STANDSTILL AGREEMENT
AGREEMENT dated as of January 29, 1997 between E. I. DU PONT
DE NEMOURS AND COMPANY, a Delaware corporation ("DuPont"), DU PONT CHEMICAL AND
ENERGY OPERATIONS, INC., a Delaware corporation ("DCEO") and HUDSON
TECHNOLOGIES, INC., a New York Corporation (the "Company").
DCEO has acquired pursuant to a Stock Purchase Agreement with
the Company dated January 29, 1997 (the "Stock Purchase Agreement") and
currently owns an aggregate of 500,000 shares of the Common stock, par value
$0.01 per share (such class of common stock being referred to herein as "Common
Stock"), of the Company. In order to establish a constructive and mutually
beneficial relationship between DuPont, DCEO and the Company, the parties agree
as follows:
1. TERM OF AGREEMENT
(a) Except as otherwise expressly provided herein, the
respective covenants and agreements of the parties contained in this Agreement
will continue in full force and effect until January 29, 2002 (such date being
referred to herein as the "Termination Date").
(b) If notice of termination is delivered by DuPont or DCEO or
the Company as provided in paragraph 7(a), this Agreement shall terminate in its
entirety on the date which is sixty days following such notice (such date being
referred to herein as the
"Termination Date"), but shall continue in full force and effect until the
Termination Date except as otherwise provided herein.
(c) If this Agreement is terminated as provided in this
paragraph, unless the Company otherwise agrees, DuPont and DCEO will cause all
designees of DuPont or DCEO serving on the Company's Board of Directors pursuant
to paragraph 4 to resign from such Board of Directors, effective as of the
Termination Date.
2. COVENANTS OF DUPONT
Prior to the Termination Date or earlier termination of this
Agreement in accordance with its terms and subject to the further provisions
hereof:
(a) Neither DuPont nor any corporation or other entity
controlled by DuPont (collectively, the "DuPont Group") will, directly or
indirectly, acquire any shares of any class of capital stock of the Company
which is then entitled to vote generally in the election of directors (all such
classes of capital stock of the Company being referred to herein as "Voting
Securities") (except by way of stock dividends or other distributions or
offerings made available to holders of Voting Securities generally) if the
effect of such acquisition would be to increase the aggregate voting power in
the election of directors of all Voting Securities then owned by all members of
the DuPont Group (such aggregate voting power of all Voting Securities owned by
all members of the DuPont Group being referred to herein as the "DuPont Voting
Power") to greater than 20% of the total combined voting power in the election
of
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directors of all the Voting Securities then outstanding (such total combined
voting power of all the Voting Securities outstanding being referred to herein
as the "Total Voting Power"); provided that the DuPont Group may acquire Voting
Securities without regard to the foregoing limitation if any of the following
events (hereinafter referred to as "Triggering Events") shall occur: (i) a
tender or exchange offer is made by any person or 13D Group (as hereinafter
defined) (other than an affiliate of, or any person acting in concert with, any
member of the DuPont Group and other than a tender or exchange offer that is
induced by any member of the DuPont Group) to acquire Voting Securities which,
if added to the Voting Securities (if any) already owned by such person or 13D
Group, would represent more than 20% of the Total Voting Power at such time,
(ii) it is publicly disclosed or DuPont otherwise learns that Voting Securities
representing more than 20% of the Total Voting Power have been acquired
subsequent to January 1, 1997, or are proposed (in a public announcement or
filing) to be acquired subsequent to such date by any person or 13D Group (other
than an affiliate of, or any person acting in concert with, any member of the
DuPont Group and other than any such acquisition or proposed acquisition of
Voting Securities that has been induced, in whole or in part, by any member of
the DuPont Group), or (iii) any person (not including any member of the
Stockholders Group, as defined in the Stockholders Agreement as defined below)
or 13D Group (not including affiliates or members of the DuPont Group and not
including any 13D Group comprised solely of the members of the
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Stockholders Group, as defined in the Shareholders Agreement as defined below)
shall beneficially own Voting Securities representing a percentage of the Total
Voting Power which exceeds the greater of (x) 10% or (y) the percentage of the
Total Voting Power represented by the DuPont Voting Power at such time, and
would be required (under rules and regulations in effect on January 29, 1997) to
file a statement on Schedule 13D with the Securities and Exchange Commission
reporting beneficial ownership of such Voting Securities, other than any such
beneficial ownership that has been induced, in whole or in part, by any member
of the DuPont Group or (iv) pursuant to its rights to purchase Voting Securities
under the Shareholders Agreement between DCEO, DuPont, the Company and certain
principal shareholders of the Company dated January 29, 1997 (the "Shareholders
Agreement"). As used herein, the term "13D Group" shall mean any group of
persons formed for the purpose of acquiring, holding, voting or disposing of
Voting Securities which would be required under Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder (as in effect, and based on legal interpretations thereof
existing, on January 29, 1997) to file a statement on Schedule 13D with the
Securities and Exchange Commission as a "person" within the meaning of Section
13(d)(3) of the Exchange Act if such group beneficially owned Voting Securities
representing more than 5% of any class of Voting Securities then outstanding.
