EXHIBIT 3
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (this "Agreement") dated as of October 30,
1998 is made by and among Xxxxxxx X. Xxxxxxxxxx, Xxxx X. Xxxxx and Xxxxx X.
Xxxxxxxxx (collectively, the "Significant Stockholders"), First Data Merchant
Services Corporation, a Florida corporation ("Investor") (each Significant
Stockholder and Investor and each other person that may become a party hereto as
contemplated hereby are hereinafter collectively referred to as the "Parties"
and individually a "Party"), and iMall, Inc., a Nevada corporation (the
"Corporation").
RECITALS
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WHEREAS, the Corporation has authorized capital stock consisting of
37,500,000 shares of Common Stock, and 10,000,000 shares of Preferred Stock,
having the respective rights and powers set forth in the articles of
incorporation of the Corporation (as amended from time to time, the "Charter");
WHEREAS, the Significant Stockholders in the aggregate are, on the
date hereof, the legal and beneficial owners of approximately 58% of the issued
and outstanding shares of Common Stock of the Corporation, none of the issued
and outstanding shares of the Series A Preferred Stock of the Corporation and 7%
of certain rights to purchase Common Stock calculated on a Fully Diluted Basis
(as defined below);
WHEREAS, Investor has agreed to purchase 2,000,000 shares of Common
Stock of the Corporation pursuant to the Investment Agreement dated October 30,
1998 between Investor and the Corporation;
WHEREAS, Investor and the Corporation have entered into a marketing
agreement as of the date hereof; and
WHEREAS, the Parties have agreed, among other things, to make certain
provisions for the management of the Corporation and its subsidiaries, and to
restrict the transfer of their Capital Stock.
NOW, THEREFORE, in consideration of the covenants and agreements made
herein, the Parties and the Corporation agree as follows:
ARTICLE 1
CERTAIN DEFINED TERMS
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1.1 Certain Terms. In addition to terms defined elsewhere in this
Agreement, for purposes of this Agreement, except as otherwise set forth herein
or the context otherwise requires, the following terms shall have the following
meanings:
"Affiliate" of a Party means, in the case of a Party who is a natural
person, such Party's spouse, siblings, parents, descendants (including the issue
of such Party or such Party's spouse, including any by adoption), such Party's
estate and any trust entirely for the benefit of any one or more of such Party,
such Party's estate, such Party's spouse, siblings, parents or descendants, and,
with respect to any Party which is not a natural person, any other person which
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such person.
"Alliance" means any venture (in any form, including in corporate,
partnership or limited liability company form) or contractual alliance now or
hereafter entered into between Investor (or any of its Affiliates) and one or
more third parties for the provision of any Merchant Acquiring Business services
pursuant to an arrangement whereby Investor (or any of its Affiliates) shares
the economic benefits of ownership of merchant contracts through profit sharing,
revenue sharing, a royalty interest or otherwise.
"Board of Directors" means the board of directors of the Corporation.
"Capital Stock" means the Common Stock, the Preferred Stock
(including, without limitation, the Series A Preferred Stock) and any other
class of capital stock of the Corporation that may be outstanding from time to
time.
"Common Stock" means the Common Stock of the Corporation, par value
$.008 per share.
"Common Stock Equivalents" means (without duplication with any other
Common Stock or Common Stock Equivalents) rights, warrants, options (including,
without limitation, employee stock options), convertible securities or
indebtedness, exchangeable securities or indebtedness, or other rights,
exercisable for or convertible or exchangeable into, directly or indirectly,
Common Stock and securities convertible or exchangeable into Common Stock,
whether at the time of issuance or upon the passage of time or the occurrence of
some future event. For purposes of this Agreement, the number of Common Stock
Equivalents shall be (i) in the case of all or a portion of any right, warrant
or other security which may be exercised for a share or shares of Common Stock,
the number of shares of Common Stock receivable upon exercise of such security
(or such portion of such security), and (ii) in the case of any security
convertible or exchangeable into a share or shares of Common Stock, the number
of shares of
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Common Stock that would be received if such security were converted or exchanged
on such date.
"Fully Diluted Basis" means, at any time, the then outstanding Common
Stock owned by such person plus (without duplication) all shares of Common Stock
issuable, whether at such time or upon the passage of time or the occurrence of
future events, upon the exercise, conversion or exchange of all then outstanding
Common Stock Equivalents owned by such person.
