1
EXHIBIT 10.18
SHAREHOLDERS' AGREEMENT
2
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (this "Agreement") dated as of July 27th,
2000, is entered into by and among GMP|Wireless Medicine, Inc., a Delaware
corporation (the "Company"), GMP|Companies, Inc., a Delaware corporation
("GMP"), and Motorola, Inc., a Delaware corporation ("Motorola")(GMP and
Motorola are hereinafter sometimes referred to individually as a "Shareholder"
and collectively as the "Shareholders"), as amended from time to time to add
such other person(s) who may hereafter become a party to this Agreement.
RECITALS
A. As provided for in the Amended and Restated License and
Cross-License Agreement dated this even date between the Company and Motorola
(the "License Agreement"), the Company will issue to Motorola an aggregate of
One Million Five Hundred Thousand (1,500,000) shares of the Company's Class B
Common Stock, par value $0.001 per share (the "Class B Common Stock"), pursuant
to the terms and conditions of the Stock Acquisition Agreement of even date
herewith and as a part of the transactions between the Company and Motorola
described in the License Agreement.
B. As provided for in the License Agreement, the Company will
issue and sell to GMP an aggregate of Eight Million Five Hundred Thousand
(8,500,000) shares of the Company's Class A Common Stock, par value $0.001 per
share (the "Class A Common Stock" and, together with the Class B Common Stock,
the "Common Stock") pursuant to the terms and conditions of the Stock Purchase
Agreement between the Company and GMP of even date herewith.
C. As provided in the License Agreement, Motorola will also be
granted certain options to purchase shares of common stock of GMP from GMP and
an option to purchase certain shares of the Class A Common Stock from GMP.
D. The Shareholders and the Company agree to provide herein for
the options described above and agree that it is in their mutual best interest
and in the best interest of the Company to provide certain rights, obligations
and restrictions with respect to the Common Stock now or hereafter owned by the
Shareholders and any other capital stock of the Company or securities
convertible into, exchangeable for or having rights to purchase capital stock of
the Company (such capital stock, securities and Common Stock are hereinafter
referred to collectively as "Stock").
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements herein contained, and other valuable consideration, the receipt,
adequacy and sufficiency whereof are hereby acknowledged, the parties hereto,
intending to be legally bound, do hereby covenant and agree as follows:
1
3
ARTICLE I
Restrictions on Transfer/Rights of First Refusal
1.1 Restrictions on Transfer. Except as otherwise provided by
Section 1.6, no Shareholder (including transferees of Shareholders) shall
transfer any Stock, or any interest therein, whether by operation of law or
otherwise, except in accordance with all of the provisions of this Agreement. As
used in this Agreement, the term "transfer" shall include any sale, pledge,
gift, assignment or other disposition of shares of Stock.
1.2 First Offer. If a Shareholder (the "Selling Shareholder")
desires to transfer any or all of such Shareholder's Stock (the "Offered
Stock"), such Shareholder shall first give written notice (a "Transfer Notice")
thereof to the Company and the other Shareholders, identifying the proposed
transferee, the number of shares sought to be transferred, the proposed purchase
price (the "Offered Price"), if applicable, the terms of the proposed
transaction including the proposed transaction date and a copy of any written
offer or other writing setting forth the terms and conditions of the proposed
transaction. Such Transfer Notice shall constitute an irrevocable offer by the
Selling Shareholder to sell all of the Offered Stock to the other Shareholders
at the Offered Price and upon the same terms and conditions as the Selling
Shareholder is willing to sell the Offered Stock to the proposed transferee;
provided, however, that without the prior written consent of the other
Shareholders (which consent shall not be unreasonably withheld), all transfers
pursuant to this Article I shall be solely for cash. Once given, a Transfer
Notice may not be modified or amended except with the written consent of the
Company and the Shareholders (or their Permitted Transferees (as defined in
Section 1.6 below)) holding at least two-thirds of the Common Stock of the
Company. Within the twenty (20) day period following the giving of the Transfer
Notice (the "First Offer Period"), the other Shareholders may elect, by giving
written notice of such election to the Selling Shareholder and the Company, to
purchase all but not less than all of the Offered Stock. If more than one of the
Shareholders makes such election, each such electing Shareholder shall purchase
its pro rata share based upon the number of shares of Common Stock held by it at
the time of the election. Any modification or amendment of a Transfer Notice
will be deemed a new Transfer Notice with respect to the proposed transfer and
will restart the First Offer Period.
1.3 Second Offer. If the other Shareholders do not elect to
purchase all of the Offered Stock within the First Offer Period, the Offered
Stock shall then be offered by the Selling Shareholder to the Company for a
period of ten (10) days from the end of the First Offer Period (the "Second
Offer Period"). The Company shall have the right to purchase all, but not less
than all, of the Offered Stock upon the same terms and conditions as set forth
in the Transfer Notice.
