Exhibit 4
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made this 16th day
of January, 1997, by and among Xxxxxx X. Xxxxxxxx and Guy Xxx Xxxxxxxx, in
their capacities as stockholders, (the "Founders"), Rio Grande, Inc., a
Delaware corporation (the "Company"), and the persons and organizations
whose signatures appear below (whether one or more, the "Stockholders").
WHEREAS, pursuant to that certain Preferred Stock Purchase Agreement
dated as of January 16, 1997, the Stockholders acquired from the Company
shares of its Series A Preferred Stock, par value $.01 per share (the
"Series A Preferred Stock") and shares of its Series B Preferred Stock, par
value $.01 per share ("Series B Preferred Stock") which are convertible
into shares of common stock of the Company, par value $.01 per share, as
more fully set forth in the Certificate of Designation filed with the
Secretary of State of Delaware on January 15, 1997 (such Common Stock,
adjusted, hereinafter referred to as, the "Common Stock"); and
WHEREAS, the Founders are presently the legal or beneficial owner of
2,360,940 shares, collectively, of the outstanding Common Stock of the
Company; and
WHEREAS, the Founders have agreed pursuant to this Agreement, among
other things, to grant the Stockholders the opportunity to participate,
upon the terms and conditions set forth in this Agreement, in certain
subsequent sales of the Common Stock of the Company made by the Founders to
induce the Stockholders to make the proposed investment;
NOW, THEREFORE, THE PARTIES HERETO, INTENDING TO BE LEGALLY BOUND,
HEREBY AGREE AS FOLLOWS:
ARTICLE 1
Sales by a Founder
1.1 Notice of Certain Purchase Offers. Prior to January 18, 2002
(unless otherwise terminated pursuant to Section 5.1 hereof), except as set
forth in Section 1.5, should either Founder propose to accept one or more
bona fide offers (collectively the "Purchase Offer") from any Persons to
purchase shares of the Company's Common Stock from the Founder (a
"Transferring Founder"), then such Transferring Founder shall promptly
notify each Stockholder of the terms and conditions of such Purchase Offer.
For purposes hereof, a "Person" means a natural person, partnership,
corporation, association, joint stock company, trust, joint venture,
unincorporated organization or other entity, or a governmental entity or
any department, agency or political subdivision thereof.
1.2 Right to Participate. Each Stockholder shall have the right,
exercisable upon written notice to the Transferring Founder within 15
Business Days after the date of receipt of the notice of the Purchase
Offer, to participate in the Transferring Founder's sale of Common Stock on
the same terms and conditions. A "Business Day" means any day other than
Saturday, Sunday or a day on which national banks located in the State of
Kansas are authorized to be closed for business. If no Stockholder elects
to participate in the Purchase Offer as provided herein, then the
Transferring Founder may offer such Common Stock to any Outsider pursuant
to the terms of the Purchase Offer. To the extent a Stockholder exercises
such right of participation, the number of shares of Common Stock which the
Transferring Founder may sell pursuant to such Purchase Offer shall be
correspondingly reduced in accordance with the provisions below. The right
of participation of each Stockholder shall be subject to the following
terms and conditions:
(a) Each Stockholder may sell all or any part of that number
of shares of Common Stock of the Company which it then owns equal to the
product obtained by multiplying (i) the aggregate number of shares of
Common Stock covered by the Purchase Offer by (ii) a fraction the numerator
of which is the number of shares of Common Stock of the Company at the time
owned by such Stockholder and the denominator of which is the combined
number of shares of Common Stock of the Company at the time owned by the
Transferring Founder (including shares transferred to Permitted Transferees
as hereinafter defined in accordance herewith) and the Stockholders. For
purposes of making such computation, each Stockholder shall be deemed to
own the number of shares of Common Stock into which all its Series B
Preferred Stock is convertible on the date such Stockholder receives the
notice of the Purchase Offer.