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(b) If at any time the DuPont Voting Power shall be increased
to more than 20% of the Total Voting Power as a result of a repurchase of Voting
Securities by the Company or any other change in the Company's capitalization,
no member of the DuPont Group shall be required to dispose of any Voting
Securities.
(c) As used herein, the term "Significant Event" means any
charter or bylaw amendment, acquisition or disposition of assets (by way of
merger, consolidation or otherwise), change in capitalization, liquidation, or
other action out of the ordinary course of business of the Company.
(d) The members of the DuPont Group, as holders of Voting
Securities, shall be present, in person or by proxy, at all meetings of
shareholders of the Company so that all Voting Securities beneficially owned by
them may be counted for the purpose of determining the presence of a quorum at
such meetings.
(e) No member of the DuPont Group shall solicit proxies or
become a "participant" in a "solicitation" (as such terms are defined in
Regulation 14A under the Exchange Act, as in effect on January 29, 1997) in
opposition to the recommendation of the majority of the directors of the Company
with respect to any matter; provided that the limitation contained in this
paragraph (e) shall not apply to any Significant Event to be voted on by the
Company's shareholders that is not initiated or proposed by any member of the
DuPont Group.
(f) No member of the DuPont Group shall join a partnership,
limited partnership, syndicate or other group, or otherwise act in concert with
any other person, for the purpose
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of acquiring, holding, voting or disposing of Voting Securities, or otherwise
become a "person" within the meaning of Section 13(d)(3) of the Exchange Act (in
each case other than solely with members of the DuPont Group), except as to
voting on specific matters as to which the DuPont Group is permitted to solicit
proxies pursuant to the proviso of paragraph 2(e).
(g) No member of the DuPont Group shall, directly or
indirectly, offer, sell or transfer any Voting Securities without offering the
Company a right of first refusal in the manner provided in paragraph 5, except
(i) to another member of the DuPont Group, (ii) pursuant to a bona fide public
offering, registered under the Securities Act of 1933, as amended (the "Act"),
of Voting Securities (provided that no sales of Voting Securities or securities
exchangeable for Voting Securities are made to any person or related group of
persons who would immediately thereafter, to the knowledge of any member of the
DuPont Group, own or have the right to acquire Voting Securities representing
more than 5% of the Total Voting Power) or (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
any member of the DuPont Group, own or have the right to acquire Voting
Securities representing more than 5% of the Total Voting Power).
