EXECUTION COPY
XXXXXX PRODUCTS CORP.
STOCKHOLDERS' AGREEMENT
Dated as of November 26, 1997
XXXXXX PRODUCTS CORP.
STOCKHOLDERS' AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I Definitions.................................................1
ARTICLE II Covenants and Conditions....................................8
Section 2.1 Restrictions on Transfers; Right of First Refusal...........8
Section 2.2 Call by the Company........................................12
Section 2.3 Take Along.................................................14
Section 2.4 Come Along.................................................15
Section 2.5 Corporate Governance.......................................16
Section 2.6 Preemptive Rights..........................................18
ARTICLE III Miscellaneous..............................................19
Section 3.1 Remedies...................................................20
Section 3.2 Entire Agreement; Amendment; Waiver........................20
Section 3.3 Severability...............................................20
Section 3.4 Notices....................................................21
Section 3.5 Binding Effect; Assignment.................................22
Section 3.6 Governing Law..............................................22
Section 3.7 Termination................................................22
Section 3.8 Recapitalizations, Exchanges, Etc..........................22
Section 3.9 Action Necessary to Effectuate the Agreement...............23
Section 3.10 Purchase for Investment; Legend on Certificate.............23
Section 3.11 Effectiveness of Transfers.................................24
Section 3.12 Additional Stockholders....................................25
Section 3.13 No Waiver..................................................25
Section 3.14 Counterpart................................................25
Section 3.15 Headings...................................................25
Section 3.16 Number; Gender.............................................25
Section 3.17 Consent to Jurisdiction....................................25
Section 3.18 Costs and Expenses.........................................26
Section 3.19 Arbitration ...............................................26
EXHIBIT A Schedule of Stockholders
- i -
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement (this "Agreement") is entered into as of
the 26th day of November, 1997, by and among Xxxxxx Products Corp., a
Massachusetts corporation (the "Company"), those persons listed as Berkshire
Stockholders on the signature pages hereof (collectively, the "Berkshire
Stockholders"), those persons listed as the Management Stockholders on the
signature pages hereof (the "Management Stockholders"), Asco Investments Ltd., a
Bahamas corporation ("Asco"), and those "Other Stockholders" who acquire shares
of capital stock of the Company as described in Section 3.12 hereof. The
Berkshire Stockholders, the Management Stockholders, Asco and the Other
Stockholders are sometimes collectively referred to herein as the
"Stockholders."
WHEREAS, upon consummation of the transactions contemplated by (i) that
certain Stock Purchase and Redemption Agreement dated as of October 27, 1997
(the "Purchase Agreement") by and among the Company, Xxxxxx Acquisition LLC and
the other parties named therein, and (ii) that certain Stock Purchase Agreement
dated as of October 27, 1997 by and between Jordan X. Xxxx and Xxxxxx
Acquisition LLC, the Stockholders will own the number of shares of common stock,
$.01 par value per share (the "Common Stock"), of the Company set forth opposite
their respective names on Exhibit A hereto;
WHEREAS, each of the Stockholders desires to enter into this Agreement
for the purpose of regulating certain aspects of the Stockholders' relationships
with regard to the Company and certain restrictions on the Common Stock owned by
the Stockholders; and
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
Definitions
For the purposes of this Agreement, the following terms shall be
defined as follows:
"Affiliate" shall mean a specified person, corporation or other entity
which, directly or indirectly, through one or more intermediaries, controls, or
is controlled by, or is under common control with, the corporation or other
entity specified and when used with respect to the Company or any Subsidiary of
the Company, shall include any holder of at least 5% of the capital stock, or
any officer or director, of the Company.
"Assignment Notice" shall have the meaning as set forth in Section
2.1(c).
"Associate" (i) when used to indicate a relationship with any Person
shall mean, (a) any corporation or organization of which such Person is an
officer or partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of any class of
equity securities, (b) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar fiduciary capacity and (c) any relative of such Person who has
the same home as such Person, is a parent, aunt or uncle, sibling, spouse,
in-law, child, niece or nephew or grandchild of such Person, or the spouse of
any of them, or (ii) when used to indicate a relationship with the Company,
shall also mean a director or officer of the Company or any Subsidiary. Neither
the Company nor any of its Subsidiaries shall be deemed an Associate of any
Stockholder.
"Berkshire Representatives" shall have the meaning as set forth in
Section 2.5.
"Berkshire Stockholder" shall have the meaning as set forth in the
first paragraph of this Agreement.
"Board" or "Board of Directors" shall mean the Board of Directors of
the Company as the same shall be constituted from time to time.
"Call Event" shall have the meaning as set forth in Section 2.2(a).
"Call Group" shall have the meaning as set forth in Section 2.2(a).
"Call Notice" shall have the meaning as set forth in Section 2.2(a).
"Call Option" shall have the meaning as set forth in Section 2.2(a).
"Call Price" shall have the meaning as set forth in Section 2.2(c).
"Call Securities" shall have the meaning as set forth in Section
2.2(b).
"Cause" shall have the meaning as set forth below, except with respect
to any Management Stockholder who is employed by the Company or one of its
Subsidiaries pursuant to an effective written employment agreement between the
Company and/or one of its Subsidiaries and such Management Stockholder, in which
event the definition of "Cause" as set forth in such employment agreement shall
be deemed to be the definition of "Cause" herein solely for such Management
Stockholder and only for so long as such employment agreement remains effective.
In all other events, the term "Cause" shall mean that the Board of
Directors of the Company has determined, in its reasonable judgment, that any
one or more of the following has occurred:
- 2 -
(i) the Management Stockholder shall have been convicted of,
or shall have pleaded guilty or nolo contendere to, any felony or any
crime involving dishonesty or moral turpitude;
(ii) the Management Stockholder shall have committed any
fraud, embezzlement, misappropriation of funds, breach of fiduciary
duty or act of dishonesty;
(iii) the Management Stockholder shall have failed to perform
his duties and responsibilities to the Company and its Affiliates
(other than by reason of disability);
(iv) the Management Stockholder shall have breached in any
respect any of the provisions of this Agreement or any other agreement
between the Management Stockholder and the Company;
(v) the Management Stockholder shall have engaged in conduct
likely to make the Company or any of its Affiliates subject to civil or
criminal liabilities other than those arising from the Company's normal
business activities; or
(vi) a failure by the Management Stockholder to take, or
refrain from taking, any action as directed by of the Board of
Directors of the Company.
"Change in Control" shall mean any transaction in which (i) any person,
or any two or more persons acting as a group, and all affiliates of such person
or persons, who prior to such time owned shares representing less than fifty
percent (50%) of the voting power at elections for the Board of Directors of the
Company, shall acquire, whether by purchase, exchange, tender offer, merger,
consolidation or otherwise, such additional shares of the Company's Capital
Stock in one or more transactions, or series of transactions, such that
following such transaction or transactions, such person or group and affiliates
beneficially own fifty percent (50%) or more of the voting power at elections
for the Board of Directors of the Company or any successor or (ii) all or
substantially all of the assets of the Company are sold other than in the
ordinary course of business.
"Closing" shall have the meaning set forth in Section 2.1(e).
