal Rule
144) are complied with, in the opinion of legal counsel of
the Company, and (D) any lock-up or other restrictive
covenant given by the Trustee to the Company or an
underwriter in connection with any primary offering or
secondary offering is complied with. The Trustee shall have
the burden of demonstrating to the Company that the foregoing
numerical limits are observed. For this purpose, a "week"
shall consist of five consecutive trading days, even if those
days occur in different calendar weeks. The risks and
expenses of each such sale shall be borne by the Beneficiary
requesting it. The Trustee may require any such Beneficiary
to deliver his or her Certificates to the Trustee for
cancellation prior to executing a sale of the underlying
shares. The Trustee shall re-issue to such Beneficiary a new
Certificate representing unsold Shares, and shall remit to
the selling Beneficiary the proceeds from the sale, net of
all fees, expenses, and costs. If in any instance two or
more Beneficiaries request sales at the same time, the
Trustee shall aggregate such requests and shall apportion
expenses and sale proceeds among the selling Beneficiaries as
their interests shall appear.
Section 2.04. Subscription Procedures.
In case any securities of the Company shall be offered
for subscription to the holders of the Company's common
stock, the Trustee, promptly upon receipt of notice of such
offer, shall mail a copy thereof to each Beneficiary who is
entitled to so subscribe. Upon receipt by the Trustee, at
least five (5) business days prior to the last date fixed by
the Company for subscription, of a request from any such
Beneficiary to subscribe in such Beneficiary's behalf,
accompanied by the sum of money required to be paid for such
securities in immediately available funds, the Trustee shall
make such subscription and payment on behalf of such
Beneficiary, and upon receiving from the Company the
certificates for the securities subscribed for, shall issue
to such Beneficiary a Certificate in respect thereof if the
same be securities having any right to vote, whether
absolute, contingent or otherwise, or if the same be
securities other than securities having such voting power,
the Trustee shall deliver the same to the Beneficiary in
whose behalf the subscription was made. Notwithstanding the
foregoing, the Company may determine in its sole discretion
in any instance that the securities offered shall not become
Shares and shall not otherwise be subject to this
Agreement; in such event, the securities so subscribed shall
be issued in the name of, and shall be delivered to, the
Beneficiary that so subscribed.
Section 2.05. Stock Certificate Legends.
The Trustee agrees that all certificates representing
Shares which are, or at any time become, subject to this
Agreement shall have endorsed upon them a legend as follows:
The transfer of the shares represented hereby is
restricted by provisions of a Voting Trust Agreement dated
____________________, 20_____, among the registered holder of
these shares, as Trustee, MDI Technologies, Inc., and the
Beneficiaries named therein, copies of which are on file at
the offices of the corporation.
ARTICLE III
DIVIDENDS AND DISTRIBUTIONS
Section 3.01. Cash Dividends.
Each Beneficiary shall be entitled, until termination of
this Agreement as hereinafter provided, to receive from time
to time payments equal to the amount of cash dividends, if
any, collected or received by the Trustee or their successors
upon the number of Shares in respect of which such
Beneficiary's Certificates are issued (the "Beneficiary's
Shares"). Such payments shall be made as soon as
practicable, after the receipt of such dividends, to the
Beneficiaries. The Trustee may arrange with the Company for
the direct payment by the Company of dividends to the
Beneficiaries.
Section 3.02. Non-Stock Distributions.
If at any time during the term of this Agreement, the
Trustee shall receive or collect any moneys through a
distribution by the Company to the stockholders, other than
in payment of cash dividends, or shall receive any property
(other than shares of the Company's common or preferred stock
or securities convertible into same) through a distribution
by the Company to its stockholders, the Trustee shall
distribute the same to each Beneficiary in proportion to each
Beneficiary's Shares.
Section 3.03. Stock Dividend or Distribution.
If the Trustee shall receive, as a dividend or other
distribution upon any Shares held by the Trustee under this
Agreement, any shares of common or preferred stock of the
Company or any securities convertible into same
("Distribution Shares"), the Trustee shall hold the same
subject to this Agreement for the benefit of the
Beneficiaries in proportion to their respective interests,
and said Distribution Shares shall be deemed "Shares" under
this Agreement and shall be subject to all of the terms and
conditions hereof to the same extent as if originally
deposited hereunder. The Trustee shall issue Certificates in
respect of such Distribution Shares to the Beneficiaries in
proportion to their respective interests (which may be issued
as a separate class, distinct from the Certificates issued in
respect of Shares of common stock, if such Distribution
Shares are securities
other than common stock), and said Distribution Shares shall
be subject to all of the terms and conditions hereof to the
same extent as if originally deposited hereunder.
Section 3.04. Recapitalization or Reclassification of Stock.
In the event of a recapitalization of the Company or
reclassification of the shares of stock deposited pursuant to
this Agreement, the Trustee shall hold, subject to the terms
of this Agreement, any shares of voting stock issued as a
result of such recapitalization or reclassification in
respect of shares of stock deposited pursuant to this
Agreement. Certificates issued and outstanding under this
Agreement at the time of such recapitalization or
reclassification may remain outstanding or the Trustee may,
in his or her discretion, issue new voting trust Certificates
in appropriate form in substitution for the old Certificates.
