AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
THIS AMENDED AND RESTATED SHAREHOLDERS AGREEMENT (this
"Agreement") is made and entered into as of October 11, 1999, by and among MERUS
PARTNERS, INC., an Oregon corporation ("Merus"), XXXXX X. XXXXXX ("CRK"), NET
VALUE HOLDINGS, INC., a Delaware corporation ("Net Value") and WEBMODAL, INC., a
Delaware corporation (the "Corporation") and amends and restates in its entirety
the Shareholders Agreement dated as of July 30, 1999 among Merus, CRK and the
Corporation (the "Original Shareholders Agreement").
RECITALS:
WHEREAS, pursuant to the terms and provisions of that certain
Subscription Agreement, dated as of July 30, 1999, by and between Merus and the
Corporation, Merus purchased shares of Common Stock of the Corporation (the
"Common Stock"); and
WHEREAS, pursuant to the terms and provisions of that certain
Subscription Agreement, dated as of July 29, 1999, by and between CRK and the
Corporation, CRK purchased shares of Common Stock of the Corporation; and
WHEREAS, Net Value has purchased shares of Common Stock from
the Corporation pursuant to a Stock Purchase Agreement dated as of October 11,
1999 and has purchased, or has agreed to purchase, certain shares of Common
Stock directly from Merus; and
WHEREAS, in order to reflect the revised share ownership
structure of the Corporation, Merus, CRK, Net Value and the Corporation wish to
amend and restate the Shareholders Agreement of the Corporation;
NOW THEREFORE, in consideration of the foregoing and the
mutual covenants, agreements and warranties herein contained, Merus, CRK, Net
Value and the Corporation agree as follows, with such agreement covering all
shares of Common Stock now owned or hereafter acquired by Merus, CRK and Net
Value (including, without limitation, the shares of Common Stock which Net Value
has purchased, or has agreed to purchase, from Merus):
ARTICLE I.
SHARE OWNERSHIP
The percentage ownership of Merus, the percentage ownership of
Net Value and the percentage of ownership of CRK shall be subject to dilution on
a proportionate basis for the sale, exchange, or issuance of any capital stock
of the Corporation, whether now authorized or not, and any securities of any
type whatsoever that are, or may become, convertible or exchangeable for capital
stock, and for any rights, options, or warrants to purchase, subscribe for, or
otherwise acquire
capital stock, including, without limitation, the issuance of options,
restricted stock or other equity based incentives to employees, consultants and
advisors of the Corporation.
ARTICLE II.
THE LOAN
A. The Corporation has executed a Note in the form attached
hereto evidencing a loan (the "Loan") to the Corporation from Merus in the
amount of Two-Hundred Forty-Five Thousand Five Hundred Eighty-Eight Dollars and
Twenty-Three Cents ($245,588.23). The outstanding principal of the Loan will be
payable on the tenth anniversary hereof and will bear interest at the rate of
eight percent (8%) per annum, payable in arrears commencing on the third
anniversary and on each anniversary thereafter, and at maturity.
B. The option to purchase 18 additional shares of Common Stock
(on a pre-stock split basis) at an aggregate price of $1,245,588.23, granted to
Merus pursuant to Article II.B of the Original Shareholders Agreement, is null
and void and of no further effect.
ARTICLE III.
USE OF PROCEEDS
The Corporation shall use the proceeds of the subscriptions
and purchases of its capital stock referred to in the recitals of this Agreement
and the Loan for all startup costs of the Corporation, including without
limitation the following:
A. Accounting, legal, and other costs incurred in connection
with formation of the Corporation.
B. Costs of capital raising efforts including documentation,
investment agreements, etc.
C. Development of the Corporation business plan.
D. Research on intermodal freight transportation and
electronic commerce activities as necessary to develop and refine the
Corporation's business plan and related product offerings.
E. Research, design, and development of technical platform
necessary to support anticipated business plan and product offerings, including:
1. Website design;
-2-
2. Internet interface with information systems of shipper
customers; and
3. Internet interface with information systems of vendor or
partner transportation companies (railroads, trucking companies, steamship
companies, third party logistics companies, equipment providers, etc.).
F. Creation of the Corporation's initial website.
G. Public relations or advertising expenditures associated
with the launch of the Corporation and the Corporation's product offerings.
H. Rent, utilities, telecommunications, insurance, accounting
services, legal services, and any other administrative expenses associated with
establishing and maintaining the Corporation's offices or the Corporation's
ongoing business.
I. Procurement of computers, telephones, fax machines, office
equipment, furniture, and other fixtures for the Corporation's offices.
