SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement (the "Agreement") is made and
entered into as of January 29, 1997, among HUDSON TECHNOLOGIES, INC. ("HTI"), E.
I. DU PONT DE NEMOURS AND COMPANY ("DUPONT"), DU PONT CHEMICAL AND ENERGY
OPERATIONS, INC. ("DCEO") and the persons named in Attachment A to this
Shareholders' Agreement who have Beneficial Ownership of approximately twenty
percent (20%) of the issued and outstanding Common Stock, par value $0.01 per
share ("Common Stock") of HTI (hereafter the individuals named in Attachment A
are referred to collectively as the Stockholders Group).
W I T N E S S E T H :
HTI, DCEO and DUPONT are simultaneously herewith entering into
a Stock Purchase Agreement, a Standstill Agreement, and a Registration
Agreement, all of which are dated as of January 29, 1997.
Each member of the Stockholders Group is willing to execute
this Shareholders' Agreement and to be bound by its provisions with respect to
future sales of their shares of Common Stock and to voting for DUPONT's nominee
for election to the Board of Directors of HTI. It is a condition precedent to
DUPONT entering
into the Stock Purchase Agreement, the Standstill Agreement, and
the Registration Agreement that this Shareholders' Agreement be signed by the
parties hereto. Each of the parties considers the provisions contained herein to
be in the best interest of HTI.
NOW, THEREFORE, in consideration of the respective agreements
herein contained, the parties hereto agree as follows:
1. DEFINITIONS
For purposes of this Shareholders' Agreement:
(a) The term "Voting Securities" shall mean all classes of
capital stock of HTI which are then entitled to vote generally in the election
of directors or securities which do not carry the right to vote generally in the
election of directors (including convertible debt securities) but which may be
exchanged, converted or exercised into a class of capital stock with such voting
rights, and shall include Voting Securities owned contemporaneously with the
date first above written or purchased subsequent to such date pursuant to stock
options held on such date.
(b) The term "Beneficial Ownership" shall have the meaning set
forth in Rule 13d-3(a) under the Securities Exchange Act of 1934, as amended
(the "1934 Act").
(c) The term "Control Disposition" shall mean a Disposition or
a series of related Dispositions that would have the effect of transferring to
any transferee or group (as defined
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for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (the "Exchange Act")) of
persons (a "Group") beneficial ownership (as defined in Rule 13d-3 of the
Exchange Act ) of a number of shares of outstanding Voting Securities that, in
the aggregate, exceeds (1) 5% of the outstanding shares of Voting Securities if,
after giving effect to such proposed transfer, the proposed transferee or Group
will have beneficial ownership, directly or indirectly, of 10% or more of the
then outstanding shares of Voting Securities or (2) 10% of the then outstanding
shares of Voting Securities. "Control Disposition" shall not include the
transfer of Voting Securities from one member of the Stockholder Group to
another member of the Stockholder Group.
(d) The term "Disposition" shall mean any direct or indirect
transfer, assignment, sale, gift, pledge, hypothecation, encumbrance or other
disposition of Voting Securities (or any interest therein) or of all or part of
the voting power (other than the granting of a revocable proxy) associated with
the stock (or any interest therein) whatsoever, or any other transfer of
beneficial ownership of Voting Securities, whether voluntary or involuntary,
including, without limitation, any such disposition or transfer as a part of any
liquidation of the holder's assets or any reorganization of a holder pursuant to
the United States or any other bankruptcy law or other similar debtor relief
laws.
Each capitalized term not here defined shall have the meaning
assigned to it by the provisions in which it is first
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used, or if not defined in this Agreement, the meaning assigned to it by the
Stock Purchase Agreement.
2. TERM
(a) The effective date of this Shareholders' Agreement shall
commence as of January 29, 1997, and shall terminate on January 29, 2002.
Notwithstanding the foregoing, this Shareholders' Agreement shall not become
effective unless and until the Stock Purchase Agreement, the Standstill
Agreement and the Registration Agreement have been signed by HTI, DUPONT and
DCEO, and received by the other party.
