STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated November____, 2000 (this
"Agreement"), by and between eHotHouse Inc., a Delaware corporation (the
"Company"), and the stockholders identified on the execution page hereof (the
"RAND Stockholders"). Capitalized terms used in this Agreement and not otherwise
defined shall have the meanings ascribed to them in the Merger Agreement (as
defined below).
WHEREAS, pursuant to the Agreement and Plan of Merger, dated
the date hereof (the "Merger Agreement"), between the Company and RAND
Interactive Corporation, et al., the RAND Stockholders have become the holders
of shares of the Company's Class A Common Stock and its Class B Common Stock
(together, the "Shares"); and
WHEREAS, the parties hereto wish to restrict the transfer of
the Shares and to provide for, among other things, tag-along, drag-along and
preemptive rights, corporate governance rights and obligations and certain other
rights under certain conditions,
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS.
1.1 Definitions. All references herein to Articles,
Sections and Exhibits shall be deemed to be references to Articles and Sections
of, and Exhibits to, this Agreement unless the context shall otherwise require.
All Exhibits attached hereto shall be deemed incorporated herein as if set forth
in full herein and, unless otherwise defined therein, all terms used in any
Exhibit shall have the meaning ascribed to such term in this Agreement. The
words "include," "includes" and "including" shall be deemed to be followed by
the phrase "without limitation." The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement
unless the context shall otherwise require. Unless otherwise expressly provided
herein, any agreement, instrument or statute defined or referred to herein or in
any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein. All
references to specific numbers of shares of Capital Stock contained in this
Agreement shall be appropriately adjusted to take into account any stock splits,
stock dividends, subdivisions, reclassifications, combinations,
recapitalizations, or similar transactions involving such Capital Stock,
including a stock dividend or distribution in the form of shares of such Capital
Stock. As used in this Agreement, and unless the context requires a different
meaning, the following terms have the meanings indicated:
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof
"Board of Directors" means the Board of Directors of the
Company.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting or non-voting) of, such Person's capital stock and
any and all rights, warrants or options exchangeable for or convertible into
such capital stock.
"Change of Control Event" means a sale, merger, tender offer
or other business combination in which the stockholders owning a majority of the
voting securities of the Company prior to such transaction do not own a majority
of the voting securities of the surviving Person after which such stockholders
no longer have the power to elect a majority of the Board of Directors or a sale
of all or substantially all of the assets of the Company.
"Class A Common Stock" means the shares of Class A Common
Stock of the Company.
"Class B Common Stock" means the shares of Class B Common
Stock of the Company.
"Class C Common Stock" means the shares of Class C Common
Stock of the Company.
"Common Stock" means the Class A Common Stock , the Class B
Common Stock and the Class C Common Stock.
"Common Stock Equivalents" means any security or obligation
which is by its terms convertible into or exchangeable or exercisable for shares
of common stock or other Capital Stock of a Person, and any option, warrant or
other subscription or purchase right with respect to common stock or such other
Capital Stock.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Contract Date" has the meaning set forth in Section 3.1(e).
"Drag-Along Notice" has the meaning set forth in Section
3.1(g).
"Drag-Along Rightholders" has the meaning set forth in Section
3.1(g).
"Drag-Along Sellers" has the meaning set forth in Section
3.1(g).
"Employment Agreements" means each Employment Agreement, dated
the date hereof, between the Company and each of Xxxx Xxxxxxx, Xxxxx Xxxxxx and
Xxxx Xxxx.
"Fair Value" has the meaning set forth in Section 3.2(b).
2
"Family Members" has the meaning set forth in Section 2.2.
"Governmental Authority" means the government of any nation,
state, city, locality or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Initial Public Offering" means the first public offering of
the shares of Capital Stock of the Company (or first public offering of the
shares of a company that is a successor by merger to the Company after the
merger) pursuant to an effective registration statement filed under the
Securities Act.
