EXHIBIT 9.1
STOCKHOLDERS AGREEMENT
----------------------
THIS STOCKHOLDERS AGREEMENT (this "AGREEMENT") is made as of February
__, 1999, by and among XXXXXXX.XXX, INC., a Delaware corporation (the "COMPANY")
and the Stockholders of the Company listed on the Schedule of Holders attached
hereto as Exhibit A and each other holder of Common Stock who hereafter executes
---------
a Joinder Agreement agreeing to be bound by the terms hereof. (The Persons
listed on Exhibit A and such additional Persons who execute Joinder Agreements
---------
are referred to collectively herein as the "STOCKHOLDERS".)
RECITALS
--------
A. The Stockholders have previously agreed that, in connection with
the Target Acquisitions, it is intended that the sellers of the companies
involved in such transactions receive capital stock of the Company in a manner
that qualifies for tax-free treatment under Section 351 of the Code. The
Stockholders agreed that, if necessary to preserve such tax-free treatment, they
would reduce their aggregate stake in the Company so that such stake plus the
stake of all Other Holders constitutes less than 20% of the outstanding Common
Stock of the Company, measured post-consummation of the IPO Event and the Target
Acquisitions. The Stockholders agreed that they would accomplish such reduction
by surrendering to the Company an appropriate number of their shares of the
Company's Common Stock immediately prior to the consummation of the Target
Acquisitions and the IPO Event.
B. As an integral part of the IPO Event, the Company will give the
underwriters an option (the "OVER-ALLOTMENT OPTION") to purchase additional
shares of the Company's Common Stock in order to cover over-allotments made in
connection with the sale of such stock to the public. By its terms, the Over-
Allotment Option will be exercisable not later than 30 days after the date of
the underwriting agreement pursuant to which shares are sold in the IPO Event.
C. The parties hereto wish by this Agreement to provide in a more
comprehensive fashion for the reduction in their aggregate ownership of Common
Stock and to address expressly the possibility that the underwriters may not
exercise the Over-Allotment Option as to some or all of the shares subject to
the Over-Allotment Option.
D. Any other Persons who acquire shares of the Company's capital
stock subsequent to the date of this Agreement but prior to the IPO Event and
the Target Acquisitions shall become parties to this Agreement with respect to
all of such capital stock by executing a Joinder Agreement.
AGREEMENT
---------
In consideration of the foregoing and the covenants set forth herein and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
DEFINITIONS. For purposes of this Agreement, in addition to terms defined
-----------
elsewhere herein, the following terms when used herein shall have the following
meanings:
"CODE" means the U.S. Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means shares of the Company's Common Stock, $.001 par value
per share.
"IPO EVENT" means an underwritten public offering, pursuant to an effective
registration statement under the Securities Act, that is underwritten by one or
more nationally-recognized investment banking firms and results in the Company
receiving not less than $10,000,000 in aggregate cash proceeds from such
offering.
"OTHER HOLDERS" means persons who own Common Stock prior to the IPO Event
and the Target Acquisitions but who are not bound by the terms of this
Agreement.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government body.
"PRO RATA SHARE" means the holder's pro rata share of the outstanding
Common Stock held by the Stockholders immediately prior to the consummation of
the Target Acquisitions and the IPO Event (the "applicable time"), which shall
be a fraction calculated by dividing (i) the number of shares of Common Stock
held by the holder as of the applicable time by (ii) the total number of shares
of Common Stock held by the Stockholders as of the applicable time.
"TARGET ACQUISITIONS" means the acquisitions by the Company of various
internet service providers that are expected to close in conjunction with the
IPO Event.
-2-
ARTICLE II
CUTBACK PROVISION
2.1 INITIAL CUTBACK. If, in connection with the consummation of the
---------------
IPO Event and the Target Acquisitions and based on the advice of the Company's
counsel and independent accountants, it becomes necessary to reduce the
Stockholders' aggregate holdings of Common Stock so that such holdings plus the
holdings of all Other Holders will constitute less than 20% of the outstanding
Common Stock of the Company (measured post-consummation of the IPO Event and the
Target Acquisitions), each of the Stockholders agrees to surrender to the
Company, immediately prior to the consummation of the Target Acquisitions and
the IPO Event, his or her Pro Rata Share of the aggregate number of shares of
the Company's Common Stock necessary to effect such reduction.
2.2 NUMBER OF SHARES OUTSTANDING. The determination of the number of
----------------------------
shares of the Company's Common Stock that the Stockholders are required to
surrender to the Company immediately prior to the consummation of the Target
Acquisitions and the IPO Event pursuant to Section 2.1 shall be based on the
-----------
number of shares of Common Stock that will be outstanding immediately after
completion of the IPO Event and the Target Acquisitions. In recognition of the
fact that the Over-Allotment Option is an integral part of the IPO Event, the
shares that are subject to the Over-Allotment Option will be treated for this
purpose as outstanding immediately after completion of the IPO Event and the
Target Acquisitions.
