EXHIBIT 2
FORM OF STOCKHOLDERS AGREEMENT
This Stockholders' Agreement (this "Agreement") dated as of September
12, 2001, by and among NTS INVESTORS, LLC, a Delaware limited liability company
("NTSINV"), XXXXXX, INC., a Delaware corporation (the "Company"), XXXX X.
XXXXXX, an individual, XXXXX XXXXXXX, an individual, and XXXXXX X. XXXXXXX, an
individual. Each of the parties hereto (other than the Company) and each other
person who shall hereafter become a party or agree to become a party or will be
bound by the terms of this Agreement is sometimes herein referred to
individually as a "Stockholder" and all of such parties are sometimes
collectively herein referred to as "Stockholders," and Xxxx X. Xxxxxx, Xxxxx
Xxxxxxx and Xxxxxx X. Xxxxxxx shall sometimes be collectively referred to as the
"NTS Designees".
RECITALS:
WHEREAS, NTSINV, pursuant to the terms of a Secured Note Agreement (the
"Note") dated January 9, 2001 by and among NTSINV and Xxxxxx Traffic Systems,
Inc., a Delaware corporation ("NTS"), agreed to invest up to $8,000,000 in NTS
subject to, among other things, the consummation of a merger between NTS and the
Company (the "Merger"); and
WHEREAS, in contemplation of the consummation of the Merger; and
WHEREAS, in accordance with paragraph 21(c) of the Note, the parties
hereto deem it to be in their best interests and in the best interests of the
Company to provide for consistent and uniform management and governance of the
Company and desire to enter into this Agreement in order to effectuate such
purposes.
NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
4.
DEFINITIONS
4.1 Defined Terms. As used herein, the terms below shall have the
following meanings:
"Affiliates" shall mean with respect to a Person, any other
Person controlling, controlled by or under common control with, or the members,
parents, spouse, lineal descendants or beneficiaries of, such Person.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Common Stock" shall mean the common stock of the Company.
"Control" shall mean, with respect to any Person, the power to
direct the management and policies of such person, directly or indirectly, by or
through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other Persons by or through stock ownership, agency or otherwise.
"Effective Date" shall mean the effective date of the Merger.
"Person" shall mean an individual, partnership, limited
liability company, joint venture, corporation, trust or unincorporated
organization.
5.
BOARD OF DIRECTORS
5.1 Designation.
(a) From and after the Effective Date, as long as NTSINV and its
Affiliates own at least 25% of the then outstanding Common Stock,
NTSINV shall be entitled to designate one-third (1/3) of the
members of the Board of Directors. For example, in the event the
Board of Directors shall consist of six (6) members, NTSINV shall
be entitled to designate two (2) directors, or in the event the
Board of Directors shall consist of nine (9) members, NTSINV shall
be entitled to designate three (3) directors.
(b) From and after the Effective Date, in the event that NTSINV and
its Affiliates own less than 25% of the then outstanding Common
Stock, but more than 15% of the then outstanding Common Stock,
NTSINV shall be entitled to designate two-ninths (2/9) of the
members of the Board of Directors. For example, in the event the
Board of Directors shall consist of six (6) members, NTSINV shall
be entitled to designate two (2) directors, or in the event the
Board of Directors shall consist of nine (9) members, NTSINV shall
be entitled to designate two (2) directors.
(c) From and after the Effective Date, in the event that NTSINV and
its Affiliates own less than 15% of the then outstanding Common
Stock, but more than 5% of the then outstanding Common Stock, it
shall have the power to designate one-ninth (1/9) of the members
of the Board of Directors. For example, in the event the Board of
Directors shall consist of six (6) members, NTSINV shall be
entitled to designate one (1) director, or in the event the Board
of Directors shall consist of nine (9) members, NTSINV shall be
entitled to designate one (1) director.
(d) From and after the Effective Date, as long as Xxxx X. Xxxxxx and
his Affiliates own at least 90% of the aggregate number of shares
of Common Stock to be issued to Xxxx X. Xxxxxx pursuant to the
Merger (after giving effect to any recapitalization,
reclassification, stock split or stock dividend that may occur
after the Effective Date), he shall be entitled to designate one
(1) of the members of the Board of Directors in the event that the
Board of Directors shall consist of nine (9) members.
(e) From and after the Effective Date, as long as Xxxxx Xxxxxxx and
his Affiliates own at least 90% of the aggregate number of shares
of Common Stock to be issued to Xxxxx Xxxxxxx pursuant to the
Merger (after giving effect to any recapitalization,
reclassification, stock split or stock dividend that may occur
after the Effective Date), he shall be entitled to designate one
(1) of the members of the Board of Directors in the event that the
Board of Directors shall consist of nine (9) members.
(f) From and after the Effective Date, as long as Xxxxxx X. Xxxxxxx
and his Affiliates own at least 90% of the aggregate number of
shares of Common Stock to be issued to Xxxxxx X. Xxxxxxx pursuant
to the Merger (after giving effect to any recapitalization,
reclassification, stock split or stock dividend that may occur
after the Effective Date), he shall be entitled to designate one
(1) of the members of the Board of Directors in the event that the
Board of Directors shall consist of nine (9) members.
(g) If the size of the Board of Directors is enlarged beyond nine (9)
members, the parties hereto agree that NTSINV and each of the NTS
Designees shall be given the right to designate an additional
number of directors proportionate to the number of directors
previously designated by NTSINV and each of the NTS Designees.