"Involuntary Transfer" means any transfer, proceeding or
action by or in which a Stockholder shall be deprived or divested of any right,
title or interest in or to any of the Shares, including, without limitation, (i)
any seizure under levy of attachment or execution, (ii) any transfer in
connection with bankruptcy (whether pursuant to the filing of a voluntary or an
involuntary petition under the United States Bankruptcy Code of 1978, or any
modifications or revisions thereto) or other court proceeding to a debtor in
possession, trustee in bankruptcy or receiver or other officer or agency, (iii)
any transfer to a state or to a public officer or agency pursuant to any statute
pertaining to escheat or abandoned property and (iv) any transfer pursuant to a
divorce or separation agreement or a final decree of a court in a divorce
action.
"Involuntary Transferee" has the meaning set forth in Section
3.2(a).
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other) or preference,
priority, right or other security interest or preferential arrangement of any
kind or nature whatsoever (excluding preferred stock and equity related
preferences).
"Merger Agreement" has the meaning set forth in the recitals
to this Agreement.
"Offer Price" has the meaning set forth in Section 3.1(a).
"Offered Securities" has the meaning set forth in Section
3.1(a).
"Offering Notice" has the meaning set forth in Section 3.1(a).
"Other Stockholders" means each holder of Common Stock other
than a RAND Stockholder.
"Permitted Transferee" has the meaning set forth in Section
2.2.
"Person" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.
3
"Qualified Initial Public Offering" means an Initial Public
Offering covering the offer and sale of Capital Stock of the Company pursuant to
an effective registration statement filed under the Securities Act, covering the
offer and sale of Capital Stock for the account of the Company resulting in
aggregate net proceeds to the Company of at least $20,000,000.
"RAND Stockholders" has the meaning set forth in the preamble
to this Agreement and any Permitted Transferee thereof to whom Shares are
transferred in accordance with Section 2.2 of this Agreement, and the term "RAND
Stockholder" shall mean any such Person.
"Rightholder(s)" has the respective meanings set forth in
Sections 3.1(c) and 3.2(a).
"Rightholder Option Period" has the meaning set forth in
Section 3.1(c).
"Securities Act" means the United States Securities Act of
1933 and the rules and regulations thereunder.
"Selling Stockholder" has the meaning set forth in Section
3.1(a).
"Shares" means, with respect to each Stockholder, all shares,
whether now owned or hereafter acquired, of Common Stock and any other Common
Stock Equivalents owned thereby.
"Stockholders" means the Other Stockholders and the RAND
Stockholders, and the term "Stockholder" shall mean any such Person.
"Tag-Along Rightholder" has the meaning set forth in Section
3.1(f).
"Third Party Purchaser" has the meaning set forth in Section
3.1(a).
"Transfer" has the meaning set forth in Section 2.1.
"Transferred Shares" has the meaning set forth in Section
3.2(a).
4
ARTICLE II
PERMITTED TRANSFERS.
2.1 Limitation on Transfer. No RAND Stockholder shall (i)
sell, give, assign, hypothecate, pledge, encumber, offer, pledge, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, grant a security
interest in or otherwise dispose of (whether by operation of law or otherwise)
or otherwise transfer (each a "transfer") any Shares or any right, title or
interest therein or thereto or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of any Shares (whether any such transaction described in clause (i)
or (ii) above is to be settled by delivery of any Shares or other securities, in
cash or otherwise), except in accordance with the provisions of this Agreement,
including, without limitation, Section 2.4. Any attempt to transfer any Shares
or any rights thereunder in violation of the preceding sentence shall be null
and void ab initio.
2.2 Permitted Transfers. Notwithstanding anything to the
contrary contained in this Agreement, but subject to Section 8 of each of the
Employment Agreements, each of the RAND Stockholders may transfer all or a
portion of his Shares to (i) a member of such RAND Stockholder's (or the owner's
of such RAND Stockholder) immediate family, which shall include his spouse,
siblings, children or grandchildren or nieces or nephews ("Family Members") or
(ii) a trust, corporation, partnership or limited liability company, all of the
beneficial interests in which shall be held by such RAND Stockholder or one or
more Family Members of such RAND Stockholder; provided, however, that during the
period that any such trust, corporation, partnership or limited liability
company holds any right, title or interest in any Shares, no Person other than
such RAND Stockholder or one or more Family Members of such RAND Stockholder may
be or may become beneficiaries, stockholders, limited or general partners or
members thereof (the Persons referred to in the preceding clauses (i) and (ii)
are each referred to hereinafter as a "Permitted Transferee"). A Permitted
Transferee of Shares pursuant to this Section 2.2 may transfer its Shares
pursuant to this Section 2.2 only to the transferor Stockholder or to a Person
that is a Permitted Transferee of such transferor Stockholder.
