MERIDIAN USA HOLDINGS, INC. SECURITYHOLDERS AGREEMENT
This Securityholders Agreement (this "Agreement") is made as of June 16,
2000 by and among Meridian USA Holdings, Inc., a Florida corporation (the
"Company"), Alan Posner and Mark Streisfeld (each, a "Founder" and,
collectively with their transferees, the "Founders"), Joel Flig, Paul M. Galant,
Ronald Shapss (each an "Other Holder," collectively with their transferees, the
"Other Holders" and together with the Founders, the "Management Holders") and
the purchasers of the Company's Series A Convertible Notes due 2010 (the
"Convertible Notes") listed on the signature pages hereto (each a "Purchaser"
and, collectively with their transferees, the "Purchasers").
WHEREAS, the Management Holders currently own shares of Common Stock of the
Company, $.001 par value per share (the "Common Stock") and shares of the
Company's Series I Preferred Stock, $1.00 par value per share (the "Series I
Preferred"); and
WHEREAS, the Purchasers and the Company have entered into that certain
Securities Purchase Agreement dated as of June 16, 2000 (the "Purchase
Agreement"); and
WHEREAS, the Purchase Agreement provides for, among other things, the sale
By the Company and the purchase by the Purchasers of $8,000,000 aggregate
Principal amount of the Company's Series A Convertible Notes (the "Convertible
Notes"); and
WHEREAS, the sale of the Convertible Notes to the Purchasers is conditioned
Upon the extension of the rights set forth herein, and the Company and the
Management Holders desire to extend such rights herein.
NOW, THEREFORE, the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings.
1.1 "Affiliate" of any person or entity shall mean any other person or
entity which, directly or indirectly, controls, is controlled by or is under
common control with such person or entity.
1.2 "Common Stock Equivalents" means and includes all shares of the
Company's Common Stock issued and outstanding at the relevant time plus (a) all
shares of Common Stock that may be issued upon exercise of any options, warrants
and other rights of any kind that are then exercisable, and (b) all shares of
Common Stock that may be issued upon conversion or exchange of (i) any
convertible securities, including without limitation the Series I Preferred,
Series II Preferred and all other preferred stock and debt securities then
outstanding, which are by their terms then convertible into or exchangeable for
Common Stock, or (ii) any such convertible securities issuable upon exercise of
options, warrants or other rights, in each case that are then exercisable.
1.3 "Investment Return Date" means the first date on which the Purchasers
who acquire Convertible Notes (or shares of Series II Preferred issuable upon
conversion of Convertible Notes) prior to the date ninety (90) days after the
Purchase Date have Transferred (other than to Affiliates) shares of Common Stock
in transactions consummated after the date ninety (90) days after the Purchase
Date and yielding aggregate proceeds to such Purchasers at least equal to the
sum of (x) $8,000,000, plus (y) the amount necessary to provide an IRR on
amounts invested equal to twelve percent (12%), compounded quarterly, through
the date of such payment.
1.4 "IRR" means an annual internal rate of return, calculated on a daily
basis, but compounded quarterly.
1.5 "Management Stock" means the Common Stock Equivalents currently owned or
hereafter acquired by the Management Holders or their transferees who become
parties to this Agreement.
1.6 "Purchase Date" means June 16, 2000.
1.7 "Purchaser Stock" means the Common Stock Equivalents currently owned or
hereafter acquired by the Purchasers or their transferees who become parties to
this Agreement.
1.8 "Series II Preferred" means the Series II Convertible Preferred Stock,
$.01 par value per share, of the Company.
1.9 "Transfer" means (i) when used as a noun: any direct or indirect
transfer, sale, assignment, pledge, hypothecation, encumbrance or other
disposition and (ii) when used as a verb: to directly or indirectly transfer,
sell, assign, pledge, hypothecate, encumber, or otherwise dispose of.
2. Restrictions on Transfer.
2.1 Transfers in Accordance with this Agreement. Any attempt to
Transfer, or purported Transfer of, any shares of Management Stock in violation
of the terms of this Agreement shall be null and void and neither the Company
nor any transfer agent shall register upon its books any such Transfer. A copy
of this Agreement shall be filed with the Secretary of the Company and kept with
the records of the Company.
