STOCKHOLDERS' AGREEMENT
-----------------------
This Stockholders' Agreement (this "Agreement"), is made as of
May 9, 2000, by and among Webmodal, Inc., a Delaware corporation (the
"Company"), Net Value Holdings, Inc. (the "Investor"), and Xxxxxxxxxxx X. Xxxxxx
(the "Founder") and such other parties as may from time to time and with the
consent of the Company become parties hereto (the Founder and the other parties
who become parties hereto being collectively referred to as the "Principal
Stockholders" and, collectively with the Investor, the "Stockholders"). This
Agreement shall become effective as of the Closing (as defined therein) of that
certain Series A Preferred Stock Purchase Agreement dated as of even date
herewith (the "Purchase Agreement") by and between the Company and the Investor.
RECITALS
--------
WHEREAS, the parties hereto desire to restrict the sale,
assignment, transfer, encumbrance or other disposition of the securities of the
Company which the Principal Stockholders currently own or may hereafter acquire
(collectively, the "Securities") and to provide for certain rights and
obligations in respect thereto as hereinafter provided and the parties also wish
to agree upon the composition of the Board of Directors.
WHEREAS, the execution and delivery of this Agreement by the
Company, the Investor and the Principal Stockholders is a condition to the
closing of the issuance, sale and purchase of the Series A Preferred Stock
pursuant to the Purchase Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the agreements set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Restrictions on Transfers.
1.1 General Prohibition on Transfers; Permitted Transfers.
(a) Except as otherwise permitted hereby, no Stockholder shall
directly or indirectly sell, assign, pledge, encumber or otherwise transfer to
any person or entity (a "Transferee") any Securities unless the Stockholder has
complied with all of the terms of this Agreement. Any purported sale,
assignment, pledge, encumbrance or other transfer in violation of any provision
of this Agreement shall be void and ineffective and shall not operate to
transfer any interest or title to the purported Transferee.
(b) The restrictions contained in this Agreement with respect
to transfers by Stockholders of Securities shall not apply (i) to repurchases of
Securities of a Principal Stockholder pursuant to any stock option plan or other
incentive agreement, plan or arrangement approved by the board of directors of
the Company between the Principal Stockholder and the Company which provides the
Company with the right to repurchase such Securities; (ii) to any transfer of
Securities by a Principal Stockholder to any such Principal Stockholder's
spouse, parents, siblings (by blood or adoption) or lineal descendants (by blood
or adoption); (iii) to any transfer of Securities by a Principal Stockholder to
a trust, partnership, corporation, limited liability company or other similar
entity solely for the benefit of such Principal Stockholder or such Principal
Stockholder's spouse, parents, siblings or lineal descendants; (iv) to any
transfer of Securities by a Principal Stockholder, or upon a Principal
Stockholder's death to the executors, administrators, testamentary trustees,
legatees or beneficiaries of such Principal Stockholder; or (v) to any transfer
of Securities by the Investor to its Affiliates (as defined in Section
1.2(b)(iii) hereof); provided, that in each of clauses (ii) through (v), each
transferee, donee, heir or distributee shall, as a condition precedent to such
transfer, become a party to this Agreement by executing an Adoption Agreement
substantially in the form attached as Annex A and shall have all of the rights
and obligations of a Stockholder hereunder.
1.2 Right of First Offer.
(a) Except as otherwise permitted in Section 1.1(b) of this
Agreement, transfers of the Securities by Stockholders shall not be permitted
unless the Stockholder has complied with this Section 1.2. Any Stockholder who
intends to transfer any of such Stockholder's Securities (the "Proposed Seller")
shall give written notice (the "Seller's Notice") to the Company and each other
Stockholder (the "Offerees") stating that the Proposed Seller intends to make
such a transfer, identifying the party who made the bona fide offer, if any (the
"Proposed Transferee"), specifying the number of Securities proposed to be
transferred (the "First Offer Shares"), and specifying the per share purchase
price at which the Proposed Seller intends to transfer the First Offer Shares or
which the Proposed Transferee, if any, has offered to pay for the First Offer
Shares (the "Sale Price"). A copy of the bona fide offer, if available, and a
statement of the number of shares held by each Stockholder shall be attached to
the Seller's Notice, if available.