"Common Stock" shall mean the Company's common stock, $.01 par value,
that the Company may be authorized to issue from time to time, any other
securities of the Company into which such Common Stock may hereafter be changed
or for which such Common Stock may be exchanged after giving effect to the terms
of such change or exchange (by way of reorganization, recapitalization, merger,
consolidation or otherwise) and shall also include any common stock of the
Company hereafter authorized and any capital stock of the Company of any other
class hereafter authorized which is not preferred as to dividends or
distribution of
- 3 -
assets in liquidation over any other class of capital stock of the Company and
which has ordinary voting power for the election of directors of the Company.
"Common Stock Equivalents" shall mean all shares of Common Stock (i)
owned or (ii) issuable upon exercise of Performance Options (to the extent
earned and vested) and Time Options (to the extent vested), held by each
Stockholder.
"Company" shall mean Xxxxxx Products Corp., a Massachusetts
corporation, and its successors and assigns.
"Designated Employee" or "Designated Employees" shall have the meaning
as set forth in Section 2.2(e).
"Determination Date" shall mean the earliest date on which the Company
shall have consummated (i) a Public Offering or (ii) a sale of all or
substantially all of the capital stock, assets or business of the Company.
"Disability" shall mean permanent disability within the meaning of
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended, unless
otherwise defined in a separate written employment agreement between the Company
and/or one of its Subsidiaries and the person whose disability is in question.
"Fair Market Value" shall mean, the fair value per share of the
applicable Shares as of the applicable date on the basis of a sale of such
Shares in an arms length private sale between a willing buyer and a willing
seller, neither acting under compulsion. In determining such Fair Market Value,
no discount shall be taken for constituting a minority interest and no upward
adjustment or discount shall be taken relating to the fact that the Shares in
question are subject to the restrictions and entitled to the rights provided
hereunder. Such Fair Market Value shall be determined in good faith by the Board
of Directors of the Company.
"Good Reason" shall have the meaning as set forth below except with
respect to any Management Stockholder who is employed by the Company or one of
its Subsidiaries pursuant to an effective written employment agreement between
the Company and/or one of its Subsidiaries and such Management Stockholder in
which event the definition of "Good Reason" as set forth in such employment
agreement shall be deemed to be the definition of "Good Reason" herein solely
for such Management Stockholder and only for so long as such employment
agreement remains effective.
In all other events, the term "Good Reason" shall mean (i) a change of
more than forty (40) miles in the location of the Company's offices where the
employee is located or (ii) a material change in the nature or scope of the
employee's authorities, status, powers, functions, duties, responsibilities, or
reporting relationships that is determined by the employee in good faith to be
adverse to those existing before such change;
- 4 -
"Investment Price" shall mean an amount per Share equal to the price
per Share paid for such Share at the time of initial purchase thereof (subject
to appropriate adjustments for stock splits, recapitalizations and the like).
"Involuntary Transfer" shall have the meaning as set forth in Section
2.1(i).
"Management Representatives" shall have the meaning as set forth in
Section 2.5.
"New Securities" shall have the meaning as set forth in Section 2.6(b).
"Offer Price" shall have the meaning as set forth in Section 2.1(a).
"Offered Shares" shall have the meaning as set forth in Section 2.1(a)
"Offered Shares Electing Stockholders" shall have the meaning as set
forth in Section 2.1(c).
"Option Period" shall have the meaning as set forth in Section 2.1(b).
"Outside Representatives" shall have the meaning as set forth in
Section 2.5.
"Performance Options" shall mean, collectively, the options, granted to
certain Management Stockholders under the Company's 1997 Stock Option Plan, to
purchase shares of the Company's Common Stock, the number of earned shares of
which is subject to the attainment of certain performance targets as determined
by the Board of Directors of the Company, on the terms set forth therein.
"Permitted Transfer" shall mean:
(a) a Transfer of Shares by any Stockholder who is a natural
person to (A) such Stockholder's spouse, children, grandchildren,
parents or siblings, (B) a trust for the benefit of any of them or (C)
a limited partnership or limited liability company whose sole partners
or members, as the case may be, are any of the persons described in
clause (A) or clause (B);
(b) a Transfer of Shares by a Stockholder upon death to such
Stockholder's legal representatives, heirs or legatees, provided that
such Stockholder immediately prior to death was not an employee of the
Company so that such Stockholder's Shares are subject to the provisions
of Section 2.2 of this Agreement;
(c) a Transfer of Shares by (i) the initial Berkshire
Stockholders to any affiliate of Berkshire Partners LLC or any of the
employees, partners, members or affiliates of any such affiliate or
(ii) between any Berkshire Stockholders;
- 5 -
(d) a Transfer of Shares from any Stockholder which is a
corporation or partnership to any Affiliate of such Stockholder; or
(e) solely with respect to Xxxxxxx X. Xxxxx and Xxxxxxx
Xxxxxxxxxx, a bona fide pledge of shares, Performance and/or Time
Options to another Stockholder or Affiliate of a Stockholder or any
other lender reasonably acceptable to the Company; provided that such
pledge is made to secure a loan used to acquire capital stock of the
Company and that such lender shall agree as a condition of such pledge
that it will become a party to this Agreement in connection with any
foreclosure upon such pledge.
No Permitted Transfer shall be effective unless and until the
transferee of the Shares so transferred, if such transferee is not
already a party to this Agreement, executes and delivers to the Company
an executed counterpart of this Agreement in accordance with the terms
of Section 3.12 hereof. No Permitted Transfer shall conflict with or
result in any violation of a judgment, order, decree, statute, law,
ordinance, rule or regulation.
"Permitted Transferee" shall mean any person or entity who shall have
acquired and who shall hold shares pursuant to a Permitted Transfer described
above.
"Person" shall mean an individual, corporation, partnership, trust, or
unincorporated association, or a government or any agency or political
subdivision thereof.
"Pro Rata Fraction" shall mean, with respect to any given Stockholder,
the number of Shares, vested Time Options and vested and earned Performance
Options owned by such Stockholder in relation to the total number of Shares,
vested Time Options and vested and earned Performance Options owned by all of
the Stockholders.
"Public Offering" shall mean the first issuance of shares of Common
Stock by the Company pursuant to a public distribution in which the Common Stock
of the Company shall be listed and traded on a national exchange or on the
NASDAQ National Market System.
"Schedule" shall refer to the Schedule of Stockholders attached hereto
as Exhibit A.
"Seller" shall have the meaning as set forth in Section 2.3(a).
"Shares" shall mean all (i) shares of Common Stock held by Stockholders
from time to time, (ii) shares of Common Stock subsequently held by Permitted
Transferees who acquire them in one or more Permitted Transfers, or (iii)
securities of the Company issued in exchange for, upon reclassification of, or
as a distribution in respect of, any of the foregoing.
"Stockholder" shall have the meaning as set forth in the first
paragraph of this Agreement.