For purposes of (ii) and (iii) above, DuPont, DuPont's counsel and
HTI's transfer agent shall be entitled to rely on a written representation from
the person purchasing or receiving the Voting
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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 Standstill 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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3. COVENANTS OF THE COMPANY
(a) Prior to the Termination Date or earlier termination of
this Agreement in accordance with its terms and subject to the further
provisions hereof without DuPont's written consent, the Company will not take or
recommend to its shareholders any action during the term of this Agreement which
would (1) impose limitations on the legal rights of the DuPont Group as Company
shareholders other than those imposed pursuant to the express terms of this
Agreement, including, without limitation, any action which would impose
restrictions (i) based upon the size of security holding, nationality of a
security holder, the business in which a security holder is engaged or other
considerations applicable to the DuPont Group and not to security holders
generally, or (ii) with reference to Common Stock generally, by means of the
issuance of or proposal to issue any other class of securities having voting
power disproportionately greater than the equity investment in the Company
represented by such securities; (2) involve the issuance or corporate action
providing for the issuance of any warrant, capital stock or other security or
any other rights of which (including rights of redemption) are dependent upon
the amount of Voting Securities owned by the DuPont Group; (3) deny any benefit
to the members of the DuPont Group proportionately as holders of any class of
Voting Securities that is made available to other holders of the same class of
Voting Securities generally; or (4) alter voting or other rights of the holders
of any class of
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Voting Securities so that any such rights (or the vote required with respect to
any matter) are determined with reference to the amount of Voting Securities
held by the DuPont Group; provided that the Company will cease to be subject to
this paragraph 3(a) if a Triggering Event has occurred (other than pursuant to
the rights of the DuPont Group to purchase Voting Securities pursuant to the
Shareholders Agreement) and DuPont does not deliver to the Company, within five
business days after becoming aware of such Triggering Event, a written waiver of
the DuPont Group's right to acquire Voting Securities representing more than 20%
of the Total Voting Power pursuant to the proviso of paragraph 2(a).
(b) The Company will cease to be subject to paragraph 3(a)
above at such time that the DuPont Group beneficially owns a number of Voting
Securities that represents less than 50% of the DuPont Voting Power that the
DuPont Group held immediately after the Closing.
4. COVENANTS REGARDING BOARD REPRESENTATION
(a) As promptly as practicable after receipt of written notice
from DCEO and DuPont, the Company will cause two persons designated by DCEO and
DuPont to be elected to the Company's Board of Directors. Such designation of
any person for election to the Company's Board of Directors, or to attend Board
meetings as an observer, shall be made after consultation with the Company, and
any such person shall be a person agreed to
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by the Company (which agreement will not be unreasonably withheld). At the time
of any such designation, such designee will affirm his or her duty of
confidentiality to the Company with regard to any non-public, confidential
Company information through a confidentiality agreement reasonably satisfactory
to the Company and DuPont. Until the Termination Date or earlier termination of
this Agreement in accordance with its terms, the Company's nominating committee
shall recommend to the Company's Board of Directors that all persons designated
by DCEO and DuPont for election to the Company's Board of Directors in
accordance with the provisions of this paragraph (a) be included in the slate of
nominees recommended by such Board to the Company's shareholders for election as
directors at each annual meeting of the shareholders of the Company. In the
event that any designee of DCEO and DuPont for election to the Company's Board
of Directors pursuant to the foregoing provisions shall cease to serve as a
director for any reason, the vacancy resulting therefrom shall be filled
according to the procedures described above.
(b) The Company will furnish to such designees on the
Company's Board of Directors all information that is provided to the other
directors of the Company.
(c) At any time that the DuPont Group does not have two
designees serving on the Board of Directors, DCEO and DuPont shall be entitled
to designate a non-voting observer for each
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such Board seat and such observer(s) shall be entitled to attend all Board
meetings.
(d) It is the Company's policy to discuss with the Board of
Directors any proposed merger, consolidation, reorganization or acquisition or
disposition of material assets other than in the ordinary course of business and
other transactions out of the ordinary course of business which would have a
material impact on the Company's financial position or results of operations. If
in the future it should no longer be the Company's policy to present any such
matters to the Board, then the Company will, during the term of this Agreement,
discuss any such transactions with DuPont in advance.
(e) The parties acknowledge and agree that any director or
observer nominated or designated by DCEO and DuPont will be under an obligation
to DuPont not to disclose to any person outside of DuPont, or use in other than
DuPont's business, any confidential information or material relating to the
business of DuPont or its subsidiaries. The parties acknowledge that there shall
be no obligation on the part of such director or observer to disclose any such
information or material to the Company, even if such disclosure would be of
interest or value to the Company.
