INTERNATIONAL PLASTIC TECHNOLOGIES, INC.
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, dated as of the day immediately preceding the
effective date of the initial public offering of the Company, by and among Xxxxx
X. Xxxxxx ("Xxxxxx"), residing at 000 Xxxx 00xx Xxxxxx, Xxx. 00X, Xxx Xxxx, Xxx
Xxxx 00000, Xxxxx Xxxxxxx ("Xxxxxxx"), residing at 00 Xxxxxxx Xxxxx, Xxxxxxxxx
Xxxxxx, Xxx Xxxx 00000, Xxxxxx Xxxxxxxx ("Xxxxxxxx"), residing at Xxx 000,
Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxx Xxxx 00000 and International Plastic
Technologies, Inc., a Delaware corporation with its principal place of business
at 000 Xxxxx Xxxxxx Xxxx, Xxxxxxxxxxx, Xxx Xxxx 00000 (the "Company"). All of
the parties to this Agreement are collectively referred to as the Parties.
Kassel, Xxxxxxx and Xxxxxxxx are collectively referred to as the "Stockholders"
and individually as a "Stockholder".
WHEREAS, the Stockholders and the Company wish to provide for various
matters affecting the interests of the Stockholders as stockholders of the
Company and enter into this Agreement in order to effectuate such purpose; and
WHEREAS, each Stockholder is the owner of common stock of the Company,
par value $.001 per share (the "Common Stock");
WHEREAS, each of the Stockholders owns the number of shares of Common
Stock set forth in Schedule "A" to this Agreement; and
WHEREAS, all shares of Common Stock of the Company now held by a
Stockholder or any Permitted Transferee (as defined in Section 3)(collectively,
the "Stockholders Shares") shall be subject to this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and the terms and conditions set forth in this Agreement, the Parties
hereto agree as follows:
1. Representations and Warranties.
Each of the Stockholders represents and warrants that:
(a) Ownership of Common Stock. He owns the number of shares of Common
Stock ascribed to him in Schedule "A" to this Agreement.
(b) Authorization. He has full right, power and authority to execute
this Agreement and to perform fully the obligations hereunder; he has duly
executed and delivered this Agreement, and this Agreement constitutes his legal,
valid and binding obligation, enforceable against him in accordance with its
terms.
(c) Conflicts. This Agreement does not and will not conflict with or
result in the breach of any term or provision of, or constitute a default under
any agreement or instrument to which he is a party or by which he is bound, or
any law, rule, regulation, order, judgment or decree of any court or
governmental authority applicable to him.
(d) Consents. Except as expressly contemplated by this Agreement, no
consent, approval, authorization, registration, declaration or filing with any
governmental authority is required to be obtained or made in connection with the
execution, delivery or performance of this Agreement.
2. General Restrictions on Disposition of Common Stock.
(a) None of the Stockholders nor any of their successors in interest
shall, directly or indirectly, sell, transfer, assign, pledge, option, mortgage,
hypothecate or otherwise dispose of or encumber any Stockholder Shares
(including, without limitation, transfers to any other Stockholder, dispositions
by gift, or other dispositions by operation of law), all of which acts shall be
deemed included in the term "transfer" as used in this Agreement, unless:
(i) such transfer is made in accordance with the provisions
of Sections 3 and
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4 of this Agreement;
(ii) such transferee agrees to be bound by this Agreement as
if named as a Stockholder herein, executes a counterpart hereof and executes
such further documents as may be necessary, in the opinion of the Company, to
make it a party hereto; and
(iii) such transfer is made pursuant to either (A) an
effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), and any applicable state securities laws, or (B) an
available exemption from the registration requirements of the Securities Act and
applicable state securities laws and, prior to any such transfer, the person
proposing the transfer provides to the Company a written opinion of legal
counsel which is reasonably satisfactory in form and substance to the Company
and its counsel to the effect that the proposed transfer may be effected without
registration under the Securities Act and any applicable state securities laws.