(h) The parties hereto hereby acknowledge the existence of the right
granted to Wand/Xxxxxx Investments L.P. ("Wand") pursuant to the
Securities Purchase Agreement, dated as of March 7, 1996, to
propose two (2) candidates for election to the Board of Directors.
Notwithstanding the foregoing, on June 14, 2001, the Company
received a waiver from Wand of such right with respect to one (1)
candidate for 2001.
(i) The parties hereto hereby acknowledge the existence of the right
granted to Transaction Systems Architects, Inc. ("TSAI") pursuant
to the Securities Purchase Agreement, dated as of April 28, 1998,
to propose one (1) candidate for election to the Board of
Directors. Notwithstanding the foregoing, on May 29, 2001, the
Company received a waiver from TSAI of such right with respect to
2001.
5.2 Removal. Any director designated and elected pursuant to 2.1
hereof may only be removed by the Board of Directors for cause or
at the written request of the designating party (with or without
cause) received by the Board of Directors. In such event or in the
event that any Person for any reason ceases to serve as a member
of the Board of Directors during such director's term of office,
the resulting vacancy on the Board of Directors shall be filled by
an individual recommended by either NTSINV or by the applicable
NTS Designee, as applicable, subject to the approval of the Board
of Directors consistent with its fiduciary duties to the Company's
Stockholders.
5.3 Covenant to Vote. Each Stockholder hereby agrees to vote all
shares of Common Stock owned or held of record by such Stockholder
at all annual or special meetings in favor of, or to take all
actions by written consent in lieu of such a meeting, necessary to
ensure (i) the election as members of the Board of Directors of
those individuals so designated by NTSINV and each of the NTS
Designees in accordance with and to otherwise effect the intent
of, this Article II and (ii) that the Company maintains a nine (9)
member Board of Directors. In addition, each Stockholder agrees to
vote the shares of Common Stock owned or held of record by such
Stockholder or over which such Stockholder has voting control upon
any other matters arising under this Agreement submitted to the
vote of the Stockholders in a manner so as to implement the terms
of this Agreement.
5.4 Representation on the Nominating Committee. From and after the
Effective Date, as long as (a) NTSINV owns at least 25% of the
then outstanding Common Stock and (b) Xxxx X. Xxxxxx shall remain
as a member of the Board of Directors, Xxxx X. Xxxxxx in his
capacity as a member of the Board of Directors will recommend to
the Board of Directors that one of the directors designated by
NTSINV shall serve as the Chairman of the Nominating Committee of
the Company.
6.
MISCELLANEOUS
6.1 Notices. All communications under this Agreement shall be in
writing and shall be delivered by hand or fax mail or by overnight
courier or by registered or certified mail, postage prepaid:
(i) if to the Company, to:
Xxxxxx, Inc.
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Mr. Xxxxx Xxx
Facsimile: (000) 000-0000
With a copy to:
Xxxx Marks & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
or at such other address or facsimile number as it may have furnished
in writing to NTSINV;
(ii) if to NTSINV, to:
NTS Investors, LLC
0000 Xxxxxxx Xxxx Xxxx
0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn.: Xxxxx X. Xxxxx
Facsimile: (___) __________
With a copy to:
Weinstein, Boldt, Halhide & Camel
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxx X. Camel, Esq.
Facsimile: (000) 000-0000
(iii) if to a NTS Designee, to the address or facsimile
number set forth beneath such director's name on the signature page hereto.
or at such other address or facsimile number as may have been furnished to the
Company in writing.
(iv) Any notice so addressed shall be deemed to be given if delivered
by hand or fax mail (with confirmation of transmission) on the date of such
delivery or mailed by courier when received, if mailed by registered or
certified mail, when received.
6.2 Term.
(a) Unless terminated as provided in the applicable Article or Section
of this Agreement, this Agreement shall terminate upon the first
to occur:
(i) four (4) years after the Effective Date; or
(ii) the date upon which NTSINV and its Affiliates own less than 5% of
the then outstanding Common Stock.
(b) Notwithstanding the foregoing, this Agreement shall in any event
terminate with respect to any Stockholder when such Stockholder
and/or his Affiliates no longer own(s) any shares of the Common
Stock.
6.3 Governing Law. This Agreement shall be governed by and construed
in accordance with the terms of the laws of the state of Delaware
without regard to principles of conflicts of laws.
6.4 Headings. Headings in this Agreement are inserted herein for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
6.5 Entire Agreement; Amendment and Waiver. This Agreement constitutes
the entire understanding of the parties hereto and supersedes all
prior understandings among such parties with respect to the
subject matter herein. This Agreement may be amended and the
observance of any term of this Agreement may be waived with (and
only with) the written consent of each of the parties hereto.
6.6 Severability. In the event any part or parts of this Agreement
shall be held illegal or unenforceable by any court or
administrative body of competent jurisdiction, such determination
shall not affect the remaining provisions of this Agreement which
shall remain in full force and effect.
6.7 Counterparts; Facsimile Signatures. This Agreement may be executed
in one or more counterparts, each of which will be deemed an
original and all of which together shall be considered one and the
same Agreement. Delivery of an executed counterpart of this
Agreement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart therein.
[Signature page follows.]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth above.
XXXXXX, INC.
By:
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Name:
Title:
NTS INVESTORS, LLC
By:
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Name: Xxxxx Xxxxx, Manager
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Name: Xxxx X. Xxxxxx
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Address:
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Name: Xxxxx Xxxxxxx
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Address:
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Name: Xxxxxx X. Xxxxxxx
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Address:
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