2.3 SUBSEQUENT CUTBACK. If, by the close of the last day on which
------------------
the Over-Allotment Option is exercisable (and, in any event, by no later than
the end of the thirtieth day following the date of the underwriting agreement
pursuant to which shares are sold in the IPO Event), the Over-Allotment Option
has not been exercised as to part or all of the shares of Common Stock subject
to the Over-Allotment Option, the Stockholders shall immediately surrender to
the Company additional shares of their Common Stock. The aggregate number of
additional shares of Common Stock the Stockholders must surrender pursuant to
this Section 2.3 shall equal 25% (rounded upward in the case of a fractional
-----------
share) of the number of shares of Common Stock that were subject to the Over-
Allotment Option but as to which the Over-Allotment Option was not exercised.
The obligation to surrender additional shares of Common Stock pursuant to this
Section 2.3 shall be allocated among the Stockholders in the same proportions
-----------
that the obligation to surrender shares pursuant to Section 2.1 was allocated.
-----------
-3-
ARTICLE III
EFFECT ON STOCKHOLDERS AGREEMENT
TERMINATION; ADDITIONAL PARTIES
3.1 EFFECT OF STOCKHOLDERS AGREEMENT. The provisions of this
--------------------------------
Agreement supersede and replace any provisions of other agreements entered into
by and among the Stockholders that are inconsistent with this Agreement.
3.2 TERMINATION. All rights and obligations set forth in this
-----------
Agreement, to the extent not previously terminated, shall terminate upon the
earlier of (i) the completion of the surrender of shares of Common Stock
pursuant to the provisions of Article II of this Agreement, and (ii) the written
-----------
agreement of the Stockholders holding 66 2/3% of the Stockholders' Common Stock.
3.3 ADDITIONAL PARTIES. Any other Persons who acquire shares of the
------------------
Company's capital stock prior to the IPO Event and the Target Acquisitions shall
become parties to this Agreement with respect to all of such capital stock by
executing a Joinder Agreement in the form attached hereto as Exhibit B.
---------
ARTICLE IV
MISCELLANEOUS
4.1 LEGEND. All certificates evidencing Equity Securities restricted
------
by this Agreement shall bear a legend indicating the existence of the
restrictions imposed hereby and a stop transfer order may be placed with respect
to such securities. The legend referred to in the preceding sentence shall be
substantially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO THE TRANSFER RESTRICTIONS AND
OTHER TERMS OF A STOCKHOLDERS AGREEMENT DATED AS
OF FEBRUARY __, 1999, AMONG XXXXXXX.XXX, INC.
AND CERTAIN STOCKHOLDERS THEREOF AND MAY NOT BE
TRANSFERRED EXCEPT IN ACCORDANCE WITH SUCH
AGREEMENT. A COPY OF SUCH AGREEMENT IS ON FILE
AT THE PRINCIPAL OFFICE OF XXXXXXX.XXX, INC. AND
WILL BE FURNISHED UPON REQUEST TO THE HOLDER OF
RECORD OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE.
4.2 NO WAIVER OF RIGHTS. No failure or delay on the part of any
-------------------
party in the exercise of any power or right hereunder shall operate as a waiver
thereof. No single or partial exercise of any right or power hereunder shall
operate
-4-
as a waiver of such right or power or of any other right or power. The waiver by
any party of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any other or subsequent breach hereunder. Except as
otherwise expressly provided herein, all rights and remedies existing under this
Agreement are cumulative with, and not exclusive of, any rights or remedies
otherwise available.
4.3 AMENDMENT. Except as otherwise expressly set forth in this
---------
Agreement, this Agreement may be amended or supplemented only by the written
agreement of the Company and the holders of at least sixty-six and two-thirds
percent (66-2/3%) of all outstanding shares of Common Stock held by the
Stockholders.
4.4 ENTIRE AGREEMENT; SUCCESSORS; THIRD PARTIES. This Agreement
-------------------------------------------
contains the entire agreement among the parties with respect to the transactions
contemplated hereby and supersedes all prior arrangements or understandings with
respect thereto, written or oral. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors, heirs, executors, administrators and permitted assigns.
Except as specifically set forth herein, nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto and
their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities.