Such shares of voting stock shall be "Shares" hereunder and
shall be subject to all of the terms and conditions hereof to
the same extent as if originally deposited hereunder.
Section 3.05. Distribution Upon Dissolution of the Company.
In the event of the dissolution and liquidation of the
Company, whether voluntary or involuntary, the Trustee as the
owners of record shall receive the money, securities, rights
or property to which the Beneficiaries are entitled in
respect of the Shares under this Agreement and shall
distribute or cause to be distributed the same among the
registered holders of the Certificates ratably in accordance
with the number of shares represented by their respective
Certificates.
Section 3.06. Distributions Upon Merger or Reorganization of
the Company.
(a) In the event the Company is merged or consolidated
into another corporation so that the Shares are extinguished
and converted into the right to receive cash or other
property (not including equity securities of the surviving
corporation), the transaction shall be treated as a
dissolution of the Company in accordance with Section 3.05.
(b) In the event the Company is merged or consolidated
into another corporation so that the Shares are extinguished
and converted into (among other things) the right to receive
equity securities of the surviving corporation, the Trustee
shall:
(i) receive and hold under the terms of this
Agreement any shares of voting stock of the successor
corporation received on account of such merger or
consolidation in respect of the Shares deposited under this
Agreement (in which case Certificates issued and outstanding
under this Agreement at the time of such merger or
consolidation may remain outstanding or the Trustee may, in
their discretion, substitute for such Certificates new voting
trust certificates in appropriate form) and such shares shall
be "Shares" hereunder and shall be subject to all of the
terms and conditions hereof to the same extent as if
originally deposited hereunder, and
(ii) distribute or cause to be distributed any
money, non-voting securities, rights or other property so
received among the Beneficiaries ratably in accordance with
the number of Shares represented by their respective
Certificates.
The Beneficiaries hereby agree to execute any amendments to
this Agreement, if any are necessary, to perpetuate this
Trust under the reorganized corporation.
ARTICLE IV
REGISTRATION AND SALE RIGHTS
Section 4.01. Commitment to Consult with Underwriter.
On every even-numbered anniversary of the commencement of the
Term of the Trust (and more often if the Company so chooses),
the Company agrees to consult with a regional or national
U.S. equities underwriter of good reputation (the
"Underwriter") selected by the Company to determine in good
faith the efficacy of conducting an underwritten registered
secondary offering of the Shares (the "Secondary Offering")
as provided herein. The Underwriter may be the Company's
investment banker or financial advisor, or any other
qualified firm selected by the Company.
Section 4.02. Secondary Offering Requirements.
Each Secondary Offering must satisfy all of the
following requirements: (a) it must be firmly underwritten;
(b) it must be for at least 2% of the Company's then-
outstanding shares of common stock (unless combined with a
primary offering as described below); (c) the Underwriter
must determine (in its good-faith judgment) that the
Secondary Offering is not reasonably likely to close at a
gross sale price less than 90% of the lowest 20-consecutive-
trading-day average price occurring within the 40 consecutive
trading days immediately preceding the day the Underwriter
first is asked to make its determination; (d) the Underwriter
must propose an underwriting commission or discount and the
Company in good faith must determine that the underwriting
commission or discount is commercially reasonable and in any
case does not exceed 10%; and, (e) the Underwriter must
determine (in its good-faith judgment) that the Secondary
Offering is not likely to interfere substantially with any
then-existing plan or proposal by the Company to conduct any
primary securities offering. A Secondary Offering may be
combined with a primary offering by the Company if the
Company finds that to be convenient, but the success of any
primary offering by the Company must take precedence over a
Secondary Offering by the Trust. A Secondary Offering may be
for all of the Trust's Shares or the largest portion that the
Underwriter determines may be sold under the conditions
above. The Company agrees to instruct the Underwriter to
seek to maximize the number of Shares sold in each Secondary
Offering, subject to the foregoing requirements. The
Underwriter is not required to guarantee at the time the
foregoing determinations are made that a Secondary Offering
ultimately will achieve any particular price or be
accomplished in any particular manner at any particular time;
the Underwriter is required only to use its best judgment in
good faith in making the determinations above.
Section 4.03. Conduct of Secondary Offering.
(a) If the Underwriter determines that a Secondary
Offering can be accomplished as provided above, the Company
and the Trustee shall proceed to engage the Underwriter and
to
proceed with the Secondary Offering at the maximum number of
Shares that the Underwriter is willing to sell on a firm-
commitment basis. The Trustee shall notify the Beneficiaries
of that determination, and shall inform the Beneficiaries of
material developments in the offering process (i.e., the
effectiveness of the registration, the signing of the
underwriting agreement, and the closing of the offering). The
Company and the Trustee shall use their best efforts to close
the Secondary Offering as quickly as possible on a
commercially reasonable basis in conformity, however, with
the terms and conditions of this Agreement.