"Fully Diluted Common Stock" means, at any time, the then outstanding
Common Stock of the Corporation plus (without duplication) all shares of Common
Stock issuable, whether at such time or upon the passage of time or the
occurrence of future events, upon the exercise, conversion or exchange of all
then outstanding Common Stock Equivalents.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Investment Agreement" means the Investment Agreement dated as of
October 30, 1998 between the Corporation and the Investor.
"Market Price" means the average of the daily per share closing prices
of a security for the 20 consecutive trading days immediately prior to the date
of determination. The closing price for each day shall be the last sale price
of such security on the national securities exchange on which such security is
listed and principally traded or, if such security is not listed on any national
securities exchange, as reported by The Nasdaq Stock Market, or, if not so
reported by The Nasdaq Stock Market, the average of the high bid and low asked
quotations for such security as reported by the National Quotations Bureau
Incorporated or similar organization, or, if on any such date such security is
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in such
security selected in good faith by a majority of the members of the Board of
Directors, excluding therefrom any directors designated by the Transferor (or
any Affiliate thereof).
"Market Sale" means a proposed transfer of shares of Common Stock
pursuant to which the shares are to be sold in the public market at the
prevailing market price so that the price cannot be determined at the time of
the Transferor's Notice. The date of determination for the Market Price shall
be the date of the Transferor's Notice for such Market Sale.
"Merchant Acquiring Business" means a business providing any of the
following services or products to merchants with respect to Transaction Cards
(as hereinafter defined): (i) the authorization and capture of transactions;
(ii) the submission of such transactions for interchange settlement or other
settlement; (iii) the preparation of statements or reports based on such
transactions, chargebacks and other exception items (including by electronic
access); (iv) the provision of customer service or other back office services in
respect of any of such transactions;
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(v) clearing and settlement services; (vi) enhancements or modifications to any
of the foregoing services; and (vii) new services or products developed in
support of merchants to allow such merchants to remain competitive in the
Transaction Card industry.
"Preferred Stock" means the Preferred Stock of the Corporation, par
value $.001 per share, in such series as may be designated by the Corporation
from time to time.
"SEC" means the Securities and Exchange Commission or any successor
governmental agency.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" means the Series A 9% Convertible Preferred
Stock of the Corporation, designated as a series of the Preferred Stock.
.
"Subsidiary" means any corporation or other entity, a majority of
whose capital stock or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions is at the time held by the Corporation or any subsidiary thereof.
"Transaction Card" means (a) a card used for credit or debit
transactions, (b) a private label or retail debit or credit card, (c) a stored
value or other prepayment service card, or (d) an electronic coupon, electronic
benefit card, or signature/security card used in connection with electronic
financial transactions or other similar services.
"Transfer Restricted Equivalents" means any Common Stock Equivalent
other than the Warrant. For purposes of this Agreement, the number of Transfer
Restricted Equivalents shall be (i) in the case of all or a portion of any
right, warrant or other security which may be exercised for a share or shares of
Common Stock, the number of shares of Common Stock receivable upon exercise of
such security (or such portion of such security), and (ii) in the case of any
security convertible or exchangeable into a share or shares of Common Stock, the
number of shares of Common Stock that would be received if such security were
converted or exchanged on such date.
"Voting Stock" means any class of Capital Stock entitled to cast a
vote in the election of directors of the Corporation. For purposes of this
Agreement, the number of shares of Voting Stock outstanding shall be equal to
the total number of votes which any outstanding share of Capital Stock is
entitled to cast in the election of directors.
"Warrant" means the Warrant to be issued to Investor pursuant to the
Investment Agreement.
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ARTICLE 2
MANAGEMENT OF THE CORPORATION AND CERTAIN ACTIVITIES
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2.1 Board of Directors.
(a) The Parties and the Corporation hereby acknowledge and agree
that, during the term of this Agreement, they shall use their respective
reasonable best efforts to cause the Board of Directors to consist of (i) not
less than seven and (ii) not more than ten members, with the following
composition:
(i) not less than (A) the Agreed Representative Number (as hereinafter
defined) of directors designated in writing by Investor and (B) two
directors who are current or former officers of the Corporation or any of
its Subsidiaries and who are designated by a majority of the members of the
Board of Directors (excluding members who are Affiliates of Investor or
were otherwise designated by Investor); and
(ii) not more than (A) the Agreed Representative Number of directors
who are Affiliates of Investor and (B) two directors who are current or
former officers of the Corporation or any Subsidiary.