2.3 Permitted Transfer Procedures. If any RAND
Stockholder wishes to transfer Shares to a Permitted Transferee under Section
2.2, such RAND Stockholder shall give notice to the Company of its intention to
make such a transfer not less than ten (10) days prior to effecting such
transfer, which notice shall state the name and address of each Permitted
Transferee to whom such transfer is proposed, the relationship of such Permitted
Transferee to such Stockholder, and the number of Shares proposed to be
transferred to such Permitted Transferee.
5
2.4 Transfers in Compliance with Law, Substitution of
Transferee. Notwithstanding any other provision of this Agreement, no transfer
may be made pursuant to this Section 2 or Section 3 unless (a) the transferee
has agreed in writing to be bound by the terms and conditions of this Agreement
pursuant to an instrument substantially in the form attached hereto as Exhibit
A, (b) the transfer complies in all respects with the applicable provisions of
this Agreement and (c) the transfer complies in all respects with applicable
federal and state securities laws, including, without limitation, the Securities
Act. If requested by the Company, an opinion of counsel to such transferring
Stockholder shall be supplied to the Company, at such transferring Stockholder's
expense, to the effect that such transfer complies with the applicable federal
and state securities laws. Upon becoming a party to this Agreement, (i) the
Permitted Transferee of a RAND Stockholder shall be substituted for, and shall
enjoy the same rights and be subject to the same obligations as, the
transferring RAND Stockholder hereunder with respect to the Shares transferred
to such Permitted Transferee, (ii) an Other Stockholder shall be subject to the
same obligations as, but none of the rights of, the transferring RAND
Stockholder, and (iii) the transferee of an Other Stockholder shall be
substituted for, and shall be subject to the same obligations as, the
transferring Other Stockholder hereunder with respect to the Shares transferred
to such transferee.
ARTICLE III
TRANSFERS; TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS.
3.1 Proposed Voluntary Transfers.
(a) Offering Notice. Subject to Section 2 and
Section 8 of each of the Employment Agreements, if any RAND Stockholder (a
"Selling Stockholder") wishes to transfer all or any portion of his Shares to
any Person (other than to a Permitted Transferee) (a "Third Party Purchaser")
and such Selling Stockholder has received a bona fide offer to purchase such
Shares from a Third Party Purchaser, such Selling Stockholder shall then offer
such Shares to the Company, by sending written notice (an "Offering Notice") to
the Company, which shall state (i) the number of Shares proposed to be
transferred (the "Offered Securities"); (ii) the proposed purchase price per
Share offered by the Third Party Purchaser for the Offered Securities (the
"Offer Price"); and (iii) the terms and conditions of such sale. Upon delivery
of the Offering Notice, such offer shall be irrevocable unless and until the
rights of first refusal provided for herein shall have been waived or shall have
expired.
(b) Notice to each of the Other Stockholders. The
Company shall promptly deliver a copy of the Offering Notice to each of the
Other Stockholders.
(c) Rightholder Option, Exercise.
(i) For a period of thirty (30) days after
the date upon which the Other Stockholders shall have received written notice
from the Company as described on Section 3.l(b) (the "Rightholder Option
Period"), and subject to any Company right to purchase the Offered Securities,
each of the Other Stockholders (for the purpose of Section 3.1, each, a
"Rightholder" and collectively, the "Rightholders") shall have the right to
purchase their allocable portion of the Offered Securities (as determined by
this Section 3.1(c)) at a purchase price equal to the Offer Price and upon the
terms and conditions set forth in the Offering Notice.
6
Each such Rightholder shall have the right to purchase that percentage of the
Offered Securities determined by dividing (i) the total number of Shares then
owned by such Rightholder by (ii) the total number of Shares then owned by all
such Rightholders. If any Rightholder does not fully subscribe for the number or
amount of Offered Securities it or he is entitled to purchase, then each other
participating Rightholder shall have the right to purchase that percentage of
the Offered Securities determined by dividing (x) the total number of Shares
then owned by such fully participating Rightholder by (y) the total number of
Shares then owned by all fully participating Rightholders who elected to
purchase Offered Securities. The procedure described in the preceding sentence
shall be repeated until there are no remaining Offered Securities. If the
Rightholders do not purchase all of the Offered Securities pursuant to this
Section 3.l(c), then the Selling Stockholder may, subject to Section 3.l(f),
sell the Offered Securities to a Third Party Purchaser in accordance with
Section 3.1(e).