(b) In furtherance of each Secondary Offering, the Company
shall file a registration statement (the "Registration
Statement") under the Securities Act of 1933, as amended (the
"1933 Act") on the appropriate form of the Securities and
Exchange Commission (the "SEC") and shall use its
commercially reasonable best efforts to cause the SEC to
declare it effective as promptly as possible. The Company may
elect to file a so-called "shelf" Registration Statement
under SEC Rule 415 and to maintain its effectiveness in
advance of need, but is not required to do so.
(c) The Trustee shall provide the Company and the
Underwriter with any and all information concerning the
Trustee, the Trust, and the Beneficiaries required to be
included in the Registration Statement. Each Beneficiary
agrees to provide the Trustee, within 10 days after any
written request, with any and all information requested by
the Trustee for the purpose of inclusion in the Registration
Statement, and to immediately inform the Trustee of any
changes thereto during the continuation of any Secondary
Offering.
(d) The Company may delay filing the Registration
Statement for up to four months if the Company's Board of
Directors determines in good faith that the registration
process, including (among other things) the public
disclosures attendant thereto, at that time would be
substantially detrimental to the Company or impose a
substantial hardship on the Company in connection with one or
more specific and material activities then contemplated by
the Company, or that the delay would allow the Company to
take advantage of a substantially beneficial situation. For
example: if the Company were in merger discussions at that
time, the Board might determine that conducting a registered
public offering of stock would impose disclosure obligations
inconsistent with the Company's best interests in pursuing
the merger opportunity; or, if the Company were about to
launch a registered primary offering, the Company might delay
the Secondary Offering so that it could be combined with such
primary offering and thus realize cost and time savings.
After such delay period has passed, if the Secondary Offering
has not already commenced, the Company promptly shall cause
the Underwriter to re-determine whether a Secondary Offering
is efficacious as provided in Sections 4.01 and 4.02.
(e) The Company shall use its commercially reasonable
best efforts to cause each Registration Statement to remain
effective until the closing of the related Secondary
Offering, and shall use its commercially reasonable best
efforts to qualify the Shares for registration (or applicable
exemption) in such U.S. and Canadian jurisdictions as the
Underwriter deems appropriate to successfully conclude and
close the Offering. The Company further shall use its
commercially reasonable best efforts to cause the Shares sold
to be listed for trading or quotation on the Company's then-
current principal securities exchange, market, or quotation
system.
(f) The costs of the Registration Statement, the
underwriting, and the entire Secondary Offering process
(including legal and accounting fees and expenses, printing
and engraving, transfer agent, and all other costs) shall be
borne entirely by the Company other than the following: the
underwriting commission or discount (which shall be paid by
the Trust); securities transfer and other taxes, charges, and
assessments associated with the Offering and its closing
(which shall be paid by the Trust); and, fees and expenses of
any legal counsel or other advisor that any Beneficiary
chooses to engage for itself (which shall be paid entirely by
that Beneficiary). In his or her discretion, the Trustee may
engage one law firm as legal counsel to represent the Trust
and the interests of all Beneficiaries and to advise the
Trustee concerning its responsibilities; the Company shall
pay the reasonable fees and expenses of that law firm. The
Shares, and the proceeds therefrom, shall be used to pay the
costs payable by the Trust as seller of the Shares.
(g) The Company and the Trustee shall negotiate,
execute, and deliver a commercially reasonable underwriting
agreement with the Underwriter. The gross sale price at which
the Shares are to be offered shall not be less than 90% of
the lowest 20-consecutive-trading-day average price occurring
within the 40 consecutive trading days immediately preceding
the day the underwriting agreement is executed and delivered.
The underwriting commission or discount specified in the
underwriting agreement shall be consistent with the
requirements of Section 4.02(d).
(h) During each Secondary Offering, the Company and the
Trustee (if needed) shall cooperate fully with the
Underwriter's commercially reasonable requests for Company
personnel to conduct or attend investor presentations (also
known as "road shows"), for due diligence examinations of
Company records and personnel, for press releases and
announcements, and for all the other matters normally
attendant to a registered offering of a substantial number of
shares of stock. The Company and the Trustee agree to execute
and deliver customary supplemental agreements, closing
certificates, and other documents as required by the
underwriting agreement or imposed as a condition to closing,
and to cause to be delivered such legal opinions, letters
from auditors, and other third-party documents as may be
required by the underwriting agreement or imposed as a
condition to closing.
(i) During the Term, the Company continuously shall
remain current in all of its reporting and other disclosure
obligations under the U.S. federal securities laws, the rules
of the SEC, and the rules of the Company's principal stock
exchange, stock market, or quotation system. During the time
each Secondary Offering is being conducted the Company shall
cause the Registration Statement, from the time it becomes
effective until the closing of the Offering, to be true,
accurate, and complete in all material respects, and to be
fully in conformity with all SEC and other applicable legal
requirements.
(j) The Trustee shall act for the Trust as seller of
the Shares in all matters relating to the Secondary Offering.
No Beneficiary shall have any right to act as a seller or for
the Trust.