(f) The right of DCEO and DuPont to nominate up to two
designees to be a director or observer shall terminate at such
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time that the DuPont Group beneficially owns a number of Voting Securities that
represents less than 50% of the DuPont Voting Power that the DuPont Group held
immediately after the Closing.
5. RIGHT OF FIRST REFUSAL
To the extent required by paragraph 2(g), any member of the
DuPont Group, prior to making any offer to sell, sale or transfer of Voting
Securities, shall give the Company the opportunity to purchase such Voting
Securities in the following manner:
(a) Any member of the DuPont Group intending to make such
offer, sale or transfer shall give notice (the "Transfer Notice") to the Company
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 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.
(b) The Company shall have the right, exercisable by written
notice given by the Company to DuPont within thirty (30)
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days after receipt of such Transfer Notice (or in the case of a tender or
exchange offer, 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 the Company no later than five (5) business days after the
tender offer materials have been received by DuPont) to exercise its right of
first refusal to purchase (or to cause a person or group designated by the
Company to purchase) all, but not a part of, the Voting Securities specified in
such Transfer Notice for cash at the price set forth therein.
(c) Except as set forth in Section 5(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 the parties or, in the event
the parties are unable to agree, by a nationally or 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 Company,
respectively, of such
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other property included in such price. The parties shall share equally
the expenses incurred by the Property Valuation Firm.
(ii) The parties 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 the parties are unable to agree
upon the value of any such securities within such three-day period, the
parties 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.
(iii) The parties 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 the parties are unable to agree upon a value
within such five-day period, the parties 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.
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(iv) If the above process to determine the value of
the other non-cash property is not completed within 15 calendar days of
the date of the Transfer Notice, then the Company'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 or
provided for in paragraphs 5(c)(i) and 5(c)(ii) above.
(d) If the Company 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 30 calendar days (or
if approval of such purchase by the Company's shareholders is required by law or
pursuant to any stock exchange rule or policy, within 90 calendar days) after
the Company gives notice of such exercise. Upon exercise of its right of first
refusal, the Company shall use its best efforts to secure all approvals required
in connection therewith.
(e) If the Company does not exercise its right of first
refusal hereunder within the time specified for such exercise, the DuPont Group
shall be free during the period of 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. If the DuPont Group shall not have completed such
transfer within such 90-day period, the
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restrictions or transfer imposed by this Section 4 shall again apply to any
proposed transfer of such Voting Securities.
6. FURTHER UNDERSTANDINGS
(a) DuPont, DCEO and the Company shall use their best efforts
to further the purposes of this Agreement and the spirit of cooperation which it
evidences. Each party will refrain from inducing or encouraging any other party
to interfere with the relationships and rights created hereby. The parties
recognize that the foregoing provisions of this paragraph (a) cannot and should
not be interpreted so as to restrict the ability of the Board of Directors of
the Company to take such action as such Board may deem to be in the best
interests of all the Company's shareholders, or the ability of the Board of
Directors of DuPont to take such action as such Board may deem to be in the best
interests of DuPont's shareholders.
(b) The Company and DuPont each agree to advise the other of
any intention on the part of the Company or any member of the DuPont Group, as
the case may be, to acquire outstanding Voting Securities of any class in order
to insure that such acquisitions of Voting Securities will conform to all
applicable legal requirements.
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7. TERMINATION
(a) Notwithstanding any other provision of this Agreement,
either DuPont and DCEO or the Company may terminate this Agreement, in its sole
discretion, if (i) the other party fails to perform or observe any of its
obligations pursuant to this Agreement or (ii) DCEO's and DuPont's designees
pursuant to paragraph 4 are not elected to the positions specified therein
(except as provided for in paragraph 4(f)). In addition, the Company shall have
the right to terminate this Agreement, in its sole discretion, as provided in
paragraph 8(b).
(b) In the event of the termination of this Agreement pursuant
to this paragraph 7, unless the parties otherwise agree, DCEO and DuPont will
cause all its respective designees serving on the Board of Directors of the
Company pursuant to paragraph 4 to resign from such Board of Directors effective
as of the date of such termination.
