EXHIBIT 2 TO SCHEDULE 13D
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT, dated as of April 30, 1998 (the "Agreement"),
by and among Fuel-Tech N.V., a Netherlands Antilles limited liability company
(the "Company"), and the shareholders set forth on the signature page hereto
(each a "Shareholder", collectively, the "Shareholders").
WHEREAS, Fuel Tech, Inc., a Massachusetts corporation ("FTI") is
acquiring a 50% interest in Nalco Fuel Tech, a partnership ("NFT") (the
"Purchase"), pursuant to a Purchase Agreement, dated as of March 23, 1998, among
FTI, Nalco FT, Inc. ("Nalco FT") and Nalco Chemical Company, for the limited
purposes set forth therein (the "Purchase and Sale Agreement");
WHEREAS, pursuant to a Securities Purchase Agreement, dated as of March
23, 1998 (the "Securities Purchase Agreement"), the Company will issue certain
shares of Common Stock, par value $.01 of the Company ("FTNV Common Stock"), and
Warrants to purchase shares of FTNV Common Stock (the "FTNV Warrants") to the
Shareholders;
WHEREAS, each Shareholder will pledge the FTNV Common Stock and FTNV
Warrants as security for the benefit of Nalco FT and certain related parties
pursuant to a Xxxxxx Pledge Agreement, dated as of the date hereof, among the
Shareholders and Nalco FT (the "Pledge Agreement");
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the closing of the transaction(s) set forth in the Purchase and
Sale Agreement and the Securities Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound thereby, the parties hereto agree as follows:
1. Shares and Warrants Subject to Agreement. The provisions of this
Agreement shall apply to any and all shares of FTNV Common Stock and FTNV
Warrants (and shares of FTNV Common Stock issuable upon the exercise thereof)
issued to the Shareholders pursuant to the Securities Purchase Agreement.
2. Transfer Restrictions. Except pursuant to the terms of the Xxxxxx Pledge
Agreement (as defined in the Purchase and Sale Agreement), no Shareholder shall,
directly or indirectly, sell, distribute, transfer, assign, pledge, hypothecate
or otherwise dispose of or encumber (all of which acts shall be deemed included
in the term "transfer" as used in this Agreement) any shares of FTNV Common
Stock or FTNV Warrants, or
shares of FTNV Common Stock issuable upon the exercise thereof, or any interest
therein, unless:
(a) for so long as any Purchaser Obligations (as defined in the
Purchase and Sale Agreement) remain outstanding, such transfer of FTNV Common
Stock and/or FTNV Warrants does not and will not, immediately thereafter or
after the lapse of time, result in a Change of Control or a Purchaser Event of
Default (each as defined in the Purchase and Sale Agreement); and
(b) any transferee agrees to be bound by this Agreement as if named
as a Shareholder herein and executes a counterpart hereof and such further
documents as may be necessary to make it a party hereto; and
(c) such transfer of shares of FTNV Common Stock or FTNV Warrants
is made pursuant to either (i) an effective registration statement under the
Securities Act of 1933, as amended, and any applicable state securities laws, or
(ii) an available exemption from the registration requirements of the Securities
Act of 1933 and applicable state securities laws.
Any transferee who receives shares of FTNV Common Stock and/or FTNV
Warrants pursuant to and in accordance with this Section 2 is a "Permitted
Transferee" who shall be deemed a Shareholder for all purposes of this
Agreement. Any purported transfer of shares or FTNV Common Stock and/or FTNV
Warrants in violation of this Agreement shall be null and void, and the Company
shall refuse to recognize any such transfer for any purpose and shall not
reflect in its records any change in ownership of shares or FTNV Common Stock
and/or FTNV Warrants pursuant to such purported transfer.
3. Corporate Governance.
3.1 Board of Directors of FTNV.
(a) The Company hereby agrees with the Shareholders that during the
Corporate Governance Term (as defined below), the Board of Directors of the
Company shall consist of eight directors, of whom two shall be outside directors
(i.e., neither an officer nor employee of the Company) and one shall be a
Netherlands Antilles representative director. During such period, the
Shareholders and directors of the Company shall be entitled to nominate persons
to serve as directors at each meeting of shareholders of the Company for the
election of directors of the Company as follows:
(i) the Shareholders shall be entitled to nominate three
persons to serve as directors of the Company, one of whom shall be an outside
director;
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(ii) the Shareholders and the directors of the Company shall
nominate Tarma Trust Company N.V., or another mutually acceptable Netherlands
Antilles person; and
(iii) (x) for the first meeting of shareholders of the Company
on the date hereof at which the election of directors is on the agenda, those
directors of the Company who were directors of the Company immediately prior to
the closing of the Securities Purchase Agreement shall nominate four directors,
one of whom shall be an outside director (collectively, the "Company-nominated
Directors"), and (y) for all subsequent meetings of shareholders at which the
election of directors is on the agenda, the Company-nominated Directors (or
their successors pursuant to this paragraph) shall nominate four directors, one
of whom shall be an outside director, as well as a sufficient number of persons
to serve as directors in respect of any positions for which the Shareholders
have not nominated persons to serve as directors pursuant to Section 3(a)(i) and
(ii) above or Section 3(c) below.