1.4 If the other Shareholders and the Company do not elect to
purchase all (but not less than all) of the Offered Stock, the Selling
Shareholder shall be free to dispose of all of the Offered Stock within ninety
(90) days of the end of the Second Offer Period to the original proposed
transferee, at a price not lower than the Offered Price, and upon the terms
stipulated in the Transfer Notice in all material respects; provided, however,
that any such sale shall be subject to participation by the Shareholders
pursuant to the provisions of Section 2.1. However, as a condition to the
effectiveness of such transfer, said transferee shall thereupon become a party
to
2
4
this Agreement as a Shareholder and, pursuant to Section 6.13, shall confirm
such fact by executing a counterpart of this Agreement. If such Offered Stock is
not so disposed of by the Selling Shareholder within such ninety (90) day
period, the Selling Shareholder shall continue to hold such Stock subject to all
of the terms and conditions of this Agreement and may not sell the Stock without
again complying with all of the provisions hereof. Any transferee of Offered
Stock as to which the right of first refusal set forth in this Article I has not
been exercised shall be referred to herein as follows: (i) if the Offered Stock
was transferred by GMP, a "GMP Transferee," and (ii) if the Offered Stock was
transferred by Motorola, a "Motorola Transferee."
1.5 Right of First Refusal. Subject to Section 5.2 and the last
clause of this sentence, the Shareholders are hereby given a right of first
refusal by the Company to purchase their respective pro rata portion of any
additional stock issued by the Company; provided, however, that the right of
first refusal granted in this Section 1.5 shall not apply to the issuance by the
Company of up to an aggregate of 500,000 shares of Common Stock (or options to
purchase such shares of Common Stock) (such number being subject to equitable
adjustment as provided by Section 6.10 hereof), issuable pursuant to any stock
option plan of the Company approved by the Board of Directors of the Company.
1.6 Certain Transfers Not Prohibited. Except as otherwise
expressly provided herein, the restrictions on dispositions of Stock contained
in this Agreement shall not be construed to prohibit the following transfers of
Stock ("Permitted Transfers"):
(a) an involuntary transfer by operation of law;
(b) transfers between Shareholders or by a Shareholder to
a subsidiary or parent of such Shareholder or to an
"affiliate" of such Shareholder (as such term is
defined in Rule 501(b) under the Securities Act of
1933, as amended (the "Securities Act");
(c) any transfer of Stock in accordance with Section 2.2
of this Agreement; and
(d) any transfer of Stock as part of a firm commitment
underwritten public offering of the Company's Common
Stock underwritten by a nationally recognized
full-service investment bank (a "Qualified Public
Offering").
Any and all Stock in the hands of any transferee pursuant to
subsections (a) and (b) of this Section 1.6 (each a "Permitted Transferee")
shall remain subject to this Agreement. Permitted Transferees under subsections
(a) and (b) of this Section 1.6 shall be deemed to be Shareholders for all
purposes of this Agreement as if they had executed and delivered this Agreement.
The rights to purchase Stock under Article I of this Agreement belong to the
Company and the Shareholders and are not transferable except that any
transferees of Stock under Section 1.6(b), with respect to the shares so
transferred, and any transferee of any Shareholder of not fewer than 500,000
shares of Stock (such number being subject to equitable adjustment as provided
by Section 6.10 hereof) shall also maintain the right to purchase pursuant to
this Article I.
3
5
1.7 Payment for Stock. All payments hereunder shall be made in
cash, by wire transfer of immediately available funds. To the extent that the
proposed consideration to be paid by any proposed transferee as described in a
Transfer Notice pursuant to Section 1.2 consists of property other than cash,
and the Company and the other Shareholders provide the requisite written consent
with respect to such non-cash consideration, the purchase price under Sections
1.2 and 1.3 of this Agreement shall be the fair market value of such non-cash
consideration.
1.8 Delivery of Stock and Documents. Upon the closing of a sale as
herein provided, the Selling Shareholder shall deliver to each purchaser in
exchange for payment of the purchase price: (a) the certificates representing
the Offered Stock purchased by such purchaser, endorsed for transfer and bearing
any necessary documentary stamps, and (b) such assignments, certificates of
authority, tax releases, consents to transfer, instruments and evidence of title
of the Selling Shareholder, and of its compliance with applicable state and
federal laws, as may be reasonably required by counsel for each such purchaser.
ARTICLE II
Co-Sale Rights
2.1 Tag Along Rights. (a) In the event any Selling Shareholder or
any Permitted Transferee of a Shareholder proposes to sell its Stock and the
Shareholders and the Company have not elected to purchase such Stock in
accordance with Section 1.2 or in a transaction which is not otherwise exempt
under Section 1.6, the Selling Shareholder shall have the right to sell to the
proposed transferee upon the terms and conditions set forth in the Transfer
Notice, subject to the right of the other Shareholders to participate in such
sale in accordance with this Section 2.1. Any Shareholder may elect to
participate in the contemplated transfer by delivering written notice to the
Selling Shareholder within five (5) days after the expiration of the Second
Offer Period. If any other Shareholders have elected to participate in such
transfer, the Selling Shareholder and such other Shareholders shall be entitled
to sell in the contemplated transfer, at the same price and on the same terms, a
number of shares of Stock equal to the product of (i) the quotient determined by
dividing the percentage of Stock owned by such Shareholder by the aggregate
percentage of Stock owned by all Shareholders participating in such sale and
(ii) the number of shares of Stock to be sold in the contemplated transfer.