(ii) The right of each Rightholder to
purchase all, or any portion, of the Offered Securities under subsection (i)
above shall be exercisable by delivering written notice of the exercise thereof,
prior to the expiration of the Rightholder Option Period, to the Selling
Stockholder with a copy to the Company. Each such notice shall state (a) the
number of Shares held by such Rightholder and (b) the number of Shares that such
Rightholder is willing to purchase pursuant to this Section 3.1(c). The failure
of a Rightholder to respond within the Rightholder Option Period to the Selling
Stockholder shall be deemed to be a waiver of such Rightholder's rights under
subsection (i) above; provided, however, that each Rightholder may waive its
rights under subsection (i) above prior to the expiration of the Rightholder
Option Period by giving written notice to the Selling Stockholder, with a copy
to the Company.
(d) Closing. The closing of the purchases of
Offered Securities subscribed for by the Rightholders under Section 3.1(c) shall
be held at the executive office of the Company at 11:00 a.m., local time, on the
sixtieth (60th) day after the giving of the Offering Notice pursuant to Section
3.1(a) or at such other time and place as the parties to the transaction may
agree. At such closing, the Selling Stockholder shall deliver certificates
representing the Offered Securities, duly endorsed for transfer and accompanied
by all requisite transfer taxes, if any, and such Offered Securities shall be
free and clear of any Liens (other than those arising hereunder and those
attributable to actions by the purchasers thereof and the Selling Stockholder
shall so represent and warrant, and shall further represent and warrant that it
is the sole beneficial and record owner of such Offered Securities. Each
Rightholder purchasing Offered Securities shall deliver at the closing payment
in full in immediately available funds for the Offered Securities purchased by
it or him. At such closing, all of the parties to the transaction shall execute
such additional documents as are otherwise necessary or appropriate.
7
(e) Sale to a Third Party Purchaser. Unless the
Rightholders elect to purchase all, but not less than all, of the Offered
Securities under Section 3.1(c), the Selling Stockholder may, subject to Section
3.1(f), sell that number of Offered Securities not being purchased by the
Rightholders to a Third Party Purchaser on the terms and conditions set forth in
the Offering Notice; provided, however, that such sale is bona fide and made
pursuant to a contract entered into within sixty (60) days after the earlier to
occur of (i) the waiver by all of the Rightholders of their options to purchase
the Offered Securities and (ii) the expiration of the Rightholder Option Period
(the "Contract Date"); and provided further, that such sale shall not be
consummated unless and until (x) such Third Party Purchaser shall represent in
writing to the Company and each Rightholder that it is aware of the rights of
the Company and the Stockholders contained in this Agreement and (y) prior to
the purchase by such Third Party Purchaser of any of such Offered Securities,
such Third Party Purchaser shall become a party to this Agreement and shall
agree to be bound by the terms and conditions hereof in accordance with Section
2.4 hereof. If such sale is not consummated within thirty (30) days after the
Contract Date for any reason, then the restrictions provided for herein shall
again become effective, and no transfer of such Offered Securities may be made
thereafter by the Selling Stockholder without again offering the same to the
Rightholders in accordance with this Section 3.1.
(f) Tag-Along Rights (i) (i) If any Other
Stockholders are transferring any shares of the Company's capital stock
("Tag-Along Securities") to a Third Party Purchaser in a transaction
constituting a Change of Control Event, then each of the RAND Stockholders
(each, a "Tag-Along Rightholder") shall have the right to sell to such Third
Party Purchaser, upon the same terms and conditions as such Other Stockholders,
that number of Shares held by such Tag-Along Rightholder equal to that
percentage of the Tag-Along Securities determined by dividing (A) the total
number of Shares then owned by such Tag-Along Rightholder by (B) the sum of (x)
the total number of Shares then owned by all such Tag-Along Rightholders
exercising their rights pursuant to this Section 3.1(f) and (y) the total number
of shares then owned by the Other Stockholders. The Other Stockholders and the
Tag-Along Rightholder(s) exercising their rights pursuant to this Section 3.1(f)
shall effect the sale of the Tag-Along Securities and such Tag-Along
Rightholder(s) shall sell the number of Shares required to be sold by such
Tag-Along Rightholder(s) pursuant to this Section 3.1(f)(i).