8. MISCELLANEOUS
(a) DuPont, on the one hand, and the Company, on the other,
acknowledge and agree that irreparable damage would occur in the event any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agree that the
parties shall be entitled to an injunction or injunctions to prevent
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breaches of the provisions of this 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 equity.
(b) If any provision of this Agreement is in violation of any
statute, rule, regulation, order or decree of any governmental authority, court
or agency, or subjects any member of the DuPont Group to governmental regulation
to which it would not be subject except for such provision, then such member of
the DuPont Group shall be relieved of its obligations under such provision to
the minimum extent necessary to cure such violation or eliminate the
applicability of such regulation; and provided further that in the event any
member of the DuPont Group is relieved of its obligations under any provision of
this Agreement pursuant to this paragraph, the Company may terminate this
Agreement, in its sole discretion.
(c) If requested in writing by the Company, DuPont shall
present or cause to be presented promptly all certificates representing Voting
Securities now owned or hereafter acquired by members of the DuPont Group, for
the placement thereon of the following legend, which will remain thereon as long
as such Voting Securities are subject to the restrictions contained in this
Agreement:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE PROVISIONS OF AN AGREEMENT DATED AS OF JANUARY 29, 1997, BETWEEN E.
I. DU PONT DE NEMOURS AND COMPANY AND HUDSON TECHNOLOGIES, INC., AND
MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH. A COPY
OF SAID AGREEMENT IS ON FILE AT THE OFFICE OF THE CORPORATE SECRETARY
OF HUDSON TECHNOLOGIES, INC.
The Company may enter a stop transfer order with the transfer agent or agents of
Voting Securities against the transfer of Voting Securities except in compliance
with the requirements of this Agreement. The Company agrees to remove promptly
any stop transfer order with respect to, and issue promptly unlegended
certificates in substitution for, certificates for any Voting Securities that
are no longer subject to the restrictions contained in this Agreement.
(d) As used herein, the term "affiliate" shall have the
meaning set forth in Rule 12b-2 under the Exchange Act (as in effect on January
29, 1997), and the term "person" shall mean any individual, partnership,
corporation, trust or other entity.
(e) This Agreement, the Stock Purchase Agreement, the
Shareholders Agreement and the Registration Agreement contain the entire
understanding of the parties with respect to the transactions contemplated
hereby and this Agreement may be amended only by an agreement in writing
executed by the parties hereto.
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(f) Descriptive headings are for convenience only and shall
not control or affect the meaning or construction of any provision of this
Agreement.
(g) For the convenience of the parties, any number of
counterparts of this Agreement may be executed by the parties hereto and each
such executed counterpart shall be deemed to be, an original instrument.
(h) 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
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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:
THE COMPANY:
Hudson Technologies, Inc.
25 Torne Valley Road
Hillburn, New York 10931-9900
Attention: President
DUPONT:
E. I. du Pont de Nemours and Company
1007 Market Street
Wilmington, Delaware 19898
Attention: Vice President and Treasurer
DCEO:
Du Pont Chemical and Energy Operations, Inc.
DuPont Building, Room 8045
1007 Market Street
Wilmington, Delaware 19898
Attention: Administrator --
Du Pont Chemical and Energy Operations, Inc.
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).
(i) From and after the Termination Date or earlier termination
of this Agreement in accordance with its terms, the covenants of the parties set
forth herein shall be of no further force or effect and the parties shall be
under no further obligation with respect thereto.
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(j) 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.
(k) Each capitalized term not defined herein shall have the
meaning assigned to it by the provisions in which it is first used, or if not
defined in this Agreement, the meaning assigned to it by the Stock Purchase
Agreement.
IN WITNESS THEREOF, DuPont and the Company have caused this
Agreement to be duly executed by their respective officers, each of whom is duly
authorized, all as of the day and year first above written.
E. I. DU PONT DE NEMOURS AND COMPANY
by
- ----------------------------------
Name:
Title:
DU PONT CHEMICAL AND ENERGY OPERATIONS, INC.
by
- ----------------------------------
Name:
Title:
HUDSON TECHNOLOGIES, INC.
by
- ----------------------------------
Name:
Title:
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