For example, if the Transfer Notice contemplated a sale of 70,000
shares of Stock by the Selling Shareholder, and if the Selling Shareholder at
such time owned 60% of all of the Stock and if one other Shareholder elects to
participate and owns 20% of all of the Stock, the Selling Shareholder would be
entitled to sell 52,500 shares of stock (60% / 80% x 70,000 shares of Stock) and
the other Shareholder would be entitled to sell 17,500 shares of Stock (20% /
80% x 70,000 shares of Stock).
(b) Each Shareholder who elects to participate in a transfer
pursuant to this Article II shall effect its participation by promptly
delivering to the Selling Shareholder for delivery to the prospective purchaser
one or more certificates, properly endorsed for transfer, which represent the
Stock that such Shareholder elects to sell.
4
6
The stock certificate or certificates that the Shareholder delivers to
the Selling Shareholder pursuant to this section shall be transferred to the
prospective purchaser in consummation of the sale of the Stock pursuant to the
terms and conditions specified in the Transfer Notice, and the Selling
Shareholder shall concurrently therewith remit to each Shareholder that portion
of the sale proceeds to which such Shareholder is entitled by reason of its
participation in such sale. To the extent that any prospective purchaser or
purchasers prohibits such assignment or otherwise refuses to purchase shares or
other securities from a Shareholder exercising its right of co-sale hereunder,
the Selling Shareholder shall not sell any Stock to such prospective purchaser
or purchasers unless, simultaneously with such sale, such Selling Shareholder
shall purchase such shares or other securities from each Shareholder electing to
participate under this Section 2.1 on the same terms and conditions specified in
the Transfer Notice.
The exercise or non-exercise of the rights of the Shareholders
described in this Section 2.1 shall not adversely affect their rights to
participate in subsequent transfers of Stock subject to this section.
2.2 Obligation to Sell. Subject to the superceding rights in
Section 1.2, in the event the Company or any Shareholder(s) receive(s) a bona
fide written offer to purchase all or substantially all of the assets or all of
the outstanding Stock of the Company, regardless of the form of the proposed
transaction, at the written request of the Company or the selling Shareholder(s)
(the "Selling Party"), as the case may be, each Shareholder shall participate
pro rata in such sale and/or vote all of such Shareholder's shares of Stock in
favor of the transaction, provided that such sale is approved by at least 50.1%
of the outstanding shares of Stock, determined on an a fully diluted basis, held
by the Shareholders (other than the Selling Party). The Company or the Selling
Party, as the case may be, shall give to each Shareholder a notice (an
"Obligation to Sell Notice") containing a description of the material terms of
such proposed transaction including the name and address of the proposed
transferee, the consideration per share offered for such shares by the proposed
transferee, the payment terms and closing date, which shall be a date not less
than sixty (60) days after the giving of the Obligation to Sell Notice, and
including a copy of any written offer, letter of intent, term sheet or contract
of sale. All Shareholders shall be treated equally under this Section 2.2. It
shall be a condition of the obligation to sell under this Section 2.2 that all
facts and circumstances and all material aspects of any transaction under this
Section 2.2 shall be disclosed to all Shareholders.
ARTICLE III
Voting and Corporate Governance
3.1 Voting for Directors. The parties agree to vote their shares
of Stock or consent in writing in the manner necessary to produce the following
effect:
(a) the Board of Directors of the Company shall initially
consist of five (5) members;
5
7
(b) the Company agrees to cause, by action of its Board
of Directors, any committee thereof or otherwise, the
nomination for election as directors of the Company,
one nominee of Motorola, if, and only if, requested
by Motorola, and two nominees of GMP (each a
"Minority Nominee"); provided, however, that the
rights granted in this Section 3.1(b) shall terminate
with respect to a Shareholder when such Shareholder
or its Permitted Transferees under Section 1.6(b) no
longer is the owner of record of at least ten percent
(10%) of the issued and outstanding shares of Common
Stock on a fully diluted basis;
(c) each Shareholder agrees to take any and all actions,
including, but not limited to, voting (i) all shares
of Stock held of record by it or of which it is the
beneficial owner at the time of such vote or action
by written consent and (ii) all shares of Stock as to
which such Shareholder at the time of such vote or
action by written consent has voting control, in each
case, in favor of the election to the Board of
Directors of the Minority Nominees nominated in
accordance with Section 3.1(b) (each such director
hereinafter referred to as a "Minority Director");
(d) each Shareholder agrees to vote or act by written
consent with respect to or cause to be voted or acted
by written consent (i) all shares of Stock held of
record by it or of which it is the beneficial owner
at the time of such vote or action by written consent
and (ii) all shares of Stock as to which such
Shareholder at the time of such vote or action by
written consent has voting control, in each case, to
remove or cause the removal from office of any
Minority Director if the Shareholder that designated
such Minority Director requests such removal by
notice to the Shareholders;
(e) if at anytime during the term of this Agreement a
Minority Director ceases to serve on the Board of
Directors of the Company (whether by reason of death,
resignation, removal or otherwise), such vacancy
shall be filled by the Shareholders of the Company
and each Shareholder hereby agrees to vote or act by
written consent with respect to or cause to be voted
or acted upon by written consent (i) all shares of
Stock held of record by it or of which it is the
beneficial owner at the time of such vote or action
by written consent and (ii) all shares of Stock as to
which such Shareholder at the time of such vote or
action by written consent has voting control for the
vacancy resulting therefrom to be filled by an
individual designated by the Shareholder whose
Minority Director created such vacancy, in which case
such individual, notwithstanding Section 3.1(b),
shall be such Shareholders Minority Nominee; and
(f) each Shareholder shall vote its shares of Stock, and
shall take all other action necessary including,
without limitation, any action necessary to amend the
Certificate of Incorporation and the By-Laws, to
ensure that the
6
8
Certificate of Incorporation and the By-Laws
facilitate and do not at any time conflict with the
provisions of this Agreement.