2.2 Agreement to be bound. No Management Holder shall Transfer any shares
of Management Stock (other than Transfers to the Company or Transfers in
accordance with (i) Sections 2.3 and 2.4 or (ii) Section 3) unless (x) the
certificates representing such shares of capital stock issued to the transferee
bear the legend provided in Section 5, and (y) the transferee (if not already a
party hereto) has executed and delivered to each other party hereto, as a
condition precedent to such Transfer, an instrument or instruments, reasonably
satisfactory to the Purchasers, confirming that the transferee agrees to be
bound by the terms of this Agreement as a Founder or Other Holder in the same
manner and capacity as such party's transferor and as if such transferee had
executed this Agreement on the date hereof.
2.3 Notice of Proposed Transfer. Prior to the Investment Return Date no
Management Holder may sell shares of Management Stock pursuant to Sections 2.3
and 2.4. After the Investment Return Date, if any Management Holder desires to
sell (a "Selling Holder"), and has received a bona fide offer in writing from
unaffiliated third parties to buy, shares of Management Stock, such Management
Holder shall provide the Company and each of the Purchasers with a written
notice (the "Sale Notice") of the proposed sale at least thirty (30) days prior
to the proposed date thereof. The Sale Notice shall contain each and every term
of the proposed sale, including, without limitation, a copy of the written offer
received, the name and address of the prospective purchaser, the purchase price
and terms of payment, the date and place of the proposed sale, and the number of
shares of Management Stock proposed to be sold by such Management Holder.
2.4 Right of Co-Sale.
(a) Upon receipt of the Sale Notice each Purchaser shall have the right
exercisable upon written notice to the (a) Selling Holder within ten (10) days
after receipt of the notice, to participate in such Transfer of shares of
Management Stock. Each Purchaser may notify the Selling Holder of its desire to
Transfer to the prospective purchaser (or at the Purchaser's option and demand,
to the Selling Holder, who hereby agrees to purchase in the event that a direct
sale from the Selling Holder to the prospective purchaser is consummated) all or
any part of the shares of stock of the Company which the Purchaser then holds on
the same terms as those on which the Selling Holder proposed to Transfer its
Management Stock to the prospective purchaser. The maximum number of shares
which a Purchaser shall be entitled to sell pursuant to this Section 2.4 with
respect to any single sale by a Selling Holder shall be equal to that number
obtained by multiplying (x) the total number of shares of Common Stock
Equivalents proposed to be sold in such Transfer, times (y) a fraction the
numerator of which is the total number of Common Stock Equivalents held by such
Purchaser, and the denominator of which is the total number of shares of Common
Stock Equivalents (including only the number of shares of Common Stock into
which (i) the Convertible Notes (including the Series II Preferred issuable upon
conversion of the Convertible Notes) and the shares of Series I Preferred have
been converted or are then convertible and (ii) other Common Stock Equivalents
held by such Selling Holder are then convertible). If the Purchaser elects to
sell to the prospective purchaser, then the Selling Holder shall assign as much
of its interest in the agreement of sale with the prospective purchaser as the
Purchaser shall be entitled to and shall accept hereunder.
(b) If, after expiration of the time periods described in Section 2.4(a),
the Purchasers do not send notice pursuant to subparagraph (a) above, then the
Selling Holder shall be free to sell the stock to such prospective purchaser,
but only at the time and on the same terms and conditions as outlined in the
Sale Notice sent to the Purchasers, and provided that in the event that the
Transfer of such Shares is not closed within sixty (60) days of the date of the
Sale Notice, they shall once again be subject to the right of co-sale provided
herein. Any proposed sale or Transfer on terms and conditions more favorable
than those described in the Sale Notice pursuant to Section 2.3, as well as any
subsequent proposed Transfer of any shares of Management Stock by a Management
Holder, shall again be subject to the co-sale rights of the Purchasers and shall
require compliance by the Management Holder with the procedures described in
this Section 2.4.
(c) The exercise or non-exercise of the rights of the Purchasers hereunder
to participate in one or more transfers by the Management Holders shall not
adversely affect their rights to participate in subsequent transfers of shares
of Management Stock subject to this Section 2.4
3. Transfers to Which Co-Sale Rights Do Not Apply.
3.1 Exception for Certain Family Gifts. Notwithstanding anything in
this Agreement to the contrary, Transfers of Management Stock by gift or other
transfer to immediate family members of such Management Holder or to trusts for
the exclusive benefit of family members of such Management Holder, or transfers
of Management Stock by will or intestate succession, shall be exempt from
Section 2.4 of this Agreement, provided that each transferee agrees in writing
to hold the Management Stock so transferred subject to all of the provisions of
this Agreement so that such transferee is bound by all provisions of this
Agreement and that there shall be no further transfer of such Management Stock,
except in accordance with the terms of this Agreement. Any transferee or other
recipient not so agreeing may not receive any shares of Management Stock. For
purposes of this Section 3.1, the term "immediate family" shall mean the spouse,
child, grandchild, father, mother, brother or sister of such Management Holder,
the adopted child or adopted grandchild of such Management Holder, or the spouse
of any child, adopted child, grandchild or adopted grandchild of such Management
Holder.