(b) (i) Upon delivery of the Seller's Notice, the Company
shall have the irrevocable and exclusive option to purchase, upon delivery to
the Proposed Seller within 20 days of delivery of the Seller's Notice, all or
any portion of the First Offer Shares at the price specified in the Seller's
Notice and, if pursuant to a bona fide offer, on the same terms as the bona fide
offer. The Company shall deliver a notice (the "Company Notice") to the Proposed
Seller and each of the Offerees of its election to purchase such First Offer
Shares within such 20 day period. To the extent that the Company does not elect
to purchase all of the First Offer Shares, each Offeree shall have the
irrevocable and exclusive option to purchase up to that number of the remaining
First Offer Shares at the Sale Price as equals the product of (A) the number of
remaining First Offer Shares multiplied by (B) a fraction, the numerator of
which shall be the number of shares of Common Stock owned by such Offeree
(assuming full conversion and exercise of all convertible and exercisable
securities into Common Stock) and the denominator of which shall be the number
of shares of Common Stock owned by all of the Offerees (assuming full conversion
and exercise of all convertible and exercisable securities into Common Stock)
(the "Proportionate Share"). Upon delivery of the Company Notice, each Offeree
shall have 20 days to deliver to the Proposed Seller a written notice stating
whether it elects to exercise its option under this Section 1.2(b) and the
maximum number of First Offer Shares (up to all of such Offeree's Proportionate
Share) that it is willing to purchase, and such notice shall constitute an
irrevocable commitment to purchase such First Offer Shares, subject only to such
conditions as were contained in the bona fide offer, if applicable.
(ii) If an Offeree does not elect to purchase its
full Proportionate Share, the Proposed Seller shall deliver another written
notice to each Offeree that has elected to purchase its full Proportionate Share
(a "Fully Exercising Offeree") stating the number of unpurchased First Offer
Shares. Each Fully Exercising Offeree shall be entitled, by delivering written
notice to the Proposed Seller within five days following the delivery of such
notice, to purchase up to all of the remaining First Offer Shares at the Sale
Price. In the event of an oversubscription, the oversubscribed amount shall be
allocated among such Fully Exercising Offerees pro rata based on the number of
shares of Common Stock (assuming full conversion and exercise of all convertible
and exercisable securities into Common Stock) owned by each of them. The
delivery of the notice of election under this paragraph shall constitute an
irrevocable commitment to purchase such First Offer Shares, subject only to such
conditions as were contained in the bona fide offer, if applicable. The closing
of the sale of First Offer Shares to the Company and any exercising Offerees
shall occur in accordance with the terms of the bona fide offer, if applicable,
and otherwise on or before the fifth business day following the expiration of
the first refusal rights under this Section 1.2. At such closing, the Proposed
Seller shall deliver a certificate or certificates representing the First Offer
Shares, properly endorsed for transfer, and the Company and the exercising
Offerees shall deliver payment of the purchase price therefor in accordance with
the terms of the bona fide offer, if applicable, and otherwise by cashier's
check or wire transfer of immediately available funds.
(iii) For the purposes of determining the number of
shares an Offeree is entitled to sell or purchase pursuant to this Agreement,
the shares held by the Investor shall be deemed to include any shares of Common
Stock (assuming full conversion and exercise of all convertible and exercisable
securities into Common Stock) held by officers, directors, employees and
affiliates of the Investor and any partners, officers or directors of the
Investor's affiliates ("Affiliates").