(b) Improper Transfer Ineffective. Any purported transfer of
Stockholder Shares in violation of this Agreement shall be null and void and the
Company shall refuse to recognize any such transfer for any purpose and shall
not reflect in its records any change in ownership of Stockholder Shares
pursuant to any such purported transfer.
3. Certain Permitted Transfers. The Company acknowledges that any of
the following transfers of Stockholder Shares by a Stockholder are subject only
to the restrictions contained in Sections 2(a)(ii) through 2(a)(iii) hereof (and
each of the persons or entities to whom a transfer is made pursuant to this
Section 3 is herein called a "Permitted Transferee"):
(a) a transfer upon or consequent to the death of a Stockholder or a
Permitted Transferee to the executors, administrators, personal representatives,
testamentary trustees, legatees or beneficiaries of a Stockholder or a
Stockholder's Permitted Transferee;
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(b) a transfer made to a Stockholder's spouse, parent or issue or a
Stockholder's Permitted Transferee, or to a trust, all of the beneficiaries of
which, or to a corporation, all of the stockholders of which include only a
Stockholder or a Stockholder's spouse, parents or issue or a Stockholder's
Permitted Transferee, or a trust for the sole benefit of one or more of the
foregoing;
(c) in the case of a Stockholder or a Stockholder's Permitted
Transferee which is a corporation, a transfer to an Affiliate (as hereinafter
defined) of such corporation; and, in the case in which a Stockholder or
Permitted Transferee is a trust, a transfer to any other trust or entity which
is controlled by the currently existing trustee of such trust and, in the case
of a grantor trust, to such grantor or his issue; provided, however, that, if a
transferee specified in this paragraph (c) ceases to be controlled by the
designated partner, trustee or grantor, or ceases to be owned by the transferor
corporation, Stockholder's Shares held by the transferee shall either be
transferred back to the Stockholder or to another Permitted Transferee; and
(d) a transfer by a Permitted Transferee of a Stockholder to a
Stockholder or to any other Stockholder's Permitted Transferee.
For purposes of this Section 3, "Affiliate" shall mean with respect to
a Stockholder, any Person (as hereinafter defined) that, directly or indirectly
controls, or is controlled by, or is under common control with a Stockholder.
For purposes of this Section 3, "Person" shall mean any individual, corporation,
partnership, joint venture, association, joint-stock company, trust or
unincorporated organization.
4. Purchase Upon A Stockholder's Death.
In the event of the death of any Stockholder, the deceased
Stockholder's estate may take the following actions with respect to the
Stockholder's Shares owned by the Stockholder at the time of his death:
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(a) Immediately upon the Stockholder's death, cause the Company to
redeem 250,000 shares of the Stockholder's Shares for $500,000, payable [in
lump sum]. (the "Initial Redemption")
(b) For each three (3) months' period after the Initial Redemption, the
estate of the deceased Stockholder may sell a number a number of shares of the
Stockholder's Shares in accordance with Rule 144 of the Securities Act of 1933,
as amended; provided, however that in no event shall the estate of a deceased
Stockholder be permitted to sell more than 25,000 shares of the Stockholder's
Shares within any three month period.
5. Incidental Registration Rights.
(a) If the Company at any time proposes to register any shares of
Common Stock under the Securities Act of 1933, as amended (the "Securities
Act"), by registration on Forms XX-0, XX-0 or any successor or similar form(s),
whether or not for sale for its own account (other than registrations of
securities in connection with an employee benefit plan, Company stock option or
dividend reinvestment plan or in connection with the acquisition of assets or
shares of or merger or consolidation with another corporation), and the
registration form to be used may also be used for the registration of shares of
Stockholder Shares (an "Incidental Registration"), the Company shall each such
time notify the Stockholders at least 30 days prior to the filing of any
registration statement with respect thereto. Upon the receipt of a written
request of any Stockholder made within 10 days after such notice (which request
shall specify the Common Stock intended to be disposed of by each holder and the
intended method of disposition thereof), the Company will use its best efforts,
subject to the limitations set forth below, to include in such registration all
such Stockholder Shares with respect to which the Company has received a written
request for inclusion by any Stockholder, provided that the Company shall not be
obligated to register in an Incidental Registration Stockholder Shares
constituting less than five percent (5 %) of the total number of shares of
Common Stock then outstanding, unless the Company shall be registering all of
the shares of Common Stock held by such Stockholder. Each request shall also
contain an undertaking from the Stockholders to provide all information and
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material and to take all actions as may be required by the Company in order to
permit the Company to comply with all applicable federal and state securities
laws. For the purposes of this subsection (a), "best efforts" shall not require
the Company to reduce the amount or sale price of the securities it proposes to
register.
