Exhibit 10.19
STOCKHOLDERS AGREEMENT
This Stockholders Agreement dated as of May 19, 1993 (the "AQREEMENT") by
and among NEON Systems, Inc., a Delaware corporation (the "COMPANY"), JMI Equity
Fund, L.P., a Delaware limited partnership (the "PURCHASER"), and Xxxxx
Xxxxxxxxx (the "STOCKHOLDER"):
WITNESSETH:
WHEREAS, the Stockholder owns certain outstanding shares of the Common
Stock, par value $.01 per share (the "COMMON STOCK"), of the Company;
WHEREAS, pursuant to the Series A Stock Purchase Agreement of even date
herewith (the "PURCHASE AGREEMENT"), the Purchaser is purchasing on the Closing
Date (as defined in the Purchase Agreement) an aggregate of 500,000 shares (the
"PREFERRED SHARES") of Series A Convertible Preferred Stock, par value $.01 per
share (the "PREFERRED STOCK"), of the Company; and
WHEREAS, the Purchaser and the Stockholder wish to provide for certain tax
and other matters and for their continuing representation on the Board of
Directors of the Company in the manner set forth below;
NOW THEREFORE, in consideration of these premises and the mutual covenants
contained in this Agreement, the parties hereto agree as follows:
1. S CORPORATION STATUS. (a) The term "TAXES" as used herein means all
federal, state, local, foreign and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall profits, customs duties, or other
taxes, fees, assessments or other governmental charges of any kind whatever,
together with any interest and any penalties, additions to tax or additional
amounts with respect thereto, and the term "TAX" means any one of the foregoing
taxes. The term "RETURNS" as used herein, means all returns, declarations,
reports, statements and other documents required to be filed in respect of
taxes, and "RETURN" means any one of the foregoing returns.
(b) The Stockholder, represents and warrants to the Purchaser that:
(i) the Company and its stockholders, including the Stockholder, have made a
valid election for the Company to be treated as an "S corporation," as that term
is defined in Section 1361(a) of the Internal Revenue Code of 1986, as amended
(the "CODE"), and at all times after such election the Company has qualified as
an S corporation; (ii) the Stockholder has timely filed all returns with respect
to S corporation taxes required to be filed through the date hereof, and paid
all taxes required to be paid with respect to such filed returns; (iii) there
has not been any audit of any return filed by the Stockholder with respect to,
or which may relate to, such S corporation tax liabilities; and (iv) no such
audit of the Stockholder is in progress and the Stockholder has not been
notified by any tax authority that any such audit is contemplated or pending.
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(c) The Stockholder shall not take any action that would make, or
would result in, the S corporation election of the Company becoming ineffective,
except for the transfer of the Preferred Shares at the Closing. The Stockholder
shall prepare and timely file, in a manner consistent with prior years, when due
all returns with respect to the short tax year from January 1, 1992 to and
including the Closing Date and shall timely pay any taxes and estimated taxes,
required to be paid by such Stockholder (including without limitation pursuant
to Section 6655 of the Code) after the date hereof.
(d) If it is determined, either (i) by a finding or order in
connection with any government or judicial audit or proceeding to which any
stockholder of the Company, including the Stockholder, is a party or (ii) by the
Company's independent public accountants that the Company's S corporation
election pursuant to Section 1362 of the Code was not validly in effect for any
period after such election was purportedly made, the Stockholder shall promptly
remit to the Company in cash, any tax liability (including any penalties,
additions to tax or interest assessed with respect thereto) of the Company in
connection with any taxes which may be imposed on the Company as a result of
such invalid election.
(e) Notwithstanding anything to the contrary contained in this
Agreement, the provisions of this Section 1 shall survive until the applicable
statutes of limitations with respect to any taxes contemplated hereby shall have
expired.
2. VOTING OF SHARES. In any and all elections of directors of the
Company (whether at a meeting or by written consent in lieu of a meeting), the
Purchaser and the Stockholder shall vote or cause to be voted all Shares (as
defined below) owned by him, or over which he has voting control, and otherwise
use his or its respective best efforts, so as to fix the number of directors of
the Company at five (5) and to elect (i) up to two (2) members designated by the
Purchaser, who shall be elected by the holders of the Preferred Shares, (ii) up
to two (2) members designated by the Stockholder, who shall be elected by the
holders of the Common Stock, and (iii) one (1) member designated jointly by the
Purchaser and the Stockholder, who shall not be an affiliate of the Purchaser or
of the Stockholder and who shall be elected by the holders of the Preferred
Stock and the Common Stock, voting together as a single class (the "INDEPENDENT
NOMINEE"). "SHARES" shall mean and include any and all shares of Common Stock
and/or shares of capital stock of the Company, by whatever name called, which
carry voting rights (including voting rights which arise by reason of default)
and shall include any shares now owned or subsequently acquired by the Purchaser
or the Stockholder, however acquired, including without limitation stock splits
and stock dividends.
