STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT dated as of March 25, 1998 (this "Agreement"), by
and among Unidigital Inc., a Delaware corporation (the "Company"), William E.
Dye ("Dye"), and Richard J. Sirota ("Sirota" and, collectively with Dye, the
"Stockholders").
W I T N E S S E T H :
WHEREAS, the Company is authorized to issue 10,000,000 shares of common
stock, $0.01 par value (the "Common Stock"); and
WHEREAS, Dye, on the date hereof, has voting control over 1,051,421 shares
of the Common Stock; and
WHEREAS, the Company and Sirota are parties to that certain Asset Purchase
Agreement (the "Asset Purchase Agreement") dated March 25, 1998 by and among the
Company, Unison (NY), Inc., a Delaware corporation and wholly-owned subsidiary
of the Company ("Unison"), Kwik International Color, Ltd., a New York
corporation ("Kwik"), and Sirota, pursuant to which Sirota has been issued
649,841 shares of the Common Stock (the "Sirota Shares"); and
WHEREAS, the parties deem it in the best interests of each of the parties
to restrict the transfer of the Restricted Shares (as defined below) as herein
provided.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein, the Parties hereto hereby agree as follows:
SECTION 1. General Restrictions on Transfer of the Restricted Shares.
(a) During the term of this Agreement, none of the shares of Common
Stock owned on the date hereof or thereafter acquired by any Stockholder
(collectively, the "Restricted Shares") may be transferred, assigned, pledged,
encumbered or otherwise hypothecated except in accordance with the provisions of
this Agreement.
(b) Any attempted transfer of the Restricted Shares other than in
accordance with this Agreement (other than an involuntary transfer by operation
of law) shall be null and void and the Company shall refuse to recognize any
such transfer and shall not reflect on its records any change in record
ownership of the Restricted Shares pursuant to any such transfer.
(c) Notwithstanding anything contained herein to the contrary, but
subject to Section 5 hereof, it is understood and agreed that (i) each of the
Stockholders may transfer any or all of the Restricted Shares beneficially owned
by him to his immediate family (as defined below), or to trusts established for
the benefit of such immediate family, provided that in connection with such
transfer, the transferee grants to such transferor an irrevocable proxy coupled
with an interest to vote all of the Restricted Shares so transferred, and (ii)
in the case of Sirota, the Sirota Shares may be transferred to Sirota's former
business partner, Walter Berkower. Such transferees shall be
referred to herein as "Permitted Transferees." For purposes of this Section
1(c), "immediate family" shall mean any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive
relationships.
SECTION 2. Right of First Refusal.
(a) Subject to Section 2(f) hereof, whenever and as often as any of
the Stockholders shall desire to sell any of the Restricted Shares pursuant to a
bona fide offer for the purchase thereof in a private transaction, such selling
Stockholder (the "Selling Stockholder") shall give notice (the "Notice") to the
Company in writing to such effect, enclosing a copy of such bona fide offer (it
being agreed that the Selling Stockholder shall cause any such offer to be
reduced to writing) and specifying the number of shares of the Selling
Stockholder's Restricted Shares which such Selling Stockholder desires to sell
(the "Shares"), the name of the person or persons to whom such Selling
Stockholder desires to make such sale and the dollar value of the consideration
which has been offered in connection therewith. Upon receipt of the Notice, the
Company shall have the first right and option to purchase all but not less than
all of the Shares, for cash at a purchase price equal to the dollar value of
such consideration (in the event such consideration includes noncash
consideration, subject to Section 2(g) hereof, the dollar value of such noncash
consideration shall be determined by the Company's Board of Directors, provided
that if such Selling Stockholder is a member of the Board of Directors, he shall
not participate in such determination), exercisable for a period of ten (10)
days from the date of receipt of the Notice. Failure of the Company to respond
to the Notice within the ten (10) day period shall be deemed to constitute a
notification to the Selling Stockholder of the Company's decision not to
exercise the first right and option to purchase the Shares under this Section
2(a).