(k) All Shares sold in the Offering shall be for the
pro-rata benefit of all Beneficiaries. The proceeds from the
closing and sale, net of the discount and all other costs
payable by the Trust, shall be distributed to the
Beneficiaries in proportion to their interests
represented by their Certificates. The Trustee shall require
each Beneficiary, as a condition to receiving his, her, or
its distribution, to deliver his, her, or its Certificate(s)
for cancellation. Such old Certificate(s) shall be replaced
by a new Certificate reflecting the Beneficiary's pro-rata
interest in the new, lesser number of Shares held in the
Trust. The Trustee shall issue Certificates reflecting
fractions of a Share as necessary, and may consistently use
any rounding method he or she finds to be convenient and
fair; however, the Trustee is not required to record or
reflect fractions less than one one-hundredth of a Share.
Section 4.04. Indemnity.
(a) Indemnification by the Company. In the event of a
registration of any Shares hereunder, the Company will
indemnify and hold harmless the Trust, Trustee, and each
Beneficiary and any underwriter (as defined in the 0000 Xxx)
of such Shares and each other person, if any, who controls
any such person within the meaning of the 1933 Act, and their
respective directors, officers, partners, members, agents and
affiliates, and each of their successors from and against,
and will reimburse such indemnified person with respect to,
any and all claims, actions, demands, losses, damages,
liabilities, costs and expenses to which such person may
become subject under the 1933 Act or otherwise, including,
without limitation, the reasonable fees and expenses of legal
counsel (including those incurred in connection with any
claim for indemnity hereunder) insofar as such claims,
actions, demands, losses, damages, liabilities, costs or
expenses (or actions, or proceedings, whether commenced or
threatened in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any
material fact contained in such registration statement under
which securities were registered under the 1933 Act, any
prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading or arise out of any violation by the Company
of any rule or regulation under the 1933 Act or any state or
provincial securities laws applicable to the Company and
relating to action or inaction required of the Company in
connection with such registration; provided, that the Company
will not be liable in any case to the extent, but only to the
extent, that any such claim, action, demand, loss, damage,
liability, cost or expense arises out of or is based upon an
untrue statement or omission so made in reliance upon and in
strict conformity with information furnished by such person
in writing specifically for use in the preparation thereof.
This indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such
indemnified person and shall survive the transfer of such
securities by such person.
(b) Indemnification by Trustee, Trust, and the
Beneficiaries. The Trustee, Trust, and each Beneficiary,
severally and not jointly, will indemnify and hold harmless
the Company, each person, if any, who controls the Company
within the meaning of the 1933 Act, each officer of the
Company who signs the Registration Statement, each director
of the Company, each underwriter and any person who controls
the underwriter and each of their successors from and
against, and will reimburse the Company and such other
indemnified person with respect to, any and all claims,
actions, demands, losses, damages, liabilities, costs or
expenses to which the Company or such person may become
subject under the 1933 Act or otherwise, insofar as such
claims, actions, demands, losses, damages, liabilities, costs
or expenses arise out of or are based
upon any untrue statement of any material fact contained in
such Registration Statement, any prospectus contained therein
or any amendment or supplement thereto, or arise out of or
are based upon the omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which
they are made, not misleading; provided, that such indemnitor
will be liable in any such case to the extent, but only to
the extent, that any such claim, action, demand, loss,
damage, liability, cost or expense arises out of or is based
upon an untrue statement or omission made in reliance upon
and in strict conformity with written information furnished
by such person specifically for use in the preparation
thereof. The liability of each indemnitor under this Section
shall be limited to the proportion of any such claim, action,
demand, loss, damage, liability, cost or expense which is
equal to the proportion that the public offering price of the
Shares sold by such person under such Registration Statement
bears to the total offering price of all Shares sold
thereunder, but not, in any event, to exceed the proceeds
received by such indemnitor from the sale of Shares covered
by the Registration Statement. This indemnity shall remain in
full force and effect regardless of any investigation made by
or on behalf of such indemnified person and shall survive the
transfer of such securities by the indemnitor.
(c) Notices of Claims, etc. Promptly after receipt by
a party to be indemnified pursuant to the provisions of this
Section 12(l) (an "indemnified party") of notice of the
commencement of any action involving the subject matter of
the foregoing indemnity provisions, such indemnified party
will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of this Section
12(l), notify the indemnifying party of the commencement
thereof, but the omission to so notify the indemnifying party
will not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section and
shall not relieve the indemnifying party from liability under
this Section unless such indemnifying party is prejudiced by
such omission. In case such action is brought against any
indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party shall have
the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party, and after
the notice from the indemnifying party to such indemnified
party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified
party pursuant to the provisions of this Section 12(l) for
any legal expense subsequently incurred by such indemnified
party in connection with the defense thereof other than
reasonable costs of investigation; provided that, if the
defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be reasonable
defenses available to it that are different from or
additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be
deemed to conflict with the interests of the indemnifying
party, the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with
the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by
the indemnifying party as incurred. No indemnifying party
shall be liable to an indemnified party for any settlement of
any action or claim without the consent of the indemnifying
party and no indemnifying party may unreasonably withhold its
consent to any such settlement. No indemnifying party will,
except with the consent of the indemnified party, consent to
entry of any judgment or enter into any settlement which does
not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
(d) Contribution. In order to provide for just and
equitable contribution to joint liability under the 1933 Act
in any case in which either (i) the Trust or any Beneficiary
exercising rights under this Agreement, or any controlling
person of any such person, makes a claim for indemnification
pursuant to this Section but it is judicially determined (by
the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such
indemnification may not be enforced in such case
notwithstanding the fact that this Section provides for
indemnification in such case, or (ii) contribution under the
1933 Act may be required on the part of the Trust or any such
Beneficiary or any such controlling person in circumstances
for which indemnification is provided under this Section,
then, and in each such case, the Company and the Trust and
such Beneficiary will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the Company on
the one hand and of the Trust or the Beneficiary on the other
in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The relative
fault of the Company on the one hand and of the Trust or
Beneficiary on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by
the Company on the one hand or by the Trust or Beneficiary on
the other, and each party's relative intent, knowledge,
access to information and opportunity to correct or prevent
such statement or omission; provided, that, in any such case,
(A) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
0000 Xxx) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent
misrepresentation and (B) neither the Trust nor any
Beneficiary will be required to contribute any amount in
excess of the proceeds received by the Trust or such
Beneficiary from the sales of Shares covered by the
Registration Statement.