(ii) The Other Stockholders shall give
notice to each Tag-Along Rightholder of each proposed sale by it of Tag-Along
Securities which gives rise to the rights of the Tag-Along Rightholders set
forth in this Section 3.1(f), at least fifteen (15) days prior to the proposed
consummation of such sale, setting forth the name of such Other Stockholders,
the number of Tag-Along Securities, the name and address of the proposed Third
Party Purchaser, the proposed amount and form of consideration and terms and
conditions of payment offered by such Third Party Purchaser, the percentage of
Shares that such Tag-Along Rightholder may sell to such Third Party Purchaser
(determined in accordance with Section 3.1(f)(i)), and a representation that
such Third Party Purchaser has been informed of the "tag-along" rights provided
for in this Section 3.1(f) and has agreed to purchase Shares in accordance with
the terms hereof. The tag-along rights provided by this Section 3.1(f) must be
exercised by any Tag-Along Rightholder wishing to sell its Shares within ten
(10) days following receipt of the notice required by the preceding sentence, by
delivery of a written notice to the Other Stockholders indicating such Tag-Along
Rightholder's wish to exercise its rights and specifying the number of
8
Shares (up to the maximum number of Shares owned by such Tag-Along Rightholder
required to be purchased by such Third Party Purchaser) it wishes to sell;
provided, however, that any Tag-Along Rightholder may waive its rights under
this Section 3.1(f) prior to the expiration of such ten (10) day period by
giving written notice to the Other Stockholders, with a copy to the Company. The
failure of a Tag-Along Rightholder to respond within such ten (10) day period
shall be deemed to be a waiver of such Tag-Along Rightholder's rights under this
Section 3.1(f).
(g) Drag-Along Rights. If the Other Stockholders
(the "Drag-Along Rightholders") receive a bona fide offer from a Third Party
Purchaser to purchase all or any portion of their Shares in a transaction
constituting a Change of Control Event , the Drag-Along Rightholders may send
written notice (the "Drag-Along Notice") to the Company and the RAND
Stockholders (the "Drag-Along Sellers") notifying the Drag-Along Sellers that
they will be required to sell a pro rata portion of their Shares in such sale
(or, in the case of an asset sale, vote in favor of such sale). Upon receipt of
a Drag-Along Notice, each Drag-Along Seller receiving such notice shall be
obligated to (i) sell a pro rata portion of their Shares contemplated by the
Drag-Along Notice on the same terms and conditions as the Drag-Along Sellers
(including payment of its pro rata share of all costs associated with such
transaction) and (ii) otherwise take all necessary action to cause the
consummation of such transaction, including voting its Shares in favor of such
transaction and not exercising any appraisal rights in connection therewith.
Each Drag-Along Seller further agrees to (A) take all actions (including
executing documents) in connection with the consummation of the proposed
transaction as may reasonably be requested of it by the Drag-Along Rightholders
and (B) appoint the Drag-Along Rightholders as its attorney-in-fact to do the
same on its behalf
3.2 Involuntary Transfers.
(a) Rights of First Offer upon Involuntary
Transfer. If an Involuntary Transfer of any Shares (the "Transferred Shares")
owned by any RAND Stockholder shall occur, then the Other Stockholders (for the
purpose of Section 3.2, each, a "Rightholder" and collectively, the
"Rightholders") shall have the same rights as specified in Section 3.1(c) with
respect to such Transferred Shares as if the Involuntary Transfer had been a
proposed voluntary transfer by a Selling Stockholder and shall be governed by
Section 3.1 except that (i) the time periods shall run from the date of receipt
by the Company of actual notice of the Involuntary Transfer (and the Company
shall immediately give notice to the Rightholders of the date of receipt of such
notice), (ii) such rights shall be exercised by notice to the transferee of such
Transferred Shares (the "Involuntary Transferee") rather than to the Stockholder
who suffered or will suffer the Involuntary Transfer and (iii) the purchase
price per Transferred Share shall be agreed upon by the Involuntary Transferee
and purchasing Rightholders purchasing a majority of the Transferred Shares;
provided, however, that if such parties fail to agree as to such purchase price,
the purchase price shall be the Fair Value thereof as determined in accordance
with Section 3.2(b).
