Exhibit 10.17
SHAREHOLDERS AGREEMENT
This Shareholders Agreement, dated for reference purposes September 12,
2000, is made by and among TSET, Inc., a Nevada corporation ("TSET"), Xxxxx
Xxxxxxxx ("Xxxxxxxx") an individual, and XxxxXxxxx.Xxx, Inc., an Oregon
corporation ("the Corporation"). TSET and Xxxxxxxx are referred to in this
Agreement collectively as the "Shareholders" and each individually as a
"Shareholder."
The Shareholders own all of the outstanding common stock of the
Corporation. The Shareholders believe that it will promote their mutual
interests and help insure continuity and stability in the management of the
Corporation to impose certain restrictions and obligations upon themselves and
the Corporation with respect to the transfer and ownership of their shares of
common stock of the Corporation ("Shares").
Therefore, for valuable consideration, including the mutual covenants set
forth below, the parties agree as follows:
1. RESTRICTIONS ON TRANSFER
1.1 No transfer of any of the Shares shall be valid unless such transfer is
made in accordance with the provisions of this Agreement. Any transfer in
violation of this Agreement shall be void. The Corporation may demand evidence
of compliance with this Agreement as a condition precedent to registering the
purported transfer on the Corporation's books.
1.2 The restrictions set forth in this Agreement shall apply to all Shares
now or at any time owned or acquired by any Shareholder.
2. TRANSFER DEFINED
The term "transfer" as used in this Agreement means any sale, assignment,
exchange, pledge, hypothecation, lien, encumbrance, attachment, levy,
foreclosure, or sale by legal process. The term transfer as used in this
Agreement shall also include any filing by or against a Shareholder under any
bankruptcy, reorganization, receivership, or other laws providing relief for
debtors (collectively, Debtor Relief Laws). The term transfer shall not,
however, include any gift, assignment, or sale to the Corporation.
3. RIGHT OF FIRST REFUSAL UPON PROPOSED TRANSFER
3.1 If a Shareholder wishes to transfer part or all of his Shares to a bona
fide third party who is willing to purchase such Shares, the Shareholder must
first offer to sell such Shares to the Corporation and the other Shareholders,
at the price and on the same terms of the proposed transfer. The offer shall be
made by giving the other Shareholders and the Corporation written notice of the
proposed transfer (the "Proposed Transfer Notice") stating (a) that the
Shareholder intends to transfer part or all his Shares, and (b) the terms of the
proposed transfer, including the name and address of the proposed transferee,
the transfer price, and the terms of payment.
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3.2 During the 30-day period following delivery of the Proposed Transfer
Notice the Corporation or the other Shareholders may accept the offer by giving
written notice to the transferring Shareholder.
3.3 The Corporation shall have the first right to purchase the offered
Shares. If the Corporation elects not to purchase the offered Shares, the other
Shareholders may purchase the offered Shares in such proportions as they
mutually agree. If the other Shareholders can not agree on how many of the
offered Shares each shall purchase, they shall have the right to purchase the
offered Shares in proportion to the number of Shares each other Shareholder then
owns.
3.4 If the Corporation and the other Shareholders do not accept the offer
during the 30-day period, then the Shareholders must upon the earlier of (a)
within five (5) business days after determining that neither the Corporation nor
the Shareholders are going to accept the offer or (b) the expiration of the
30-day period, provide the additional notice required under paragraph 6 of the
Amendment to Agreement and Plan of Reorganization dated of even date herewith
("Amendment"). If the option to purchase provided for under paragraph 6 of the
Amendment is not exercised, then the transferring Shareholder may complete the
transfer, but only in strict accordance with the terms previously stated in the
Proposed Transfer Notice and only if the proposed transferee first executes a
counterpart of this Agreement, as amended, pursuant to which the proposed
transferee agrees to be bound by the terms and provisions of this Agreement. If
the transfer of the Shares is not completed within 30 days after the expiration
of the option period provided for in paragraph 6 of the Amendment, the offered
Shares shall again become subject to the restrictions of this Agreement.