(c) If any First Offer Shares are not elected to be purchased
pursuant to this Section 1.2, then, subject to Section 1.3 hereof, the Proposed
Seller shall be free, for a period of 90 days from the date of the Seller's
Notice, to sell the remaining First Offer Shares (i) to the Transferee at the
price and on the terms and conditions of the bona fide offer, if applicable, and
(ii) otherwise, at a price equal to or greater than the Sale Price and upon
terms no more favorable to the Transferee than those specified in the Seller's
Notice. Any transfer of the remaining First Offer Shares by the Proposed Seller
after the end of such 90 day period or any change in the terms of the sale as
set forth in the Seller's Notice which are more favorable to the Transferee
shall give rise anew to the rights provided in the preceding paragraphs.
(d) If the Company and/or the Offerees elect to purchase any
or all of the First Offer Shares mentioned in the Seller's Notice, the Company
and/or such Offeree shall have the right to purchase the First Offer Shares for
cash consideration whether or not part or all of the consideration specified in
the Seller's Notice is other than cash. If part or all of the consideration to
be paid for the First Offer Shares as stated in the Seller's Notice is other
than cash, the price stated in such Seller's Notice shall be deemed to be the
sum of the cash consideration, if any, specified in such Seller's Notice, plus
the fair market value of the non-cash consideration. The fair market value of
the non-cash consideration shall be determined by the Board of Directors of the
Company, and its judgment as to the fair market value of such non-cash
consideration shall be binding upon the Proposed Seller and the other Offerees.
1.3 Right of Co-Sale. In the event that all of the First Offer Shares
are not purchased by the Company or the Offerees as provided in Section 1.2
hereof, the Proposed Seller (if it is not the Investor) shall deliver a notice
to the Investor informing the Investor of the number of First Offer Shares not
elected to be purchased by the Offerees and the number of First Offer Shares it,
he or she still holds and intends to sell to the Proposed Transferee (the
"Co-Sale Shares"). The Investor shall have the right, exercisable upon written
notice to the Proposed Seller within five days after the giving of such notice
by the Proposed Seller, to participate in the Proposed Seller's sale of Co-Sale
Shares at the Sale Price. The delivery of the notice of election under this
paragraph shall constitute an irrevocable commitment to sell such shares
contingent only upon the closing of the proposed sale on the terms communicated
in the notice. To the extent the Investor exercises such right of participation
in accordance with the terms and conditions set forth below, the number of
Securities which the Proposed Seller may sell to the Proposed Transferee shall
be correspondingly reduced. The right of participation of the Investor shall be
subject to the following terms and conditions:
(a) The Investor may elect to sell all or any part of that
number of shares of the Company held by the Investor equal to the product
obtained by multiplying (i) the aggregate number of Co-Sale Shares by (ii) a
fraction, the numerator of which is the number of shares of Common Stock of the
Company (assuming full conversion and exercise of all convertible and
exercisable securities into Common Stock) at the time owned by the Investor and
the denominator of which is the combined number of shares of Common Stock of the
Company (assuming full conversion and exercise of convertible and exercisable
securities into Common Stock) at the time owned by the Proposed Seller and the
Investor (the "Co-Sale Share").
(b) The Investor shall (i) effectuate the sale by promptly
delivering to the Proposed Seller for transfer to the Proposed Transferee one or
more certificates, properly endorsed for transfer, which represent the number of
shares of Common Stock which the Investor elects to sell and (ii) provide a
written representation and warranty to the Proposed Transferee that the shares
of capital stock represented by such certificates are free and clear of all
pledges, liens and other encumbrances and that the person transferring on behalf
of the Investor has requisite power to do so.