(b) Each Stockholder may participate in the sale by delivering
to the Transferring Founder for transfer to the purchase offeror one or
more certificates, properly endorsed for transfer, which represent
the number of shares of Common Stock which such
Stockholder elects to sell pursuant to this Section 1.2 not to exceed the
number of shares of Common Stock which it may sell as determined in
accordance with Section 1.2(a) above; or
that number of shares of Series B Preferred Stock which is
at such time convertible into the number of shares of Common Stock which
such Stockholder elects to sell pursuant to this Section 1.2 not to exceed
the number of shares of Common Stock which it may sell as determined in
accordance with Section 1.2(a) above; provided, however, that if the
purchase offeror objects to the delivery of Series B Preferred Stock in
lieu of Common Stock, such Stockholder may convert and deliver Common Stock
as provided in subparagraph (b)(i) above.
(c) If a Stockholder elects not to participate in such a sale
and the terms and conditions of such sale thereafter materially change
(except with regard to the purchase price, as to which any change shall be
deemed material), the Founders must once again give the notice required in
Section 1.1 and allow each such Stockholder the opportunity to participate
in such sale.
1.3 Consummation of Sale. The stock certificate or certificates
which the Stockholder delivers to the Transferring Founder pursuant to
Section 1.2 shall be transferred by the Transferring Founder to the
purchase offeror in consummation of the sale of the Common Stock pursuant
to the terms and conditions specified in the Section 1.1 notice to the
Stockholders, and the Transferring Founder shall promptly thereafter remit
to such Stockholder that portion of the sale proceeds to which such
Stockholder is entitled by reason of its participation in such sale.
1.4 Ongoing Rights. The exercise or non-exercise of the rights
of the Stockholders hereunder to participate in one or more sales of Common
Stock made by the Founders shall not adversely affect their rights to
participate in subsequent sales of Common Stock by either Founder pursuant
to Section 1.1 hereof.
1.5 Permitted Transfers. The participation rights of the
Stockholders and restriction on transfers by the Founders shall not apply
(a) to offers or sales by the Founders or their Permitted Transferees in an
underwritten public offering or otherwise pursuant to an effective
registration statement, on the facilities of a national securities exchange
or in any other recognized public securities market, (b) to any pledge of
Common Stock made by a Founder pursuant to a bona fide loan transaction
which creates a mere security interest, (c) upon the death of a Founder, to
any transfer of Common Stock owned by such Founder on the date of such
Founder's death to such Founder's ancestors or descendants or spouse or to
a trustee for their benefit or to any charity, (d) to any inter vivos gift
of shares to such Founder's ancestors or descendants or spouse or to a
trust for the benefit of any of the foregoing, or (ed) to any other bona
fide gift (collectively, "Permitted Transfers" and the respective
transferees "Permitted Transferee"); provided, however, that (i) such
Founder shall inform the Stockholders of any Permitted Transfer involving
singly or in the aggregate more than one percent (1%) of the outstanding
stock on a fully diluted basis and (ii) to the extent any Person (other
than an underwriter in connection with a registered offering) acquires
beneficial ownership of Common Stock representing more than 5% of the then
outstanding shares of Common Stock on a fully diluted basis as a result of
a Permitted Transfer, the transferring Founder will request such Person to
furnish the Stockholders with a written agreement to be bound by and comply
with all provisions of this Agreement applicable to such Founder; provided,
to the extent a Founder makes a Permitted Transfer and subsequently
re-acquires shares from such Permitted Transferee, those shares shall again
become subject to the terms hereof.
1.6 Restrictions on Transfer On or Before January 18, 2000. Without
the prior written consent of the Stockholders, except as otherwise
expressly permitted by Sections 1.5(a) - (c)Sections 1.5(a)-(d), neither
Founder will sell, assign or otherwise transfer any shares of Common Stock
owned by such Founder on or before January 18, 2000; provided, that if the
Stockholders consent to a proposed sale, assignment or transfer on or
before January 18, 2000 pursuant to this provision, the other provisions of
this Agreement will apply to such sale, assignment or transfer.