- 6 -
"Subsidiary" with respect to any entity (the "parent") shall mean any
corporation, firm, association or trust of which such parent, at the time in
respect of which such term is used, (i) owns directly or indirectly more than
fifty percent (50%) of the equity or beneficial interest, on a consolidated
basis, and (ii) owns directly or controls with power to vote, indirectly through
one or more Subsidiaries, shares of capital stock or beneficial interest having
the power to cast for the election of directors, trustees, managers or other
officials having powers analogous to that of directors of a corporation. Unless
otherwise specifically indicated, when used herein the term Subsidiary shall
refer to a direct or indirect Subsidiary of the Company.
"Take Along Group" shall have the meaning as set forth in Section
2.3(a).
"Third Party" shall mean any person other than the Company.
"Time Options" shall mean, collectively, the time vested options,
granted to certain Management Stockholders under the Company's 1997 Stock Option
Plan, to purchase shares of the Company's Common Stock on the terms set forth
therein.
"Transfer" shall mean to transfer, sell, assign, pledge, hypothecate,
give, create a security interest in or lien on, place in trust (voting or
otherwise), assign or in any other way encumber or dispose of, directly or
indirectly and whether or not by operation of law or for value, any Shares.
"Transfer Notice" shall have the meaning as set forth in Section
2.1(a).
"Transferring Stockholder" shall have the meaning as set forth in
Section 2.1(g).
"Voluntary Termination" shall include a voluntary termination of
employment with the Company by a Management Stockholder in the absence of a Good
Reason, except as otherwise specified in an effective written agreement between
the Company and/or one of its Subsidiaries and such Management Stockholder. The
term Voluntary Termination shall not include termination of employment due to
death or permanent disability.
ARTICLE II
Covenants and Conditions
2.1 Restrictions on Transfers; Right of First Refusal. No Stockholder
may Transfer all or any part of the Shares owned by any of them to anyone other
than a Permitted Transferee except in accordance with the following procedures:
(a) If at any time a Stockholder desires to Transfer Shares to
anyone other than a Permitted Transferee (each, an "Offeror"), such
Offeror shall give notice of
- 7 -
such offer (the "Transfer Notice") to the Company. The Transfer Notice
shall state the terms and conditions of such offer, including the name
of the prospective purchaser, the proposed purchase price per share of
such Shares (the "Offer Price"), payment terms (including a description
of any proposed non-cash consideration), the type of disposition and
the number of such Shares to be transferred ("Offered Shares"). The
Transfer Notice shall further state (i) that the Company may acquire,
in accordance with the provisions of this Agreement, any of the Offered
Shares for the price and upon the other terms and conditions, including
deferred payment (if applicable), set forth therein, and (ii) that the
Company may not purchase any of such Offered Shares unless the Company
purchases all of such Offered Shares.
(b) For a period of thirty (30) business days after receipt of
the Transfer Notice (the "Option Period"), the Company may, by notice
in writing to the Offeror delivering such Transfer Notice, elect in
writing to purchase all, but not less than all, of the Offered Shares
at the Offer Price. The closing of the purchase of Offered Shares
pursuant to Section 2.1(b) or Section 2.1(c), as the case may be, shall
take place at the principal office of the Company on the tenth (10th)
day after the expiration of the Option Period. At such Closing, the
Company shall deliver to the Offeror against delivery of certificates
duly endorsed and stock powers representing the Offered Shares being
acquired by the Company, the Offer Price, on the same terms as set
forth in the Transfer Notice (including any non-cash consideration
described therein), payable in respect of the Offered Shares being
purchased by the Company. All of the foregoing deliveries will be
deemed to be made simultaneously and none shall be deemed completed
until all have been completed. Notwithstanding any other provisions of
this Agreement, if the Offeror is an affiliate of Berkshire Partners
LLC ("Berkshire"), before Berkshire may consummate any Transfer
pursuant to Section 2.1(b) or Section 2.1(c), Berkshire shall comply
with the provisions of Section 2.4 hereof solely with respect to the
other Berkshire Stockholders.
(c) Notwithstanding anything set forth in this Section 2.1 to
the contrary, prior to the termination of the Option Period, the Board
of Directors may, in its sole discretion, elect to assign the Company's
right to purchase the Offered Shares pursuant to this Section 2.1 to
the Stockholders, provided that the Company and any of the Stockholders
to whom the Company assigns its right to purchase shall collectively
purchase all, but not less than all, of the Offered Shares. If the
Offeror is a Management Stockholder, the assignment in the previous
sentence shall be made first, to the other Management Stockholders and,
if such other Management Stockholders do not elect to purchase all of
the Offered Shares, second to the other Stockholders, in either case as
set forth herein. If the Board so elects, the Company shall give notice
of such assignment to each Stockholder (the "Assignment Notice"),
indicating the number of Shares each such Stockholder is entitled to
purchase (including the right to over-allotment of Offered Shares, if
any), the Offer Price of such Shares, and any other relevant payment
terms. Within five (5) days of the Assignment Notice, those
- 8 -
Stockholders who intend to purchase the Offered Shares pursuant to this
Section 2.1(c) (the "Offered Shares Electing Stockholders") shall
notify the Company in writing of such intention, indicating the number
of Offered Shares (including over-allotments, if any) they intend to
purchase. The right to purchase such Offered Shares shall be allocated
to the Stockholders based upon each Stockholder's Pro Rata Fraction;
provided, however, that if any Stockholder does not elect to purchase
the number of Offered Shares which such Stockholder may purchase
pursuant to this Section 2.1(c), then the Offered Shares Electing
Stockholders may elect to purchase the remaining Offered Shares. The
right to purchase the remaining Offered Shares shall be allocated to
the Offered Shares Electing Stockholders based on each such Offered
Shares Electing Stockholder's Pro Rata Fraction of all Offered Shares
Electing Stockholders.
(d) If the Company or the Stockholders, as the case may be, do
not elect to purchase all of the Offered Shares, all, but not less than
all, of the Offered Shares may be Transferred, but only in accordance
with Sections 2.1(e) and 2.1(f) and the terms of the Transfer Notice,
within sixty (60) days after expiration of the Option Period, after
which, if the Offered Shares have not been Transferred, all
restrictions contained herein shall again be in full force and effect.
(e) Five (5) days prior to the closing of the purchase of any
Offered Shares pursuant to Section 2.1(d) hereof (the "Closing"), the
Offeror shall notify the Company of the disposition of the Offered
Shares, including the name of each purchaser and the number of shares
bought by each purchaser. The Closing shall take place no later than
sixty (60) days after the expiration of the Option Period. At such
Closing, each purchaser of Offered Shares shall deliver to the Offeror
against delivery of certificates duly endorsed and stock powers
representing the Offered Shares being acquired by such purchaser, the
Offer Price, on the same terms as set forth in the Transfer Notice
(including any non-cash consideration described therein), payable in
respect of the Offered Shares being purchased by such purchaser. All of
the foregoing deliveries will be deemed to be made simultaneously and
none shall be deemed completed until all have been completed.
(f) Any Transfer of Shares pursuant to this Section 2.1 shall
remain subject to the Transfer restrictions of this Agreement and each
intended transferee pursuant to this Section shall execute and deliver
to the Company a counterpart of this Agreement, which shall evidence
such transferee's agreement that the Shares intended to be transferred
shall continue to be subject to this Agreement and that as to such
Shares the transferee shall be bound by the restrictions of this
Agreement as a Stockholder hereunder.