(b) Each selling Stockholder shall pay all sales commissions or other
similar selling charges with respect to Stockholder Shares sold by such
Stockholder pursuant to a registration. The Company shall pay all registration
and filing fees, fees and expenses for compliance with federal and state
securities laws, printing expenses, messenger and delivery expenses, fees and
disbursements of counsel and accountants for the Company and fees and expenses
of one counsel for all selling Stockholders in connection with an Incidental
Registration, to be selected by the selling Stockholders holding a majority of
the Stockholder Shares to be sold in such registration, unless the applicable
state securities laws require that stockholders whose securities are being
registered pay their pro rata share of such fees, expenses and disbursements, in
which case each Stockholder participating in the registration shall pay its pro
rata share of all such fees, expenses and disbursements based on his pro rata
share of the total number of shares being registered.
(c) If an Incidental Registration is an underwritten registration, only
shares of Common Stock which are to be distributed by the underwriters may be
included in the registration. If the managing underwriters advise the Company in
writing that in their opinion the number of shares of Common Stock requested to
be included in such registration exceeds the number which can be sold in such
offering or will have a material adverse effect on the price of the shares of
Common Stock to be sold, the Company will include in such registration (i)
first, the shares of Common Stock which the Company proposes to register and
shares of Common Stock of any other holders of shares of Common Stock or
options, warrants or other securities convertible into Common Stock who are
entitled to incidental registration rights prior to those which the Stockholders
propose to register, allocated among the Company and such holders in accordance
with any agreement among the Company and such holders; and (ii) second,
Stockholder Shares which the Stockholders propose to register and shares of
Common Stock any
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other holders of shares of Common Stock or options, warrants or other securities
convertible into Common Stock who are entitled to incidental registration rights
on a par with that which the Stockholders propose to register, in proportion to
the number of shares of Common Stock such Stockholders and other holders propose
to include in the Incidental Registration. The managing underwriters for a
registration pursuant to this Section shall be chosen by the Company.
(d) Notwithstanding the foregoing, if at any time after giving written
notice to the Stockholders of its intention to register any shares of Common
Stock pursuant to subsection (a) of this Section 5 and prior to the effective
date of the Registration Statement filed in connection with such registration,
the Company shall determine for any reason not to register such securities, the
Company may, at its election, give written notice of such determination to each
Stockholder and thereupon shall be relieved of its obligation to register any
Stockholder Shares in connection with such registration (but not from its
obligation to pay certain expenses in connection therewith as provided in
subsection (b) above).
(e) The Company may suspend its obligation to register Stockholder
Shares pursuant to this Section 5 if, in the opinion of counsel to the Company,
the Stockholder Shares proposed to be sold pursuant to this Section 5 can be
sold in the same volume and manner as they are proposed to be sold by such
Stockholder in a transaction exempt from registration pursuant to the Securities
Act and similar state securities laws.
(f) Each Stockholder agrees not to sell or offer for sale any of his
Stockholder Shares within seven (7) days prior to or ninety (90) days after the
effective date of any registration (except as part of such registration).