J. Salaries, insurance benefits, and payroll costs for
anticipated startup staffing potentially including:
1. President, Chairman of Board of Directors, and Chief
Executive Officer;
2. Executive Vice President of Marketing;
3. Executive Vice President of Operations;
4. Executive Vice President of Information Systems;
5. Executive Vice President of Finance;
6. Office Manager and/or administrative support employees
as required;
7. Customer Service Managers and staffing as necessary to
support the Corporation's product requirements;
8. Supplemental staffing as necessary to support marketing,
operations, information systems, office administration, or any other of the
Corporation's requirements at the discretion of the Chief Executive Officer, and
9. All actual staffing levels and the timing of staff
hirings will be determined by ongoing workload requirements and availability of
qualified resources and funding.
-3-
K. Executive recruiter commissions or fees.
L. Travel, lodging, meals, etc.
M. Other reasonable and necessary costs to implement the
Corporation's business plan.
ARTICLE IV.
MERUS' AND NET VALUE'S RESPONSIBILITIES
Merus and Net Value will each be responsible for using their
respective reasonable best efforts to provide financing, strategic, and
operational assistance to the Corporation to formally launch its business plan,
for outlining the Corporation's technology, operations, and resources necessary
to support the business, and for providing operations and resources necessary to
secure funding for future growth, including without limitation the provision of
strategic and operational assistance:
A. Provide long term strategy and vision and advice and assist
in raising capital.
B. Develop, review, and refine the Corporation's business
plan.
C. Provide strategic advice concerning critical partnerships.
D. Assist with capital planning and fund-raising.
E. Assist in development of exit strategy (merger/IPO) as
appropriate.
F. Assist in development of infrastructure and resources.
G. Assist in development of necessary corporate requirements.
H. Assist in recruitment of top tier persons to fill resource
gaps.
I. Assist in development of capital requirements and
procurement.
J. Develop marketing plan and strategy.
K. Create the Corporation's brand awareness through
advertising and promotions.
L. Provide technological and operational advice in support as
appropriate.
-4-
ARTICLE V.
ACKNOWLEDGMENT OF RISK
A. Merus acknowledges for itself and for its shareholders,
agents, employees and affiliates, that the investment of seed money or other
financial assets in the Webmodal concept and/or the Corporation, or the lending
of money to be used in furtherance of the Webmodal concept or the Corporation's
business, is wholly speculative and may result in complete loss of invested or
loaned funds or assets.
B. Merus acknowledges for itself and for its shareholders,
agents, employees and affiliates, that the anticipated business plan and any
perceived value of the Corporation is based on an assessment of the
transportation industry and associated transportation e-commerce activities that
may be incorrect or incomplete, and, furthermore, that this incorrect or
incomplete assessment could result in a complete loss of invested or loaned
funds, time, or any other resources brought into the venture by Merus, CRK or
Net Value or any other entity.
C. Merus acknowledges for itself and for its shareholders,
agents, employees and affiliates, that any involvement in the activities of the
Webmodal venture and any investment or loan of time, expertise, intellectual
capital, or other resources by Merus, its shareholders, agents, employees and
affiliates in the Webmodal venture or the Corporation, is wholly speculative and
may result in no return on, or compensation for, such invested time, expertise,
intellectual capital, or other resources.
D. Net Value acknowledges for itself and for its shareholders,
agents, employees and affiliates, that the investment of seed money or other
financial assets in the Webmodal concept and/or the Corporation, or the lending
of money to be used in furtherance of the Webmodal concept or the Corporation's
business, is wholly speculative and may result in complete loss of invested or
loaned funds or assets.
E. Net Value acknowledges for itself and for its shareholders,
agents, employees and affiliates, that the anticipated business plan and any
perceived value of the Corporation is based on an assessment of the
transportation industry and associated transportation e-commerce activities that
may be incorrect or incomplete, and, furthermore, that this incorrect or
incomplete assessment could result in a complete loss of invested or loaned
funds, time, or any other resources brought into the venture by Net Value, CRK
or Merus or any other entity.
F. Net Value acknowledges for itself and for its shareholders,
agents, employees and affiliates, that any involvement in the activities of the
Webmodal venture and any investment or loan of time, expertise, intellectual
capital, or other resources by Net Value, its shareholders, agents, employees
and affiliates in the Webmodal venture or the Corporation, is wholly speculative
-5-
and may result in no return on, or compensation for, such invested time,
expertise, intellectual capital, or other resources.
ARTICLE VI.