(e) Other Indemnification. Notwithstanding the
foregoing, to the extent that the provisions on
indemnification and contribution contained in the
underwriting agreement entered into in connection with the
Secondary Offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement
shall control.
Section 4.05 Primary Offering Lock-up.
If the Company conducts an underwritten registered
primary offering of Shares to the public and if the
underwriter so requests, the Trustee shall execute and
deliver a lock-up agreement, in the underwriter's customary
form, preventing the Trust from selling Shares for that
period of time which then is customary for issuers like the
Company. This covenant shall apply whether or not the Trust
participates as a selling shareholder in such offering.
ARTICLE V
THE TRUSTEE
Section 5.01. Trustee's Right to Delegate.
The Trustee may vote all stock held hereunder in person
or by such person or persons (including any Beneficiary) as
he or she may from time to time select as proxy or proxies.
The Trustee may employ or use the services of accountants,
attorneys, or any other qualified personnel to assist them or
their agents to carry out any of the duties undertaken
pursuant to this Agreement.
Section 5.02. Trustee's Right to Call Meetings of the
Beneficiaries.
The Trustee may call a meeting of the Beneficiaries for
any purpose which the Trustee desires, including but not
limited to discussions of any past or future exercise of
their rights or powers under this Agreement, or for other
informational purposes. Any vote of the Beneficiaries taken
at a meeting called pursuant to this Section is advisory and
not binding on the Trustee unless the Trustee declares to the
Beneficiaries in writing in advance that the Trustee desires
the vote to be binding in connection with a specified action.
Section 5.03. Trustee's Right to Indemnification.
The Company agrees to indemnify and hold harmless the
Trustee and each agent or attorney of the Trustee acting
hereunder from and against all liability and claims or
proceedings of any nature arising from or in connection with
the acceptance or administration of the Trust and the
performance of his or her duties and obligations hereunder
and the exercise of his or her rights and powers except
liability and claims based solely upon the Trustee's
malfeasance, and subject to such exception further agrees to
be responsible for and to pay all damages, costs and expenses
of or assessed against the Trustee of any nature, including
attorney's fees, in connection with any such claim or
proceeding.
Section 5.04. Trustee Compensation.
The Trustee shall not be entitled to compensation for
his or her services as Trustee hereunder, but shall be
entitled to reimbursement by the Company for all ordinary and
necessary expenses associated with the administration of the
Trust. The Company may provide administration services to the
Trust directly, using its own staff, in satisfaction of this
obligation.
Section 5.05. Trustee's Right to Participate.
The Trustee herein appointed and his or her successors
may be parties to this Agreement as Beneficiaries. The
Trustee and any firm or corporation of which he or she may be
members, agents or employees and any corporation, trust or
association of which he or she may be Trustee, stockholder,
director, officer, agent or employee may contract with or be
or become pecuniarily interested, directly or indirectly, in
any matter or transaction to which the Company or any
subsidiary or controlled or affiliated corporation may be a
party or in which it may be concerned, as
fully and freely as though such Trustee were not Trustee
hereunder. The Trustee may act as director and/or officer of
the Company and/or of any subsidiary or controlled or
affiliated corporation of the Company.
Section 5.06. Trustee's Powers.
(a) The Trustee is authorized and empowered to construe
this Agreement, and his or her reasonable construction made
in good faith shall be conclusive and binding upon the
Beneficiaries and upon all parties hereto.
(b) In voting Shares or in doing any act in respect of
the control or management of the Company or its affairs, as
holder of stock deposited hereunder or held in the Trustee's
name, the Trustee shall exercise his or her best judgment in
the interests of the Company to the end that its affairs
shall be properly managed for the benefit of all
Beneficiaries as indirect beneficial stockholders of the
Company, and may in furtherance thereof cast all shares of
stock subject to this Agreement in favor of any individual,
the Trustee, or one or more Beneficiaries, as director of the
Company; provided however, the Trustee assumes no
responsibility as Trustee in respect to the management of the
Company or in respect of any action taken by him or her or
taken by the Company on the basis of his or her consent
thereto or vote so cast.