The "Agreed Representative Number" shall be equal to the product, rounded to the
nearest whole number, of (A) the total number of members of the Board of
Directors and (B) a fraction with a numerator equal to the number of shares of
Common Stock that Investor, its Affiliates and the Alliances ("Investor Group")
own, on a primary basis, and a denominator equal to the number of shares of
Voting Stock then outstanding; provided, however, that, so long as the Investor
Group owns in the aggregate at least 1,000,000 shares of Common Stock or Common
Stock Equivalents (the "Amount of Owned Equity"), the Agreed Representative
Number shall be not less than one. The Amount of Owned Equity shall be equitably
adjusted in the event of any reclassification, stock split or stock dividend
with respect to the Common Stock, any change or conversion of the Common Stock
into other securities of the Corporation or any dividend or distribution with
respect to the Common Stock. Accordingly, immediately following the Closing of
the Investment Agreement, the Board of Directors shall use its reasonable best
efforts to amend the by-laws of the Corporation, take all necessary actions to
increase the size of the Board of Directors, if necessary, cause two members of
the Board of Directors who are current or former officers to resign and fill any
vacancies created thereby with the Agreed Representative Number of persons
designated in writing by Investor. The Parties and the Corporation thereafter
agree to use their respective reasonable best efforts, including, but not
limited to, the voting of Voting Stock of the Corporation owned by them or as to
which they otherwise possess the power (directly or indirectly) to vote,
required to cause the Board of Directors to at all times include the persons
designated pursuant to Section 2.1(a). Unless otherwise agreed upon in writing
by the Investor and the Corporation, the Corporation agrees that it shall cause
the board of directors of all Subsidiaries of the Corporation to consist of the
same members as of the Board of Directors.
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For purposes of this Agreement, only shares transferred to Alliances in
accordance with Sections 6.6 and 8.4 of the Investment Agreement and Section
3.1(a) of this Agreement shall be deemed to be owned by any such Alliances.
(b) In the event that any director (a "Withdrawing Director")
designated pursuant to Section 2.1(a)(i) is unable or unwilling to serve, or
once having commenced to serve, is removed or withdraws from the Board of
Directors, such Withdrawing Director's replacement (the "Substitute Director")
on the Board of Directors will be designated by the person entitled to designate
such director pursuant to Section 2.1(a)(i); provided, however, that a director
designated pursuant to Section 2.1(a)(i) may only be removed by the persons
entitled to designate such director pursuant to Section 2.1(a)(i). The
Corporation and each of the Parties agree to use their reasonable best efforts,
including, but not limited to, the voting of Voting Stock of the Corporation, to
cause the election of such Substitute Director as soon as practicable following
such designation.
(c) In the event Investor ceases to be entitled to designate a
director or directors pursuant to this Agreement, the vacancy or vacancies
resulting therefrom shall be filled by the directors or by the stockholders in
the manner provided by applicable law. In the event Investor chooses not to
designate any director or directors, such directorship or directorships shall
not otherwise be filled and the size of the Board of Directors shall be
correspondingly reduced until such time as Investor elects to designate a
director or directors in accordance with this Agreement.
(d) The Corporation and the Parties agree that no action shall be
taken at any meeting of the Board of Directors unless each director shall
receive at least one business day's notice of such meeting or shall waive such
notice. The Corporation and each of the Parties agree to use their reasonable
best efforts, including, but not limited to, the voting of Voting Stock of the
Corporation, to prevent action from being taken without such notice unless such
notice is waived by all of the members of the Board of Directors.
(e) The Corporation and the Parties shall vote to approve and adopt
amendments to the by-laws set forth in Exhibit A attached hereto and to take
such other actions in furtherance of, and to give effect to, the agreements and
provisions set forth in this Agreement and the Investment Agreement, and shall
not vote to repeal or adopt any by-law or amendment to the Charter if such
repeal or adoption is in violation of, or inconsistent with, such agreements or
provisions, or take any other action in violation of, or inconsistent with, such
agreements and provisions.