(b) Fair Value. If the parties fail to agree upon
the purchase price of the Transferred Shares in accordance with Section 3.2(a)
hereof, then the Rightholders shall purchase the Transferred Shares at a
purchase price equal to the Fair Value (as hereinafter defined) thereof. The
Fair Value of the Transferred Shares shall be determined by a panel of three
independent appraisers, which shall be nationally recognized investment banking
firms or
9
nationally recognized experts experienced in the valuation of corporations
engaged in the business conducted by the Company. Within five (5) Business Days
after the date the applicable parties determine that they cannot agree as to the
purchase price, the Involuntary Transferee and the purchasing Rightholders
purchasing a majority of the Transferred Shares being purchased by the
purchasing Rightholders shall each designate one such appraiser that is willing
and able to conduct such determination. If either the Involuntary Transferee or
the purchasing Rightholders fails to make such designation within such period,
then the other party that has made the designation shall have the right to make
the designation on its behalf. The two appraisers designated shall, within a
period of five (5) Business Days after the designation of the second appraiser,
designate a mutually acceptable third appraiser. The three appraisers shall
conduct their determination as promptly as practicable, and the Fair Value of
the Transferred Shares shall be the average of the determination of the two
appraisers that are closer to each other than to the determination of the third
appraiser, which third determination shall be discarded; provided, however that
if the determination of two appraisers are equally close to the determination of
the third appraiser, then the Fair Value of the Transferred Shares shall be the
average of the determination of all three appraisers. Such determination shall
be final and binding on the Involuntary Transferee and the Rightholders. The
Involuntary Transferee shall be responsible for the fees and expenses of the
appraiser designated by or on behalf of it, and the purchasing Rightholders for
the fees and expenses of the appraiser designated by or on behalf of the Board
of Directors. The Involuntary Transferee and the purchasing Rightholders shall
each share half the fees and expenses of the appraiser designated by the
appraisers. For purposes of this Section 3.2(b), the "Fair Value" of the
Transferred Shares means the fair market value of such Transferred Shares
determined in accordance with this Section 3.2(b) based upon all considerations
that the appraisers determine to be relevant. All expenses of the purchasing
Rightholders shall be shared in proportion to the number of Shares purchased.
(c) Closing. The closing of any purchase under
this Section 3.2 shall be held at the executive office of the Company at 11:00
a.m., local time, on the earlier to occur of (a) the fifth (5th) Business Day
after the purchase price per Transferred Share shall have been agreed upon by
the Involuntary Transferee and the purchasing Rightholders in accordance with
Section 3.2(a)(iii), or (b) the fifth (5th) Business Day after the determination
of the Fair Value of the Transferred Shares in accordance with Section 3.2(b),
or at such other time and place as the parties to the transaction may agree. At
such closing, the Involuntary Transferee shall deliver certificates, if
applicable, or other instruments or documents representing the Transferred
Shares being purchased under this Section 3.2, duly endorsed with a signature
guarantee for transfer and accompanied by all requisite transfer taxes, if any,
and such Transferred Shares shall be free and clear of any Liens (other than
those arising hereunder) arising through the action or inaction of the
Involuntary Transferee and the Involuntary Transferee shall so represent and
warrant, and further represent and warrant that it is the beneficial owner of
such Transferred Shares. Each Rightholder purchasing such Transferred Shares
shall deliver at closing payment in full in immediately available funds for such
Transferred Shares. At such closing, all parties to the transaction shall
execute such additional documents as are otherwise necessary or appropriate.