Section 5.07. Trustee's Liability.
(a) The Trustee shall not be liable for any error of
judgment nor for any act done or omitted, nor for any mistake
of fact or law nor for anything which he or she may do or
refrain from doing in good faith, nor generally shall the
Trustee have any accountability hereunder, except for his or
her individual willful default, deceit, fraud, or gross
negligence. Furthermore, upon any judicial or other inquiry
or investigation of or concerning the Trustee's acts pursuant
to his or her rights and powers as Trustee, such acts shall
be deemed reasonable unless proved to the contrary by clear
and convincing evidence.
(b) The Trustee shall not be liable in any event for
acts or defaults of any employee, agent, proxy or attorney in
fact of the Trustee. The Trustee shall always be protected
and free from liability in acting upon any notice, request,
consent, certificate, declaration, telegram, fax, email,
telex, guarantee, affidavit or other paper or document or
signature believed by him or her to be genuine and to have
been signed by the proper party or parties or by the party or
parties purporting to have signed the same, whether in paper,
electronic, or other format.
(c) The Trustee may consult with legal counsel,
pursuant to Section 5.01 hereof, which may be counsel to the
Company, and any action under this Agreement taken or
suffered in good faith by him in accordance with the opinion
of such counsel shall be conclusive upon the parties hereto
and the Trustee shall be fully protected and be subject to no
liability in respect thereof.
Section 5.08. Trustee Removal, Resignation, and Replacement.
The Trustee may resign by giving notice to each of the
Beneficiaries and to the Company of his or her resignation
twenty-one (21) days prior to the effective date of such
resignation. The
Trustee shall be deemed to have resigned in the event of his
or her death or incapacity for more than 30 consecutive days.
The Trustee may be removed by the Company, with the consent
of a majority in interest of the Beneficiaries, and may be
removed by a majority in interest of the Beneficiaries, with
the consent of the Company, in either case at any time. The
initial Trustee is an employee of the Company. If at any time
the Trustee ceases for any reason to be an employee or
director of the Company, the Company may remove the Trustee
and may do so with or without the consent of a majority in
interest of the Beneficiaries. If the Trustee resigns or is
removed, the Company's Board of Directors may appoint a new
Trustee without the approval of the Beneficiaries except
that, if the Trustee is removed by the Company following
termination of employment without the consent of a majority
in interest of the Beneficiaries, the new Trustee must be
approved in writing by at least one Beneficiary prior to or
within 30 days after appointment. Any newly-appointed Trustee
shall notify the Beneficiaries of his or her appointment
promptly thereafter. During any interim period when no person
is Trustee, the Company may appoint an interim Trustee who
shall have all administrative powers of the Trustee but who
may not participate in any voting or sale of Shares.
Section 5.09. Trustee's Acceptance of Trust and Limitations
on Share Transfer.
The Trustee by executing this Agreement accepts the
trust created hereby and agrees to carry out the terms and
provisions hereof. The Trustee hereby consents to be bound
by the terms of this Agreement.
ARTICLE VI
TERMINATION
Section 6.01. Termination or Extension.
(a) This Agreement shall terminate in any event upon
the twentieth anniversary of the date hereof (such period
defined as the "Term").
(b) This Agreement shall terminate prior to the end of
said Term upon the occurrence of any of the following
described events:
(i) the mutual written agreement by the Trustee,
the Company, and all Beneficiaries to terminate this
Agreement;
(ii) the distribution of all proceeds from the
Shares relating to a dissolution, merger, or other
transaction pursuant to Section 3.05 or 3.06, or from the
sale of all Shares pursuant to Article IV;
(iii) the agreement of the Trustee and the Company
if at any time the total number of Shares held by the Trustee
is less than 4% of the Company's then-outstanding shares of
common stock as publicly reported by the Company on its most
recent audited balance sheet as of the last day of its most
recently completed fiscal year;
(iv) the cessation of the Company's status as a
public reporting company under the Securities Exchange Act of
1934, as amended after a determination by the Company's Board
of Directors, in good faith, to cause the Company to "go
private."
(c) Except as otherwise expressly provided in this
Agreement, the trust created by this Agreement is hereby
expressly declared to be irrevocable.
Section 6.02. Trustee's Rights and Duties Upon Termination.
As soon as practicable after the termination of this
Agreement with respect to any Shares that remain deposited
with the Trustee hereunder, the Trustee shall deliver to the
Beneficiaries stock certificates or instruments of transfer
representing the number of shares of the Company's stock to
which such Beneficiary is entitled upon such termination,
such delivery to be contingent upon the surrender by the
Beneficiary of the Certificates issued by the Trustee in
respect of such shares, properly endorsed for transfer, and
upon payment by the Beneficiaries of a sum sufficient to
cover any tax or governmental charge in respect of the
transfer or delivery of such stock certificates.