(g) Any Stockholder who is the subject of an Involuntary
Transfer (as defined below) (the "Transferring Stockholder"), shall
notify the Company in writing within ten (10) days of such Involuntary
Transfer but the failure to give such notice
- 9 -
shall not affect the rights of the parties hereunder. Upon the
Company's receipt of such notice, the Company shall treat the
Involuntary Transfer as an offer under this Section 2.1. The Company
shall act upon the deemed offer under this Section within the time
periods and following the applicable procedures set forth in this
Section 2.1, with the date of the deemed offer being the later of the
date of the Company's receipt of written notice setting forth the
existence of such an Involuntary Transfer and the date of such
Involuntary Transfer, such later date being the date of notification
for the purpose of Section 2.1.
(h) The purchase price for the Shares being transferred as a
result of an Involuntary Transfer under Sections 2.1(g) shall be fair
market value, as fair market value is agreed to by the Company and the
transferee in each such Involuntary Transfer, or if no such agreement
is reached, as determined by an independent appraiser selected by the
Company and reasonably acceptable to the transferee in such Involuntary
Transfer. All costs of any appraisal under this Section 2.1(h) shall be
paid by the transferee.
(i) For purposes of this Agreement, the term "Involuntary
Transfer" shall mean any involuntary sale, transfer, encumbrance or
other disposition (other than as a result of the death of the
Stockholder) by or in which any Stockholder shall be deprived or
divested of any right, title or interest in or to any Shares, including
without limitation, any levy of execution, transfer in connection with
bankruptcy, reorganization, insolvency or similar proceedings or any
transfer to a public officer or agency pursuant to any abandoned
property or escheat law. A Transfer pursuant to Section 2.2 hereof
shall not be deemed to be an Involuntary Transfer.
(j) The provisions of this Section 2.1 shall not apply to a
Transfer of Shares which (i) is a Permitted Transfer (ii) is pursuant
to Section 2.2 or (iii) is pursuant to Section 2.3.
2.2 Call by the Company.
(a) If the employment of a Management Stockholder by the
Company or any of its Subsidiaries shall terminate (a "Call Event") for
any reason then the Company shall have the right to purchase (the "Call
Option"), by delivery of a written notice (the "Call Notice") to such
terminated Management Stockholder no later than ninety (90) days after
the date of such Call Event, and such Management Stockholder and such
Management Stockholder's Permitted Transferees (the "Call Group") shall
be required to sell all (but not less than all) of the Call Securities
(as defined below) at a price per share equal to the Call Price (as
defined below) of such Call Securities as of the date the Call Notice
is delivered.
(b) For purposes of this Section 2.2, the term "Call
Securities" shall mean:
- 10 -
(i) if the Management Stockholder's employment with
the Company or any of its Subsidiaries is terminated for
Cause, all of the Shares, vested Time Options and vested and
earned Performance Options which are owned by the members of
the Call Group on the date of such Call Event; or
(ii) if the Management Stockholder's employment with
the Company or any of its subsidiaries is terminated other
than for Cause, all of the Shares (except, with respect only
to Jordan X. Xxxx, Xxxxxxx Xxxxxxxxxx and Xxxxxxx X. Xxxxx,
that number of Shares (which number shall be adjusted to
reflect stock splits, stock dividends, recapitalizations and
the like) owned as of the date hereof), vested Time Options
and vested and earned Performance Options which are owned by
the members of the Call Group on the date of such Call Event.
(c) For purposes of this Section 2.2, the term "Call Price"
shall mean
(i) with respect to Shares,
(A) in the event of a termination of a
Management Stockholder's employment (i) by the Company without
Cause, (ii) by virtue of death or Disability or (iii) by
Voluntary Termination after the fifth anniversary of the date
hereof (or with respect to Xx. Xxxx, the third anniversary of
the date hereof), the Fair Market Value of such Shares; and
(B) in the event of a termination of a
Management Stockholder's employment (i) by the Company for
Cause or (ii) by Voluntary Termination prior to the fifth
anniversary of the date hereof (or with respect to Xx. Xxxx,
the third anniversary of the date hereof), the lower of (x)
the Investment Price of such Shares and (y) the Fair Market
Value of such Shares.
(ii) with respect to any vested Time Options, the
difference between (x) the Call Price, as determined above for
the Shares acquirable upon exercise of such option, payable in
respect of such Shares minus (y) the exercise price of such
vested Time Options. Notwithstanding the foregoing, any Time
Option will terminate to the extent set forth in the option
agreement pursuant to which such Time Option was granted.
(iii) with respect to
(A) any vested and earned Performance
Options, the difference between (x) the Call Price, as
determined above for the Shares acquirable upon exercise of
such option, payable in respect of such Shares minus (y) the
exercise price of such vested and earned Performance Options;
and
- 11 -
(B) any vested Performance Options which are
called pursuant to this section prior to a Determination Date
(so that it is not known how many, if any, of such vested
Performance Options will be earned), the difference between
(x) the Call Price, as determined above for the Shares
acquirable upon exercise of such option, payable in respect of
such Shares minus (y) the exercise price of such vested and
earned Performance Options; provided that Fair Market Value
for such purpose shall be equal to the lesser of (A) the Fair
Market Value of the Shares acquirable upon exercise of such
option as of the date of the Call Event and (B) the Fair
Market Value of the Shares acquirable upon exercise of such
option as of the Determination Date.
(d) The closing of any purchase of Call Securities by the
Company pursuant to Section 2.2(a) shall take place at the principal
office of the Company no later than the 180th day after the Call Event,
or solely with respect to Performance Options for which a Determination
Date has not yet occurred, no later than the 5th day after the
Determination Date. At such closing, the Company shall deliver to the
Call Group consideration in an amount equal to the aggregate Call Price
payable in respect of such Call Securities against delivery of (i)
original stock certificates and stock powers duly endorsed in favor of
the Company representing the Call Securities and (ii) an executed
agreement, in form reasonably satisfactory to the Company, evidencing
the cancellation of any vested Time Options and vested and earned
Performance Options purchased at such closing. The Company, at its
option, may pay the consideration for such Call Securities in the form
of a bank or certified check or wire transfer. If the Call Event is due
to the termination of the Management Stockholder's for Cause and the
Company is unable to exercise its Call Option by payment of the Call
Price in cash because such payment would cause the Company or any
Subsidiary to be in violation of applicable law or in default under or
otherwise in violation of the terms of, or limited by the ceiling in
the availability or credit advances under, any loan, credit or
investment agreements or promissory notes to which the Company or any
Subsidiary is a party (a "Default"), the Company may exercise such Call
Option, at its sole election, and pay the Call Price by delivery of a
five year promissory note issued by the Company, bearing interest at a
fixed rate of interest per annum equal to the applicable federal rate
on the date of issuance for notes of that maturity, such interest to be
payable quarterly in arrears, which note shall be prepayable without
premium or penalty, and subordinated to all other funded debt of the
Company and its Subsidiaries on terms reasonably satisfactory to the
holders of such funded debt (each a "Company Note", and collectively,
the "Company Notes"). If the Company shall issue a Company Note as
payment of the Call Price, the Company shall not be obligated to make
any payment of principal or interest due under a Company Note if the
Company or any Subsidiary is at the time of the delivery of such
payment, or would be upon delivery of such payment and as a consequence
thereof, in Default. In the event the Company cannot make payments of
principal and interest due under a Company Note because it is in
Default, the Company will undertake to make payment of principal and
interest due under such
- 12 -
Company Note at such time as the Company is no longer in Default and
would not be so in Default by virtue of the delivery of such Company
Note or any payment of principal and interest due under such Company
Note as contemplated herein.