(b) The Company may exercise the right and option provided in Section
2(a) above by giving written notice to the Selling Stockholder not later than
the close of business on the date of expiration of such right and option (or if
such date is not a business day, then on or before the close of business on the
next succeeding business day), advising of the election to exercise the same and
the date (not later than ten (10) days from the date of expiration of such first
right and option to purchase the Shares under Section 2(a)) upon which payment
of the purchase price for the Shares shall be made. The Selling Stockholder
shall cause to be delivered to the Company at the Company's principal office, on
the payment date specified in such written notice, the certificate or
certificates representing the Shares, properly endorsed for transfer, against
payment of the purchase price therefor by the Company in immediately available
funds.
(c) In the event that the Shares are not purchased by the Company
hereunder, the Selling Stockholder shall next give notice (the "Second Notice",
and together with the Notice, the "Notices") to the other Stockholder, by which
the Selling Stockholder shall then offer to the other Stockholder (the
"Offeree") the right and option to purchase all but not less than all of the
Shares for cash at the same purchase price and on the same terms as offered to
the Company as set forth in the Notice. Pursuant to such offer, the Offeree
shall have the right and option to purchase all but not less than all of the
Shares, for cash at a purchase price equal to the dollar value of such
consideration (in the event such consideration includes noncash consideration,
subject to Section 2(g) hereof, the dollar value of such noncash consideration
shall be determined
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by the Company's Board of Directors, provided that if the Selling Stockholder or
the Offeree is a member of the Board of Directors, he shall not participate in
such determination), exercisable for a period of ten (10) days from the date of
receipt of the Second Notice. Failure of the Offeree to respond to the Second
Notice within the ten (10) day period shall be deemed to constitute a
notification to the Selling Stockholder of the Offeree's decision not to
exercise the right and option to purchase the Shares under this Section 2(c).
(d) The Offeree may exercise the rights and options provided in
Section 2(c) by giving written notice to the Selling Stockholder not later than
the close of business on the date of expiration of such right and option (or if
such date is not a business day, then on or before the close of business on the
next succeeding business day), advising of the election to exercise the same and
the date (not later than ten (10) days from the date of expiration of the notice
upon which the Offeree is acting) upon which payment of the purchase price for
the Shares shall be made. The Selling Stockholder shall cause to be delivered to
the Offeree at the Company's principal office, on the payment date specified in
such written notice, the certificate or certificates representing the Shares
being purchased by the Offeree, properly endorsed for transfer, against payment
of the purchase price therefor.
(e) If the Shares are not purchased by the Company or the Offeree
in accordance with this Section 2, the Selling Stockholder may, during the
ninety (90) day period commencing on the expiration of the rights and options
provided for in Sections 2(a) and 2(c), sell all, but not less than all, of the
Shares to the transferee named in the Notices for consideration, the dollar
value of which is equal to or greater than the dollar value of the consideration
specified in the Notices, free of the restrictions contained in Section 2 of
this Agreement.
(f) Notwithstanding the foregoing, any of the Sirota Shares
distributed to the Company in satisfaction of an indemnification claim made by
the Company or Unison under the Asset Purchase Agreement shall be free of the
restrictions contained in Section 2 of this Agreement. In addition, in the event
a Selling Stockholder desires to sell any of the Restricted Shares pursuant to
Rule 144 promulgated under the Securities Act of 1933, as amended, such sale
shall be free of the restrictions contained in Section 2 of this Agreement,
provided such sale does not result in such Selling Stockholder selling in excess
of 10,000 shares of Common Stock in the immediately preceding three-month
period.
(g) In the event the Selling Stockholder disputes the Board of
Directors' determination of the dollar value of noncash consideration to be paid
for the Shares, such Selling Stockholder shall notify the Company in writing
within three (3) calendar days after such determination setting forth the
amount, nature and basis of the dispute.