6. Registration Upon Request.
(a) Request for Registration. At any time after the Company has
completed an initial public offering of common stock and warrants (the "IPO")
and shall no longer be restricted from commencing a second registration pursuant
to applicable law, one or more Stockholders holding
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in the aggregate at least 7% of the shares of outstanding Common Stock (each an
"Initiating Holder") may request in writing that the Company effect pursuant to
this Section 6 the registration of any of such Initiating Holders' Stockholder
Shares under the Securities Act (a "Demand Registration"). The Initiating
Holder's request shall specify the Stockholder Shares requested to be
registered, the proposed amounts thereof, and the intended method of disposition
by such Initiating Holders. Upon receipt of the initiating Holder's written
request, the Company shall promptly give written notice of such requested
registration to all Stockholders, and thereupon the Company will, as
expeditiously as reasonably possible, use its best efforts to effect the
registration of: (i) the Stockholder Shares which the Company has been so
requested to register by the Initiating Holder, for disposition in accordance
with the intended method of disposition stated in such request, and (ii) all
other Stockholder Shares owned by Stockholders, the holders of which shall have
made a written request to the Company for registration thereof (which request
shall specify the Stockholder Shares requested to be registered, the proposed
amounts thereof and the intended method of disposition by such Stockholder)
within thirty (30) days after the receipt of such written notice from the
Company, all to the extent requisite to permit the disposition by the holders of
the securities constituting Stockholder Shares so to be registered, provided
that the Company shall not be required to effect any registration pursuant to
this Section 6 if it is a registration with respect to which the Company is not
required to pay expenses pursuant to Section 6(b)(i) unless the Company shall
have received assurances satisfactory to it that the Initiating Holder will bear
the expenses of registration.
(b) Limitations on Registrations. The registration rights granted to
the Initiating Holders pursuant to this Section 6 are subject to the following
limitations:
(i) Each selling Stockholder shall pay all sales
commissions or other similar selling charges with
respect to his Stockholder Shares sold pursuant to a
registration. In connection with one Demand
Registration pursuant to this Section 6, at the
request of the Initiating Holder, the Company shall
pay all registration and filing fees, fees and
expenses of compliance with federal
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and state securities laws, printing expenses,
messenger and delivery expenses, fees and
disbursements of counsel and accountants for the
Company and fees and expenses of one counsel,
selected by the selling Stockholders holding a
majority of the Stockholder Shares to be sold in such
registration, for all selling Stockholders in
connection with a Demand Registration, unless the
applicable state securities laws require that
stockholders whose securities are being registered
pay their pro rata share of such fees, expenses and
disbursements, in which case each Stockholder
participating in the registration shall pay his pro
rata share of all such fees, expenses and
disbursements based on his pro rata share of the
total number of shares being registered. In all other
instances, the selling Stockholders shall pay all
expenses of a Demand Registration.
(ii) Initiating Holders holding a majority of the shares
of Common Stock held by all Initiating Holders shall
determine (A) whether such Demand Registration shall
be the one Demand Registration in which the Company
pays expenses pursuant to clause (i) of this section,
(B) the method of distribution of the securities to
be registered and (C) if an underwritten offering,
shall select the managing underwriter of such
offering;
(iii) the Company shall be entitled to postpone for a
reasonable time not exceeding one hundred twenty
(120) days the filing of any registration statement
under this Section 6 if, at the time it receives a
request for a Demand Registration pursuant thereto,
the Board of Directors of the Company shall determine
in good faith that such offering will interfere with
a pending financing, merger, sale of assets,
recapitalization or other corporate action which the
Company is actively pursuing and is material to the
business of the Company; and
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(iv) a Registration Statement that does not become
effective or does not remain effective for the period
specified in Section 7(b) shall be deemed not to
constitute a Registration Statement filed pursuant to
this Section 6, provided that, if such Registration
Statement does not become effective or -------- does
not remain effective for such period solely by reason
of the Initiating Holders' refusal to proceed, it
shall be deemed to constitute a Registration
Statement filed pursuant to this Section 6, unless
the Initiating Holders shall have elected to pay all
expenses in connection with such registration as
aforesaid.