Except as otherwise provided in this Section 3.1, all directors of the Company
shall be elected in the manner prescribed in the By-Laws.
3.2 Approval by the Board of Directors. The Board shall be
consulted on the Company's entry into or amendment of significant distribution,
licensing or other material agreements or contracts. The approval of (i) at
least 50.1% of the Board of Directors of the Company, and (ii) the approval of
the Minority Directors then in office, shall be required for the following:
(a) changes to the Company's approved stock option, ESOP
or comparable compensation plans in which common
share equivalents in excess of 5% of outstanding
Common Stock of the Company, on a fully diluted
basis, are granted or issued;
(b) any merger, consolidation or reorganization of the
Company involving any Shareholder or an affiliate
thereof; or
(c) any amendment or repeal of any of the provisions of
the Company's Certificate of Incorporation.
3.3 Board Meetings. The Board of Directors shall meet in
accordance with Section 3.5 of the Company's By-Laws. The Company shall
reimburse members of the Board of Directors for the customary and reasonable
expenses of attending the meetings of the Board of Directors.
3.4 Indemnification. The Company shall not amend the
indemnification provisions of the Company's Certificate of Incorporation or
By-Laws to eliminate or reduce the indemnification provided to all directors and
such provisions as so written shall be deemed to be a contract with each
director regarding his or her indemnification by the Company. The Company may
also enter into separate indemnification agreements with each director.
ARTICLE IV
Dividends
4.1 General. Subject to Section 4.2, Shareholders shall be
entitled to such dividends as may be declared from time to time by the Board of
Directors of the Company.
4.2 GMP Dividends. From and after such time as GMP and its
Permitted Transferees under Section 1.6(b) hold fifteen percent (15%) or less of
the issued and outstanding shares of Common Stock on a fully diluted basis,
Motorola shall use its best efforts to cause all directors to propose and vote
at meetings of the Board of Directors or in actions taken by written consent of
the Board of Directors in favor of distributing to GMP and its Permitted
Transferees under Section 1.6(b) quarterly cash distributions of the Company's
net earnings, computed in
7
9
accordance with generally accepted accounting principles consistently applied,
based on the then outstanding percentage ownership of the Company held by GMP
and its Permitted Transferees under Section 1.6(b).
ARTICLE V
Grant of Options
5.1 Option to Purchase Shares in GMP. GMP hereby grants to
Motorola an option to purchase Fifty Thousand (50,000) shares of the $0.001 par
value common stock of GMP (the "GMP Option"). The exercise price of GMP Option
shall be $18.00 per share, payable in cash at the time of exercise. The GMP
Option shall vest upon completion of an initial public offering by GMP of its
common stock ("IPO") and shall expire five (5) years after the effective date of
that initial public offering ("Expiration Date").
Exercise of the GMP Option shall be by written notice to GMP (the
"Exercise Notice"), which shall state the election to exercise the GMP Option,
the number of whole shares for which the GMP Option is being exercised and such
other customary representations and agreements as may be reasonably required by
GMP in order to comply with the exemptions from registration under the
Securities Act or other applicable state securities laws and the lock-up
agreements entered into by shareholders of GMP in connection with the IPO. The
Exercise Notice must be signed by Motorola and be delivered in person, by
certified or registered mail, return receipt requested, by confirmed facsimile
transmission, or by such other means as GMP may permit, to the President of GMP,
or other authorized representative of GMP, prior to the Expiration Date,
accompanied by (i) full payment (as evidenced by a check or by wire transfer) of
the aggregate exercise price for the number of shares of GMP stock specified in
the Exercise Notice and (ii) an executed copy of the representations and
agreements, if any, required by GMP as described above. The GMP Option shall be
deemed to be exercised upon receipt by GMP of the Exercise Notice, the aggregate
exercise price, and, if required, the other representations and agreements
required by GMP as described above.