Within the following five (5) days, the parties shall use their
best efforts to resolve such dispute. Upon their failure to do so, the dispute
shall be submitted for arbitration as follows:
(i) The arbitrator shall be a public accounting firm located
in the City of New York, State of New York. In the event the selected arbitrator
declines or is unable to serve for any reason, the parties shall select another
arbitrator. Upon their failure to agree on
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another arbitrator, the jurisdiction of the Supreme Court of the State of New
York shall be invoked to make such selection.
(ii) The arbitrator shall follow the Commercial Arbitration
Rules of the American Arbitration Association, except as otherwise provided
herein. The arbitrator shall substantially comply with the rules of evidence;
shall grant essential but limited discovery; shall provide for the exchange of
witness lists and exhibit copies; shall conduct a pretrial and consider
dispositive motions. Each party shall have the right to request the arbitrator
to make findings of specific factual issues.
The arbitrator shall complete its proceedings and render its decision
within forty (40) days after submission of the dispute to it, unless both
parties agree to an extension. Each party shall cooperate with the arbitrator to
comply with the procedural time requirements and the failure of either to do so
shall entitle the arbitrator to extend the arbitration proceedings accordingly
and to impose sanctions on the party responsible for the delay, payable to the
other party.
In the event the arbitrator does not fulfill its responsibilities on a
timely basis, either party shall have the right to require a replacement and the
appointment of a new arbitrator.
(iii) The decision of the arbitrator shall be final and binding
upon the parties and accordingly a judgment by a court of competent jurisdiction
may be entered in accordance therewith.
SECTION 3. Election of Directors. At any time at which stockholders of
the Company will have the right to vote or will vote all shares of Common Stock
of the Company in matters relating to the election of directors, each
Stockholder shall vote all shares of Common Stock presently owned or hereafter
acquired by him to cause and maintain the election to the Board of Directors of
the Company of the other Stockholder; provided, however, that neither
Stockholder shall have any such obligation under this Section 3 in the event the
other Stockholder no longer owns at least ten percent (10%) of the Company's
then issued and outstanding shares of Common Stock.
SECTION 4. Standstill Agreement. Sirota hereby agrees that, without
the prior written consent of Dye, he shall not take any action to cause him to
be the beneficial owner of more than 1,000,000 shares of the Company's Common
Stock.
SECTION 5. Purchasers or Transferees of Restricted Shares. Except as
otherwise specifically provided herein, any person who shall acquire (either
voluntarily or involuntarily, by operation of law or otherwise) any Restricted
Shares from a Stockholder or any Permitted Transferee, shall be bound by the
provisions of this Agreement relating to the voting, transfer and sale of such
Restricted Shares to the same extent as the parties hereto and, prior to the
registration of the transfer of any such Restricted Shares on the books of the
Company, any purchaser or other transferee shall execute a counterpart to this
Agreement agreeing to be bound by such provisions.
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SECTION 6. Legend on Stock Certificates. During the term of this
Agreement, each certificate issued after the date hereof representing Restricted
Shares held by a Stockholder shall conspicuously bear the following legend until
such time as the shares represented thereby are no longer subject to the
provisions hereof:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A STOCKHOLDERS' AGREEMENT, DATED AS OF
MARCH 25, 1998, AMONG UNIDIGITAL INC. (THE "COMPANY"), WILLIAM E.
DYE AND RICHARD J. SIROTA. COPIES OF SUCH AGREEMENT MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF THIS
CERTIFICATE TO THE COMPANY."
The Company covenants that it shall keep a copy of this Agreement on file at its
principal executive offices for the purpose of furnishing copies to the holders
of record of the Restricted Shares.
SECTION 7. Duration of Agreement. This Agreement shall terminate on
the tenth anniversary of the date of this Agreement, unless earlier terminated
by the parties hereto. Additionally, this Agreement shall terminate as to a
Stockholder upon the transfer of all the Restricted Shares owned by such
Stockholder.
SECTION 8. Representations and Warranties.