1.7 Termination. The rights of the Stockholders set forth in this
Article 1 shall terminate and have no further force and effect after
January 18, 2000, unless earlier terminated in accordance with other
provisions hereof.
ARTICLE 2
Sales by Stockholders
2.1 During the term hereof and except as set forth in this Article
2, no Stockholder may sell any Series B Preferred Stock which such
Stockholder now owns, or which such Stockholder may hereafter acquire, to a
person not a party to this Agreement (an "Outsider"), unless such person is
an affiliate of such Stockholder, without first offering the Series B
Preferred Stock which the Stockholder wishes to transfer to the Company and
the Founders pursuant to the procedures set forth in this Article on
substantially the same terms as will be offered to the Outsider. If, at
the end of the Second Option Period as provided in Section 2.4, the Company
or the Founders have not agreed to acquire all of the offered Series B
Preferred Stock, then all of such Series B Preferred Stock may be
transferred to an Outsider in compliance with Section 2.3.
2.2 All offers to transfer made pursuant to this Article shall state
the proposed purchase price and all other terms applicable to the proposed
transfer to the Outsider.
2.3 Any transfer to an Outsider must be effected in accordance with
the provisions hereof:
(a) the transferring Stockholder shall transfer all the
Preferred Stock which was offered pursuant to Section 2.1;
(b) such transfer must be made on substantially the same terms
set forth in the offer to the Company and the Founders; and
(c) such transfer must be made within one hundred (120) days
after expiration of the Second Option Period.
Any proposed transfer of Series B Preferred Stock which does not
comply with the provisions of Section 2.3 must be reoffered to the Company
and the Founders.
2.4 Before any Stockholder may transfer or dispose of all or any of
such Stockholder's Series B Preferred Stock in a transaction subject to the
provisions of this Article, such Stockholder must first offer such Series B
Preferred Stock to the Company and, if the Company refuses such offer, then
to the Founders pro rata, according to their then existing Common Stock
ownership interests. The offering price shall be equal to or less than the
purchase price, and otherwise on substantially the same terms, proposed to
be offered by such Stockholder to the Outsider. Such offer to the Company
shall be held open by such Stockholder for a period of ten (10) days from
the date of such offer, which period shall be known as the "First Option
Period" and such offer to the Founders shall be held open by such
Stockholder for a period of ten (10) days from the end of the First Option
Period, which period shall be known as the "Second Option Period".
2.5 The Company may, within the First Option Period, accept such
offer as to all the Series B Preferred Stock so offered. In the event such
offer is not accepted by the Company, then the Founders may, pro rata or
otherwise as agreed among said Founders, within the Second Option Period,
accept such offer as to all the Series B Preferred Stock so offered. In
the event such offer is not accepted by the Company and/or the Founders as
to all the Series B Preferred Stock so offered, then the transferring
Stockholder may offer such Series B Preferred Stock to any Outsider
pursuant to the terms of Section 2.3; provided, if either the Company or
the Founders elects not to participate in such a sale and the terms and
conditions of such sale thereafter materially change, the transferring
Stockholder must once again give the notice required in Section 2.1 and
allow the Company and the Founders to exercise their right under this
Article 2.
ARTICLE 3
Prohibited Transfers
3.1 Treatment of Prohibited Transfers. In the event a Founder
should sell any Common Stock of the Company in contravention of the
participation rights of the Stockholders under this Agreement (a
"Prohibited Transfer"), the Stockholders, in addition to such other
remedies as may be available at law, in equity or hereunder, shall have the
put option provided in Section 3.2 below, and such Founder (the "Breaching
Founder") shall be bound by the applicable provisions of such put option.
3.2 Put Option. In the event of a Prohibited Transfer, each
Stockholder shall have the right to sell to the Breaching Founder a number
of shares of Common Stock of the Company (either directly or through
delivery of convertible Series B Preferred Stock) equal to the number of
shares each Stockholder would have been entitled to transfer to the
purchaser in the Prohibited Transfer pursuant to the terms hereof. Such
sale shall be made on the following terms and conditions:
(a) The price per share at which the shares are to be sold to
the Breaching Founder shall be equal to the price per share paid by the
purchaser to the Breaching Founder in the Prohibited Transfer. Such
Breaching Founder shall also reimburse each Stockholder for any and all
fees and expenses, including legal fees and expenses, incurred pursuant to
the exercise or the attempted exercise of the Stockholder's rights under
this Article 3.