5.2 Option to Purchase Shares in the Company. As used in this
Section 5.2, Section 5.3 below, Section 6.2 below and Section 6.15 below, the
term "GMP" shall include GMP, any Permitted Transferee of GMP and any GMP
Transferee, and the term "Motorola" shall include Motorola, any Permitted
Transferee of Motorola and any Motorola Transferee. GMP hereby grants to
Motorola an option to purchase from GMP a portion of the shares of the Common
Stock of the Company that GMP owns pursuant to the following schedule and terms
and conditions:
a. Subject to the provisions of Subsection (e) below,
beginning on the second (2nd) anniversary after the
Company receives its first regulatory approval from
both the U.S. Food and Drug Administration and the
Federal Communications Commission for the sale or use
of a Licensed Product (as defined in the License
Agreement) (the "Approval Date") and continuing for a
sixty-day period thereafter, Motorola may elect to
purchase from GMP an amount of Common Stock of the
Company that would increase
8
10
Motorola's equity stake in the Company up to a
maximum of fifty percent (50%) of the Company's
outstanding Common Stock. For purposes of this
subparagraph 5.2(a), outstanding Common Stock shall
not include: (i) any percentage of the Common Stock
of the Company that is outstanding due to the
election of Motorola and/or GMP not to exercise their
rights of first refusal as set forth in Section 1.5
above; and (ii) the percentage of Common Stock
outstanding resulting from any stock option approved
by the Board of Directors of the Company.
b. Subject to the provisions of Subsection (e) below, on
the earlier to occur of (i) Motorola's receipt of
written notice from the Company stating its intention
to sell all or substantially all of the assets or
capital stock of the Company (such notice to be
provided no later than forty-five (45) days prior to
the anticipated closing date of such transaction),
(ii) Motorola's receipt of written notice from the
Company stating its intention to file with the
Securities and Exchange Commission a registration
statement to initiate a Qualified Public Offering
(such notice to be provided no later than forty-five
(45) days prior to the initial filing of such
registration statement), or (iii) at any time between
the fifth (5th) and tenth (10th) anniversaries of the
Approval Date, Motorola may elect to purchase from
GMP an amount of the outstanding Common Stock of the
Company, that would increases Motorola's equity stake
in the Company to eighty five percent (85%) of the
Company's outstanding Common Stock. For purposes of
this subparagraph 5.2(b), outstanding Common Stock
shall not include: (i) any percentage of the Common
Stock of the Company that is outstanding due to the
election of Motorola and/or GMP not to exercise their
rights of first refusal as set forth in Section 1.5
above; and (ii) the percentage of Common Stock
outstanding resulting from any stock option approved
by the Board of Directors of the Company.
c. The exercise of the options described in Subsections
(a) and (b) above shall be made by Motorola within 15
days after receipt of the written notice given by the
Company, by giving GMP written notice of such
election as provided in Section 6.11 below. Subject
to the receipt of any regulatory approvals required
in connection with the purchase of the shares, the
closing of the purchase of the shares of Common Stock
of the Company shall occur on a date and at a place
specified by GMP, which date shall be no sooner than
twenty (20) days following the date that the Fair
Market Value (as defined in Section 5.3 below) is
agreed to by the parties or announced by the
independent appraisers.
d. In the event that Motorola exercises any of its
options described in Subsections (a) or (b) above,
Motorola shall, concurrently with the giving of the
notice described in Subsection (c) above, offer to
purchase a corresponding percentage of Common Stock
issued to any person under
9
11
any stock option grant approved by the Board of
Directors of the Company pursuant to the same terms
described above.
e. The options granted under Subsections (a) and (b)
above shall expire upon the consummation of a
Qualified Public Offering.
f. The purchase price of the Common Stock of the Company
to be purchased by Motorola under Sections 5(a), (b)
and (d) above shall be at a price equal to the
product of: (i) 105% of the Fair Market Value of the
Company (as defined below) at the time of the
exercise of such option; and (ii) the ratio that such
shares of Common Stock bear to the total outstanding
shares of Common Stock of the Company at the time of
the exercise of such option.
5.3 For purpose of this Article V, the "Fair Market Value" of the
Company shall be determined jointly by Motorola and GMP. If such parties are
unable to reach an agreement within thirty (30) days of Motorola providing
written notice that it intends to exercise its option under Section 5(a) or (b),
each party shall, at its own expense and within fifteen (15) days of the end of
such thirty (30) day period, hire an independent qualified valuation
professional of national standing in order to determine the Fair Market Value of
the Company. Such valuation professionals shall: (1) utilize the cost, market
and income approaches in order to determine Fair Market Value of the Company;
(2) be credentialed by the American Society of Appraisers as an "ASA" or be
licensed as a Certified Financial Analyst; (3) conduct the appraisal
simultaneously and in compliance with the Uniform Standards of Professional
Appraisal Practice ("USPAC"); (4) include a control premium or, in the
alternative, not reflect a minority discount, in determining Fair Market Value;
and (5) complete the valuation within seventy-five (75) days of their
appointment (or such other time period as may be mutually agreed to by Motorola
and GMP). Subject to the next paragraph, the Fair Market Value of the Company
shall be determined by taking the average of the two Fair Market Values
determined by each party's appraiser.