(e) Notwithstanding anything set forth in this Section 2.2 to
the contrary, prior to the exercise by the Company of its Call Option
to purchase Call Securities pursuant to this Section 2.2, the Board of
Directors of the Company may designate one or more new or existing
employees of the Company or any Subsidiary (individually a "Designated
Employee" and collectively, the "Designated Employees") or another
Stockholder who shall have the right, but not the obligation, to
exercise the Call Option and to acquire, in lieu of the Company, some
or all (as determined by the Company) of the Call Securities that the
Company is entitled to purchase from the Call Group hereunder, on the
same terms and conditions as set forth in Section 2.2(d) which apply to
the purchase of Call Securities by the Company. Concurrently with any
such purchase of Call Securities by any such Designated Employee, such
Designated Employee shall execute a counterpart of this Agreement,
whereupon such Designated Employee shall be deemed a "Management
Stockholder" and shall have the same rights and be bound by the same
obligations as the other Management Stockholders hereunder.
(f) If neither the Company nor any Designated Employee or
other Stockholder elects to exercise the Call Option and deliver a Call
Notice within 90 days of a Call Event, then the Call Option provided in
this Section 2.2 shall terminate but the Management Stockholder and his
Permitted Transferees shall continue to hold such Call Securities
pursuant to all of the other provisions of this Agreement and other
applicable agreements (including without limitation, any restrictions
on the vesting of stock options).
2.3 Take Along.
(a) If any of the Stockholders, individually or collectively
(referred to herein as the "Take-Along Group"), determine to sell or
exchange (in a business combination or otherwise) more than 50% of the
then outstanding Shares (including vested Time Options and vested and
earned Performance Options) in one or a series of bona fide arms-length
transactions to a Third Party, then upon five (5) days written notice
by the Take Along Group to each other Stockholder, which notice shall
include reasonable details of the proposed sale or exchange including
the proposed time and place of closing and the consideration to be
received by the Take Along Group (such notice being referred to as the
"Sale Request"), each other Stockholder (each, a "Seller") shall be
obligated to, and shall sell, transfer and deliver, or cause to be
sold, transferred and delivered, to such Third Party on the same terms
as the Take Along Group, that number of Shares owned by such Seller as
shall equal the product of (A) a fraction, the numerator of which is
the number of Common Stock Equivalents proposed
- 13 -
to be transferred by the Take Along Group as of the date of such Sale
Request and the denominator of which is the aggregate number of Common
Stock Equivalents actually owned as of the date of such Sale Request by
the Take Along Group, multiplied by (B) the number of Common Stock
Equivalents actually owned as of the date of such Sale Request by such
Seller. Each Seller shall (i) deliver certificates for all of its
Shares at the closing of the proposed Transfer, free and clear of all
claims, liens and encumbrances and (ii) if stockholder approval of the
transaction is required, vote his Shares in favor thereof.
(b) The provisions of this Section 2.3 shall not apply to a
Permitted Transfer.
2.4 Come Along. Except as provided in Section 2.4(c) hereof, no
Stockholder shall Transfer the outstanding Shares of the Company to a Third
Party who is not a Permitted Transferee without complying with the terms and
conditions set forth in Section 2.4(a) and 2.4(b) below; provided, however, that
this Section 2.4 shall not in any way limit or affect the restrictions of
Section 2.1.
(a) Any Stockholder, when desiring to Transfer Shares (the
"Transferor"), shall give not less than fifteen (15) days prior written
notice of such intended Transfer to each other Stockholder and to the
Company. Such notice (the "Participation Notice") shall set forth the
terms and conditions of such proposed Transfer, including the name of
the prospective transferee, the number of Shares proposed to be
transferred (the "Participation Securities") by the Transferor, the
purchase price per share proposed to be paid therefor and the payment
terms and type of transfer to be effectuated. Within ten (10) days
following the delivery of the Participation Notice by the Transferor to
each other Stockholder and to the Company, each Stockholder desiring to
participate in such proposed Transfer (each, a "Participating Offeree")
shall, by notice in writing to the Transferor and to the Company, have
the opportunity and right to sell to the purchasers in such proposed
Transfer (upon the same terms and conditions as the Transferor) up to
that number of Common Stock Equivalents owned by such Participating
Offeree as shall equal the product of (i) a fraction, the numerator of
which is the number of Common Stock Equivalents owned by such
Participating Offeree as of the date of such proposed Transfer and the
denominator of which is the number of Common Stock Equivalents actually
owned as of the date of such Participation Notice by the Transferor and
by all Participating Offerees multiplied by (ii) the number of
Participation Securities. The amount of Participation Securities to be
sold by the Transferor shall be reduced to the extent necessary to
provide for such sales of Shares by Participating Offerees.
(b) At the closing of any proposed Transfer in respect of
which a Participation Notice has been delivered, the Transferor,
together with all Participating Offerees, shall deliver to the proposed
transferee certificates evidencing the Shares to
- 14 -
be sold thereto duly endorsed with stock powers and shall receive in
exchange therefor the consideration to be paid or delivered by the
proposed transferee in respect of such Shares as described in the
Participation Notice.
(c) The provisions of this Section 2.4 shall not apply to (i)
any Permitted Transfer, (ii) any Transfer pursuant to Section 2.2 or
(iii) any Transfer pursuant to Section 2.3.
2.5 Corporate Governance.
(a) At each annual meeting of the Stockholders and at each
special meeting of the Stockholders called for the purpose of electing
directors of the Company, and at any time at which stockholders of the
Company shall have the right to, or shall, vote for directors of the
Company, then, and in each event, the Stockholders hereby agree to
attend each meeting in person or by proxy and hereby agree to vote
stock of the Company and shares of the Company now owned or hereafter
acquired by him, her or it (whether at a meeting or by written consent
in lieu thereof) (i) so that the Company's Board of Directors shall be
designated as set forth herein, (ii) to fix the number of members of
the Board at seven (7) and (iii) to elect and thereafter to continue in
office as a Director of the Company the following: (i) two (2)
Directors shall be persons nominated by the Berkshire Stockholders (who
shall initially be Xxxxxxx X. Xxxxx and Xxxxx Xxxxxx) (collectively the
"Berkshire Representatives"); (ii) three (3) Directors shall be persons
nominated by the Management Shareholders (who shall initially be Jordan
X. Xxxx, Xxxxxxx Xxxxxxxxxx and Xxxxxxx X. Xxxxx) (collectively, the
"Management Representatives") and (iii) two (2) Directors shall be
persons who are not employees or officers of the Company, one of whom
shall be nominated by the Berkshire Stockholders (subject to the
reasonable approval of the Management Stockholders) and one of whom
shall be nominated by the Management Stockholders (subject to the
reasonable approval of the Berkshire Stockholders) (collectively the
"Outside Representatives"). A vacancy in either of the directorships to
be occupied by a Berkshire Representative shall be filled only by vote
or written consent of a majority in interest of the Berkshire
Stockholders; a vacancy in any of the directorships to be held by the
Management Representatives shall be filled only by vote or written
consent of Management Stockholders holding at least eighty percent
(80%) in interest of the Shares held by all Management Stockholders;
and a vacancy in the directorships to be held by the Outside
Representatives shall be filled only by vote or written consent of the
Stockholders who nominated such Outside Representative (subject to
approval as set forth in clause (iii) above).