(f) Upon the request of the person entitled to designate a director
pursuant to Section 2.1(a)(i) to remove a director designated by such person,
the Parties shall vote all of their Voting Stock (and all Voting Stock that they
otherwise possess the power, directly or indirectly, to vote) in favor of the
removal of such director. Except as contemplated by the immediately preceding
sentence, no Party shall vote its Voting Stock (or any Voting Stock that it
otherwise
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possesses the power, directly or indirectly, to vote) in favor of the removal of
a director nominated pursuant to Section 2.1(a)(i).
(g) Prior to December 31, 1999, Investor shall vote all of its Voting
Stock together with Voting Stock held by any Affiliate of Investor (and all
Voting Stock that it otherwise possesses the power, directly or indirectly, to
vote) in favor of the nominees to the Board of Directors designated by a
majority of the members of the Board of Directors (excluding members who are
Affiliates of Investor or who were designated by Investor pursuant to Section
2.1(a)(i)).
2.2 Other Activities of the Parties; Fiduciary Duties. It is
understood and accepted that the Parties and their Affiliates have interests in
other business ventures which may be in conflict with the activities of the
Corporation and its Subsidiaries and that, subject to applicable law, nothing in
this Agreement shall limit the current or future business activities of the
Parties, whether or not such activities are competitive with those of the
Corporation and its Subsidiaries; provided, however, that the foregoing shall
not limit Investor's obligation under Section 5.1 of the Investment Agreement.
Nothing in this Agreement, express or implied, shall relieve any officer or
director of the Corporation or any of its Subsidiaries, or any Party, of any
fiduciary or other duties or obligations they may have to the Corporation's
stockholders.
2.3 Issuance of the Warrant. Each of the Significant Stockholders
hereby agrees to attend each shareholder meeting of the Corporation, in person
or by proxy, and to vote (or cause to be voted) all shares of Voting Stock,
whether issued heretofore or hereafter, that such Party owns or has the right to
vote, for approval of the issuance of the Second Common Shares (as defined in
the Investment Agreement), the Warrant and the Warrant Shares (as defined in the
Investment Agreement) to Investor. Each of the Significant Stockholders agrees
not to grant any proxies or enter into any voting agreement or arrangement
inconsistent with this Agreement.
2.4 No Adverse Actions. The Corporation will not adopt any
amendment to its Charter or by-laws or enter into or adopt any plans,
agreements, arrangements or understandings which have the effect of materially
impeding, preventing or prohibiting the Investor Group from beneficially owning,
in the aggregate, 39.9% of the outstanding Voting Stock, such percentage to be
calculated by dividing (i) the number of shares of Common Stock beneficially
owned, on a Fully Diluted Basis, by the Investor Group, by (ii) the sum of the
number of outstanding shares of Voting Stock plus the number of Common Stock
Equivalents beneficially owned by the Investor Group. For the purpose of the
preceding sentence only, during the Warrant Term (as defined in the Investment
Agreement), Investor shall be deemed to beneficially own the Warrant. Each of
the Parties agree to use their reasonable best efforts, including, but not
limited to, the voting of Voting Stock of the Corporation, to prevent any such
action from being taken by the Corporation.
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2.5 Preservation of Corporate Existence and Property. During the
Warrant Term (as defined in the Investment Agreement), the Corporation shall
preserve and maintain its corporate existence and its rights franchises and
privileges.
2.6 Increase in Employee Stock Options. Investor and each
Significant Stockholder agree to vote in favor of a one-time 1,500,000 share
increase in the number of options available under the Corporation's employee
stock option plan.
ARTICLE 3
TRANSFER OF SECURITIES
----------------------
3.1 Transfers. During the term hereof, no Party shall sell, transfer
or otherwise dispose of, hypothecate or otherwise encumber (voluntarily or
involuntarily) (any such sale, transfer, disposition, hypothecation or
encumbrance being referred to as a "transfer") any Common Stock or Transfer
Restricted Equivalents except as expressly permitted in this Section 3.1.