In the event that the difference between these two Fair Market Values
exceeds ten percent (10%) of the highest valuation, a third similarly qualified
independent valuation professional, selected by the two appraisers within
fifteen (15) days of the date the two appraisers submitted their reports, shall
be hired to determine a Fair Market Value within seventy-five (75) days (or such
other time period as may be mutually agreed to by Motorola and GMP), unless GMP
and Motorola otherwise agree to a Fair Market Value. This third valuation
professional shall likewise utilize the cost, market and income approaches and
conduct the appraisal in compliance with USPAC. GMP and Motorola agree to share
equally the costs and expenses incurred by the third valuation professional and
to execute and deliver such engagement letters as are reasonably requested.
The Fair Market Value of the Company shall be determined by taking the
average of the two closest of the three Fair Market Values.
5.4 Adjustments for Changes in Capital Structure. In the event of
any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in
10
12
the capital structure of GMP, appropriate adjustments shall be made in the
number, class and the exercise price of the shares subject to the option granted
to Motorola in Section 5.1.
ARTICLE VI
Miscellaneous Provisions
6.1 Information Rights. The Company shall furnish to Shareholders:
(i) audited annual and unaudited quarterly financial statements; (ii) monthly
summary financial statements within twenty-one (21) days of the end of each
month; and (iii) a copy of Company's proposed annual business plan at least 45
days prior to the beginning of Company's fiscal year. Shareholders shall be
entitled to inspect books, records and properties of the Company on reasonable
notice and during normal business hours.
6.2 Registration Rights.
a. Demand Rights. If any Shareholder or Shareholders
holding at least five percent (5%) of the outstanding
Common Stock of the Company request in writing
(specifying that the request is being made pursuant
to this Section 6.2(a)) that the Company file a
registration statement or similar document under the
Securities Act to effect the registration of at least
fifteen percent (15%) of the Common Stock held by all
Shareholders (or any lesser percentage if the
aggregate offering price to the public would be not
less than $7,500,000, net of underwriting discounts
and commissions), the Company will, within ten (10)
days of receiving such request, provide notice to all
Shareholders of such request and shall use its best
efforts to effect the registration (including,
without limitation, filing post-effective amendments,
appropriate qualifications under applicable blue sky
or other state securities laws and ensuring
compliance with the Securities Act) of all shares of
Common Stock that any Shareholder joining in such
request shall specify in a written request received
by the Company within fifteen (15) days following
notice by the Company of the proposed registration.
The Company shall not be obligated to effect more
than two (2) registrations under these demand right
provisions for either Motorola or GMP, and shall not
be obligated to effect a registration (i) during the
one hundred eighty (180) day period commencing with
the date of a Qualified Public Offering, or (ii) if
it delivers notice to the holders of the shares of
Common Stock that have requested inclusion in such
registration within forty-five (45) days of receiving
any registration request of its intent to initiate
such Qualified Public Offering within one hundred
eighty (180) days.
b. Company Registration. The Shareholders shall be
entitled to "piggyback" registration rights on all
registrations of the Company or on any demand
11
13
registrations of any other Shareholder.
Notwithstanding the foregoing, if the Board of
Directors of the Company determines, upon the advice
of the managing underwriter, that a limitation should
be imposed on the number of shares of Common Stock
which may be included in the registration statement
because, in its reasonable discretion, such
limitation is necessary to avoid a materially adverse
effect on the distribution or market for the Common
Stock, then the Company may exclude shares of Common
Stock pro rata among Shareholders seeking to include
shares of Common Stock, in proportion to the number
of shares of Common Stock owned by each such
Shareholder.
c. S-3 Rights. Shareholders shall be entitled to two (2)
demand registrations on Form S-3 per year if
available to the Company so long as the aggregate
price to the public of such registered offerings are
not less than $500,000.
d. Expenses. The Company shall bear registration
expenses (exclusive of underwriting discounts and
commissions) of all such demands, piggybacks and S-3
registrations.
e. Transfer of Rights. The registration rights shall
inure to the benefit of a Permitted Transferee of a
Shareholder who is deemed a Shareholder hereunder in
accordance with Section 6.13 below, provided the
Company is given written notice thereof.
f. Other Registration Rights.The Company shall not,
without the prior written consent of both the holders
of a majority of the Class A Common Stock and Class B
Common Stock, voting separately as a class, grant any
registration rights superior to or on parity with the
rights granted pursuant to this Section 6.2.
g. Standoff Provision. No Shareholder of the Company
will sell shares within one hundred eighty (180) days
of the effective date of a Qualified Public Offering
if all officers, and directors are similarly bound.
h. Other Provisions. Other provisions shall be entered
into with respect to registration rights as are
reasonable, including cross-indemnification, the
period of time in which the registration statement
shall be kept effective and underwriting
arrangements.
