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EXHIBIT 99.2
SHAREHOLDERS' COMMITTEE AGREEMENT
This Shareholders' Committee Agreement made as of this __________ day
of _______________, 1998, by and among the shareholder executing this Agreement
(the "Shareholder") and F.S. Prabhakara, Xxxx X. Xxxxx, and Xxxxxxx X. Xxxxx
(individually, a "Member" and collectively the "Committee").
Stone & Xxxxxxx, Incorporated and certain of its affiliates
(collectively, "SW") have entered into an Agreement and Plan of Merger, dated
April 20, 1998 (the "Merger Agreement"), with Power Technologies, Inc. ("PTI")
and certain of its shareholders. The Merger Agreement provides for the merger
(the "Merger") of a subsidiary of Stone & Xxxxxxx, Incorporated with and into
PTI, with PTI being the surviving corporation. PTI has delivered a
Prospectus/Proxy Statement and a copy of the Merger Agreement, and certain
information about PTI relating to the Merger and the other transactions
contemplated by the Merger Agreement (collectively, with the Merger, the
"Transaction") to each of the shareholders of PTI. Unless otherwise defined
herein, capitalized terms used herein mean what they mean in the Merger
Agreement.
Pursuant to the Merger Agreement, the Initial Escrow Shares will be
deposited with the Escrow Agent to satisfy certain indemnification obligations
of the Participating Holders and the Fund Shares will be deposited in a separate
escrow account for the purpose of satisfying expenses and compensation of the
Shareholders' Committee (collectively, "Administrative Expenses"). The Initial
Escrow Shares will be distributed to the Participating Holders or returned to SW
pursuant to the terms of the Escrow Agreement and the Fund Shares will be
distributed to the Participating Holders to the extent they are not used to
satisfy Administrative Expenses. Also, the Merger Agreement entitles the
Participating Holders to Contingent Merger Consideration, which Contingent
Merger Consideration may be reduced by the amount of any Unsatisfied Claims for
which SW is entitled to indemnification under the Merger Agreement. Finally, the
Participating Shareholders will have certain indemnification rights against SW.
The Merger Agreement contemplates the appointment of a Shareholders'
Representative for the purpose of representing the collective interests of the
Participating Holders and acting and making decisions on their behalf with
respect matters arising under the Merger Agreement and the Escrow Agreement, and
the Committee will perform this function pursuant to this Agreement and
corresponding agreements with other Participating Holders.
1. APPOINTMENT.
(a) APPOINTMENT AND ACCEPTANCE. The Shareholder hereby
appoints the Committee to act as his or her representative as contemplated by
the Merger Agreement and the Escrow Agreement in connection with all matters
relating to the Transaction. Without limiting the generality of the foregoing,
the Committee is authorized to represent the Shareholder in connection with (a)
any indemnification claim against or by the Participating Holders pursuant to
the Merger Agreement, (b) the determination of the amount of the Contingent
Merger Consideration to which the Participating Holders are entitled pursuant to
the Merger Agreement and (c) the administration of the Escrow Agreement and any
disputes or issues that arise thereunder. The Committee hereby accepts such
appointment and agrees to serve as the Shareholders' Representative for the
Shareholder as contemplated by the Merger Agreement and the Escrow Agreement.
(b) INDEMNIFICATION CLAIMS. The Committee may, but is not
obligated to enforce, collect or recover any claim as to which indemnity may be
sought on behalf of the Shareholder under the Merger Agreement. The Committee
shall in no event have any obligation for the payment of, or the collection of,
any amounts to which the Shareholder may be entitled under this Agreement, the
Merger Agreement or the Escrow Agreement.
(c) LIMITATION ON POWERS. Notwithstanding anything in
this Agreement to the contrary, the Committee shall not have the authority to
waive, or agree to any amendment to, the Shareholder's rights under the Merger
Agreement or the Escrow Agreement except that:
(i) The Committee may waive or agree to an
amendment to the Shareholder's rights if such amendment is approved by
the affirmative vote of "Represented Shareholders" holding two-thirds
of the aggregate "Represented Interests" (such terms being defined
below);
(ii) The Committee may agree to the payment of a
reduced amount of Contingent Merger Consideration on an accelerated
basis (except for acceleration pursuant to Section 1.10(i) of the
Merger Agreement) in lieu of the actual Contingent Merger Consideration
provided for in the Merger Agreement, provided, however, that the
aggregate Closing Market Value of Contingent Merger Consideration shall
not be less than $6,000,000 if paid on or before 12/31/1998, $6,500,000
if paid between 1/1/1999 and 12/31/1999, $7,000,000 if paid between
1/1/2000 and 12/31/2000, $7,500,000 if paid between
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1/1/2001 and 12/31/2001, or $8,000,000 if paid at any time on or after
1/1/2002; and
(iii) The settlement of a bona fide dispute
relating to the rights to which the Participating Holders are entitled
shall not constitute a "waiver" or "amendment" of any rights subject to
this paragraph (c).