(a) Investor or its permitted assigns may transfer shares of Common
Stock or Transfer Restricted Equivalents and its rights hereunder to any
subsidiary of First Data Corporation or to any Alliance; provided, however,
that Investor shall first deliver to the Corporation the written agreement of
such subsidiary or Alliance to be bound by the terms and provisions of this
Agreement as though a Party; provided, further, that such Alliance shall not be
required to bind any of its Affiliates to any of the provisions of this
Agreement; provided, further, that any such Alliance shall be allowed to
transfer to any of its Affiliates shares of Common Stock and Transfer Restricted
Equivalents received from Investor or its Affiliates, if such Affiliate shall
deliver to the Corporation the written agreement of such Affiliate to vote any
such shares transferred in accordance with the provisions of Section 2.1 of this
Agreement.
(b) A Party may transfer up to 25,000 shares of Common Stock or
Transfer Restricted Equivalents during each calendar quarter, subject to
compliance with the requirements of the Securities Act.
(c) Any Significant Stockholder may transfer Common Stock or Transfer
Restricted Equivalents to any member of such Significant Stockholder's immediate
family (including any spouse, parent grandparent, child or grandchild, whether
by blood, marriage or adoption), any trust or trustee for the benefit of such
person or any entity substantially all of the equity of which is directly or
indirectly owned by the transferor and/or one or more of the foregoing persons;
provided, however, that such Significant Stockholder shall first deliver to the
Corporation a written agreement of such person to be bound by the terms and
provisions of this Agreement as though a Party. Any Significant Stockholder may
also pledge to a lender in connection with a bona fide personal loan one-third
of such Significant Stockholder's Common
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Stock; provided, however, such Significant Stockholder shall not pledge Common
Stock with a market value in excess of $5,000,000 based on the Market Price of
the Common Stock on the date of such pledge; provided, further, that so long as
any such shares of Common Stock are pledged, such Significant Stockholder shall
own at least twice as many shares of Common Stock as have been pledged.
(d) No Party may transfer any shares of Common Stock or Transfer
Restricted Equivalents except as provided in Section 3.1(a), (b), (c), (d) or
(f). If a Party (the "Transferor") proposes to transfer any shares or Transfer
Restricted Equivalents pursuant to this Section 3.1(d), the Transferor shall
give written notice (the "Transferor's Notice") to the Corporation and the other
Parties (the "Other Parties") that either it proposes to complete a Market Sale
of any or all shares of such Party's Common Stock or it has received a bona fide
written offer to purchase any or all shares of such Party's Common Stock or
Transfer Restricted Equivalents and that such Party desires to transfer any or
all of such shares or Transfer Restricted Equivalents. In the case of a Market
Sale, the Transferor's Notice shall specify the number of shares of Common Stock
to be transferred and the Market Price. In the case of all other proposed
transfers pursuant to Section 3.1(d), the Transferor's Notice shall specify the
proposed transferee thereof, all material terms of the proposed transaction,
including the number of shares of Common Stock or Transfer Restricted
Equivalents to be transferred and the amount and type of consideration to be
received therefor and shall be accompanied by a copy of such bona fide offer.
The shares or Transfer Restricted Equivalents proposed to be transferred as set
forth in the Transferor's Notice (the "Transfer Securities") shall be subject to
the following options:
(i) The Transferor shall offer to sell (the "First Option") all such
Transfer Securities to the Other Parties at the Market Price, in the case
of a Market Sale, and at the same price per Transfer Security as to be paid
by the proposed transferee (or at the cash equivalent as determined
pursuant to this Section 3.1(d)(i)), in all other cases. To the extent the
consideration to be paid by the proposed transferee consists of assets
other than cash, the cash equivalent of such consideration shall be
determined reasonably and in good faith by the Corporation. The cash
equivalent determination required by the preceding sentence, in any
particular instance, shall be made in good faith by the Board of Directors,
excluding therefrom any directors designated by the Transferor or the
proposed transferee (or any Affiliate thereof), who may be counted for
quorum purposes but shall abstain from any such decision, utilizing any
method and/or advisory assistance the Board of Directors deems appropriate,
and the Corporation shall give the Transferor and the Other Parties written
notice of such determination within twenty days after receipt of the
Transferor's Notice. Each Other Party may purchase the number of Transfer
Securities equal to the product of (A) the aggregate number of Transfer
Securities and (B) a fraction with a numerator equal to the number of
shares of Common Stock that such Other Party owns on a Fully Diluted Basis
and a denominator equal to the number of shares of Common Stock owned in
the aggregate, on a Fully Diluted Basis, by the Other Parties.