(c) If any registration pursuant to this Section 6 involves an
underwritten offering and the managing underwriter requests that the
participants in such offering grant the underwriters an over-allotment or "green
shoe" option for the purpose of covering over-allotments that may be made by the
underwriters in connection with such offering, then a percentage of the shares
proposed to be sold by each selling Stockholder, which portion shall not exceed
the maximum amount then permitted by the rules of the National Association of
Securities Dealers, Inc. and shall equal the percentage of the shares proposed
to be sold by other sellers in the offering that is applied to the same purpose,
shall be made subject to such over-allotment option, unless otherwise agreed in
the underwriting agreement relating thereto. Each of the Initiating Holders and
the other sellers may withdraw from any Demand Registration pursuant to this
Section 6 by giving written notice to the Company, the managing underwriter, if
any, and the other Stockholders prior to the effective date of such Registration
Statement.
(d) The Company may suspend its obligation to register shares of Common
Stock by a Stockholder pursuant to this Section 6 if, in the opinion of counsel
to the Company, the shares of Common Stock proposed to be sold by such
Stockholder pursuant to this Section 6 can be sold in the same volume and manner
as they are proposed to be sold by such Stockholder in a transaction exempt from
registration pursuant to the Securities Act, as amended, and similar state
securities laws.
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(e) Each Stockholder agrees not to sell or offer for sale any of such
Stockholder's shares of Common Stock within seven (7) days prior to or ninety
(90) days after the effective date of any registration (except as part of such
registration).
7. Registration Procedures. If and whenever the Company is required to
use its best efforts to effect the registration of any Stockholder Shares under
the Securities Act as provided in this Agreement, the Company will promptly:
(a) prepare and file with the Securities Exchange Commission (the
"SEC") a Registration Statement with respect to such securities and use its best
efforts to cause such Registration Statement to become effective;
(b) prepare and file with the SEC such amendments and supplements to
such Registration Statement and the prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement until such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such Registration
Statement, but in no event for a period of more than four (4) months after such
Registration Statement becomes effective;
(c) furnish to counsel (if any) selected by the selling Stockholders
holding a majority of the Stockholder Shares to be sold in such registration,
copies of all documents proposed to be filed with the SEC in connection with
such registration, which documents will be subject to the review of such counsel
prior to filing with the SEC;
(d) furnish to each seller of securities such number of conformed
copies of such Registration Statement and of each amendment and supplement
thereto (in each case including all exhibits, except that the Company shall not
be obligated to furnish any seller of securities
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with more than 2 copies of such exhibits), such number of copies of the
prospectus comprised in such Registration Statement (including each preliminary
prospectus and any summary prospectus), in conformity with the requirements of
the Securities Act, and such other documents, as such seller may reasonably
request in order to facilitate the disposition of the securities owned by such
seller;
(e) use its best efforts to register or qualify such securities covered
by such Registration Statement under such other securities or blue sky laws of
such jurisdictions as may apply, and do any and all other acts and things which
may be necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the securities owned by such seller, except
that the Company shall not for any such purpose be required to qualify generally
to do business as a foreign corporation in any jurisdiction wherein it is not so
qualified, or to consent to general service of process in any such jurisdiction;
(f) in connection with an underwritten offering only, furnish to each
seller copies of: (i) an opinion of counsel for the Company, dated the effective
date of the Registration Statement, and (ii) a "comfort" letter signed by the
independent public accountants who have certified the Company's financial
statements included in the Registration Statement, each covering substantially
the same matters with respect to the Registration Statement (and the prospectus
included therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountant's letters delivered to
the underwriters in underwritten public offerings of securities;
(g) notify each seller of any such securities covered by such
Registration Statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, or the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein
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not misleading in the light of the circumstances then existing, and at the
request of any such seller prepare and furnish to such seller a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(h) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC, and make available to its security holders, as soon
as reasonably practicable, an earnings statement covering the period of at least
twelve (12) months, but not more than eighteen (18) months, beginning with the
first month after the effective date of the Registration Statement, which
earnings statement shall satisfy the provisions of section 11(a) of the
Securities Act; and use its best efforts to list such securities on any
securities exchange on which the Common Stock is then listed, if such securities
are not already so listed and if such listing is then permitted under the rules
of such exchange, and to provide a transfer agent and registrar (which, in each
case, may be the Company) for such Stockholder Shares not later than the
effective date of such registration statement.