4.5 NOTICES. All notices or other communications which are required
-------
or permitted hereunder shall be in writing and sufficient if delivered
personally, by facsimile or sent by overnight express or by registered or
certified mail, postage prepaid, addressed as follows:
If to the Company to:
XxxXxxx.xxx, Inc.
c/o Unison Partners
00 Xxxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
President
Tel: (000) 000-0000
Fax: (000) 000-0000
During the term of this Agreement, the Company shall maintain a
current list of all Stockholders (the "LIST"), including their names, addresses
and facsimile numbers, if any, for purposes of sending notices and other
communications pursuant to this Section 4.5. At the request of any party
-----------
hereto, the Company promptly shall provide a copy of the List to such party.
All deliveries of notice shall
-5-
be deemed effective when received by the persons entitled to such receipt or
when delivery has been attempted but refused by such person or persons.
4.6 CAPTIONS. The captions contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
4.7 COUNTERPARTS; FACSIMILES. This Agreement may be executed in any
------------------------
number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement. This Agreement may be executed and delivered by facsimile
transmission.
4.8 GOVERNING LAW AND VENUE. The validity, interpretation,
-----------------------
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware applicable to agreements made and entirely to be performed
within such jurisdiction. The party bringing any action under this Agreement
shall only be entitled to choose the federal or local courts in the District of
Columbia or Delaware as the venue for such action, and each party consents to
the jurisdiction of the court chosen in such manner for such action.
4.9 SEVERABILITY. The provisions of this Agreement are severable,
------------
and the unenforceability of any provision of this Agreement shall not affect the
enforceability of the remainder of this Agreement. The parties acknowledge that
it is their intention that if any provision of this Agreement is determined by a
court to be invalid, illegal or unenforceable as drafted, that provision should
be construed in a manner designed to effectuate the purpose of that provision to
the greatest extent possible under applicable law.
4.10 TRANSFERS; TRANSFERS IN VIOLATION OF AGREEMENT. Prior to
----------------------------------------------
Transferring any Common Stock of the Company ("EQUITY SECURITIES") to any
Person, the transferring Stockholder shall cause the prospective transferee to
execute and deliver to the Company a Joinder to this Agreement in the form of
Exhibit B hereto. Any Transfer or attempted Transfer of any Equity Securities
---------
in violation of any provision of this Agreement shall be void, and the Company
shall not record such transfer on its books or treat any purported transferee of
such Equity Securities as the owner of such shares for any purpose.
4.11 SPECIFIC PERFORMANCE. The rights of the parties under this
--------------------
Agreement are unique and the failure of a party to perform its obligations
hereunder would irreparably harm the other parties hereto. Accordingly, the
parties shall, in addition to such other remedies as may be available at law or
in equity, have the right to enforce their rights hereunder by actions for
specific performance to the extent permitted by law.
-6-
4.12 FURTHER ASSURANCES. Each of the parties hereto agrees to
------------------
execute all such further instruments and documents and to take all such further
action as any other party may reasonably require in order to effectuate the
terms and purposes of this Agreement.
[Execution Pages Follow]
-7-
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed as of the day and year first
above written.
XXXXXXX.XXX, INC.
By: ______________________________
Xxxxxxx X. Xxxxx
President
-8-
EXHIBIT A to
Stockholders Agreement
----------------------
SCHEDULE OF HOLDERS
-------------------
STOCKHOLDERS:
------------
Xxxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxxx Xxxxxxx
Xxxxxxx X. Xxxxx
Xxxxx X. Xxxxx
Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxx
Xxxxxxxx Xxxx
Xxxx Xxxx
Xxxxxxx X. Xxxxx and
Xxxxxxx X. Xxxxx
Xxx Xxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxxx
M. Xxxxxxxx Xxxxx
-9-
EXHIBIT B to
Stockholders Agreement
----------------------
JOINDER AGREEMENT
-----------------
This Joinder Agreement (this "JOINDER AGREEMENT") is made as of the
date written below by the undersigned (the "JOINING PARTY") and the parties to
the Stockholders Agreement, dated as of February __ , 1999 (the "STOCKHOLDERS
AGREEMENT") among XxxXxxx.xxx, Inc. and the Stockholders. Capitalized terms
used but not defined herein shall have the meanings given such terms in the
Stockholders Agreement.
Accordingly, the Joining Party hereby acknowledges, agrees and
confirms that, by its execution of this Joinder Agreement, the Joining Party
will be deemed to be a party to the Stockholders Agreement and shall have all of
the obligations of a "STOCKHOLDER" thereunder as if it had executed the
Stockholders Agreement. The Joining Party hereby ratifies, as of the date
hereof, and agrees to be bound by, all of the terms, provisions and conditions
contained in the Stockholders Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Joinder
Agreement as of the date written below.
Date: _________________________
STOCKHOLDER
_______________________________
[NAME]
Address:
_______________________________
_______________________________
Tel:___________________________
Fax:___________________________
-10-