3. TERMINATION. This Agreement shall terminate in its entirety on the
earliest of (a) the seventh anniversary of the date of this Agreement, or (b)
the closing of the Company's initial public offering of shares of Common Stock
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "ACT"), resulting in at least $10,000,000 of net proceeds
to the Company.
4. NO REVOCATION. The voting agreements contained herein are coupled
with an interest and may not be revoked, except by written consent of the
Purchaser and the Stockholder.
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5. INDEMNIFICATION. In the event that any director elected pursuant to
Section 2 of this Agreement shall be made or threatened to be made a party to
any action, suit or proceeding with respect to which he may be entitled to
indemnification by the Company pursuant to its certificate of incorporation or
bylaws, or otherwise, he shall be entitled to be represented in such action,
suit or proceeding by counsel of his choice and the reasonable expenses of such
representation shall be reimbursed by the Company to the extent provided in or
authorized by said certificate of incorporation or by-laws. The Purchaser and
the Stockholder shall not take any action to amend any provisions of the
certificate of incorporation or by by-laws of the Company relating to
indemnification of directors, as presently in effect, without the prior written
consent of the Purchaser and the Stockholder.
6. RESTRICTIVE LEGEND. All certificates representing Shares owned or
hereafter acquired by the Stockholder or any transferee of the Stockholder bound
by this Agreement shall have affixed thereto a legend substantially in the
following form:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN VOTING AGREEMENTS AS SET FORTH IN A STOCKHOLDERS AGREEMENT BY
AND AMONG THE REGISTERED OWNER OF THIS CERTIFICATE, THE COMPANY AND
CERTAIN OTHER STOCKHOLDERS OF THE COMPANY, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE OFFICERS OF THE SECRETARY OF THE
COMPANY.
7. SUCCESSORS AND ASSIGNS. This Agreement and the rights and obligations
of the Purchaser hereunder may be assigned by the Purchaser to any person or
entity to which Shares are transferred by the Purchaser, and such transferee
shall be deemed a "Purchaser" for purposes of this Agreement; PROVIDED that the
transferee provides prior written notice of such assignment to the Company.
Notwithstanding the foregoing, the Purchaser shall remain subject to the terms
and conditions of this Agreement with respect to any Preferred Shares owned by
the Purchaser following any such transfer.
8. GENERAL.
(a) SEVERABILITY. The provisions of this Agreement are severable, so
that the invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other term or provision of this
Agreement, which shall remain in full force and effect.
(b) SPECIFIC PERFORMANCE. In addition to any and all other remedies
that may be available at law in the event of any breach of this Agreement, the
Purchaser shall be entitled to specific performance of the agreements and
obligations of the Company and the Stockholder hereunder and to such other
injunctive or other equitable relief as may be granted by a court of competent
jurisdiction.
(c) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE GENERAL
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CORPORATION LAW OF THE STATE OF DELAWARE AS TO MATTERS WITHIN THE SCOPE THEREOF
AND AS TO ALL OTHER MATTERS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
THE CONFLICTS OF LAWS THEREOF.
(d) NOTICES. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hand or mailed by first class certified or registered mail, return receipt
requested, postage prepaid:
If to the Company, at 0000 Xxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xx 00000,
Attention: President, or at such other address or addresses as may have been
furnished in writing by the Company to the Purchaser, with a copy to Xxxxxx X.
Xxxxxxxx, Esq., 0000 Xxxxxx Xxxxxx, Xxxxxx, XX 00000; or
If to the Purchaser, at 00000 Xxxxxxxxx Xxxxxxx, Xxxxx 0000, Xxxxx Xxxx,
Xxxxx 00000, Attention: Xxxxxxx X. Xxxxx, or at such address or addresses as may
have been furnished to the Company in writing by the Purchaser, with a copy to
Xxxx X. Xxxxxxx, Esq., Xxxxx, Xxxxxxx & Xxxxxxxxx, 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000; or
If to the Stockholder at such address or addresses as may have been
furnished to the Company in writing by such Stockholder.
Notices provided in accordance with this Section 9 shall be deemed
delivered upon personal delivery or two business days after deposit in the mail.
(e) COMPLETE AGREEMENT; AMENDMENTS. This Agreement constitutes the
full and complete agreement of the parties hereto with respect to the subject
matter hereof. No amendment, modification or termination of any provision of
this Agreement shall be valid unless in writing and signed by the Company, the
Purchaser and the holders of a majority, by voting power, of the Shares then
held by all Stockholders.
(f) PRONOUNS. Whenever the content may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute one Agreement binding on all the
parties hereto.
(h) CAPTIONS. Captions of sections have been added only for
convenience and shall not be deemed to be a part of this Agreement.
(i) DEFINITION OF COMPANY. As used in this Agreement the term the
"Company" shall include NEON Systems, Inc., a Delaware corporation, and its
predecessor, an Illinois corporation.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
as of the day and year first above written.
NEON SYSTEMS, INC.
By: /s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx, President
JMI EQUITY FUND, L.P.
By: JMI Partners, L.P.
Its General Partner
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
A General Partner
/s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx