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(ii) If any of the Other Parties (A) fails to notify the Transferor
within ten days after (i) receipt of the Transferor's Notice, if the
consideration to be paid by the proposed transferee is solely cash; or (ii)
receipt of notice of the determination by the Board of Directors of the
cash equivalent of the consideration to be paid by the proposed transferee
that it elects to accept the First Option or (B) by written notice rejects
the First Option, in whole or in part, the Transferor shall offer to sell
(the "Second Option") the Transfer Securities not so purchased by the Other
Parties to the Corporation for cash at the same price as the First Option,
and the Transferor shall promptly provide written notice thereof (the
"Second Notice") to the Corporation and the Other Parties. The Second
Option may be accepted by the Corporation by written notice delivered to
the Transferor within the ten days after receipt of the Second Notice.
(iii) If the Corporation (A) fails to notify the Transferor within
ten days after receipt of the Second Notice that it elects to exercise the
Second Option or (B) by written notice rejects the Second Option, in whole
or in part, the Transferor shall offer to sell (the "Third Option") the
Transfer Securities not purchased pursuant to the First Option or the
Second Option for cash at the same price as the First Option to the Other
Parties which exercised the First Option in full, and the Transferor shall
promptly provide written notice thereof (the "Third Notice") to the
Corporation and the Other Parties. Such Other Parties may purchase the
number of Transfer Securities as they shall mutually agree, or, in absence
of such agreement, that number equal to the product of (A) the aggregate
number of Transfer Securities remaining following the First Option and the
Second Option and (B) a fraction with a numerator equal to the number of
shares of Common Stock that such Other Party owns on a Fully Diluted Basis
and a denominator equal to the number of shares of Common Stock owned in
the aggregate, on a Fully Diluted Basis, by each Other Party which elects
to exercise the Third Option, without reference to the number of shares of
Common Stock owned by any Other Party not eligible or declining to exercise
the Third Option. Each Other Party eligible to participate in the Third
Option shall have ten days to provide written notice to the Transferor of
its election to exercise the Third Option.
Unless, through exercise of the First Option, the Second Option or the Third
Option (collectively, the "Options"), all the Transfer Securities proposed to be
transferred in the Transferor's Notice are to be acquired by the Corporation and
Other Parties, the Transferor may transfer any Transfer Securities covered by
the Transferor's Notice which are not purchased by the Corporation or the Other
Parties in the market, in the case of a Market Sale, and to the proposed
transferee upon the terms of such transfer set forth in the Transferor's Notice,
in all other cases; provided, however, that such transfer must occur no later
than 60 days after the date the Transferor's Notice was received by the
Corporation or five days after the expiration or termination of any waiting
period applicable to such transfer pursuant to the HSR Act, whichever is later.
If any of the Options is exercised, the Transferor shall transfer any such
shares or Transfer Restricted Equivalents (free of all liens and encumbrances
except this Agreement) to the respective purchasers thereof within 20 days after
the date such offer is accepted by the Corporation and/or Other Parties, as
applicable,
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against delivery by the purchasers of the consideration for such shares;
provided, however, that, if the HSR Act is applicable to the Options, such date
shall be extended to the date which is five days after the date the applicable
waiting period expires or is terminated.
(e) Other than transfers pursuant to Section 3.1(b), (c), or (f),
or Market Sales pursuant to Section 3.1(d), no transfers of shares of Common
Stock or Transfer Restricted Equivalents shall be made unless prior to the
consummation thereof, the Party transferring such shares delivers to the
Corporation in form reasonably acceptable to the Corporation a written agreement
of the proposed transferee to become a Party and be bound by the terms hereof.