(d) General. If the provisions of this Section
3.2 shall be held to be unenforceable with respect to any particular Involuntary
Transfer, the Rightholders shall have the rights specified in Section 3.1(c)
with respect to any transfer by an Involuntary Transferee of such Shares, and
each Rightholder agrees that any Involuntary Transfer shall be subject to such
10
rights, in which case the Involuntary Transferee shall be deemed to be the
Selling Stockholder for purposes of Section 3.1 of this Agreement and shall be
bound by the provisions of Section 3.1 and other related provisions of this
Agreement.
ARTICLE IV
AFTER-ACQUIRED SECURITIES.
4.1 After-Acquired Securities. All of the provisions of
this Agreement shall apply to all of the Shares and Common Stock Equivalents now
owned or which may be issued or transferred hereafter to a Stockholder in
consequence of any additional issuance, purchase, exchange or reclassification
of any of such Shares or Common Stock Equivalents, corporate reorganization, or
any other form of recapitalization, consolidation, merger, share split or share
dividend, or which are acquired by a Stockholder in any other manner.
ARTICLE V
COVENANTS
5.1 Confidentiality. Each RAND Stockholder agrees that it
will not make use of or divulge to any other person, firm or company, any trade
or business secret, process, method or means, or any other confidential
information concerning the business or policies of the Company, which it may
have learned in connection with any such position. The obligations of each RAND
Stockholder under this Section 5.1 shall not apply to any information which (i)
is known publicly; (ii) is in the public domain or hereafter enters the public
domain without the fault of such RAND Stockholder; (iii) is known to the such
RAND Stockholder prior to its receipt of such information from the Company, or
(iv) is hereafter disclosed to such RAND Stockholder or by a third party not
under an obligation of confidence to the Company.
ARTICLE VI
STOCK CERTIFICATE LEGEND
A copy of this Agreement shall be filed with the Secretary of
the Company and kept with the records of the Company. Each certificate
representing Shares now held or hereafter acquired by any Stockholder shall for
as long as this Agreement is effective bear legends substantially in the
following forms:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), OR THE SECURITIES LAWS OF
ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS.
11
THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER
DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE
STOCKHOLDERS AGREEMENT, DATED NOVEMBER [ ], 2000, AMONG THE COMPANY AND
THE PERSONS NAMED THEREIN, A COPY OF WHICH MAY BE INSPECTED AT THE
COMPANY'S PRINCIPAL OFFICE. THE COMPANY WILL NOT REGISTER THE TRANSFER
OF SUCH SECURITIES ON THE BOOKS OF THE COMPANY UNLESS AND UNTIL THE
TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE TERMS OF THE STOCKHOLDERS
AGREEMENT.
ARTICLE VII
MISCELLANEOUS.
7.1 Notices. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing and
shall be by registered or certified first-class mail, return receipt requested,
telecopier, courier service or personal delivery:
if to the RAND Stockholders:
RAND Interactive Corporation
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
if to the Company:
EHotHouse, Inc.
00 X. 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
with a copy to:
12
Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx, Esq.
All such notices, demands and other communications shall be
deemed to have been duly given when delivered by hand, if personally delivered;
when delivered by courier, if delivered by commercial courier service; five (5)
Business Days after being deposited in the mail, postage prepaid, if mailed; and
when receipt is mechanically acknowledged, if telecopied. Any party may by
notice given in accordance with this Section 7.2 designate another address or
Person for receipt of notices hereunder.
7.2 Successors and Assigns, Third Party Beneficiaries.
This Agreement shall inure to the benefit of and be binding upon the successors
and permitted assigns of the parties hereto. No Person other than the parties
hereto and their successors and permitted assigns is intended to be a
beneficiary of this Agreement; provided, however, that the Other Stockholders
including, without limitation, Change Technology Partners, Inc., shall be deemed
to be third-party beneficiaries of the Agreement for all purposes.
7.3 Amendment and Waiver.
(a) No failure or delay on the part of the
Company or any other party hereto in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Company or any other party hereto at law,
in equity or otherwise.
(b) Any amendment, supplement or modification
of or to any provision of this Agreement, any waiver of any provision of this
Agreement and any consent to any departure by any party from the terms of any
provision of this Agreement, shall be effective only if it is made or given in
writing and signed by (i) the Company and (ii) the RAND Stockholders holding a
majority of the voting power of the Shares held by the RAND Stockholders. Any
such amendment, supplement, modification, waiver or consent shall be binding
upon the Company and all of the RAND Stockholders.