6.3 No Right of Employment. No Shareholder shall have any right of
employment or other benefits, or any right to be a Director or officer of the
Company, solely as a consequence of owning Stock in the Company. Each
Shareholder who is a Director or officer of the Company acknowledges that, if
the Board of Directors determines that salary or other compensation (other than
dividends) shall be paid to any Director or officer of the Company, the Company
shall be under no obligation to pay each other Director or officer a
proportionate share of such salary or compensation.
12
14
6.4 Company Designee. All rights granted to the Company by the
terms of this Agreement may be exercised by such person, persons, entity or
entities as the Board of Directors of the Company, in its sole discretion, shall
designate acting by vote or unanimous written consent.
6.5 Endorsement of Stock Certificates. All certificates
representing Stock owned by the Shareholders shall have conspicuously endorsed
thereon a legend substantially as follows:
"TRANSFER RESTRICTED
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RIGHTS AND CONDITIONS AND RESTRICTIONS UPON TRANSFER
PURSUANT TO A SHAREHOLDERS' AGREEMENT BY AND AMONG THE COMPANY
AND ITS SHAREHOLDERS. A COPY OF THE SHAREHOLDERS' AGREEMENT
MAY BE OBTAINED FROM THE COMPANY WITHOUT CHARGE UPON THE
WRITTEN REQUEST OF THE HOLDER HEREOF.
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY
NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SHARES UNDER
THAT ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS, IN
THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, AN
EXEMPTION FROM REGISTRATION THEREUNDER IS AVAILABLE."
6.6 Entire Agreement. This Agreement together with the other
documents referenced herein represent the complete agreements among the parties
hereto with respect to the transactions contemplated hereby and supersedes all
prior written or oral agreements and understandings including without limitation
the March 29, 2000 Letter of Intent.
6.7 Pronouns. Whenever the context of this Agreement permits, the
masculine gender shall include the feminine and neuter genders, and any
reference to the singular or plural shall be interchangeable with the other.
6.8 Separability. The invalidity or unenforceability of any one or
more provisions of this Agreement shall not affect the other provisions hereof,
and this Agreement shall be construed in all respects as if any such invalid or
unenforceable provisions were omitted.
6.9 Headings. The headings in this Agreement have been inserted
for convenience of reference only and shall not constitute a part of this
Agreement.
13
15
6.10 Adjustments. If there shall be any change in the Stock of the
Company through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, anti-dilution addition, combination or exchange of
shares, or the like (any such event being an "Adjustment"), all of the terms and
provisions of this Agreement shall apply to any new, additional or different
shares or securities issued as a result of such Adjustment and the price and
number of securities subject to the provisions hereof shall be adjusted
accordingly.
6.11 Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party to
whom notice is to be given, on the date of transmittal of services via telecopy
to the party to whom notice is to be given (with a confirming copy delivered
within 24 hours thereafter), or on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, or via a nationally recognized overnight courier
providing a receipt for delivery and properly addressed as set forth below.
For the Company: For GMP:
Xxxx Xxxxxxx, M.D., President Xxxxxxx Xxxxx, M.D.
GMP|Wireless Medicine, Inc. Executive Vice President
One East Broward Blvd., Suite 1701 GMP|Companies, Inc.
Xxxx Xxxxxxxxxx, XX 00000 Xxx Xxxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxx Xxxxxxxxxx XX 00000
For Motorola:
General Counsel
Motorola, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Any party may change its address for purposes of this paragraph by
giving notice of the new address to each of the other parties in the manner set
forth above.
6.12 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs,
representatives, successors and assigns.
6.13 Parties. Any person who acquires ownership of Stock (including
shares of Stock hereafter issued) and who is required to become a party to this
Agreement in accordance with the terms of this Agreement shall automatically
become a party to this Agreement, as a Shareholder, and shall confirm such fact
by executing, upon request of any of the parties hereto, a counterpart of this
Agreement.
6.14 Failure to Comply with the Provisions of this Agreement. In
addition to any other legal or equitable remedies which it or they may have, the
Company and the Shareholders may enforce their rights under any provision of
this Agreement by actions for specific performance (to
14
16
the extent permitted by law) and each party hereto acknowledges and agrees that
the parties hereto will be irreparably damaged in the event that this Agreement
is breached. Further, the Company may refuse to transfer on its books record
ownership of Stock that shall have been sold or transferred in violation of this
Agreement or to recognize any transferee as one of the Company's shareholders
for any purpose (including without limitation, for purposes of dividend and
voting rights) until all applicable provisions of this Agreement have been
complied with in full. All remedies provided by this Agreement are in addition
to other remedies provided by law.