(a) Each of the Company and the Stockholders (in the case of clause
(ii) below) represents and warrants, severally and not jointly, to the Company
and each of the other parties hereto as follows:
(i) The execution, delivery and performance of this Agreement by the
Company will not violate any provision of law, any order of any court or
other agency of government, or any provision of any material indenture,
agreement or other instrument to which the Company or any of its properties
or assets is bound, or conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon
any of the properties or assets of the Company (other than those arising
hereunder).
(ii) This Agreement has been duly executed and delivered by the
Company or such Stockholder, as the case may be, and constitutes the legal,
valid and binding obligation of the Company or such Stockholder,
enforceable against the Company or such Stockholder in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting the enforcement of creditors' rights, and except that the
availability of the equitable remedies of specific performance and
injunctive relief may be subject to the discretion of the court before
which any proceeding may be brought.
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(b) Sirota represents and warrants to the Company and Dye that the
Sirota Shares constitute the entire ownership interest of Sirota in the Common
Stock of the Company as of the date hereof.
SECTION 9. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 10. Benefits of Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, legal representatives and heirs.
SECTION 11. Notices. Any notice, demand or request required or
permitted to be given under the provisions of this Agreement (a) shall be in
writing; (b) shall be delivered personally, including by means of telecopy or
courier, or mailed by registered or certified mail, postage prepaid and return
receipt requested; (c) shall be deemed given on the date of personal delivery or
on the date set forth on the return receipt; and (d) shall be delivered or
mailed as follows or to such other address as any party may from time to time
direct:
(i) if to the Company or Dye, c/o Unidigital Inc., 545 West 45th
Street, New York, New York, 10036, Attention: President, with a copy to Buchanan
Ingersoll, 500 College Road East, Princeton, New Jersey, 08540, Attention: David
J. Sorin, Esq.; or
(ii) if to Sirota, c/o Kwik International Color, Ltd., 229 West 28th
Street, New York, New York, 10001-5996, Attention: Mr. Richard J. Sirota, with a
copy to Kantor Davidoff Wolfe Mandelker & Kass, 51 East 42nd Street, New York,
New York, 10017, Attention: Herbert C. Kantor, Esq.
SECTION 12. Modification. Except as otherwise provided herein, neither
this Agreement nor any provision hereof may be modified, changed, discharged or
terminated except by an instrument in writing signed by the party against whom
the enforcement of any modification, change, discharge or termination is sought.
SECTION 13. Severability. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein shall, for any reason, be held to be invalid, illegal or unenforceable,
such illegality, invalidity or unenforceability shall not affect any other
provisions of this Agreement.
SECTION 14. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which taken together shall constitute one and the same instrument.
SECTION 15. Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof, and
supersedes all previous agreements. In the event of any conflict between this
Agreement and any other agreement or instrument with respect to the subject
matter hereof, the provisions of this Agreement shall control.
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SECTION 16. Reorganization, Etc. The provisions of this Agreement
shall apply mutatis mutandis to any shares or other securities resulting from
any stock split or reverse split, stock dividend, reclassification, subdivision,
consolidation or reorganization of any shares or other securities of the Company
and to any shares or other securities of the Company or of any successor company
which may be received by each Stockholder by virtue of his ownership of the
Restricted Shares.
SECTION 17. Survival of Representations. Each representation,
warranty, covenant and agreement of the parties hereto herein contained shall
survive the date hereof, notwithstanding any investigation at any time made by
or on behalf of any of the parties.
SECTION 18. Headings. The headings of this Agreement are for
convenience of reference only and are not part of the substance of this
Agreement.
* * * * * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders' Agreement as of the day and year first above written.
UNIDIGITAL INC.
By:/s/ William E. Dye
--------------------------------
Name: William E. Dye
Title: President and Chief Executive
Officer
STOCKHOLDERS
/s/ William E. Dye
-----------------------------------
William E. Dye
/s/ Richard J. Sirota
-----------------------------------
Richard J. Sirota