(b) If prior to January 29, 2002, DUPONT and DCEO beneficially
own a number of Voting Securities that represent less than 50% of the DuPont
Voting Power (as defined in the Standstill Agreement) that DUPONT and DCEO held
immediately after the Closing then this Shareholders' Agreement shall terminate
at such time upon written notice by any of the parties hereto.
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3. ONE-YEAR PROHIBITION
Except for Voting Securities offered for sale or transfer in
accordance with the provisions of paragraph 4(f) hereof, no party to this
Agreement shall, without the prior written consent of all other parties to this
Agreement, sell, agree to sell, transfer or otherwise dispose of any Voting
Securities until January 29, 1998; provided, that, the prohibitions of this
Section 3 shall not apply to the sale and transfer of Voting Securities by such
shareholder to an Affiliate of such shareholder if (in the case of an Affiliate
that is not a party hereto) such Affiliate has furnished to the other parties
hereto an undertaking, the performance of which is guaranteed by such
shareholder, in form reasonably satisfactory to the other parties hereto, to be
bound by the provisions of this Agreement. Any purported disposition made in
violation of this Section 3 shall be void.
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4. RIGHT OF FIRST REFUSAL
Except for Voting Securities offered for sale or transfer in
accordance with the provisions of paragraph 4(f) hereof, no member of the
Stockholders Group and no agent or representative of any member of the
Stockholders Group shall, directly or indirectly, offer, sell or transfer any
Voting Securities without offering DUPONT the right of first refusal set forth
in this Section 4 in the following manner:
(a) Any member of the Stockholders Group intending to make
such an offer, sale or transfer shall give notice (the "Transfer Notice") to
DUPONT in writing of such intention, specifying the number of Voting Securities
proposed to be disposed of and the proposed price therefor, and the specific
offer to purchase such Voting Securities theretofore received and then remaining
open, identifying the offeror and setting forth all the terms of such offer
(including price). For purposes hereof, a bona fide third-party tender or
exchange offer pursuant of Regulation 14D of the 1934 Act to purchase Voting
Securities shall be deemed to be an offer at the price specified therein,
without regard to any provisions thereof with respect to proration or conditions
to the offeror's obligation to purchase. In the event the Transfer Notice
specifies Voting Securities are intended to be sold into the public trading
market, the "proposed price" per share for such sale shall be the average of the
high and low price for one share of HTI Common Stock as reported on the National
Association of Securities Dealers Automated
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Quotations System ("NASDAQ") on the last trading date immediately prior to the
date that DUPONT provides such member of the Stockholders Group written notice
of DUPONT's intent to exercise its right of first refusal with regard to such
Voting Securities (the "Market Price"); provided, however, such member of the
Stockholder Group shall have the right to withdraw such Transfer Notice, by
written notice to DUPONT within two (2) business days following DUPONT's notice,
if such Market Price is below the minimum acceptable Market Price (the "Floor
Price") provided in the Transfer Notice; provided that, such Floor Price shall
not be greater than the closing price as quoted on NASDAQ on the last trading
day immediately prior to the date of the Transfer Notice; provided further, that
any such Transfer Notice that does not specify a Floor Price shall be
ineffective.
(b) DUPONT shall have the right, exercisable by written notice
given by DUPONT to the member of the Stockholders Group who gave the Transfer
Notice within thirty (30) days after receipt of such Transfer Notice (the
"Regular Notice Period") (or in the case of a cash tender or exchange offer
pursuant to Regulation 14D of the 1934 Act, no later than 24 hours prior to the
latest time by which Voting Securities must be tendered in order to be accepted
pursuant to such offer or to qualify for any proration applicable to such offer;
provided that the Transfer Notice is received by DUPONT no later than five (5)
business days after the tender offer materials have been received by the member
of the Stockholders Group who gave such Transfer Notice) to
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exercise its right of first refusal to purchase (or to cause a corporation,
entity, person or group designated by DUPONT to purchase) all, but not a part
of, the Voting Securities specified in such Transfer Notice for cash at the
price set forth therein; provided however, that such Regular Notice Period shall
be reduced from thirty (30) days to fifteen (15) days (the "Accelerated Notice
Period") for any Transfer Notice proposing to sell Voting Securities for a total
purchase price in cash of less than $500,000 (which shall be determined, in the
event the Transfer Notice specifies Voting Securities are intended to be sold
into the public trading market, by multiplying the number of Voting Securities
proposed to be sold times the Floor Price designated in the Transfer Notice);
provided further, that there shall be no more than (1) one Accelerated Notice
Period for any member of the Stockholder Group in any 12 month period.