4. INVOLUNTARY TRANSFERS
4.1 If any Shareholder (1) voluntarily or involuntarily becomes a debtor
under the United States Bankruptcy Code (2) makes a general assignment for the
benefit of creditors or permits any of his or her Shares to be attached or
levied upon or to become subject to judicial sale or execution of judgment, or
(3) would be required to voluntarily or involuntarily transfer his or her Shares
as a result of any event other than his or her death, the Shareholder shall
automatically be deemed, immediately before such event occurs, to have made an
offer (the "Offer") to sell to the Corporation and the other Shareholders all of
the Shareholder's Shares at the price in effect under Section 5 on the date of
the Offer and on the terms set forth in Section 6. Written notice of the Offer
shall be given by certified mail to the Corporation and the other Shareholders.
The Offer shall state the number of Shares to be transferred, the name and
address of the proposed transferee and the nature and terms of the proposed
transfer. The Offer shall be given by the person, firm, or entity seeking to
attach, levy upon, lien, encumber, foreclose upon, sell by legal process, or
otherwise exercise any asserted right or remedy with respect to the Shares. If
the transfer is a proceeding against a Shareholder under any Debtor Relief Law,
the person, firm, or entity filing the proceeding shall give the Offer.
4.2 Within 90 days of the receipt of the Offer, the Corporation or the
other Shareholders may elect to purchase all (but not less than all) of the
offered Shares. The Corporation shall have the first right to purchase the
offered Shares. If the Corporation elects not to purchase the offered Shares,
the other Shareholders may purchase the offered Shares in such proportions as
they mutually agree. If the other Shareholders can not agree on how many of the
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offered Shares each shall purchase, they shall have the right to purchase the
offered Shares in proportion to the number of Shares each other Shareholder then
owns. If the Corporation or the other Shareholders do not elect to purchase all
of the offered Shares, the transfer may then become effective. The
transferee(s), in either case, shall then be deemed to be a Shareholder subject
to all the restrictions of this Agreement. If the transfer of the Shares is not
completed within 30 days after the expiration of the 90-day period specified
above, the offered Shares shall again become subject to the restrictions of this
Agreement.
5. PRICE
If the Corporation or other Shareholders purchase Shares as a result of an
involuntary transfer, a transfer by operation of law, or pursuant to a
proceeding filed under any Debtor Relief Law, the price to be paid by the
Corporation or other Shareholders for the Shares shall be the lesser of the sum
required to satisfy the applicable lien, encumbrance, judgment, or proceeding or
the book value of the Shares being purchased.
6. TERMS
6.1 In the case of an involuntary transfer a purchaser shall pay the
purchase price in cash at closing or at its election, in a series of 60
substantially equal monthly payments of principal and interest beginning on the
closing date. The remaining balance (if any) shall be payable in full on the
date the 60th payment is due. Interest shall be computed at a rate equal to the
prime rate published in the Wall Street Journal on the closing date and shall be
adjusted annually on each anniversary of the closing date.
6.2 Except as may be otherwise agreed by the parties, the closing of any
purchase shall be held at the Corporation's principal place of business on the
30th day after all notices have been given, all options have been exercised, and
the purchase price has been determined. If the 30th day is a Saturday, Sunday,
or a legal holiday, the closing shall be held on the next business day. At
closing, the purchaser(s) shall tender to the selling Shareholder the required
payment, and the selling Shareholder shall tender to the purchaser(s) the Shares
to be purchased, together with an executed stock power.
7. LEGEND
Each certificate representing Shares of the Corporation now or hereafter
held by the Shareholders shall be inscribed as follows:
"The transfer of the shares of the Corporation represented by this
certificate is restricted under the terms of a Shareholders Agreement
dated September 12, 2000, a copy of which is on file at the offices of
the Corporation."
8. WAIVER
Waiver by any party of any provision of this Agreement shall be in writing
and signed by the party waiving the provision. In any event, such waiver shall
not prejudice that party's right to subsequently require strict performance of
the same or any other provision of this Agreement.