(d) The stock certificates which the Investor delivers to the
Proposed Seller shall be transferred by the Proposed Seller to the Proposed
Transferee in consummation of the sale pursuant to the terms and conditions
specified in the Sellers' Notice, and the Proposed Seller shall instruct the
Proposed Transferee to remit directly to the Investor that portion of the Sale
Price to which the Investor is entitled by reason of its participation in such
sale. To the extent that any prospective purchaser or purchasers prohibits such
assignment or otherwise refuses to purchase securities from the Investor, the
Proposed Seller shall not sell to such prospective purchaser or purchasers any
Securities unless and until, simultaneously with such sale, the Proposed Seller
shall purchase such securities from the Investor for the same consideration and
on the same terms and conditions as the proposed transfer described in the
Seller's Notice.
1.4 Additional Transactions. The exercise or non-exercise of the rights
of the Investor hereunder to participate in one or more sales made by a Proposed
Seller shall not adversely affect its rights to participate in subsequent sales
by such Proposed Seller or other Principal Stockholders.
2. Legended Certificates
2.1 Principal Stockholders' Stock. Each certificate representing shares
of the Securities now or hereafter owned by the Investor or the Principal
Stockholders or their permitted Transferees pursuant to clauses (ii) through (v)
of Section 1.1(b) shall be endorsed with the following legend:
"THE SHARES REPRESENTED HEREBY MAY NOT BE VOTED,
SOLD, ASSIGNED, PLEDGED, ENCUMBERED, OR OTHERWISE TRANSFERRED
EXCEPT IN CONFORMITY WITH THE TERMS OF A STOCKHOLDERS'
AGREEMENT AMONG THE HOLDER (OR THE PREDECESSOR IN INTEREST TO
THE SHARES), THE COMPANY AND CERTAIN OTHER STOCKHOLDERS OF THE
COMPANY. THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY
OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."
The legend required under Section 2.1 hereof shall be removed
upon termination of this Agreement in accordance with the provisions of Section
5.1.
3. Prohibited Transfers
3.1 Grant. In the event that any Proposed Seller (if it is not the
Investor) should sell any Securities in contravention of the participation
rights of the Investor under Section 1.3 of this Agreement (a "Prohibited
Transfer"), the Investor shall have the put option provided in Section 3.2.
3.2 Put Option. In the event of a Prohibited Transfer, the Investor
shall have the option to sell to the Proposed Seller a number of shares of
Common Stock of the Company (either directly or through delivery of Series A
Preferred Stock) equal to the number of shares that the Investor would have been
entitled to sell had such Prohibited Transfer been effected in accordance with
Article 1 hereof, on the following terms and conditions:
(a) The price per share at which the shares are to be sold to
the Proposed Seller shall be equal to the price per share paid to the Proposed
Seller by the third-party purchaser or purchasers of the Proposed Seller's
Securities.
(b) The Investor shall deliver to the Proposed Seller, within
30 days after they have received notice from the Proposed Seller or otherwise
become aware of the Prohibited Transfer, the certificate or certificates
representing shares to be sold, each certificate to be properly endorsed for
transfer.
(c) The Proposed Seller shall, upon receipt of the
certificates for the repurchased shares, pay the aggregate purchase price
therefor provided for in this Article 3, by delivery of consideration in the
same form such Proposed Seller received for the Securities sold in the
Prohibited Transfer and shall reimburse the Investor for any expenses incurred,
including reasonable legal fees and expenses.
4. Voting Provisions.
4.1 Voting Agreement.
(a) The shares of Series A Preferred Stock, and, unless the
context requires otherwise, the shares of Common Stock issued or issuable upon
the conversion of such shares of Series A Preferred Stock are referred to in
this Agreement as the "Shares." The Investor and the Founder agree that, except
as set forth below, in any election of directors of the Company, the Founder
shall vote all shares of capital stock of the Company owned or controlled by him
to elect one (1) director designated by the Investor ("Investor Director").
(b) The Founder further agrees to vote 1,100 shares of common
stock held by him as directed by the Investor on all other matters submitted to
a vote by the shareholders of the Company. This subsection (b) shall expire on
the earlier of the termination of this Agreement in accordance with Section 5.1
or Investor's exercise in full (or the expiration) of the Stock Purchase Warrant
issued in favor of the Investor by the Company of even date herewith.