(c) Except as set forth in Section 4(b) above, the following
procedures shall be followed with respect to a Transfer Notice which includes
any property other than cash:
(i) If the purchase price specified in the Transfer
Notice includes any property other than cash, such purchase price shall
be deemed to be the amount of any cash included in the purchase price
plus the value (as jointly determined by DUPONT and the member of the
Stockholders Group who gave such Transfer Notice or, in the event
DUPONT and the member of the Stockholders Group who gave such Transfer
Notice are unable to agree, by a nationally or
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regionally recognized investment banking or consulting firm (the
"Property Valuation Firm"), which firm shall be selected by two other
previously chosen nationally or regionally recognized investment
banking or consulting firms, each of which was chosen by DUPONT and the
member of the Stockholders Group who gave such Transfer Notice,
respectively, of such other property included in such price. DUPONT and
the member of the Stockholders Group who gave the Transfer Notice shall
share equally the expenses incurred by the Property Valuation Firm.
(ii) DUPONT and the member of the Stockholders Group
who gave such Transfer Notice shall use their best efforts to cause any
determination of the value of any securities included in the purchase
price to be made within three (3) business days after the date of
delivery of the Transfer Notice. If DUPONT and the member of the
Stockholders Group who gave such Transfer Notice are unable to agree
upon the value of any such securities within such three-day period,
DUPONT and the member of the Stockholders Group who gave such Transfer
Notice shall promptly (but in no event later than five (5) business
days after the date of delivery of the Transfer Notice) cause the
selection of the Property Valuation Firm whose determination, which
shall be made within three (3) business days of its selection, shall be
conclusive.
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(iii) DUPONT and the member of the Stockholders Group
who gave such Transfer Notice shall use their best efforts to cause any
determination of the value of property other than securities to be made
within five (5) business days after the date of delivery of the
Transfer Notice. If DUPONT and the member of the Stockholders Group who
gave such Transfer Notice are unable to agree upon a value within such
five-day Period, DUPONT and the member of the Stockholders Group who
gave such Transfer Notice shall promptly (but in no event later than
seven (7) business days after the date of delivery of the Transfer
Notice) cause the selection of the Property Valuation Firm whose
determination, which shall be made within five (5) business days of its
selection, shall be conclusive.
(iv) If the above process to determine the value of
the other non-cash property is not completed within fifteen calendar
days of the date of the Transfer Notice, then DUPONT's exercise of its
right of first refusal shall be extended until fifteen (15) calendar
days after the value of such other non-cash property is determined as
provided for in paragraphs 4(c)(ii) and 4(c)(iii) above.
(d) If DUPONT exercises its right of first refusal hereunder,
the closing of the purchase of the Voting Securities with respect to which such
right has been exercised shall take place within thirty (30) calendar days after
DUPONT gives notice of such exercise, or within twenty (20) calendar days after
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DUPONT has obtained any necessary government approval or nonobjection, if any,
whichever is later. DUPONT shall make application for any necessary government
approval as soon as practicable after exercising its right of first refusal.
Upon exercise of its right of first refusal, DUPONT shall not be legally
obligated to consummate the purchase contemplated thereby, unless and until any
such necessary government approvals are received.