3.2 Other Permitted Transfers. Notwithstanding anything in this Agreement
to the contrary, Transfers of Management Stock pursuant to Rule 144 under the
Securities Act of 1933, as amended (a "Rule 144 Transaction"), (i) by Other
Holders at any time, and (ii) by Founders after the Investment Return Date,
respectively, shall be exempt from Sections 2.2., 2.3 and 2.4 of this Agreement;
provided that prior to engaging in a Rule 144 Transaction, such Management
Holder shall provide the Purchasers with a written notice (the "Rule 144
Notice") of such proposed Rule 144 Transaction including the number of shares of
Management Stock proposed to be sold in such Rule 144 Transaction and the then
current market price for such shares. Upon receipt of the Rule 144 Notice, each
Purchaser shall have the right exercisable upon written notice to such
Management Holder within three (3) business days after receipt of the Rule 144
Notice, to purchase such shares at such market price. If after the end of such
period, such Management Holder shall be free to sell such shares for which the
Purchasers have not provided notice in a Rule 144 Transaction within ten (10)
days of the Rule 144 Notice.
3.3 Reports. So that the Management Holders may comply with the terms of
this Section 3, the Purchasers shall provide to the Company within five (5)
business days after any Transfer (other than to Affiliates) of shares of Common
Stock, a report setting forth the number of shares so Transferred, the
consideration received therefor and a calculation of the IRR with respect to
such shares.
4. Board of Directors.
4.1 Nomination Rights. So long as $1,000,000 aggregate principal
amount of Convertible Notes remain outstanding, the Purchasers shall be entitled
to nominate one person to serve as a director of the Company. Each such nominee
shall hold his or her office as a director of the Company for such term as is
provided in the Company's charter documents or until his or her death,
resignation or removal from the board of directors of the Company or until his
or her successor has been duly elected and qualified in accordance with the
provisions of this Agreement, the Company's charter documents and applicable
law. If such a nominee ceases to serve as a director of the Company for any
reason during his or her term, a nominee for the vacancy resulting therefrom
will be designated by the Purchasers.
4.2 Election of Nominees. So long as the Company is in compliance with
this Section 4 and Section 7 of the Certificate of Designation of Series II
Preferred, each of the parties hereto shall vote all Common Stock Equivalents
then held by such party in favor of the individuals nominated by the Purchasers
and individuals nominated by the Company for election to its Board of Directors
at the two annual meetings of shareholders immediately after the Purchase Date.
5. Restrictive Legend and Stop-Transfer Orders.
5.1 Legend. Each Management Holder understands and agrees that the
Company shall cause the legend set forth below, or a legend substantially
equivalent thereto, to be placed upon any certificate(s) evidencing ownership of
the Management Stock.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND MAY BE TRANSFERRED
ONLY IN COMPLIANCE WITH A SECURITYHOLDERS AGREEMENT DATED AS OF JUNE 16, 2000, A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
Such legend shall be removed upon consummation of a Transfer in accordance
with Section 2.4 or a Rule 144 Transaction.
5.2 Stop Transfer Instructions. Each Management Holder agrees, to
insure compliance with the restrictions referred to herein, that the Company
will issue appropriate "stop transfer" certificates or instructions and that, if
the Company transfers its own securities, it may make appropriate notations to
the same effect in its records.
6. Assignment of Rights. The rights to which a Purchaser is entitled
hereunder may be assigned or otherwise transferred by that Purchaser to one or
more "accredited investors" who hold Convertible Notes, shares of Series II
Preferred and/or shares of Common Stock issued on conversion of the Series II
Preferred; provided, however, that with respect to each such assignment or other
transfer, the Company shall be given written notice of the transfer, the
transferee shall agree in writing to be bound by the provisions of this
Agreement, and such transfer shall otherwise be effected in accordance with all
applicable securities laws and all other applicable agreements, if any, between
the Company and such Purchaser.
7. Automatic Termination. If not earlier terminated pursuant to Article
8.4, this Agreement shall terminate automatically upon the third anniversary of
the Investment Return Date or the redemption of all shares of Series II
Preferred in accordance with their terms.