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9. ATTORNEY FEES
In the event of any legal action to enforce or interpret this Agreement, or
otherwise related to this Agreement, or in the event a petition in bankruptcy is
filed by or on behalf of a party, the prevailing party, in addition to all other
sums that the other party may be required to pay, shall be entitled to recover
such additional sum for the prevailing party's attorney fees and costs, as the
applicable court determines to be reasonable in the action, including any
proceeding at trial, on appeal, or on petition for review, and in any bankruptcy
proceeding.
10. EQUITABLE RELIEF
The parties to this Agreement acknowledge that the Shares of the
Corporation are unique and that money damages for breach of this Agreement are
inadequate. Any party aggrieved by a breach of the provisions of this Agreement
may bring an action at law or a suit in equity to obtain redress, including
specific performance, injunctive relief, or any other available equitable
remedy. Time and strict performance are of the essence of this Agreement.
11. SUCCESSION
This Agreement shall be binding on and inure to the benefit of the heirs,
personal representatives, successors, assigns, and respective transferees of the
Corporation and the Shareholders.
12. NEW SHAREHOLDERS
Notwithstanding any other provision, this Agreement shall be binding upon
any person who becomes a shareholder of the Corporation by any method other than
pursuant to an IPO, and such new Shareholder shall, if requested by the
Corporation's Board of Directors or by the holders of a majority of the
remaining Shares, execute a counterpart of this Agreement. The parties agree to
require the execution of a counterpart of this Agreement by any transferee of
Shares as a precondition to the effectiveness of any transfer as defined in
Section 2 of this Agreement and of the effectiveness of any issue of new or
treasury shares.
13. NOTICES
Any notice, direction, or other instrument required or permitted to be
given under this Agreement shall be in writing and may be given by delivering
the same or sending the same by telecommunication or by registered or certified
mail, postage prepaid, addressed to the applicable address shown below
Agreement. Any notice, direction, or other instrument, if delivered, shall be
deemed to have been given on the date on which it was delivered. If transmitted
by telecommunication, it shall be deemed to have been given at the opening of
business in the office of the addressee on the business day next following its
transmission. If mailed, it shall be deemed to have been given on the second
business day following its mailing. In this paragraph, a business day means any
day except Saturday, Sunday, or a statutory holiday in the United States. Notice
shall be sent to the addresses set for below:
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If to the Corporation:
00000 X.X. 00xx, Xxxxx 000
Xxxxxx, Xxxxxx 00000
If to a Shareholder: to such Shareholder's address on file with the
Corporation
Any party may, by written notice to the others, change his, her or its
address for purposes of this Agreement.
14. GOVERNING LAW
This Agreement shall be governed and construed in all respects in
accordance with the laws of the state of Oregon without regard to its conflicts
of laws rules.
15. SEVERABILITY
The invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions hereof, and this Agreement shall
be construed as if such invalid or unenforceable provisions were omitted. In any
such case, the provision deemed invalid or unenforceable shall be remade or
interpreted by the parties in a manner that such provision shall be enforceable
to preserve, to the maximum extent possible, the original intention and meaning
thereof.
16. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto
and supersedes all prior promises, representations, and agreements with respect
to Shares of the Corporation. No modification of this Agreement shall be
effective unless in writing and signed by all the parties.
17. PARAGRAPH CAPTIONS
Paragraph captions are for the convenience of the parties and shall not
affect the interpretation of this Agreement.
18. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument.
19. PUBLIC OFFERING
If a public offering is made for the sale of shares with regulatory
approval under state Blue Sky laws or the Securities and Exchange Commission of
the United States, (a) the Shareholders agree to cooperate with the Corporation
in obtaining such regulatory approval, including, but not limited to, providing
to the Corporation information and documentation regarding the Shareholders, and
(b) upon the sale of shares pursuant to such offering, this Agreement shall
terminate.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
SHAREHOLDERS:
TSET INC
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Chairman and
Chief Executive Officer
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
CORPORATION:
XXXXXXXXX.XXX, INC.
By:
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Title:
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SHAREHOLDERS:
TSET INC
By: ---------------------------------
Xxxxxxx X. Xxxxxx, Chairman and
Chief Executive Officer
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Xxxxx Xxxxxxxx
CORPORATION:
XXXXXXXXX.XXX, INC.
By: /s/Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Title: CEO
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