CONSENT TO TRANSFER
Notwithstanding any other provision of this Agreement,
including without limitation, Articles VII and VIII of this Agreement, CRK and
the Corporation must consent to any sale, gift, pledge or other transfer of
shares of Common Stock by any stockholder, which consent may not be unreasonably
withheld.
ARTICLE VII.
RIGHT OF FIRST REFUSAL
If either Merus or Net Value shall at any time decide to sell
any of its respective shares of Common Stock to a third party, it shall give CRK
and the Corporation 60 days written notice of the terms of the proposed sale,
including, without limitation, the price per share and the identity of the
proposed purchaser (a "Right of First Refusal Notice"). CRK and/or the
Corporation shall have the right to purchase all (but not less than all) such
shares of Common Stock as are proposed to be sold on identical terms to those
set forth in the Right of First Refusal Notice, with such shares being allocated
among CRK and the Corporation in such proportions as CRK and the Corporation
shall elect. CRK and the Corporation shall notify Merus or Net Value, as
applicable, of their intention to exercise this right of first refusal within 30
days following receipt of the Right of First Refusal Notice. If CRK or the
Corporation elect to purchase shares pursuant to this right of first refusal, it
must close the purchase within 60 days of the date they received the Right of
First Refusal Notice. If CRK and the Corporation do not purchase the shares of
Common Stock proposed to be sold pursuant to the terms of this Article VII,
Merus or Net Value may sell such shares on the terms indicated in the Right of
First Refusal Notice; provided (i) that the consent referred to in Article VI of
this Agreement has been obtained, (ii) the closing of such sale occurs within 90
days of receipt by CRK and the Corporation of the Right of First Refusal Notice,
(iii) the purchaser becomes a party to this Agreement on terms comparable to
those that applied to the seller, and (iv) the sale is closed on terms identical
to that set forth in the Right of First Refusal Notice. Any change in proposed
sale terms or the purchaser from that set forth in a Right of First Refusal
Notice requires the new commencement of the procedures set forth in this Article
VII. This Article VII shall terminate once the Corporation closes its initial
public offering.
-6-
ARTICLE VIII.
TAG-ALONG/DRAG-ALONG RIGHTS
A. If CRK, Merus or Net Value (in such capacity, a "Selling
Stockholder") propose to effect a sale or other transfer of Common Stock to any
person (other than to CRK, Merus, Net Value, the Corporation or any of their
respective subsidiaries or affiliates), the Selling Stockholder shall offer each
of the other stockholders the opportunity to sell to the purchaser the tag-along
portion of their shares of Common Stock for the same consideration per share and
otherwise on the same terms and conditions upon which the Selling Stockholder
sells its shares of Common Stock. The "Tag-Along Portion" shall be that number
of shares of Common Stock which is equal to (a) the total number of shares of
Common Stock held by such other stockholder multiplied by (b) a fraction the
numerator of which is the total number of shares of Common Stock that the
Selling Stockholder proposes to sell and the denominator of which is the total
number of shares of Common Stock held by the Selling Stockholder. In the event
that the purchaser is not willing to purchase all shares of Common Stock being
offered pursuant to the above formula, the "Tag-Along Portion" shall be (c) the
number of shares of Common Stock the purchaser is willing to purchase multiplied
by (d) a fraction the numerator of which is the number of shares of Common Stock
that the Selling Stockholder or other stockholder electing tag-along rights
pursuant to this Article VIII, as applicable, is trying to sell and the
denominator of which is the total number of shares of Common Stock that the
Selling Stockholder and all other stockholders electing to exercise tag-along
rights pursuant to this Article VIII wish to sell.
B. If CRK proposes to effect a sale or other transfer of all
shares of Common Stock held by him, CRK may require each and every other
stockholder of the Corporation to sell or transfer to such purchaser all shares
of Common Stock held by them for the same consideration per share and otherwise
on the same terms and conditions, including without limitation, delivery date,
upon which CRK sells his shares of Common Stock. To exercise this right, CRK
shall provide each stockholder with 30 days written notice of the proposed sale.
The delivery of such notice shall not obligate CRK to close such sale of Common
Stock.
ARTICLE IX.