(f) In the case of any tender or exchange offer made pursuant to
Section 14(d) of the Securities Exchange Act of 1934, as amended, any Party
shall be permitted (i) on or before December 31, 1999, to tender shares of
Common Stock to the offeror if such tender offer or exchange offer is
recommended by the Board of Directors and (ii) after December 31, 1999 to tender
shares of Common Stock to the offeror whether or not the tender or exchange
offer is recommended by the Board of Directors, provided that such Party
complies with Section 3.1(d), as modified as follows:
(i) a Party may transfer its shares or Common Stock Equivalents only
if the Transferor has delivered the Transferor's Notice not later than ten
business days prior to expiration of such tender or exchange offer;
(ii) in an exchange offer, when the Board of Directors is required to
determine the cash equivalent of the consideration being offered, the value
of securities which are publicly traded shall be deemed to be the Market
Price of such securities on the date of the Transferor's Notice and the
Board of Directors shall make such determination within two business days
of receipt of the Transferor's Notice; and
(iii) the time periods during which the Options may be exercised
shall be reduced as follows: the First Option must be exercised within two
business days of receipt of the Transferor's Notice, the Second Option must
be exercised within two business days of receipt of the Second Notice, and
the Third Option must be exercised not later than one business day prior to
the date the tender or exchange offer is to expire.
(g) Transfers pursuant to Sections 3.1(a) and 3.1(b) shall not be
subject to Section 3.1(d). Any purported transfer of Common Stock or Transfer
Restricted Equivalents by a Party which is not permitted by the foregoing
provisions of this Section, or which is in violation of such provisions, shall
be void and of no force and effect whatsoever.
3.2 Certain Events Not Deemed Transfers. In no event shall any of
the following constitute a transfer of shares or Transfer Restricted Equivalents
for purposes of Section 3.1: an exchange, reclassification or other conversion
of shares into any cash, securities or other property pursuant to (i) the terms
of such security providing for exchange or conversion
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thereof, (ii) a merger, consolidation or recapitalization of the Corporation or
any Subsidiary with any person or entity, or (iii) a sale or transfer by the
Corporation or any Subsidiary of all or substantially all its assets to any
person or entity.
ARTICLE 4
TERMINATION
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4.1 Termination. All provisions of this Agreement shall terminate
(a) in respect of any Party, when such Party (and its Affiliates who acquired
shares of Common Stock from such Party) no longer owns any Common Stock or
Common Stock Equivalents following compliance with Section 3.1; and (b) in any
event, upon the dissolution of the Corporation. The provisions contained in
Article 3 of the Agreement shall terminate (a) if Investor and its Affiliates
own in the aggregate less than 500,000 shares of Common Stock (which number
shall be equitably adjusted in the event of any reclassification, stock split or
stock dividend with respect to the Common Stock, any change or conversion of the
Common Stock into other securities of the Corporation or any dividend or
distribution with respect to the Common Stock) or (b) in any event, on October
30, 2008.
ARTICLE 5
MISCELLANEOUS
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5.1 Amendment. This Agreement shall not be amended, modified or
supplemented except by a written instrument signed by an authorized
representative of the Corporation, Investor and the holders of a majority of
shares of Common Stock owned, on a Fully Diluted Basis, by the Significant
Stockholders.
5.2 Equitable Relief. The Parties and the Corporation recognize that
the obligations imposed on them in this Agreement are special, unique, and of
extraordinary character, and that in the event of breach by any party, damages
will be an insufficient remedy; consequently, it is agreed that the Parties
hereto and the Corporation may have specific performance, injunction, injunctive
or other equitable relief (in addition to damages) as a remedy for the
enforcement hereof, without proving damages.
5.3 Assignment. Except as otherwise expressly provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the Parties and
the Corporation. No such assignment shall relieve the assignor from any
liability hereunder. No assignment hereof shall be effective until the Party
making an assignment hereof delivers to the Corporation an executed counterpart
of this
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Agreement by the transferee or an agreement in writing executed by the
transferee to be bound by the terms hereof to the same extent as if such
transferee was a Party hereto.
5.4 Shares Subject to this Agreement. All shares of Common Stock or
Common Stock Equivalents now owned or hereafter acquired by any of the Parties
shall be subject to the terms of this Agreement.
5.5 Legend. (a) Certificates evidencing shares of Common Stock or
Transfer Restricted Equivalents owned by the Parties shall bear a legend in
substantially the following form:
THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER, VOTING
RESTRICTIONS AND OTHER TERMS AND CONDITIONS SET FORTH IN THE
STOCKHOLDERS AGREEMENT, DATED AS OF OCTOBER 30, 1998, AS AMENDED FROM
TIME TO TIME, AND THE INVESTMENT AGREEMENT, DATED OCTOBER 30, 1998, AS
AMENDED FROM TIME TO TIME, A COPY OF EACH OF WHICH MAY BE OBTAINED
FROM THE CORPORATION AT ITS PRINCIPAL EXECUTIVE OFFICES AND MAY NOT BE
SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF WITHOUT COMPLIANCE
WITH THE TERMS AND CONDITIONS OF SUCH AGREEMENTS.