(e) If DUPONT does not exercise its right of first refusal
hereunder within the time specified for such exercise, the party giving the
Transfer Notice shall be free during the period of ninety (90) calendar days
following the expiration of such time for exercise to sell the Voting Securities
specified in such Transfer Notice to the offeror identified therein at the price
specified therein or at any price in excess thereof. With regard to any Transfer
Notice specifying the sale of Voting Securities into the public trading market,
such party shall be free during such 90-day period to sell the Voting Securities
specified in such Transfer Notice into such public trading market at any price
greater than or equal to the Floor Price specified in the Transfer Notice. If
such party shall not have completed such transfer within such 90-day period, the
restrictions on transfer imposed by this Section 4 shall again apply to any
proposed transfer of such Voting Securities.
(f) No member of the Stockholders Group shall, directly or
indirectly, offer, sell or transfer any Voting
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Securities without offering DUPONT a right of first refusal in the manner
provided in Section 4 except (i) to another member of the Stockholders Group,
(ii) in a bona fide public offering registered under the Act (provided that no
sales of Voting Securities are made to any person or related group of persons
who would immediately thereafter, to the knowledge of any member of the
Stockholders Group, have Beneficial Ownership of, or have the right to acquire
Beneficial Ownership of, Voting Securities representing more than five percent
(5%) of the total combined voting power of all Voting Securities then
outstanding), (iii) pursuant to Rule 144 under the Act (provided that no sales
of Voting Securities are made to any person or related group of persons who
would immediately thereafter, to the knowledge of the selling member of the
Stockholders Group, have Beneficial Ownership of, or have the right to acquire
Beneficial Ownership of, Voting Securities representing more than five percent
(5%) of the total combined voting power of all Voting Securities then
outstanding), (iv) to a trust for the benefit of members of the Stockholders
Group, their spouses and relatives (whether born or unborn), provided the trust
becomes a party to this Shareholders' Agreement, or (v) to any beneficiary of
the estate of any member of the Stockholder's Group provided that prior to
receiving Beneficial Ownership of said Voting Securities the beneficiary becomes
a party to this Shareholders' Agreement; provided, however, that with regard to
clauses (ii) and (iii) any such sales by a member of the Stockholders Group
shall not exceed: (a) 25,000 shares of Voting Securities in the initial 12 month
period
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of the term of this Agreement, (b) 50,000 shares of Voting Securities in the
initial 24 month period of the term of this Agreement, (c) 75,000 shares of
Voting Securities in the initial 36 month period of the term of this Agreement
or (d) 100,000 shares of Voting Securities during the term of this Agreement.
For purposes of (ii) and (iii) above, the seller or donor, as
the case may be, his counsel and HTI's transfer agent shall be entitled to rely
on a written representation from the person purchasing or receiving the Voting
Securities to the effect that neither such person, nor any related group of
persons, immediately after receipt thereof, will have Beneficial Ownership of or
the right to acquire Beneficial Ownership of Voting Securities representing more
than five percent (5%) of the total combined voting power of all Voting
Securities then outstanding.
For purposes of this Shareholders' Agreement, the term
"related group of persons" means persons acting in concert with each other as to
HTI and its Voting Securities.
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5. CONTROL DISPOSITION
Notwithstanding anything herein to the contrary, no member of
the Stockholder Group shall make or participate in any Control Disposition
without first complying with Sections 3 and 4. Any member of the Stockholder
Group desiring to make or participate in a Control Disposition ("Control
Offeror"), after complying with Sections 3 and 4, shall give a written notice
("Control Disposition Offer") to all other holders of outstanding Common Stock
who are parties to this Agreement ("Control Offerees") (1) describing the
proposed Control Disposition and the proposed transferee in reasonable detail
and setting forth the number of shares to Stock as to which the Control Offeror
desires to make a Control Disposition and (2) providing each Control Offeree
with the right to elect (by written notice to the Company within ten (10) days
after the receipt of the Control Disposition Offer) to dispose of in the Control
Disposition, at the same price and on the same terms that the beneficial
ownership of the Control Offeror's Stock is to be transferred in the Control
Disposition, any number of shares of the common stock of the Company held by
such Control Offeree as determined in the sole discretion of the Control
Offeree.