(c) In the event the Company for any reason is not in
compliance with its obligation to redeem shares of Series A Preferred Stock in
accordance with the terms and conditions in Article 7 of the Series A
Certificate (as defined in the Purchase Agreement), the Investor and Principal
Stockholders agree to vote all shares of capital stock of the Company owned or
controlled by them to increase the number of directors of the Company from five
(5) to nine (9) and to elect as directors of the Company five (5) directors
designated by the holders of a majority of the Shares.
4.2 Elections, Vacancies, Removal. The Investor and each Principal
Stockholder agrees to use its, his or her best efforts to cause the Investor
Director to be elected to the Board of Directors as provided in Section 4.1. In
the event of any vacancy in the Board of Directors, the Investor and each
Principal Stockholder agrees to vote all shares of capital stock owned or
controlled by them and to otherwise use their best efforts to fill such vacancy
so that the Board of Directors of the Company will include directors designated
as provided in Section 4.1. Each Investor and each Principal Stockholder agrees
to vote all shares of capital stock owned or controlled by them for the removal
of the Investor Director whenever (but only whenever) there shall be presented
to the Board of Directors the written direction that the Investor Director be
removed, signed by the Investor.
5. General.
5.1 Termination. This Agreement shall terminate upon the occurrence of,
and shall not be applicable to, any of the following events:
(a) the liquidation, dissolution or indefinite cessation of the
business operations of the Company, or a merger, recapitalization,
reorganization or sale of all or substantially all of the assets of the Company
which will result in the Company's stockholders immediately prior to such event
not holding at least 50% of the voting power of the surviving, continuing or
purchasing entity immediately after such event;
(b) the execution by the Company of a general assignment for the
benefit of creditors or the appointment of a receiver or trustee to take
possession of the property and assets of the Company;
(c) the closing of the Company's first underwritten public
offering pursuant to an effective registration statement filed under the
Securities Act of 1933, as amended, covering the offer and sale of Common Stock
for the account of the Company in which the aggregate gross proceeds received
(before deduction of underwriters' discounts and commissions) equals or exceeds
$20 million at an offering price per share of Common Stock not less than four
(4) times the price per share paid by Investor to purchase shares of the
Company's Series A Preferred Stock pursuant to the Purchase Agreement (as
adjusted for any stock dividends, combinations, splits and similar events with
respect to the Common Stock) (a "Qualifying IPO");
(d) the written agreement of the Company, the Investor and the
holders of a majority of the shares of Common Stock held by all the Principal
Stockholders hereunder; or
(e) upon the fifth (5th) anniversary of the execution of this
Agreement.
5.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt) to the parties
at the following address for such party (or at such other address for a party as
shall be specified by like notice):
(i) in the case of the Company:
Webmodal, Inc.
000 Xxxx Xxxxxxx Xxxxxx, Xxxx X
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxx
(ii) in the case of the Investor:
NetValue Holdings, Inc.
Xxx Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxx
(iii) in the case of a Principal Stockholder, to the address
for such Principal Stockholder listed on Schedule A hereto.
Notice given by personal delivery, courier service or mail
shall be effective upon actual receipt. Notice given by facsimile shall be
confirmed by appropriate answer back and shall be effective upon actual receipt
if received during the recipient's normal business hours, or at the beginning of
the recipient's next business day after receipt if not received during the
recipient's normal business hours. All notices by facsimile shall be confirmed
promptly after transmission in writing by certified mail, commercial delivery
service or personal delivery. Any party may change any address to which notice
is to be given to it by giving notice as provided above of such change of
address.