5.6 Notices. Any notice, demand or delivery required or permitted by
this Agreement shall be in writing and shall be given to the specified party at
its address (or facsimile number) set forth below, or such other address (or
facsimile number) as shall have been furnished to the party giving or making
such notice, demand or delivery:
If to the Corporation: iMall, Inc.
000 Xxxxxxxx Xxxxxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Investor: First Data Merchant Services Corporation
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: President
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Facsimile: (000) 000-0000
-and-
First Data Merchant Services Corporation
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with copies to: Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Xxxxxxx X. Xxxxxxxxxx, to: Xxxxxxx X. Xxxxxxxxxx
000 Xx Xxxxx
Xxxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000
If to Xxxx X. Xxxxx, to: Xxxx X. Xxxxx
0000 Xxxxx Xxxxxxxxx Xxxxx
Xxxx, Xxxx 00000
If to Xxxxx X. Xxxxxxxxx, to: Xxxxx X. Xxxxxxxxx
0000 X. Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxxx, Xxxx 00000
5.7 Counterparts. This Agreement may be executed in two or more
counterparts and each counterpart shall be deemed to be an original and which
counterparts together shall constitute one and the same agreement of the parties
hereto.
5.8 Section Headings. Headings contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit or extend
the scope or intent of this Agreement or any provisions hereof.
5.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF NEVADA, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
5.10 Entire Agreement. This Agreement contains the entire
understanding of the parties hereto respecting the subject matter hereof, and
supersedes all prior agreements, discussions and understandings.
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5.11 Cumulative Rights. The rights of the Parties and the
Corporation under this Agreement are cumulative and in addition to all similar
and other rights of the parties under other agreements, including the Investment
Agreement.
5.12 Severability. Should any particular provision of this Agreement
be adjudicated to be invalid or unenforceable, such provision shall be deemed
deleted and the remainder of the Agreement, nevertheless, shall remain
unaffected and fully enforceable; further, to the extent any provision herewith
is deemed unenforceable by virtue of its scope but may be made enforceable by
limitation thereof, the parties hereto agree the same shall, nevertheless, be
enforceable to the fullest extent permissible.
5.13 No Waiver. No delay on the part of any party hereunder in
exercising any right, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude other or further exercise thereof, or
the exercise of any other right, power of privilege.
5.14 Headings. The headings in this Agreement are intended solely
for convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
5.15 Attorneys Fees. In the event of any action or suit based upon
or arising out of any actual or alleged breach by any party of any
representation, warranty or agreement in this Agreement, the prevailing party
shall be entitled to recover its reasonable attorneys' fees and expenses of such
action or suit from the other party, in addition to any other relief ordered by
the court.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
iMALL, INC.
By: /s/ Xxxxxxx Xxxxxxxxxx
_________________________
Name: Xxxxxxx Xxxxxxxxxx
Title: Chairman and Chief
Executive Officer
FIRST DATA MERCHANT SERVICES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
_________________________
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
/s/ Xxxxxxx Xxxxxxxxxx
_________________________
Xxxxxxx Xxxxxxxxxx
/s/ Xxxx X. Xxxxx
_________________________
Xxxx X. Xxxxx
STATE OF _____________ )
| ss.
COUNTY OF ___________ )
On this 30th day of October, 1998, personally appeared before me Xxxx
X. Xxxxx, personally known to me or proved to me on the basis of satisfactory
evidence to be the person whose name is signed above, and acknowledged to me
that he signed it voluntarily and for its stated purpose.
_________________________
NOTARY PUBLIC
STAMP
/s/ Xxxxx X. Xxxxxxxxx
--------------------------
Xxxxx X. Xxxxxxxxx
STATE OF _____________ )
| ss.
COUNTY OF ___________ )
On this __ day of October, 1998, personally appeared before me Xxxxx
X. Xxxxxxxxx, personally known to me or proved to me on the basis of
satisfactory evidence to be the person whose name is signed above, and
acknowledged to me that he signed it voluntarily and for its stated purpose.
_________________________
NOTARY PUBLIC
STAMP