For purposes of this Agreement, the Participating Holders who execute
Shareholders' Committee Agreements in the form of this Agreement (including the
Shareholder) are referred to as the "Represented Shareholders" and each
Represented Shareholder shall be deemed to own a number of "Represented
Interests" equal to the number of Participating Shares owned by such Represented
Shareholder.
(d) POWER OF ATTORNEY. Subject to paragraph (c) above,
the Committee shall have full power and authority for the Shareholder, on his or
her behalf and in his or her name, place and xxxxx, to take any and all actions
that the Committee may deem necessary or desirable under the Merger Agreement
and the Escrow Agreement, in its absolute discretion, as fully as the
Shareholder could do if present. The Shareholder hereby grants each Member,
acting individually after the approval of a matter by the Committee as provided
herein, an irrevocable power of attorney, in the name, place and stead of the
Shareholder, to execute and deliver any agreements, waivers, stock certificates
or other documents, to commence and defend litigation and other proceedings, and
to take such other actions as are necessary or desirable to enforce or protect
the Shareholder's rights under the Merger Agreement and the Escrow Agreement and
to implement decisions made or actions taken by the Committee.
(e) RATIFICATION. Any action taken by the Committee or
any Member pursuant to and in compliance with this Agreement is hereby ratified,
confirmed and approved by the Shareholder.
(f) RELIANCE; IRREVOCABILITY. It is anticipated that the
Committee, SW, and the other Represented Shareholders will all act, or refrain
from acting, in reliance upon this Agreement, and in consideration of that
reliance, and the mutual covenants expressed in this Agreement, the powers of
the Committee are, and shall be deemed, coupled with an interest and
irrevocable, and shall not terminate upon, or be affected by, the death,
incompetency or other disability of the Shareholder or any other Represented
Shareholder.
2. ACTION BY THE COMMITTEE.
(a) MEETINGS OF THE COMMITTEE. The Members may act only
through the Committee, however, the Members may individually implement actions
approved by the Committee. Meetings of the Committee shall be held at such times
as may from time to time be fixed by resolution of the Committee or called by
any Member of the Committee. Meetings of the Committee shall be held at such
place, within or without the State of New York, as from time to time may be
fixed by resolution of the Committee.
(b) NOTICE OF MEETINGS. Notice of meetings of the
Committee fixed by resolution of the Committee need not be given. Notice of each
other meeting shall be mailed to each Member by the Member calling the meeting,
addressed to each Member's residence or usual place of business, at least three
days before the day on which the meeting is to be held, or shall be sent to the
Member by telegraph, cable, wireless, or similar means so addressed or shall be
delivered personally, by telephone or by facsimile with confirmation received,
at least twenty-four (24) hours before the time the meeting is to be held. Each
notice shall state the time and place of the meeting but need not state the
purposes thereof. Notices of any such meeting need not be given to any Member
who submits a signed waiver of notice, whether before or after the meeting, or
who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice.
(c) QUORUM AND MANNER OF ACTING. At each meeting of the
Committee the presence of two Members shall constitute a quorum for the
transaction of business, and the vote of two or more Members present at the time
of the vote shall be the act of the Committee. Notwithstanding the foregoing, if
there is for any reason only one Member, such Member may act only for the
purpose of filling vacancies on the Committee.
(d) ACTION WITHOUT A MEETING. Any action required or
permitted to be taken by the Committee may be taken without a meeting if all
Members consent in writing to the adoption of a resolution authorizing the
action. The resolution and the written consents thereto by the Members shall be
filed with the minutes of the proceedings of the Committee.
(e) PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE.