The Company may require each seller of any securities as to which any
registration is being affected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing and as shall be required by law in
connection therewith.
Each Stockholder hereby agrees that upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 7(g),
such holder will promptly discontinue such holder's disposition of Stockholder
Shares pursuant to the Registration Statement covering such Stockholder Shares
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 7(g), and, if so directed by the Company,
will deliver to the Company (at the Company's expense) all copies, other than
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permanent file copies, then in such holder's possession of the prospectus
covering such Stockholder Shares current at the time of receipt of such notice.
In the event the Company shall give such notice, the period mentioned in Section
7(b) shall be extended by the number of days during the period from and
including the date when each seller of any Stockholder Shares covered by such
Registration Statement shall have received the notice of the event of the kind
described in Section 7(g) to but not including the date when each such seller
receives copies of the supplemented or amended prospectus contemplated by
Section 7(g).
8. Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any Stockholder Shares under the Securities Act, the Company
will, and hereby does, indemnify and hold harmless, in the case of any
Registration Statement filed pursuant to Section 5 or 6 hereof, each
Stockholder, insofar as such losses, claims, damages or liabilities (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 any Registration Statement under which such
Stockholder Shares were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged 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 were made not
misleading, and the Company will reimburse each Stockholder for any legal or
any other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability, action or proceeding;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in such
Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by or on behalf of such Stockholder specifically stating that it is
for use in the preparation thereof. Such
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indemnity shall remain in full force regardless of any investigation made by or
on behalf of a Stockholder.
(b) Indemnification by Selling Stockholders. As a condition to
including any Stockholder Shares in any Registration Statement, the Company
shall have received an undertaking satisfactory to it from each Stockholder so
including his Stockholder Shares in such Registration Statement, to indemnify
and hold harmless ( in the same manner and to the same extent as set forth in
subdivision (a) of this Section 8) the Company, and each director of the
Company, each officer of the Company and each other Person, if any, who controls
the Company within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such Stockholder specifically
stating that it is for use in the preparation of such Registration Statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; provided, however, that the liability of a Stockholder under this
Section 8(b) shall be limited to the amount of proceeds received by such
indemnifying party in the offering giving rise to such liability. Such indemnity
shall remain in full force and effect, regardless of any investigation made by
or on behalf of the Company or any such director, officer, or controlling Person
and shall survive the transfer of such securities by a Stockholder.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 8, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this Section 8, except to the
extent that the indemnifying party is actually
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prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, the indemnifying party shall be entitled to
participate in and, unless in such indemnified party's reasonable judgement a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim, to assume the defense thereof jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall be liable for any settlement of any
action or proceeding effected without its written consent (which consent shall
not be unreasonably withheld). No indemnifying party shall, without the consent
of the indemnified party (which consent shall not be unreasonably withheld),
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. If the indemnification provided for in this Section 8
shall for any reason be held by a court to be unavailable to an indemnified
party under paragraph (a) or (b) hereof in respect of any loss, claim, damage,
or liability, or any action or proceeding in respect thereof, then, in lieu of
the amount paid or payable under subparagraph (a) or (b) hereof, the indemnified
party and the indemnifying party under subparagraph (a) or (b) hereof shall
contribute to the aggregate losses, claims, damages, and liabilities (including
legal or other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the relative fault of
the Company and the Stockholders covered by the Registration Statement which
resulted in such loss, claim, damage or liability, or action in respect thereof,
with respect to the statement or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable consideration, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable
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law, in such proportion as shall be appropriate to reflect the relative benefits
received by the Company from the offering of the securities covered by such
Registration Statement. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. In addition, no Person shall be obligated to contribute
hereunder any amounts in payment for any settlement of any action or claim
effected without such Person's consent, which consent shall not be unreasonably
withheld.