(b) At each meeting of shareholders at which the election of
directors is on the agenda, the Company shall recommend to shareholders the
election of the designees nominated pursuant to Section 3(a)(i)-(iii) above.
(c) Each director nominated pursuant to Section 3(a)(i)-(iii) who
is elected to the Company's board of directors shall hold his office until his
death or resignation or until his successor shall have been duly elected and
qualified. If any designee of the Shareholders or the Company-nominated
Directors (or, in the case of Section 3(a)(ii), by mutual agreement) shall cease
to serve as a director of the Company for any reason, the vacancy resulting
thereby shall be filled by the Shareholders, the Company-nominated Directors or
by mutual agreement, respectively, in accordance with the provisions of Section
3(a)(i)-(iii).
(d) "Corporate Governance Term" shall mean (i) during the period ending on
the fourth anniversary (the "Fourth Anniversary") of the closing of the
Securities Purchase Agreement, for so long as the Shareholders own in the
aggregate at least 50% of the shares of FTNV Common Stock acquired pursuant to
the Securities Purchase Agreement and (ii) during the period following the
Fourth Anniversary and ending on the tenth anniversary of the closing of the
Securities Purchase Agreement, for so long as the Shareholders own in the
aggregate at least 10% of the then outstanding shares of FTNV Common Stock. For
purposes of this Agreement, shares of FTNV Common Stock "owned" by a Shareholder
shall not include shares obtainable pursuant to the exercise of the FTNV
Warrants or pursuant to the exercise of any other option held by such
Shareholder.
3.2 Board of Directors of FTI. For so long as the Purchaser Obligations
remain outstanding, the Company shall elect persons nominated by the
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Shareholders to act as directors of FTI to fill at least 50% of the positions on
FTI's board of directors.
3.3 Actions of the Shareholders. (a) Without either (a) the prior
approval of the Board of Directors of the Company or (b) the prior written
consent of all directors of FTI, each of the Shareholders hereby agrees not to
take any action or cause any person or entity to take any action, that would
lead to any of the following: (i) any amendment to FTI's articles of
organization or bylaws; or (ii) any amendment to, or waiver on the Company's or
FTI's behalf under the Purchaser Note, the Purchase and Sale Agreement or
Management Services Agreement.
(b) During the Corporate Governance Term, at each meeting of
shareholders at which the election of directors is on the agenda, each
Shareholder agrees to vote all of the shares of FTNV Common Stock held of record
by him or her IN FAVOR OF those directors nominated pursuant to Section
3.l(a)(ii) and above.
4. Stock Certificate Legend.
A copy of this Agreement shall be filed with the Secretary of the
Company and kept with the records and minutes of the Company. Each certificate
representing shares of FTNV Common Stock owned by the Shareholders and their
Permitted Transferees (unless registered under the Securities Act and any
applicable state securities laws and/or no longer subject to the terms of the
Pledge Agreement and/or this Agreement) shall be stamped or imprinted with a
legend (in addition to any securities law legend) in the following form:
"THESE SECURITIES ARE SUBJECT TO, AND THE TRANSFER OF
THESE SECURITIES ARE RESTRICTED BY, THE TERMS OF A
PLEDGE AGREEMENT AND A SHAREHOLDERS AGREEMENT, COPIES
OF WHICH ARE AVAILABLE FROM THE COMPANY UPON REQUEST."
5. Covenants of the Shareholders.
(a) Confidential Information. Shareholders acknowledge and agree that they
may receive during the term of this Agreement information from FTNV and its
subsidiaries, affiliates and investees that is non-public, confidential or
proprietary in nature (the "Confidential Information"). Shareholders agree that
in no event shall they disclose, transfer, copy, duplicate or publish any
Confidential Information to any third party without the prior written consent,
which consent may be withheld in FTNV's sole discretion. Shareholders further
agree that they shall not utilize any Confidential Information for any purpose
whatsoever other than for the purpose of performing their obligations under this
Agreement. Confidential Information does not include information which (i) was
or becomes generally available to the public other than as a result of an act or
omission in violation of this Section 5(a) by Shareholders, (ii) was or
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becomes available to Shareholders on a nonconfidential basis from a source other
than the originating party, or (iii) was already known to Shareholders at the
time of receipt thereof without legal restriction to the confidentiality
thereof.