Any one or more Members may participate in a meeting of the Committee by means
of a conference telephone or similar communications equipment allowing all
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persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
(f) CONFERRING WITH REPRESENTED SHAREHOLDERS. In
performing its duties hereunder and as contemplated hereby and by the Merger
Agreement and Escrow Agreement, the Committee may, but need not, confer and
consult with any or all of the Represented Shareholders. All decisions made and
actions taken by the Committee in connection with this Agreement, the Merger
Agreement and the Escrow Agreement shall be final and binding on the
Shareholder, whether or not the Committee consulted with the Shareholder in the
course of making any such decision or taking any such action.
(g) RELIANCE ON DOCUMENTS. The Committee shall be
entitled to rely upon any order, judgment, award, certification, demand, notice,
instrument or other writing delivered to it under this Agreement, the Merger
Agreement or the Escrow Agreement without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety or
validity of the service thereof. The Committee may act in reliance upon any
instrument or signature believed by it to be genuine and may assume that any
persons purporting to give notice or receipt of advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so.
(h) RETAINING THIRD-PARTIES. The Committee may engage
such third parties at such cost as the Committee shall in its sole discretion
deem necessary or appropriate for the adequate performance of its duties
hereunder and may rely on the advice of such third parties with respect to
matters within their professional or expert competence.
3. ACTION BY THE REPRESENTED SHAREHOLDERS.
(a) CALL OF MEETINGS. Meetings of the Represented
Shareholders may be called at any time by the holders of twenty-five percent
(25%) of the Represented Interests or by the Committee and shall be held on such
day and at such hour as is fixed in the call of the meeting. If all Members of
the Committee have resigned or are otherwise unable to act, the holders of ten
percent (10%) of the Represented Interests may call a meeting.
(b) PLACE OF MEETINGS. Meetings of the Represented
Shareholders shall be held at the principal office of PTI or at such other
place, within or without the State of New York, as may be fixed by the
Committee.
(c) NOTICE OF MEETINGS. Notice of each meeting of
Represented Shareholders shall be in writing and shall state the place, date,
and hour of the meeting and shall state the purpose or purposes for which the
meeting is called and who called the meeting. A copy of the notice of any
meeting shall be given by the Committee or the Represented Shareholders calling
the meeting, personally or by mail, not less than ten (10) nor more than sixty
(60) days before the date of the meeting, to each Represented Shareholder. If
mailed, such notice is given when deposited in the United States mail, with
postage thereon prepaid, directed to the Represented Shareholder at such address
as appears on such Represented Shareholders' Shareholders' Committee Agreement,
or, if such Represented Shareholder shall have filed with the Committee a
written request that notices be mailed to some other address, then directed to
the Represented Shareholder at such other address. Notice of meetings of
Represented Shareholders need not be given to any Represented Shareholder who
submits a signed waiver of notice, in person or by proxy, whether before or
after the meeting. The attendance of any Represented Shareholder at a meeting,
whether in person or by proxy, without protesting prior to the conclusion of the
meeting the lack of notice of such meeting, shall constitute a waiver of notice
by him. The Committee shall provide the Represented Shareholders with access to
the names and addresses of the Represented Shareholders upon reasonable request.
(d) PROXIES. Every Represented Shareholder may authorize
another person or persons to act for him by proxy. No proxy shall be valid after
the expiration of eleven months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the Represented
Shareholder executing it, except as otherwise provided by law. The authority of
the holder of a proxy to act shall not be revoked by the incompetence or death
of the Represented Shareholder who executed the proxy unless, before the
authority is exercised, written notice of an adjudication of such incompetence
or of such death is received by the Committee. Proxies which contain a faxed
signature shall be treated in the same manner as proxies with original
signatures.
(e) ACTION WITHOUT A MEETING. Whenever Represented
Shareholders are required or permitted to take any action by vote, such action
may be taken without a meeting on written consent, setting forth the action so
taken, signed by the holders of enough Represented Interests to approve the
action so taken.
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4. FEES AND EXPENSES.
(a) COMPENSATION. Each Member shall be entitled to an
annual retainer of $1,000 for serving as a member of the Committee and shall be
paid $250 for each Committee meeting which they attend (up to a maximum of four
meetings per year). In addition, each Member shall be entitled to be reimbursed
for any out-of-pocket expenses incurred by such Member in performing his or her
duties as a Member; however, Members will not be entitled to travel expenses for
attending Committee Meetings. The Members will no longer be entitled to
compensation hereunder after the amount of the Contingent Merger Consideration
has been finally determined and all other issues under the Merger Agreement and
Escrow Agreement have been resolved. The annual retainer shall be pro rated in
the final year based on the portion of the year during which they are entitled
to compensation.