(e) Other Indemnification. Indemnification and contribution similar to
that specified in the preceding subdivisions of this Section 8 (with appropriate
modifications) shall be given by the Company and the Stockholders proposing to
offer and sell Stockholder Shares with respect to any required registration or
other qualification of securities under any federal or state law or regulation
of any governmental authority other than the Securities Act.
(f) Indemnification Payments. The indemnification and contribution
required by this Section 8 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or expense, loss, damage, or liability is incurred.
(g) Additional Rights. Any indemnification agreements contained herein
shall be in addition to any other rights to indemnification or contribution
which any indemnified party may have pursuant to law or contract and shall
remain operative and in full force and effect regardless of any investigation
made or omitted by or on behalf of any indemnified party.
9. Books, Records and Reports.
Within one hundred twenty (120) days of the end of each fiscal year,
the Company shall mail to each of the Stockholders a report setting forth an
audited balance sheet at the end of such fiscal year and audited statements of
income and source and use of funds for such fiscal year of the Company, and any
other information the Company deems necessary or desirable. If
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requested by a Stockholder, the Company will furnish quarterly financial
statements to such Stockholder as soon as they become available.
10. Stock Certificate Legend.
A copy of this Agreement shall be filed with the Secretary of the
Company and kept with the records of the Company. Each certificate representing
Stockholder Shares shall bear upon its face substantially the following legend,
in addition to any other legends that may be required:
(i) THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, ("THE
SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND
UNTIL REGISTERED UNDER THE SECURITIES ACT, AND ANY
APPLICABLE STATE SECURITIES LAWS OR UNLESS IN THE OPINION OF
COUNSEL, SATISFACTORY TO THE ISSUER, SUCH SALE OR TRANSFER
IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE
WITH THE SECURITIES ACT.
(ii) THE SALE, TRANSFER OR ENCUMBRANCE OF THE SHARES OF COMMON
STOCK REPRESENTED BY THIS CERTIFICATE IS RESTRICTED AND
SUBJECT TO THE TERMS OF A STOCKHOLDERS' AGREEMENT, DATED AS OF
THE DAY IMMEDIATELY PRECEDING THE EFFECTIVE DATE OF THE
INITIAL PUBLIC OFFERING OF THE COMPANY, COPIES OF WHICH ARE ON
FILE AT THE OFFICE OF THE COMPANY.
The certificate representing Stockholder Shares for sale pursuant to an
effective Registration Statement under the Securities Act or pursuant to Rule
144 (to the extent permitted hereby) shall be replaced, at the expense of the
Company, with certificates without the legend required by subsection 10(i)
above.
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11. Certificate of Incorporation; By-Laws; Restrictions on Other
Agreements; No Circumvention; etc.
Each Stockholder shall vote his shares of Common Stock, at any regular
or special meeting of stockholders of the Company or in any written consent
executed in lieu of such a meeting of stockholders, and shall take all other
actions necessary to ensure that the certificate of incorporation and by-laws of
the Company do not, at any time, conflict with the provisions of this Agreement.
No Stockholder may do indirectly, that which he is not permitted to do by this
Agreement. In the event that any stock or other securities are issued in respect
of, in exchange for, or in substitution of, any shares of Common Stock by reason
of any reorganization, recapitalization, reclassification, merger,
consolidation, spinoff, partial or complete liquidation, stock dividend, stock
split or revere stock split, sale of assets, distribution to stockholders or
combinations of the shares of Common Stock or any other change in the Company's
capital structure, such capital stock or other securities shall be deemed
subject to this Agreement, and appropriate adjustments shall be made in the
percentages specified in this Agreement and as otherwise may be necessary to
fairly and equitably preserve, as far as practicable, the original rights and
obligations of the parties.