PIGGYBACK REGISTRATION
A. If the Corporation proposes to register any security under
the Securities Act of 1933 (the "Securities Act") on any registration form
(otherwise than for the registration of securities to be offered and sold
pursuant to (i) an employee benefit plan, (ii) a dividend or interest
reinvestment plan, (iii) other similar plans or (iv) reclassifications of
securities, mergers, consolidations and acquisitions of assets on Form S-4 or
any successor thereto or (v) the Corporation's initial public offering; provided
that in the event any shareholders of the Corporation are registering shares for
resale as part of the initial public offering, each of Merus, CRK and Net Value
shall have the rights set forth in this Article IX, with respect to a pro rata
portion (determined
-7-
based on relative holdings of Common Stock) of all shares of Common Stock
covered by the initial public offering registration statement to be resold by
persons other than the Corporation) prescribed by the Securities and Exchange
Commission permitting a secondary offering or distribution, not less than 20
days prior to each such registration, the Corporation shall give to each of
Merus, CRK and Net Value (the "Piggyback Stockholders") written notice of such
proposal which shall describe in detail the proposed registration and
distribution (including those jurisdictions where registration or qualification
under the securities or blue sky laws is intended) and, upon the written request
of any Piggyback Stockholder given within 10 days after the date of such notice,
proceed to include in such registration such number of the shares of Common
Stock as have been requested by such Piggyback Stockholders to be included in
such registration. In its request, each Piggyback Stockholder shall describe
briefly its proposed disposition of its Common Stock. The Corporation shall in
each instance use reasonably commercial efforts to cause such shares of Common
Stock to be registered under the Securities Act, all to the extent necessary to
permit the sale or other disposition thereof (in the manner stated in such
request) by a prospective seller of the securities so registered. Each Piggyback
Stockholder participating in a registration agrees to execute an underwriting
agreement with such underwriter that is (i) reasonably satisfactory to the
Company and (ii) in customary form. Nothing in this Article IX shall be deemed
to require the Corporation to proceed with any registration of its securities
after giving the notice herein provided. The piggyback registration rights
contained in this Article IX shall not be applicable to the extent that a
Piggyback Stockholder is able to sell shares of Common Stock pursuant to Rule
144 promulgated pursuant to the Securities Act.
B. If the managing underwriter (who shall be selected by the
Corporation in its sole discretion) advises the Corporation that, in its
opinion, the inclusion of the shares of Common Stock requested to be included in
such registration by the Piggyback Stockholders with the securities being
registered by the Corporation and other prospective sellers would materially
adversely affect the distribution or pricing of all such securities, then: (i)
if such registration has been initially proposed by the Corporation, the
Corporation shall first include in such registration the number of securities
sought to be registered by the Corporation and thereafter, to the extent
permitted by the managing underwriter, shall include in the registration such
number of shares of Common Stock owned by the Piggyback Stockholders and such
securities of any other security holders of the Corporation pro rata based on
the number of securities each originally requested to be registered, or (ii) if
such registration has been initially proposed by a holder of securities entitled
to request a registration, the Corporation shall include in the registration, to
the extent permitted by the managing underwriter, the number of shares of each
such holder of securities, the Corporation, each Piggyback Stockholder and each
other security holders of the Corporation with registration rights pro rata
based on the number of securities each originally requested to be registered.
C. To the extent the provisions of Article IX.A are
applicable, the Corporation shall pay the following expenses in connection
therewith: (i) all expenses incident to filing with the National Association of
Securities Dealers, Inc., (ii) registration fees, (iii) reasonable printing
expenses, and (iv) accounting and legal fees and expenses of the Corporation
(but not of the Piggyback Holders) in connection with such registration;
provided, however, the Corporation shall
-8-
not be liable for (a) any discounts or commissions to any underwriter, or (b)
any transfer taxes incurred in respect of the shares of Common Stock sold by the
Piggyback Holders.
D. Each Piggyback Holder agrees (i) not to effect any public
sale or distribution of or otherwise dispose of any shares of Common Stock
during the seven days prior to or 180 days after the date any registration
statement of the Corporation has become effective under the Securities Act,
except as part of such registration.
E. In connection with any registration of securities under
this Article IX, the Corporation shall indemnify each participating Piggyback
Holder, including each person, if any, who is an officer or director of, or who
controls, such Piggyback Holders within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against all losses, claims,
damages, liabilities and expenses (including reasonable costs or investigation
and reasonable attorneys' fees and expenses, whether in an action brought by a
third party or by the parties hereto), arising, directly or indirectly, out of
or based upon (i) any untrue, or alleged untrue, statement of a material fact
contained in any registration statement, preliminary prospectus or notification
or offering circular (as amended or supplemented if the Corporation shall have
furnished any amendments or supplements thereto) or (ii) any omission, or
alleged omission, to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; except insofar as
such losses, claims, damages, liabilities or expenses arise out of or are based
upon any untrue statement or alleged untrue statement or omission or alleged
omission based solely upon information furnished in writing to the Corporation
by such Piggyback Holder expressly for use therein.