(b) PAYMENT OF COMPENSATION AND EXPENSES. The
compensation and reimbursement of the members of the Committee and any costs,
fees and expenses of any third parties engaged by the Committee in connection
with the performance of its duties as contemplated hereby shall be paid in the
following manner:
(i) first, to the extent permitted by the Escrow
Agreement, from the proceeds of the sale of such portion of the Initial
Escrow Shares as is necessary to satisfy such costs as contemplated by
the Escrow Agreement;
(ii) second, from the proceeds of the sale of the
Fund Shares until all of such Fund Shares have been sold; and
(iii) finally, out of the Contingent Merger
Consideration payable pursuant to the Merger Agreement, the Committee
being hereby authorized to direct SW to pay the necessary portion of
the Contingent Merger Consideration to the Committee in order to
satisfy such compensation and expenses.
5. RELEASE AND INDEMNIFICATION.
(a) RELEASE AND INDEMNIFICATION. No Member shall be
liable to the Shareholder for any acts or omissions as a member of the Committee
except for his or her own bad faith or willful misconduct. Except with respect
to claims based upon such bad faith or willful misconduct that are successfully
asserted against such Member, the Shareholder and the other Represented
Shareholders shall jointly and severally indemnify and hold harmless each Member
from and against any and all damages, losses, liabilities, claims, actions,
costs and expenses, including reasonable attorneys' fees and disbursements,
arising out of and in connection with the Merger Agreement, the Escrow Agreement
or this Agreement and the performance of his or her duties hereunder or
thereunder. Such Member shall not be liable for any mistake of fact or of law or
any error of judgment. Each Member and the Committee is authorized to comply
with and obey laws, orders, judgments, decrees, and regulations of any
governmental authority, court, tribunal, or arbitrator. If a Member complies
with any such law, order, judgment, decree, or regulation, such Member shall not
be liable to the Shareholder or to any other person even if such law, order,
judgment, decree or regulation is subsequently reversed, modified, annulled, set
aside, vacated, found to have been entered without jurisdiction, or found to be
in violation or beyond the scope of any constitution or law. If (i) a Member is
uncertain as to the Committee's duties or rights hereunder, (ii) has received
any notice, advice, direction or other document from any other party with
respect to this Agreement, the Merger Agreement or the Escrow Agreement which,
in the Member's opinion, is in conflict with any of the provisions of this
Agreement, the Merger Agreement or the Escrow Agreement, or (iii) is aware that
a dispute has arisen with respect to this Agreement, the Merger Agreement or the
Escrow Agreement, each Member and the Committee shall be entitled, without
liability to the Shareholder, to use their best efforts to perform their duties
under this Agreement, the Merger Agreement and the Escrow Agreement until the
Committee is directed otherwise in writing by an order, decree, or judgment of a
court of competent jurisdiction which has been finally affirmed on appeal or
which by lapse of time or otherwise is no longer subject to appeal or by an
accountants' or arbitrators' determination as provided in the Merger Agreement
or the Escrow Agreement.
(b) PERIOD OF INDEMNITY. The aforesaid indemnities shall
remain in full force and effect against any of the parties for a period equal to
the applicable statute of limitation for such claim; provided, however, that if
prior to the expiration of such period any claim for indemnification has been
asserted but not fully determined, such period will be extended as to such
claim, until it is finally concluded. All rights, protections and indemnities
contemplated herein shall be available to each Member with respect to actions or
omissions while a member of the Committee despite such Member's resignation or
removal from the Committee.
(c) SATISFACTION OF INDEMNIFICATION OBLIGATIONS. The
obligations of Shareholder to indemnify the Members shall be satisfied in the
same manner as Administrative Expenses are satisfied. If a Member is entitled to
indemnification after all such amounts are exhausted, the Shareholder shall be
individually liable in an amount equal to the
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amount of indemnification multiplied by a fraction, the numerator of which this
the number of Represented Interests owned by the Shareholder and the denominator
of which is the number of Represented Interests owned by all of the Represented
Shareholders.
6. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSORS.
(a) RESIGNATION. Any Member may resign at any time by
giving 30 days written notice thereof to the other Members of the Committee.