(b) Within 90 days after the later of the date on which the
Stockholders (i) received notice from the Breaching Founder of the
Prohibited Transfer or (ii) otherwise become aware of the Prohibited
Transfer, each Stockholder shall, if exercising the put option created
hereby, deliver to such Breaching Founder the certificate or certificates
representing shares to be sold, each certificate to be properly endorsed
for transfer.
(c) Such Breaching Founder shall, upon receipt of the
certificate or certificates for the shares to be sold by a Stockholder,
pursuant to Section 3.2(b), pay the aggregate purchase price therefor and
the amount of reimbursable fees and expenses, as specified in Section
3.2(a), by certified check or bank draft made payable to the order of such
Stockholder.
ARTICLE 4
Legended Certificates
4.1 Legend. Each certificate representing shares of Series B
Preferred Stock of the Company issued to the Stockholders or of the Common
Stock of the Company now or hereafter owned by the Founders or issued to
any Permitted Transferee permitted assign of the Stockholders Permitted
Transferee pursuant to Section 1.5 who agrees to be bound by the
restrictions set forth herein shall be endorsed with the following legend:
"THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN
STOCKHOLDERS AGREEMENT BY AND BETWEEN THE STOCKHOLDERS, THE
CORPORATION AND CERTAIN HOLDERS OF PREFERRED STOCK OF THE
CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN
REQUEST TO THE SECRETARY OF THE CORPORATION."
4.2 Legend Removal. The Section 4.1 legend shall be removed (i)
upon termination of this Agreement in accordance with the provisions of
Section 5.1; or (ii) in connection with a Permitted Transfer or other sale
permitted by terms hereof; provided the Company may request an opinion of
counsel reasonably acceptable in form and substance to the Company to the
effect that the proposed transfer is permitted pursuant to the terms of
this Article and that the shares issued to the transferee are not required
to be legended in accordance with the terms hereof.
ARTICLE 5
Miscellaneous Provisions
5.1 Termination. This Agreement shall terminate upon the earliest
of (i) upon the consummation of an underwritten public offering of the
Company's Common Stock registered under the Securities Act of 1933, as
amended, which results in aggregate net proceeds to the Company of not less
than $20,000,000 at a public offering price of more than $____the Minimum
Price (as defined in the Certificate of Designation, Preferences and Rights
dated January 15, 1997), per share (appropriately adjusted to reflect any
stock split, stock dividend or recapitalization of the Company from the
date of this Agreement); (ii) as to any party, upon the death of such
party; or (iii) as to the Stockholders, at such time as the Stockholders
ceases to own 50,000 shares of Series A Preferred Stock, 50,000 shares of
Series B Preferred Stock,; or Common Stock representing in the aggregate
more than ten percent (10%) of the outstanding Common Stock of the Company
on a fully diluted basis; or (iv) as to either Founder, at such time as
said Founder ceases to own Common Stock representing in the aggregate more
than ten percent (10%) of the outstanding Common Stock on a fully diluted
basis; or (v) upon the expiration of five years from the date hereof
(except in regard to Section 5.9).
5.2 Notices. Any notice required or permitted to be given to a
party pursuant to the provisions of this Agreement shall be in writing and
shall be effective upon personal delivery or upon deposit in the U.S. mail,
postage prepaid and properly addressed to the party to be notified as set
forth below such party's signature or at such other address as such party
may designate by ten (10) days' advance written notice to the other parties
hereto.