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6. ELECTION OF DCEO NOMINEE(S)
During the period that DCEO exercises its right to designate a
person(s) for nomination to the HTI Board of Directors pursuant to Section 4 of
the Standstill Agreement, each member of the Stockholders Group, individually,
shall vote all the Voting Securities over which he has direct or indirect voting
control for such nominee(s).
7. MISCELLANEOUS
(a) DUPONT and the members of the Stockholders Group
acknowledge and agree that irreparable damage would occur to DUPONT and to the
members of the Stockholders Group in the event any of the provisions of this
Shareholders' Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that DUPONT and the
members of the Stockholders Group shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Shareholders'
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state thereof having jurisdiction, in addition
to any other remedy to which they may be entitled at law or in equity.
(b) The members of the Stockholders' Group agree that HTI may
enter a stop transfer order with the transfer agent or agents of Voting
Securities prohibiting the transfer of Voting Securities other than in
compliance with the requirements of this Shareholders' Agreement.
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(c) Each member of the Stockholders' Group and HTI agree to
take or cause to be taken such action as may be required to accomplish the
intent of this Shareholders' Agreement and further agrees to provide DUPONT with
such additional certificates, opinions, instruments or documents as DUPONT may
reasonably request to accomplish the intent of the transactions contemplated by
this Shareholders' Agreement.
(d) This Shareholders' Agreement shall be binding on the
successors, assigns, donees, heirs, distributees, beneficiaries, devisees and
legatees of each member of the Stockholders Group, except for permitted sales,
transfers and assignments under Section 4 hereof.
(e) This Shareholders' Agreement and the attachments hereto
contain the entire understanding of the parties with respect to the transactions
contemplated herein, and this Shareholders' Agreement may be amended only by an
agreement in writing executed by the parties hereto.
(f) All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or mailed by certified or registered mail, postage prepaid, return receipt
requested, or delivered to a nationally recognized next business day courier for
delivery on the next business day, or by facsimile, with a copy sent as
aforesaid and in any instance addressed as follows:
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If to Company:
Hudson Technologies, Inc.
25 Torne Valley Road
Hillburn, New York 10931-9900
If to DUPONT:
E. I. du Pont de Nemours and Company
1007 Market Street
Wilmington, Delaware 19898
Attention: Vice President and Treasurer
If to DCEO:
Du Pont Chemical and Energy Operations, Inc.
DuPont Building, Room 8045
1007 Market Street
Wilmington, Delaware 19898
Attention: Administrator
If to any member of the Stockholder's Group:
or such other address as shall be furnished in writing by any of the parties,
and any such notice or communication shall be deemed to have been given as of
the date so delivered personally, so mailed, so delivered to the courier
service, or so transmitted by telecopy (except that a notice of change of
address shall not be deemed to have been given until received by the addressee).
(g) This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed therein.
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IN WITNESS WHEREOF, DUPONT, DCEO, HTI and the members of the
Stockholders Group have caused this Agreement to be duly executed all as of the
day and year first above written.
E. I. DUPONT DE NEMOURS AND COMPANY
By
Name
Title
DU PONT CHEMICAL AND ENERGY OPERATIONS, INC.
By
Name
Title
HUDSON TECHNOLOGIES, INC.
By
Name
Title
THE STOCKHOLDER[S]
_________________________________ _________________________________
_________________________________ _________________________________
_________________________________ _________________________________
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Attachment A
HTI STOCKHOLDERS GROUP
HTI Shares HTI Options
---------- -----------
Kevin J. Zugibe 234,000 115,000
Stephen J. Cole-Hatchard 233,000 100,000
Stephen P. Mandracchia 122,000 100,000
Thomas P. Zugibe 234,000 100,000
Frederick T. Zugibe 212,500 75,000
------- ------
Total 1,035,500 490,000
========= =======
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