6.15 Waiver, Amendment and Termination. This Agreement may not be
amended or modified, and no provision hereof may be waived, without the written
consent of each Shareholder holding at least five (5%) of the shares of Stock
(on a fully diluted basis). This Agreement (other than Section 6.2 which shall
survive until (i) all of the shares of Common Stock held by a Shareholder have
been either sold or registered under the Securities Act, or (ii) all of such
shares of Common Stock may be sold under Rule 144 of the Securities Act without
regard to the volume limitations contained therein) shall terminate with respect
to all shares of Stock upon the closing of (a) a Qualified Public Offering, or
(b) a sale of all or substantially all of the assets or capital stock of the
Company, or (c) the consummation of any transaction in accordance with the
provisions of Section 2.1 hereof which results in a Change in Control. For the
purposes of this Agreement, a "Change in Control" shall be deemed to have
occurred if (i) the Company merges or consolidates with another entity and is
not the surviving entity (other than a merger to change the state of
incorporation of the Company or any successor entity); (ii) the Company sells or
otherwise transfers all or substantially all of its assets; or (iii) more than
50% of the voting capital stock of the Company is transferred in a single
transaction or a series of related transactions, provided, however, that any
increase in Motorola's equity ownership to an amount in excess of 50% shall not
be deemed a Change in Control for purposes of this Agreement.
6.16 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall have the force and effect of an original and
all of which together shall constitute but one and the same document.
6.17 Governing Law. This Agreement is executed and delivered in the
State of Delaware, and this Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware for all purposes and in all
respects, without regard to the conflict of laws provisions of such state.
6.18 Dispute Resolution. If the parties should have a material
dispute arising out of or relating to this Agreement or the parties' respective
rights and duties hereunder, then the affected parties will resolve such dispute
in the following manner: (i) any party may at any time deliver to the other
affected party a written dispute notice setting forth a brief description of the
issue for which such notice initiates the dispute resolution mechanism
contemplated by this Section 6.18; (ii) during the forty-five (45) day period
following the delivery of the notice described in Section 6.18(i) above,
appropriate representatives of the affected parties will meet and seek to
resolve the disputed issue through negotiation; and (iii) if representatives of
the parties are unable to resolve the disputed issue through negotiation, then
within thirty (30) days after the period described in Section 6.18(ii) above,
the parties will refer the issue (to the exclusion of a court of law) to final
15
17
and binding arbitration in Wilmington, Delaware in accordance with the then
existing rules (the "Rules") of the American Arbitration Association ("AAA"),
and judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof; provided, however, that the law applicable to
any controversy shall be the law of the State of Delaware, regardless of
principles of conflicts of laws. In any arbitration pursuant to this Agreement,
(i) discovery shall be allowed and governed by the Delaware Code of Civil
Procedure and (ii) the award or decision shall be rendered by a majority of the
members of a Board of Arbitration consisting of three (3) members, one of whom
shall be appointed by each of the respective parties and the third of whom shall
be the chairman of the panel and shall be appointed by mutual agreement of said
two party-appointed arbitrators. In the event of failure of said two arbitrators
to agree within thirty (30) calendar days after the commencement of the
arbitration proceeding upon the appointment of the third arbitrator, the third
arbitrator shall be appointed by the AAA in accordance with the Rules. In the
event that either party shall fail to appoint an arbitrator within ten (10)
calendar days after the commencement of the arbitration proceedings, such
arbitrator and the third arbitrator shall be appointed by the AAA in accordance
with the Rules. Nothing set forth above shall be interpreted to prevent the
parties from agreeing in writing to submit any dispute to a single arbitrator in
lieu of a three (3) member Board of Arbitration. Upon the completion of the
selection of the Board of Arbitration (or if the parties agree otherwise in
writing, a single arbitrator), an award or decision shall be rendered within no
more than forty-five (45) days. Notwithstanding the foregoing, the request by
either party for preliminary or permanent injunctive relief, whether prohibitive
or mandatory, shall not be subject to arbitration and may be adjudicated only by
the courts of the State of Delaware or the U.S. District Courts in Delaware.
16
18
IN WITNESS WHEREOF, the Company and the Shareholders have executed this
Shareholders' Agreement as of the day and year first above written.
THE COMPANY: GMP:
GMP|Wireless Medicine, Inc. GMP|Companies, Inc.
By: By:
--------------------------------- ---------------------------------
Xxxx Xxxxxxx, M.D., President Xxxxxxx Xxxxx, M.D.,
Executive Vice President
One East Broward Blvd., Suite 1701 One East Broward Blvd., Suite 1701
Xxxx Xxxxxxxxxx, XX 00000 Xxxx Xxxxxxxxxx XX 00000
Facsimile: 000-000-0000 Facsimile: 000-000-0000
MOTOROLA:
Motorola, Inc.
By:
---------------------------------
Xxxxxxxx Xxxxx
Senior Vice President,
Assistant General Counsel,
and n Director of Patents,
Trademarks and Licensing
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile:
--------------------------
17