8. Miscellaneous Provisions.
8.1 Notices. All notices and other communications required or
permitted hereunder shall be in writing (or in the form of a telecopy (confirmed
in writing) to be given only during the recipient's normal business hours unless
arrangements have otherwise been made to receive such notice by telecopy outside
of normal business hours) and shall be mailed by registered or certified mail,
postage prepaid, or otherwise delivered by hand, messenger, or telecopy (as
provided above) addressed (a) if to a Purchaser or Management Holder, at the
address for such Purchaser or Management Holder set forth on the signature pages
hereto or at such other address as such Purchaser or Management Holder shall
have furnished to the Company in writing, or (b) if to the Company, one copy
should be sent to its principal executive offices and addressed to the attention
of the Corporate Secretary or at such other address as the Company shall have
furnished in writing to the Purchasers.
8.2 Binding on Successors and Assigns. This Agreement, and the rights and
obligations of the parties hereunder, shall inure to the benefit of, and be
binding upon, their respective successors, permitted assigns and legal
representatives.
8.3 Severability. If one or more of the provisions of this Agreement
should, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, and such invalid, illegal or unenforceable
provision shall be enforced to the extent permissible.
8.4 Amendment. Any amendment, extension, modification or termination of
this Agreement shall be effective only with the written consent of (i) the
Company, (ii) Purchasers who hold not less than 50% of the Convertible Notes and
Series II Preferred than held by all Purchasers, voting together on the basis of
aggregate principal amount and liquidation preference and (iii) the holders of
more than 50% of the Management Stock. Any waiver by a party of its rights
hereunder shall be effective only if evidenced by a written instrument executed
by a duly authorized representative of such party. No such waiver shall require
consent of the Company, any Management Holder or any Purchaser, other than the
person making the waiver.
8.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida as applied to agreements among
Florida residents entered into and to be performed entirely within Florida.
8.6 Obligations of Company. The Company agrees to use its best efforts to
enforce and abide by the terms of this Agreement, to inform each Purchaser of
any breach hereof (to the extent the Company has knowledge thereof) and to
assist each Purchaser in the exercise of its rights hereunder.
8.7 Expenses. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
8.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
8.9 Facsimile Signatures. Any signature page delivered by a fax machine or
telecopy machine shall be binding to the same extent as an original signature
page, with regard to any agreement subject to the terms hereof or any amendment
thereto. Any party who delivers such a signature page agrees to later deliver
an original counterpart to any party which requests it.
8.10 Entire Agreement. This Agreement constitutes the entire understanding
and agreement of the parties with respect to the subject matter hereof and
supersedes any prior understandings and agreements with respect to such subject
matter.
8.11 Consent to Jurisdiction and Venue. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA, IN
EACH CASE LOCATED IN THE COUNTY OF NEW YORK, FOR ANY ACTION, PROCEEDING OR
INVESTIGATION IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY ("LITIGATION")
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN
SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR
DOCUMENT BY REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH IN THIS
AGREEMENT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT
AGAINST IT IN ANY SUCH COURT. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Agreement or the transactions contemplated hereby in the
courts of the State of New York or the United States of America, in each case
located in the County of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Litigation brought in any such court has been brought in an
inconvenient forum. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL
BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
THE COMPANY: MERIDIAN USA HOLDINGS, INC.
By: /s/ Mark Streisfeld
-----------------------
Name: Mark Streisfeld
Title: President
FOUNDERS: /s/ Paul M. Galant
-----------------------
Paul M. Galant
Address: 470 N.E. 25th Terrace
Boca Raton, FL 33431
/s/ Alan Posner
-------------------
Alan Posner
Address: 6786 Willow Wood Drive
Boca Raton, FL 33431
/s/ Mark Streisfeld
-----------------------
Mark Streisfeld
Address: 15848 Laurel Oak Circle
Delray Beach, FL 33484
OTHER HOLDERS: /s/ Joel Flig
-----------------
Joel Flig
Address: 425 Cedarhurst Avenue
Cedarhurst, NY 11516
/s/ Ronald Shapss
---------------------
Ronald Shapss
Address: 75 Montebello Road
Suffern, NY 10901
PURCHASERS: U.S. BANCORP INVESTMENTS, INC.
By: /s/ Jess M. Ravich
Name: Jess M. Ravich
Title: Chairman
Address: 11766 Wilshire Boulevard,
Suite 870
Los Angeles, CA 90025
Attention: General Counsel
Facsimile: (310) 312-5640