5.3 Successors and Assigns. Except as otherwise set forth herein,
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. The participation rights of
the Stockholders hereunder are only assignable (i) by each of such
Stockholders to any partner, shareholder or affiliate thereof, or (ii) to
an assignee or transferee who acquires at least 50,000 shares of Series B
Preferred Stock (or shares of Common Stock issuable upon conversion of
such Series B Preferred Stock or a combination of such Series B Preferred
Stock and Common Stock). As used herein, an "affiliate" of a Stockholder
shall mean any Person who controls, is under common control with, or is
controlled by such Stockholder.
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 in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement,
and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
5.5 Amendments. Any amendment or modification of this Agreement
shall be effective only if evidenced by a written instrument executed by
duly authorized representatives of the parties hereto. Any waiver by a
party of its rights hereunder shall be effective only if evidenced by a
written instrument executed by a duly authorized representative of such
party, provided, however, that holders of a majority of the Common Stock
issued or issuable upon conversion of the Series B Preferred Stock may,
with the prior written consent of the Founders and the Company, waive,
modify or amend on behalf of all Stockholders any provisions hereof. In no
event shall such waiver of any rights hereunder constitute the waiver of
such rights in any future instance unless the waiver so specifies in
writing.
5.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware
without regard to conflict of laws.
5.7 Other Obligations of Company. The Company agrees to use its
best efforts to enforce the terms of this Agreement, to inform the Founders
and Stockholders of any breach hereof and to assist the Founders and
Stockholders in the exercise of their rights and performance of their
obligations under Article 3 hereof.
5.8 Ownership of Shares. Each Founder represents and warrants, with
respect to the shares of Common Stock owned by such Founder, that such
Founder is the sole legal and beneficial owner of the shares of Common
Stock subject to this Agreement and that no Person has any interest (other
than a community property interest) in such shares.
5.9 Voting Agreement. (a) From and after the date on which
shares of Series B Preferred Stock have been converted into shares of
Common Stock (the "Trigger Date") and for so long as the Stockholders own
in excess of ten percent (10%) of the outstanding shares of Common Stock on
a fully diluted basis, the Founders agree to vote all shares of Common
Stock owned, or controlled or voted by each of them in favor of any
Stockholders' nominees, if any, for the Board of Directors.
(b) The Founders shall not vote any shares of Common Stock
owned or controlled by either of them to remove any of the Stockholders'
nominees from the Board without the consent of Stockholders holding a
majority of the shares of Series B Preferred Stock and Common Stock issued
upon conversion of the Series B Preferred Stock owned by all such
Stockholders ("Majority in Interest"). Any vacancy on the Board caused by
the death, resignation or removal of any of the Stockholders' nominees
shall be filled promptly by another person nominated by the Majority in
Interest at a special meeting of the Company's stockholders held for that
purpose. The failure of the Stockholders to exercise their rights under
this Section 5.9 shall not constitute a waiver of their right to exercise
such right in the future.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year indicated above.
FOUNDERS:
----------------------------
Xxxxxx X. Xxxxxxxx
Address: 00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
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Guy Xxx Xxxxxxxx
Address: 00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
COMPANY:
RIO GRANDE, INC.
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By:
Title:
Address: 00000 Xxxxxxx Xxxxx
Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: President
STOCKHOLDER:
XXXX EXPLORATION COMPANY
----------------------------
By:
Title:
Address: 0000 X. 00xx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Vice President
Consent of Spouse:
I acknowledge that I have read the foregoing Agreement and that I
know its contents, and I agree to be deemed to be a "Founder" for purposes
of the foregoing Agreement. I am aware that by its provisions if I and/or
my spouse agree to sell all or part of the shares of Common Stock of the
Company held of record by either or both of us, including my community
property interest in such shares, if any, co-sale rights (as described in
the Agreement) must be granted to the Stockholders by the seller. I hereby
agree that those shares and my interest in them, if any, are subject to the
provisions of the Agreement and that I will take no action at any time to
hinder operation of, or violate, the Agreement.
SPOUSE OF XXXXXX X. XXXXXXXX:
--------------------------------
Name:
SPOUSE OF GUY XXX XXXXXXXX:
---------------------------------
Xxxxx Xxxxxxxx