(b) Noncompetition. (i) Any Shareholder who holds a position as a
director of FTNV or FTI during the term of this Agreement (a "Shareholder
Director") agrees that, during the term that such Shareholder is a Shareholder
Director and for a period of two years thereafter (the "Non-Compete Period"),
such Shareholder Director will not, directly or indirectly: (A) engage in, or
control, invest in, provide material advice or assistance to, manage, benefit
from exert material influence upon any person or entity that engages in
manufacturing, licensing or sale anywhere in the world of (i) any chemical or
non-chemical process, system, technology or product that removes, or prevents
the formation of, oxides of nitrogen and sulfur or particulates from a
stationary combustion unit, (ii) any chemical process for the treatment of a
combustor used to prevent fireside corrosion, fouling or stagging (known under
the name "Fuel Chem" in the case of the Joint Venture), (iii) any computer
modeling or software development related to the foregoing businesses, or (iv)
any use of Urea SCR NOx reduction for mobile applications (the "Competitive
Activity"); or (B) induce, attempt or persuade any employee of FTNV, FTI, the
Joint Venture Entities or the Wholly-Owned Subsidiaries to terminate his or her
employment relationship in order to enter into competitive employment. (ii)
Without limiting the right of FTNV to pursue all other legal and equitable
remedies available in the event of a violation by the Shareholder Directors of
covenants contained in this Section 5(b), it is expressly agreed that remedies
other than injunctive or other equitable relief cannot fully compensate FTNV for
such a violation and that FTNV shall be entitled to injunctive or other
equitable relief to prevent any such violation or continuing violation thereof.
(c) Shareholders agree that during the period ending on the third
anniversary of the closing of the Securities Purchase Agreement, they will not
themselves or in concert with any other person or group purchase any additional
securities of the Company (other than the shares of FTNV Common Stock and FTNV
Warrants (and shares of FTNV Common Stock issuable upon the exercise thereof)
issued to the Shareholders pursuant to the Securities Purchase Agreement) which
in themselves or in combination with transactions by other parties would tend to
or have the effect of imposing a limitation on the ability of FTI to deduct its
net loss carry forwards for U.S. income tax purposes.
6. Miscellaneous Provisions.
(a) Notices. Any notices required hereunder shall be sent by certified
or registered mail, and shall be addressed to the address of the Company's
corporate headquarters in the case of any notice to the Company, and until
changed by
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notice to the Company, to the Shareholders at c/o American Xxxxxx Corporation,
Financial Centre, 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, XX 00000.
(b) Amendments and Waivers. The provisions of this Agreement may be
amended and the Company may take action herein prohibited, or omit to perform
any act herein required to be performed by it, if the Company has obtained the
written consent of the Shareholders.
(c) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of, in the case of the Company, its successors, assigns and
transferees and, in the case of the Shareholders, their Permitted Transferees.
Except as expressly provided herein, the rights and obligations of the
Shareholders may not be transferred.
(d) Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the laws of the State
of Connecticut.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered to be an original instrument and
to be effective as of the date first written above.
(f) Severability. In the event any one or more of the provisions of
this Agreement shall for any reason be held invalid, illegal or unenforceable,
the remaining provisions of this Agreement shall be unimpaired, and the invalid,
illegal or unenforceable provisions shall be replaced by a mutually acceptable
valid, legal and enforceable provision, which comes closest to the intention of
the parties underlying the invalid, illegal or unenforceable provision.
(g) Specific Performance. The parties hereto acknowledge that there would
be no adequate remedy at law if any party fails to perform any of its
obligations hereunder, and accordingly agree that each party, in addition to any
other remedy to which it may be entitled at law or in equity, shall be entitled
to injunctive relief, including specific performance, to enforce such
obligations without the posting of any bond, and, if any action should be
brought in equity to enforce any of the provision of this Agreement, none of the
parties hereto shall raise the defense that there is an adequate remedy at law.
(h) Insurance. The Company will use its best efforts to maintain,
without any gaps or lapses in coverage, directors' and officers' liability
insurance with terms and conditions no less favorable than those in existence on
the date hereof.
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(i) Term. The term of this Agreement shall commence on the date first
set forth above and terminate on the later of (i) the satisfaction in full of
the Purchaser Obligations or (ii) the lapsing of the Corporate Governance Term.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
FUEL-TECH N.V.
/s/
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Name:
Title:
PURCHASERS:
/s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx
/s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
/s/ XXXXX X. XXXXXXXX
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Xxxxx X. Xxxxxxxx
/s/ XXX X. XXXXXXX
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Xxx X. Xxxxxxx
/s/ J. XXXXXXX XXXXX
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J. Xxxxxxx Xxxxx
/s/ XXXXXX X. XXXXXXXXX
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Xxxxxx X. Xxxxxxxxx
/s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx
/s/ XXXXXXX X. XXXXXXX
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Xxxxxxx X. Xxxxxxx
/s/ XXXXX X. XXXXXXXX
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Xxxxx X. Xxxxxxxx
/s/ GENEVE X. XXXXXXXXX
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Geneve X. Xxxxxxxxx
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