ARTICLE VII
RESTRICTIONS ON TRANSFER OF VOTING TRUST
CERTIFICATES OR OF ANY BENEFICIAL INTERESTS HEREUNDER
Section 7.01. Nature of Restrictions.
Subject to Section 8.13, no beneficial interests,
whether or not represented by Certificates issued pursuant to
this Agreement, in any Shares of stock of the Company
deposited pursuant to this Agreement shall be sold, assigned,
hypothecated, pledged or transferred, in any manner
whatsoever, whether by any voluntary or involuntary act, or
by gift or by operation of law, unless the transferor
provides the Trustee and the Company with an opinion of legal
counsel, acceptable to them, to the effect that the transfer
does not violate applicable federal and state securities
laws. Interests in the Trust are not registered under any
securities law, and neither the Trustee nor the Company are
required to effect any such registration. The Company has the
right to prevent any transfer, whether or not in compliance
with applicable securities laws, if the number of
Beneficiaries is 50 or greater, except in the case of a
transfer by operation of the will of a deceased Beneficiary
or the laws of intestacy. The Trustee shall ignore any
purported transfer of Certificates, Shares, or beneficial
interests not effected in accordance with this Agreement,
unless and except to the extent the Company consents to such
transfer in writing and the purported transferee becomes a
Beneficiary hereunder by written instrument satisfactory to
the Trustee.
Section 7.02. New Beneficiaries.
Each person to whom an interest in the Trust is properly
transferred shall become a Beneficiary, and the transfer
shall become effective, upon the execution by such transferee
of this Agreement, acknowledged by the Trustee, and the
issuance of a Certificate to him, her, or it. The Trustee
must acknowledge any transfer made in conformity with this
Agreement.
Section 7.03. Legend.
Each Beneficiary agrees that all Certificates now held
or hereafter obtained by him, her, or it shall have placed
upon them a legend substantially in the form set forth below:
The transfer of the beneficial interests
represented hereby is restricted by provisions of a Voting
Trust Agreement dated ____________________, 20_____, among
the Trustee thereunder, MDI Technologies, Inc., and the
Beneficiaries named therein, copies of which are on file at
the offices of the corporation.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Relationships Created Hereunder.
The trust created by this Agreement is not intended to
be, and shall not be treated as, a general partnership,
limited partnership, joint venture, corporation, joint stock
company, or association. The relationship of the
Beneficiaries to the Trustee shall be solely that of
Beneficiaries of the Trust created by this Agreement and
their rights shall be limited to those conferred upon them by
this Agreement.
Section 8.02. Right of Examination.
An executed counterpart of this Agreement shall be
deposited with the Company at the Company's principal offices
from time to time. This Agreement shall be subject to the
same right of examination by a stockholder of the Company in
person or by agent or attorney, as are the books and records
of the Company, and shall be subject to examination by any
holder of a beneficial interest in the voting trust created
by this Agreement, either in person or by agent or attorney,
at any reasonable time for any proper purpose. All
Beneficiaries and the Trustee acknowledge that the Company
may be required to disclose this Agreement to the public
and/or to public agencies, such as the U.S. Securities and
Exchange Commission, and all hereby consent thereto and waive
any right to keep information herein private.
Section 8.03. Entire Agreement; Modifications.
The Agreement represents the entire understanding and
agreement of the parties hereto with respect to the subject
matter hereof, and cannot be amended, supplemented or changed
orally, but only by an agreement in writing signed by the
party or parties against whom enforcement it sought and
making specific reference to this Agreement. This Agreement
may not be amended except by a writing executed by the
Company, by the Trustee, and by Beneficiaries holding
Certificates representing beneficial interests in at least
75% of the Shares.
Section 8.04. Notices.
Any and all notices, requests, demands, or other
communications provided for hereunder shall be given in
writing by personal service or by registered or certified
mail, postage prepaid,
addressed to the intended recipients at such addresses as the
intended recipients may have most recently designated in
written notices to the Trustee at the time of executing this
Agreement or otherwise. Every notice so given shall be
effective whether or not received, and such notice shall for
all purposes be deemed to have been given on the date of
mailing thereof. A notice shall be deemed to have been
received when delivered personally or five days after being
mailed, first class U.S. postage prepaid.
Section 8.05. Successors and Assigns.
This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, legatees,
executors, administrators, and assigns.
Section 8.06. Gender and Number.
With respect to words used in this Agreement, the
singular form shall include the plural form, the masculine
gender shall include the feminine or neuter gender, and vice
versa, as the context requires.
Section 8.07. Descriptive Headings.
The descriptive headings of this Agreement are for
convenience of reference only and shall not define or limit
any of the terms or provisions hereof.
Section 8.08. Counterparts.
This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which taken
together shall constitute one instrument.
Section 8.09. Severability.
If in any judicial proceedings a court shall refuse to
enforce any provision of this Agreement, then such
unenforceable provision shall be deemed eliminated from this
Agreement for the purpose of those proceedings to the extent
necessary to permit the remaining provisions to be enforced.
To the full extent, however, that the provisions of any
applicable law may be waived, they are hereby waived to the
end that this Agreement be deemed to be a valid and binding
agreement enforceable in accordance with its terms.
Section 8.10. Governing Law.