(b) Board Expansion. So long as either (i) the Berkshire
Stockholders shall own at least forty percent (40%) of the Shares
(including vested Time Options and vested and earned Performance
Options) or (ii) the Berkshire Stockholders collectively own more
Shares (including vested Time Options and vested and earned Performance
- 15 -
Options) than the Management Stockholders or any other single
stockholder, the Berkshire Stockholders may at any time require, by
written notice to the other Stockholders (the "Increase Notice"), that
the number of directors constituting the Board of Directors be
increased by two (2). The Berkshire Stockholders shall have the right
to designate such additional directors. If the Increase Notice is given
by the Berkshire Stockholders, the nomination of the Outside
Representatives as set forth in Section 2.5(a)(iii) above shall no
longer require the approval of the other stockholders. Each Stockholder
agrees that such Stockholder and its Permitted Transferees shall take
all action as may be necessary or appropriate, including without
limitation, the voting of all Shares owned by them, to so increase the
number of directors constituting the Board of Directors and to elect
the directors so designated by the Berkshire Stockholders.
(c) Committees. Each committee of the Board shall be composed
so that the representation thereon of Berkshire Representatives and
Management Representatives shall be in the same proportion, as nearly
as may be, as the representation of such directors on the whole Board;
provided, however, that no Management Representative shall sit on the
audit committee or any committee charged with the consideration of
matters related to compensation, employee stock options, or the like;
and provided, further, that the Berkshire Representatives shall at all
times constitute a majority of all the directors on the compensation
committee.
(d) Indemnification. The Company will maintain indemnification
for officers and directors substantially similar to that which exists
as of the date hereof.
2.6 Preemptive Rights.
(a) Preemptive Right. The Company hereby grants to each
Stockholder so long as it shall own any Shares, the right to purchase
up to a pro rata portion of New Securities (as defined in paragraph (b)
below) which the Company, from time to time, proposes to sell or issue
following the date hereof. A Stockholder's pro rata portion, for
purposes of this Section 2.6, is the product of (i) a fraction, the
numerator of which is the number of outstanding Shares which such
Stockholder then owns and the denominator of which is the total number
of Shares of Common Stock then actually outstanding on a fully diluted
basis after giving effect to the exercise of all vested Time Options
and vested and earned Performance Options, warrants and the like and
the conversion of all securities convertible into or exchangeable for
Common Stock, multiplied by (ii) the number of New Securities the
Company proposes to sell or issue.
(b) Definition of New Securities. "New Securities" shall mean
any Common Stock of the Company whether now authorized or not, any
rights, options or warrants to purchase Common Stock and any
indebtedness or preferred stock of the Company which is convertible
into Common Stock (or which is convertible into a
- 16 -
security which is, in turn, convertible into Common Stock); provided
that the term "New Securities" does not include (i) indebtedness of the
Company which is not by its terms convertible into Common Stock; (ii)
Common Stock issued as a stock dividend to all holders of Common Stock
pro rata or upon any subdivision or combination of shares of Common
Stock; (iii) any employee stock options approved by the Board of
Directors of the Company; (iv) Common Stock issued in exchange for the
cancellation or retirement of any debt securities of the Company or in
connection with any restructuring or other financial workout of the
Company; (v) Common Stock or warrants to purchase Common Stock issued
to non-Affiliates of the Company as part of a bona fide debt offering
of units comprised of such Common Stock and a debt security of the
Company; (vi) Common Stock issued in connection with the acquisition of
another corporation or other entity by the Company by merger, purchase
of substantially all assets or other reorganization; or (vii) the
issuance of any Common Stock upon the exercise or conversion of any
rights, options or warrants to purchase Common Stock.
(c) Notice from the Company. In the event the Company proposes
to issue New Securities, the Company shall give each Stockholder who
has a preemptive right under this Section 2.6 written notice of such
proposal, describing the type of New Securities and the price and the
terms upon which the Company proposes to issue the same. For a period
of five (5) business days following the delivery of such notice by the
Company, the Company shall be deemed to have irrevocably offered to
sell to each Stockholder its pro rata share of such New Securities for
the price and upon the terms specified in the notice. Each Stockholder
may exercise its preemptive rights hereunder by giving written notice
to the Company and stating therein the quantity of New Securities to be
purchased.
(d) Sale by the Company. In the event any Stockholder who has
a preemptive right under this Section 2.6 fails to exercise in full its
preemptive right within said five (5) day period, the Company shall
have one hundred twenty (120) days thereafter to sell the New
Securities with respect to which the preemptive right was not
exercised, at a price and upon terms no more favorable to the
purchasers thereof than specified in the Company's notice given
pursuant to Section 2.6(c).
(e) Closing. The Closing for any such issuance shall take
place as proposed by the Company with respect to the Shares to be
issued, at which Closing the Company shall deliver certificates for the
shares in the respective names of the purchasing Stockholders against
receipt of payment therefor.
2.8 Confidentiality. Each Stockholder shall maintain the
confidentiality of any confidential and proprietary information of the Company
("Proprietary Information") using the same standard of care as it applies to its
own confidential information, except for any Proprietary Information which is
publicly available or a matter of public knowledge generally.
- 17 -
Nothing herein shall prevent any Stockholder from using Proprietary Information
to monitor its investment in the Company or to enforce its rights under this
Agreement or from disclosing a summary of Proprietary Information to the
partners of such Stockholder as to the performance of the Company.
ARTICLE III
Miscellaneous
-------------
3.1 Remedies. Notwithstanding the provisions of Section 3.19 hereof,
the parties to this Agreement acknowledge and agree that the covenants of the
Company and the Stockholders set forth in this Agreement may be enforced in
equity by a decree requiring specific performance. In the event of a breach of
any material provision of this Agreement, the aggrieved party will be entitled
to institute and prosecute a proceeding in any court of competent jurisdiction
to enforce specific performance of such provision, as well as to obtain damages
for breach of this Agreement. Without limiting the foregoing, if any dispute
arises concerning the sale or other disposition of any of the Shares subject to
this Agreement or concerning any other provisions hereof or the obligations of
the parties hereunder, the parties to this Agreement agree that an injunction
may be issued in connection therewith (including, without limitation,
restraining the sale or other disposition of such Shares or rescinding any such
sale or other disposition). Such remedies shall be cumulative and non-exclusive
and shall be in addition to any other rights and remedies the parties may have
under this Agreement or otherwise.