5.3 Successors and Assigns. This Agreement and the rights and
obligations of the parties hereunder shall inure to the benefit of, and be
binding upon, their respective successors, assigns and legal representatives. By
their execution hereof or of an Adoption Agreement attached hereto as Annex A,
each party hereto hereby appoints the Company as its attorney-in-fact for the
sole purpose of executing Adoption Agreements with any subsequent permitted
transferees.
5.4 Severability. In the event one or more of the provisions of this
Agreement should, for any reason be held to be invalid, illegal or
unenforceable, such provisions shall be excluded from this Agreement and the
balance of this Agreement shall be interpreted as if such provision had never
been contained herein.
5.5 Entire Agreement; Amendments and Waivers. This Agreement
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof. Other than with respect to amendments to Schedule A
hereto, any amendment or modification of this Agreement shall be effective only
if evidenced by a written instrument executed by the Company, the Investor and
the holders of a majority of the shares of Common Stock held by all the
Principal Stockholders hereunder. Any waiver hereunder shall be effective only
if evidenced by a written instrument executed by the Investor or the holders of
a majority of the shares of Common Stock held by all the Principal Stockholders,
as the case may be, whose rights are being waived.
5.6 Governing Law. The construction, validity and interpretation of
this Agreement will be governed by the internal laws of the State of Delaware
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware.
5.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which, when
taken together, shall constitute one and the same instrument.
5.8 Remedies. The parties hereto shall have all remedies for breach of
this Agreement available to them as provided by law or equity. Without limiting
the generality of the foregoing, the parties agree that in addition to any other
rights and remedies available at law or in equity, the parties shall be entitled
to obtain specific performance of the obligations of each party to this
Agreement and immediate injunctive relief and that, in the event any action or
proceeding is brought in equity or to enforce the same, no party will urge, as a
defense, that there is an adequate remedy at law.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties have executed this
Stockholders' Agreement on the day and year indicated above.
COMPANY:
--------
WEBMODAL, INC.
By:____________________________
Name: Xxxxxxxxxxx X. Xxxxxx
Title: President
INVESTOR:
---------
NET VALUE HOLDINGS, INC.
By:____________________________
Name: Xxxxxx X. Xxxxx
Title: President
PRINCIPAL STOCKHOLDERS:
----------------------
_______________________________
Xxxxxxxxxxx X. Xxxxxx
Schedule A
Schedule of Principal Stockholders
[Name and Address]
______________________ ______________________ Fax Number:__________________
[Name and Address]
______________________ ______________________ Fax Number:__________________
ANNEX A
-------
ADOPTION AGREEMENT
------------------
This Adoption Agreement ("Adoption Agreement") is executed by
the undersigned (the "Transferee") pursuant to the terms of that certain
Stockholders' Agreement dated as of May 9, 2000 (the "Agreement") by and among
Webmodal, Inc., Net Value Holdings, Inc. and certain Principal Stockholders.
Capitalized terms used but not defined herein shall have the respective meanings
ascribed to such terms in the Agreement. By the execution of this Adoption
Agreement, the Transferee agrees as follows:
1. Acknowledgment. Transferee acknowledges that Transferee is
acquiring certain securities of the Company (the "Securities"), subject to the
terms and conditions of the Agreement.
2. Agreement. Transferee (i) agrees that the Securities
acquired by Transferee shall be bound by and subject to the terms of the
Agreement, and (ii) hereby adopts the Agreement with the same force and effect
as if Transferee were originally a party thereto.
3. Notice. Any notice required or permitted by the Agreement
shall be given to Transferee at the address listed beside Transferee's signature
below.
EXECUTED AND DATED this __ day of _________________, 200_.
TRANSFEREE:
By:_________________________________
Name:_______________________________
Title:______________________________
Address:____________________________
Fax:________________________________
Spouse: (if applicable):
____________________________________
Name:
Accepted and agreed to by the Company on behalf of itself and
pursuant to Section 5.3 on behalf of the other parties to the Agreement.
Webmodal, Inc.
By:________________________
Name:______________________
Title:_____________________