12. Participation in Underwritten Registrations.
No Stockholder may participate in any underwritten registration
hereunder unless such Stockholder (i) agrees to sell such Stockholder's
securities on the basis provided in any underwriting arrangements approved by
the Stockholders entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements or this Agreement.
13. Termination.
This Agreement shall terminate on the earlier of: (i) ten (10) years
from the date of this Agreement or (ii) the date on which neither Kassel,
Xxxxxxx nor Xxxxxxxx own any Common Stock.
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14. Binding Effect.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective heirs, legal representatives,
and successors.
15. Notices.
Notices and other communications required or permitted to be given
under this Agreement shall be in writing and shall be deemed duly given when
delivered personally or sent by mail (certified or registered mail, postage
prepaid, return receipt requested), as follows:
If to Xxxxx X. Xxxxxx:
000 Xxxx 00xx Xxxxxx, Xxx. 00X
Xxx Xxxx, Xxx Xxxx 00000
If to Xxxxx Xxxxxxx:
00 Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxx 00000
If to Xxxxxx Xxxxxxxx:
Xxx 000, Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
If to International Plastic Technologies, Inc.:
000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxxx, Xxx Xxxx 00000
With a copy to:
Xxxxxxx Xxxxxxxxxx & Xxxxxx, LLP
000 Xxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx Xxxxxxx, Esq.
or at such other address as such party shall have furnished to the other parties
in writing.
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16. Entire Agreement; Amendments.
This Agreement embodies the entire agreement and understanding between
the Parties relating to the subject matter hereof. Neither this Agreement nor
any provision hereof may be changed, discharged or terminated without an
instrument in writing signed by the Company and each of the Stockholders at the
time owning shares of Common Stock.
17. Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware regardless of the law that
might be applied under principles of conflicts of law.
18. Headings.
All headings are inserted herein for convenience only and do not form a
part of this Agreement.
19. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered on the date first above written.
INTERNATIONAL PLASTIC TECHNOLOGIES,
INC.
By: /s/ Xxxxxx Xxxxxxxx
------------------------------
Xxxxxx Xxxxxxxx, President
/s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxx Xxxxxxx
------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxxx
------------------------------
Xxxxxx Xxxxxxxx
-00-
XXXXXXXXX XX. 0 TO THE
INTERNATIONAL PLASTIC TECHNOLOGIES, INC.
SHAREHOLDERS' AGREEMENT
This Amendment, effective as of the day immediately preceding the effective
date of the initial public offering of the Company, by and among Xxxxx X.
Xxxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxxxxxx (collectively referred to as the
"Stockholders") and International Plastic Technologies, Inc. (the "Company").
WHEREAS, the Stockholders and the Company entered into a Stockholders'
Agreement dated as of the day immediately preceding the effective date of the
initial public offering of the Company (the "Agreement"); and
WHEREAS, it is the desire of the parties hereto to amend the Agreement; and
WHEREAS, Paragraph 16 of the Agreement requires that any change to the
Agreement be made in writing signed by the Company and each of the Stockholders
then owning shares of common stock.
NOW THEREFORE, in consideration of the premises and the mutual covenants
and the terms and conditions set forth in this Amendment, the parties hereto
agree as follows:
1. Capitalized terms shall have the meaning ascribed to them in the Agreement.
2. Paragraph 4 is hereby amended by adding the following subsection (c):
(c) The obligation of the Company to purchase shares of a deceased
Stockholder upon an Initial Redemption shall be only to the extent that the
Company receives proceeds from life insurance policies on the life of such
Stockholder.
3. Except as specifically amended above, the terms and conditions of the
Agreement are hereby ratified and confirmed and remain in full force and
effect.
4. This Amendment may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly
executed and delivered on the date first above written.
International Plastic Technologies, Inc.
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------
Xxxxxx Xxxxxxxx, President
/s/ Xxxxx X. Xxxxxx
-------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxx Xxxxxxx
-------------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxxx
-------------------------------------
Xxxxxx Xxxxxxxx