Each participating Piggyback Holder shall indemnify the
Corporation, including each person, if any, who is an officer or director of the
Corporation or who controls the Corporation within the meaning of Section 15 of
the Securities act or Section 20 of the Exchange Act, against all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation and reasonable attorneys' fees and expenses, whether in an action
brought by a third party or by the parties hereto), arising out of or based upon
(i) any untrue, or alleged untrue, statement of a material fact contained in any
registration statement, preliminary prospectus or notification or offering
circular (as amended or supplemented if the Corporation shall have furnished any
amendments or supplements thereto) or (ii) any omission, or alleged omission, to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; but only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was based
solely upon information furnished in writing to the Corporation by such
Piggyback Holder expressly for use therein.
-9-
ARTICLE X.
MISCELLANEOUS
A. Ratification of Agreement. Merus, Net Value and CRK shall
vote their shares so as to cause the Corporation to adopt and ratify all of the
terms of this Agreement.
B. Assignment. Except with the other party's prior written
consent, a party may not assign any rights or delegate any duties under this
Agreement.
C. Attorney's Fees. If any suit or action is filed by any
party to enforce this Agreement or otherwise with respect to the subject matter
of this Agreement, the prevailing party shall be entitled to recover reasonable
attorney fees incurred in preparation or in prosecution or defense of such suit
or action as fixed by the trial court, and if any appeal is taken from the
decision of the trial court, reasonable attorney fees as fixed by the appellate
court.
D. Amendments. This Agreement may be amended only by an
instrument in writing executed by all the parties.
E. Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter of this
Agreement and supersedes any and all prior understandings and agreements,
whether written or oral, between the parties with respect to such subject
matter.
F. Counterparts; Facsimile Signatures. This Agreement may be
executed by the parties in separate counterparts, each of which when executed
and delivered shall be an original, but all of which together shall constitute
one and the same instrument. Facsimile signatures shall be binding.
G. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any respect for any reason, the validity and
enforceability of any such provision in any other respect and of the remaining
provisions of this Agreement shall not be in any way impaired.
H. Waiver. A provision of this Agreement may be waived only by
a written instrument executed by the party waiving compliance. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver.
Failure to enforce any provision of this Agreement shall not operate as a waiver
of such provision or any other provision.
I. Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.
The parties agree that the federal
-10-
and state courts sitting in the State of Illinois shall have exclusive personal
and subject matter jurisdiction over all claims or disputes arising out of or in
connection with this Agreement, the subscription for shares in the Corporation
made by Merus, the Loan or the Note, or the subject matter hereof or thereof.
The parties hereto hereby agree (i) to submit to the personal jurisdiction of
such courts and to service of process effected in accordance with the laws of
such State, (ii) to waive any objection to such jurisdiction and any defense of
forum non conveniens in connection therewith and (iii) to be bound by any
judgment rendered by any such court.
J. Notices. Any notice, request, instruction or other document
to be given hereunder by a party hereto shall be in writing and shall be deemed
to have been given, (a) when received if given in person or by courier or a
courier service, (b) on the date of confirmed transmission if sent by telex,
facsimile or other wire transmission or (c) three (3) Business Days after being
deposited in the U.S. mail, certified or registered mail, postage prepaid:
(a) If to CRK or the Corporation, addressed as follows:
Webmodal, Inc.
000 Xxxx Xxxxxxx Xxxxxx, Xxxx X
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx, Xxxxx & Xxxxx
000 X. XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) If to Merus, addressed as follows:
Merus Partners, Inc.
00000 X.X. Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
-11-
(c) If to Net Value, addressed as follows:
Net Value Holdings, Inc.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
or to such other person or address as a party hereto may designate for
itself by notice given as herein provided.
K. Information Requirements. So long as Net Value is a
shareholder, the Corporation and its management shall provide to Net Value and
its representatives such information concerning the Corporation, its assets,
operations and prospects, and access to the premises and information of the
Corporation, as Net Value shall reasonably require to prepare materially
accurate and complete disclosures of Net Value's investment in the Corporation
in accordance with federal and state securities laws.
-12-
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first set forth above.
MERUS PARTNERS, INC.
By: /s/ Xxxxxxx Xxxxx
------------------------------
Name: Xxxxxxx Xxxxx
Title: President
/s/ Xxxxx X. Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxx
NET VALUE HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
WEBMODAL, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
-13-