This Agreement shall be construed under and its validity
determined by the substantive laws of the State of Missouri
without regard to choice of law principles.
Section 8.11. Remedies.
The parties hereto shall have all remedies for breach of
this Agreement available to them provided by law or equity.
Without limiting the generality of the foregoing, the parties
agree that in
addition to all other rights and remedies available at law or
in equity, the parties shall be entitled to obtain specific
performance of the obligations of each party to this
Agreement and immediate injunctive relief and that in the
event any action or proceeding is brought in equity to
enforce the same, no party will urge, as a defense, that
there is an adequate remedy at law.
Section 8.12. Third Parties.
Nothing in this Agreement, whether express or implied,
is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the
parties to it and their respective permitted transferees,
successors and assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability
of any third person to any party to this Agreement, nor shall
any provision give any third person any right of subrogation
or action over or against any party to this Agreement.
Section 8.13. Lienholders.
The Trustee shall not be required to take notice of any
person purported to possess a lien or other interest in
Shares or in Certificates, but may elect to do so on a case-
by-case basis in its sole and absolute discretion. If a
person notifies the Trustee that such person has a lien or
other interest in Certificates or any underlying Shares, the
Trustee may take whatever action it deems appropriate, but in
any event shall notify the affected Beneficiary of the
claimed lien. In any case where the Trustee determines to
recognize a lien, whether accompanied by the assent of the
affected Beneficiary or otherwise, the Trustee shall record
the lien on its Certificate Book and thereafter any action
hereunder by that Beneficiary may be taken only if both the
Beneficiary and the lienholder act in concert. Moreover, in
such a case, if such Beneficiary's underlying Shares are sold
hereunder, the Trustee shall not disburse the net proceeds
from such sale except in accordance with written instructions
from the recognized lienholder; the Trustee shall be
completely absolved from any liability connected with
disbursing in accordance with any such written instructions,
absent the Trustee's willful fraud or bad faith.
IN WITNESS WHEREOF, the parties hereto have hereunto set
their respective hands as of the day and year first above
written.
TRUSTEE: INITIAL BENEFICIARIES:
_______________________ ________________________________
Name: Name:
MDI TECHNOLOGIES, INC. ________________________________
Name:
By:____________________
Authorized Officer ________________________________
Name:
________________________________
Name:
Signature Page for New Beneficiaries (pursuant to
Section 7.02):
IN WITNESS WHEREOF, the undersigned Trustee and
transferee hereto have hereunto set their respective hands as
of the day and year first above written, and by these acts
the transferee has become and is a Beneficiary under the
Voting Trust Agreement dated as of ___________________ among
the Trustee, MDI Technologies, Inc., and the Beneficiaries
named therein.
TRUSTEE: TRANSFEREE/NEW BENEFICIARY:
_______________________ ________________________________
Name: Name:
EXHIBIT A
No. ____________________
____________________ SHARES
VOTING TRUST CERTIFICATE
MDI TECHNOLOGIES, INC.
(Incorporated under the laws of the State of Delaware)
THIS CERTIFIES that there have been deposited with the
undersigned as Trustee under the Voting Trust Agreement (the
"Agreement") dated ____________________, 20____ and any
amendments thereto, certificates or instruments of transfer
for shares of MDI Technologies, Inc., a Delaware corporation
(the "Company"), in the number set forth above on this
Certificate, and that____________________, or registered
assigns, is entitled to all the benefits specified in the
Agreement arising from said shares deposited with the
Trustee, all as provided in and subject to the terms and
conditions of the Agreement to which reference is hereby
made.
Until the Trustee shall have delivered the stock or
instruments of transfer held by him or her under the
Agreement to the holders of the Voting Trust Certificates
issued pursuant to the Agreement, the Trustee in trust shall
possess and shall be entitled to exercise all rights and
powers of every nature of absolute owner and holder of said
stock, including the right to vote said shares and to take
part in and consent to any corporate or stockholders' action
of any kind whatsoever (including, without limitation,
approval of or consent to any merger or consolidation to
which the Company may be a party, whether or not the
surviving party, the dissolution of the Company or the sale
of any part or all of its business and assets), it being
expressly stipulated that no voting right passes to the
above-named owner hereof or assigns by or under this
Certificate or by or under any agreement, express or implied.
The holder of this Certificate, by acceptance hereof,
consents to all the provisions of the Agreement and agrees to
be bound thereby, and further agrees to execute and deliver
to the Trustee a signature page as a "Beneficiary" under the
Agreement.
This Certificate is transferable on the books of the
Trustee only in accordance with the provisions of the
Agreement and only by the registered holder hereof in person
or by attorney duly authorized, and upon the surrender
hereof.
IN WITNESS WHEREOF, the Trustee has executed this
Certificate this _____ day of ________________, 20_____.
______________________________
_____________________,
Trustee
The transfer of the beneficial interests represented hereby
is restricted by provisions of a Voting Trust Agreement dated
____________________, 20_____, among the Trustee thereunder,
MDI Technologies, Inc., and the Beneficiaries named therein,
copies of which are on file at the offices of the
corporation.