3.2 Entire Agreement; Amendment; Waiver. This Agreement, together with
the Schedule hereto, sets forth the entire understanding of the parties, and as
of the closing contemplated by the Stock Purchase Agreement supersedes all prior
agreements and all other arrangements and communications, whether oral or
written, with respect to the subject matter hereof. The Schedule may be amended
to reflect changes in the composition of the Stockholders and changes in stock
ownership that may occur from time to time as a result of Permitted Transfers or
Transfers permitted under Article II hereof. Amendments to the Schedule
reflecting Permitted Transfers or Transfers permitted under Article II hereof
shall become effective when a copy of the Agreement as executed by any new
transferee, are filed with the Company, except as otherwise provided in Section
3.12 hereof. Any other amendments to, or the termination of, this Agreement
shall require the prior written consent of the Company and a majority in
interest of each of the Berkshire Stockholders and the Management Stockholders.
Notwithstanding any provisions to the contrary contained herein, any party may
waive any rights with respect to which such party is entitled to the benefits
under this Agreement. No waiver of or consent to any departure from any
provision of this Agreement shall be effective unless signed in writing by the
party entitled to the benefit thereof.
- 18 -
3.3 Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if the invalid or
unenforceable provision were omitted.
3.4 Notices. All notices and other communications necessary or
contemplated under this Agreement shall be in writing and shall be delivered in
the manner specified herein or, in the absence of such specification, shall be
deemed to have been duly given three business days after mailing by certified
mail, when delivered by hand upon confirmation of receipt by telecopy, or one
day after sending by overnight delivery service, to the respective addresses of
the parties set forth below:
(a) For notices and communications to Company to:
Xxxxxx Products Corp.
000 Xxxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
for notices and communications to the Management
Stockholders, to their respective addresses set forth in the Schedule,
in either case, with a copy to:
Posternak, Xxxxxxxxxx & Xxxx
000 Xxxxxxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, P.C.
Facsimile: (000) 000-0000
(b) for notices and communications to the Berkshire
Stockholders, to their respective addresses set forth in the Schedule,
with a copy to:
Xxxxxxxx, Xxxxxxx & Xxxxxxx
A Professional Corporation
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
(c) for notices and communications to any other Stockholders,
to their respective addresses set forth in the Schedule.
By notice complying with the foregoing provisions of this Section 3.4, each
party shall have the right to change the mailing address for future notices and
communications to such party.
- 19 -
3.5 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and to their respective
transferees, successors and assigns; provided, however, that the rights under
this Agreement may not be assigned except as expressly provided herein, it being
understood that the Company's rights hereunder may be assigned by the Company to
any corporation which is the surviving entity in a merger, consolidation or like
event involving the Company. No such assignment shall relieve an assignor of its
obligations hereunder.
3.6 Governing Law. This Agreement shall be governed by the law of The
Commonwealth of Massachusetts (regardless of the laws that might otherwise
govern under applicable Massachusetts principles of conflicts of law) as to all
matters, including but not limited to matters of validity, construction, effect,
performance and remedies.
3.7 Termination. Without affecting any other provision of this
Agreement requiring termination of any rights in favor of any Stockholder,
Permitted Transferee or any other transferee of Shares, the provisions of
Article II of this Agreement shall terminate as to such Stockholder, Permitted
Transferee or other transferee, when, pursuant to and in accordance with this
Agreement, such Stockholder, Permitted Transferee or other transferee, as the
case may be, no longer owns any Shares; provided, that termination pursuant to
this Section 3.7 shall only occur in respect of a Stockholder after all
Permitted Transferees in respect thereof also no longer own any Shares.
Notwithstanding the foregoing, this Agreement shall terminate upon the
consummation of the first Public Offering; provided that the Company shall be
obligated to consummate the purchase of any vested and earned Performance
Options which have been called for purchase pursuant to Section 2.2.
3.8 Recapitalizations, Exchanges, Etc. The provisions of this Agreement
shall apply, to the full extent set forth herein with respect to Shares, to any
and all shares of capital stock of the Company or any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in exchange for, or in substitution of the Shares,
by reason of a stock dividend, stock split, stock issuance, reverse stock split,
combination, recapitalization, reclassification, merger, consolidation or
otherwise.
3.9 Action Necessary to Effectuate the Agreement. The parties hereto
agree to take or cause to be taken all such corporate and other action as may be
necessary to effect the intent and purposes of this Agreement.
3.10 Purchase for Investment; Legend on Certificate. Each of the
parties acknowledges that all of the Shares held by such party are being (or
have been) acquired for investment and not with a view to the distribution
thereof and that no transfer, hypothecation or assignment of Shares may be made
except in compliance with applicable federal and state securities laws. All the
certificates of Shares of the Company which are now or hereafter
- 20 -
owned by the Stockholders and which are subject to the terms of this Agreement
shall have endorsed in writing, stamped or printed, thereon the following
legend:
"TRANSFER RESTRICTED
The securities represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold, offered for sale, pledged or hypothecated in
the absence of an effective registration statement as to the
securities under said Act or an opinion of counsel
satisfactory to the Company and its counsel that such
registration is not required.
The securities represented by this Certificate are subject to
the terms and conditions, including certain restrictions on
transfer, of a Stockholders' Agreement dated as of November
26, 1997, as amended from time to time, and none of such
securities, or any interest therein, shall be transferred,
pledged, encumbered or otherwise disposed of except as
provided in that Agreement. A copy of the Stockholders'
Agreement is on file with the Secretary of the Company and
will be mailed to any properly interested person without
charge within five (5) days after receipt of a written
request."
All shares shall also bear all legends required by federal and state
securities laws.
3.11 Effectiveness of Transfers. All Shares transferred by a
Stockholder (other than pursuant to an effective registration statement under
the Securities Act or pursuant to a Rule 144 Transaction) shall, except as
otherwise expressly stated herein, be held by the Transferee thereof pursuant to
this Agreement. Such Transferee shall, except as otherwise expressly stated
herein, have all the rights and be subject to all of the obligations of a
Stockholder under this Agreement (as though such party had so agreed pursuant to
Section 3.12 hereof) automatically and without requiring any further act by such
transferee or by any parties to this Agreement. Without affecting the preceding
sentence, if such transferee is not a Stockholder on the date of such transfer,
then such transferee, as a condition to such transfer, shall confirm such
transferee's obligations hereunder in accordance with Section 3.12 hereof. No
Shares shall be transferred on the Company's books and records, and no transfer
of Shares shall be otherwise effective, unless any such transfer is made in
accordance with the terms and conditions of this Agreement, and the Company is
hereby authorized by all of the Stockholders to enter appropriate stop transfer
notations on its transfer records to give effect to this Agreement.
3.12 Other Stockholders. Subject to the restrictions on transfers of
Shares contained herein, any person or entity who is not already a Stockholder
acquiring Shares, shall, on or before the transfer or issuance to it of Shares,
sign a counterpart to this Agreement in form reasonably satisfactory to the
Company and shall thereby become a party to this Agreement to be bound hereunder
as (i) a Management Stockholder if a Permitted Transferee or an employee
- 21 -
of the Company or any of its Subsidiaries, (ii) a Berkshire Stockholder if a
Permitted Transferee or an employee or affiliate of Berkshire Partners LLC or
(iii) an "Other Stockholder" if such transferee does not fall within either
clause (i) or (ii) above. Each such "Other Stockholder" shall be listed on the
Schedule, as amended from time to time.