(b) REMOVAL. Any Member may be removed at any time by the
affirmative vote of Represented Shareholders who hold a majority of the
Represented Interests.
(c) FILLING VACANCIES. If any Member shall resign, be
removed or become incapable of acting, or if a vacancy shall otherwise occur on
the Committee, the remaining Members of the Committee shall appoint a successor
to take the place of such Member and fill such vacancy. Such successor Member
shall execute a counterpart to this Agreement and thereupon, without any further
act, deed or conveyance, shall become vested with all the rights, powers and
duties of the retiring Member. If all Members of the Committee resign or are
otherwise unable to act, the Represented Shareholders may appoint new Members to
the Committee by a plurality vote at a meeting of Represented Shareholders at
which Represented Shareholders holding a majority of the Represented Interests
are present.
7. CONTENTS OF AGREEMENT; PARTIES IN INTEREST. This Agreement and
the agreements referred to herein set forth the entire understanding of the
parties hereto with respect to the transactions contemplated hereby. This
Agreement shall not be amended except by a written instrument duly executed by
each of the parties hereto; provided that Sections 2(a) and (c) may not be
amended without the prior written consent of SW. Any and all previous agreements
and understandings between or among the parties regarding the subject matter
hereof, whether written or oral, are superseded by this Agreement and the
documents referred to herein.
8. ASSIGNMENT AND BINDING EFFECT. This Agreement may not be
assigned by any party hereto without the prior written consent of the other
parties. All of the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto.
9. WAIVER. Any term or provision of this Agreement may be waived
at any time by the party entitled to the benefit thereof by a written instrument
duly executed by such party.
10. NOTICES. Any notice, request, demand, waiver, consent
approval, or other communication which is required or permitted to be given to
any party hereunder shall be in writing and shall be deemed given only if
delivered to the party personally or sent to the party by telegram, facsimile
transmission, registered or certified mail (return receipt requested), with
postage and registration or certification fees thereon prepaid, or by prepaid
documented air courier. Any such notice shall be deemed to have been given (a)
when received, if delivered in person, (b) on the date sent if telegraphed, sent
by prepaid documented air courier, sent by facsimile transmission and, in the
case of facsimile transmission, confirmed in writing within three business days
thereafter, and (c) three days following the date sent if mailed by registered
or certified mail (return receipt requested). Notices shall be sent to the
Committee at the following address:
Shareholders' Committee
c/o Power Technologies, Inc.
Post Office Box 1058
0000 Xxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
with a copy to:
Nixon, Hargrave, Devans & Xxxxx LLP
Xxxx Xxxxxx Xxx 0000
Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
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Notices shall be sent to the Shareholder at the address set forth on the
signature page of this Agreement. The Committee or the Shareholder may specify
an alternate address in a notice duly given to the other parties as provided
herein.
11. JURISDICTION. The parties hereby irrevocably consent to the
jurisdiction of the courts of New York and of any federal court located in such
state in connection with any action or proceeding arising out of or relating to
this Agreement, any document or instrument delivered pursuant to, in connection
with, or simultaneously with this Agreement, or a breach of this Agreement or of
any such document or instrument.
12. GOVERNING LAW. This Agreement shall be governed and
interpreted and enforced in accordance with the laws of the State of New York
without regard to its conflicts of laws principles.
13. NO BENEFIT TO OTHERS. Except as contemplated by Section 2(f)
of this Agreement, the representations, warranties, covenants and agreements
contained in this Agreement are for the sole benefit of the parties hereto and
their respective heirs, executors, personal representatives, successors and
assigns, and they shall not be construed as conferring, and are not intended to
confer, any rights on any other person.
14. SECTION HEADINGS. All section headings are for convenience
only and shall in no way modify or restrict any of the terms or provisions
hereof.
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have duly executed this Agreement on the date first above
written.
COMMITTEE: SHAREHOLDER:
________________________________ ________________________________
F.S. Prabhakara (Name)
________________________________ ________________________________
Xxxx X. Xxxxx (Xxxxxx Xxxxxxx)
________________________________ ________________________________
Xxxxxxx X. Xxxxx (City, State, Zip)
Telephone:______________________
Facsimile: _____________________
SUCCESSOR COMMITTEE MEMBERS:
________________________________ ________________________________
(Signature) (Signature)
________________________________ ________________________________
(Name) (Name)
________________________________ ________________________________
(Signature) (Signature)
________________________________ ________________________________
(Name) (Name)