7.4 Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. The parties hereto
confirm that any facsimile copy of another party's executed counterpart of this
Agreement (or its signature page thereof) will be deemed to be an executed
original thereof
7.5 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
13
7.6 Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof
7.7 Rules of Construction. Unless the context otherwise
requires, references to sections or subsections refer to sections or subsections
of this Agreement.
7.8 Interpretation. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in the masculine, the feminine
or neuter gender shall include the masculine, the feminine and the neuter.
7.9 Certain Acknowledgments. Each of the parties hereto
acknowledge that it has been represented by legal counsel of its own choice
throughout all negotiations and preparation and review of this Agreement, and
that it has executed this Agreement voluntarily. Each of the parties hereto
acknowledge that it is sophisticated in transactions of the type contemplated by
this Agreement, and each party wishes to create a relationship based on the
terms set forth in this Agreement.
7.10 Entire Agreement. This Agreement, together with the
exhibit hereto, is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, representations,
warranties or undertakings, other than those set forth or referred to herein.
This Agreement, together with the exhibits hereto, supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
7.11 Specific Performance. The parties hereto intend that
each of the parties have the right to seek damages or specific performance if
any other party hereto fails to perform such party's obligations hereunder.
Therefore, if any party shall institute any action or other proceeding to
enforce the provisions hereof, any party against whom such action or proceeding
is brought hereby waives any claim or defense therein that the plaintiff party
has an adequate remedy at law.
7.12 Term of Agreement. This Agreement shall become
effective upon the execution hereof and shall terminate upon the earlier of (a)
the date upon which the Company closes its Qualified Initial Public Offering or
(b) the twentieth anniversary of the date hereof
7.13 Further Assurances. Each of the parties shall execute
such documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
14
7.14 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE PRINCEPLES OF CONFLICTS OF LAW THEREOF.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
15
IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Stockholders Agreement on the date first written
above.
EHOTHOUSE INC.
By:
------------------------------------
Name: Xxxxxxx Xxxx
Title: President
-----------------------------------------
Xxxx Xxxxxxx,
a RAND Stockholder
-----------------------------------------
Xxxxx Xxxxxx,
a RAND Stockholder
-----------------------------------------
Xxxx Xxxx,
a RAND Stockholder
-----------------------------------------
Xxxxxxx X. Xxxxxxx,
a RAND Stockholder
XXXXXXX, XXXXXXX & XXXXXXXX LLP, a
RAND Stockholder
By:
------------------------------------
Name:
Title: Partner
[SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT]
16
Exhibit A
---------
ACKNOWLEDGMENT AND AGREEMENT
The undersigned wishes to receive from [insert name]
("Transferor") certain shares or certain options, warrants or other rights to
purchase [insert number] shares, par value $.01 per share, of [Common Stock]
(the "Shares") of eHotHouse Inc., a Delaware corporation (the "Company");
The Shares are subject to the Stockholders Agreement, dated
November___, 2000 (the "Agreement"), among the Company and the other parties
listed on the signature pages thereto;
The undersigned has been given a copy of the Agreement and
afforded ample opportunity to read and to have counsel review it, and the
undersigned is thoroughly familiar with its terms;
Pursuant to the terms of the Agreement, the Transferor is
prohibited from transferring such Shares and the Company is prohibited from
registering the transfer of the Shares unless and until a transfer is made in
accordance with the terms and conditions of the Agreement and the recipient of
the Shares acknowledges the terms and conditions of the Agreement and agrees to
be bound thereby; and
The undersigned wishes to receive the Shares and have the
Company register the transfer of the Shares.
In consideration of the mutual promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and to induce the Transferor to transfer the Shares to
the undersigned and the Company to register such transfer, the undersigned does
hereby acknowledge and agree that (i) he[/she] has been given a copy of the
Agreement and afforded ample opportunity to read and to have counsel review it,
and the undersigned is thoroughly familiar with its terms, (ii) the Shares are
subject to the terms and conditions set forth in the Agreement, and (iii) the
undersigned does hereby agree fully to be bound thereby as [a "RAND
Stockholder"] [an "Other Stockholder"] (as therein defined).
This day of
----------- ------------, ------.
------------------------------------