3.13 No Waiver. No course of dealing and no delay on the part of any
party hereto in exercising any right, power or remedy conferred by this
Agreement shall operate as waiver thereof or otherwise prejudice such party's
rights, powers and remedies. No single or partial exercise of any rights, powers
or remedies conferred by this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
3.14 Counterpart. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original but all of which together
shall constitute one and the same instrument, and all signatures need not appear
on any one counterpart.
3.15 Headings. All headings and captions in this Agreement are for
purposes of reference only and shall not be construed to limit or affect the
substance of this Agreement.
3.16 Number; Gender. When the context so requires, the singular shall
include the plural and the plural shall include the singular and the gender of
any pronoun shall include the other gender.
3.17 Consent to Jurisdiction. The Company and each of the Stockholders,
by its or his execution hereof, (i) hereby irrevocably submit to the exclusive
jurisdiction of the state courts of The Commonwealth of Massachusetts for the
purposes of any claim or action arising out of or based upon this Agreement or
relating to the subject matter hereof, (ii) hereby waive, to the extent not
prohibited by applicable law, and agree not to assert by way of motion, as a
defense or otherwise, in any such claim or action, any claim that it or he is
not subject personally to the jurisdiction of the above-named courts, that its
or his property is exempt or immune from attachment or execution, that any such
proceeding brought in the above-named court is improper, or that this Agreement
or the subject matter hereof may not be enforced in or by such court, and (iii)
hereby agree not to commence any claim or action arising out of or based upon
this Agreement or relating to the subject matter hereof other than before the
above-named courts nor to make any motion or take any other action seeking or
intending to cause the transfer or removal of any such claim or action to any
court other than the above-named courts whether on the grounds of inconvenient
forum or otherwise. The Company and each of the Stockholders hereby consent to
service of process in any such proceeding in any manner permitted by
Massachusetts law, and agree that service of process by registered or certified
mail, return receipt requested, at its address specified pursuant to Section 3.4
hereof is reasonably calculated to give actual notice.
3.18 Costs and Expenses. The Company shall pay its own costs and
expenses incurred and the reasonable costs and expenses incurred by each
Management Stockholder in
- 22 -
connection with this Agreement, and any and all other documents furnished
pursuant hereto or in connection herewith.
3.19 Arbitration. Except as provided in Section 3.1, any dispute,
controversy or claim arising out of, in connection with, or in relation to this
Agreement or any breach thereof shall be finally settled by arbitration in
Boston, Massachusetts, pursuant to the rules then in effect of the American
Arbitration Association. Any award shall be final, binding and conclusive upon
the parties and a judgment upon the award rendered thereon may be entered in any
court having jurisdiction thereof. In any such arbitration action, the party
which is determined in the arbitration proceeding to be breaching parties, the
arbitrator shall assign the responsibility for the payment of such costs based
upon the relative nature and extent of the breach by each such party.
[Remainder of Page Intentionally Left Blank]
- 23 -
XXXXXX PRODUCTS CORP.
STOCKHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
MANAGEMENT STOCKHOLDERS:
/s/ Jordan X. Xxxx
---------------------------------
Jordan X. Xxxx
/s/ Xxxxxxx Xxxxxxxxxx
---------------------------------
Xxxxxxx Xxxxxxxxxx
/s/ Xxxxxxx X. Xxxxx
---------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxx Xxxx Fai
---------------------------------
Xxx Xxxx Fai
S-4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first above written.
XXXXXX PRODUCTS CORP.
By:
-------------------------------------
PENTLAND GROUP, PLC
By: /s/ N.P.H. Xxxxxxx
-------------------------------------
N.P.H. Xxxxxxx
Attorney
ASCO INVESTMENTS, LTD.
By: /s/ N.P.H. Xxxxxxx
-------------------------------------
N.P.H. Xxxxxxx
Attorney
-----------------------------------------
Jordan X. Xxxx
-----------------------------------------
Xxxxxxx Xxxxxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxx
XXXXXX PRODUCTS CORP.
STOCKHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
XXXXXX PRODUCTS CORP.
By: /s/ Jordan X. Xxxx
---------------------------------------
Name:
Title:
ASCO:
ASCO INVESTMENT LTD.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Attorney-In-Fact
S-1
XXXXXX PRODUCTS CORP.
STOCKHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
BERKSHIRE STOCKHOLDERS:
BERKSHIRE FUND IV, L.P.
By: Fourth Berkshire Associates, L.L.C.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------
Name:
Title: Managing Member
BERKSHIRE INVESTORS LLC
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------
Name:
Title: Managing Member
FSC CORP.
By: /s/ Xxxx Xxxxxx
------------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
BAIN SECURITIES, INC.
By: /s/ Xxxx Xxxxxxxxx
------------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Treasurer
SQUAM LAKE INVESTORS II, L.P.
By: GPI, Inc., its General Partner
By: /s/ Xxxx Xxxxxxxxx
------------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Treasurer
S-2
XXXXXX PRODUCTS CORP.
STOCKHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
BERKSHIRE STOCKHOLDERS (continued):
THE PANGAEA GROUP, INC.
By: /s/ Xxxxxx Pan
------------------------------------------
Name: Xxxxxx Pan
Title: President
EXHIBIT A
Schedule of Stockholders
No. of Shares of
Name and Address of Stockholder Common Stock
------------------------------- ----------------
BERKSHIRE STOCKHOLDERS:
Berkshire Fund IV, L.P. 266.60475
Berkshire Investors LLC 26.66048
c/o Berkshire Partners LLC
Xxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile No: (000) 000-0000
FSC Corp. 6.75570
c/o BankBoston
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Xxxx Securities, Inc. 8.84998
Squam Lake Investors II, L.P. 18.17285
x/x Xxxx & Xxxxxxx
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx
The Pangaea Group, Inc. 0.13511
000 Xxxxxxxx Xxxx Xxxxxx #000
Xxxxxxxxx, XX 00000
Attn: Xxxxxx Pan
MANAGEMENT STOCKHOLDERS:
Jordan X. Xxxx 94.57989
Xxxxxxx X. Xxxxx 8.10685
Xxxxxxx Xxxxxxxxxx 13.51141
c/x Xxxxxx Products Corp.
000 Xxxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Facsimile No: (000) 000-0000
Xxx Xxxx Fai 5.40456
Asco General Supplies (Far East) Ltd.
Harbor Crystal Center
13th Floor
100 Grandville
Tsimshatsui East, Kowloon Hong Kong
ASCO:
Asco Investments Ltd. 24.11787
x/x Xxxxxxxx Xxxxx xxx
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx Xxxx
Xxxxxx X0 0XX
Xxxxxx Xxxxxxx
Attn: Xxxxxxxx P.H. Xxxxxxx
OTHER STOCKHOLDERS:
