STOCKHOLDERS’ AGREEMENT
Exhibit
9.1
STOCKHOLDERS’
AGREEMENT
This
Stockholders’ Agreement (this “Agreement”), dated as
of August 17, 2010, is made by and among Avatech Solutions, Inc., a Delaware
corporation (the “Company”), RWWI
Holdings LLC, a Delaware limited liability company (the “Designator”), and the
holders identified on Annex I (together
with their respective successors and assigns, the “Holders”; the Holders
are each individually referred to herein as a “Holder”).
WHEREAS, the Company, ASRW
Acquisition Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of
the Company (“Merger
Sub”), Rand Worldwide, Inc. (“Merger Partner”), a
Delaware corporation, and the Designator entered into an Agreement and Plan of
Merger, dated as of August 17, 2010 (the “Merger Agreement”)
pursuant to which Merger Sub will merge with and into Merger Partner, and Merger
Partner will be the surviving entity (the “Merger”).
WHEREAS, upon the Effective
Time and thereafter, Section 5.4 of the Merger Agreement contemplates certain
director nomination rights with respect to the Company’s Board of Directors (the
“Company
Board”).
NOW, THEREFORE, in
consideration of the mutual promises, representations, warranties and covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, the Designator and
the Holders agree as follows. Capitalized terms used and not
otherwise defined herein shall have the meanings given such terms in the Merger
Agreement.
ARTICLE
1
BOARD
OF DIRECTORS
1.1 Board of Directors
Designation Rights; Voting Agreement.
(a)
During the period beginning at the Effective Time and ending on the
date on which the Designator ceases to own at least twenty-five percent (25%) of
the Merger Shares (the “Designation
Period”):
(i) the
Company shall maintain a Board of Directors consisting of no more than six (6)
individuals.
(ii) The
Designator shall have the right to submit to the Company Board for consideration
as a director three (3) director nominees (each such person a “Director Nominee”),
and the Company Board shall nominate for election and recommend that the
Company’s stockholders vote to elect each of the Director Nominees to serve as a
director (upon such election, or appointment pursuant to the next sentence, a
“Designated
Director”) of the Company until the Company’s next Annual Meeting of
Stockholders. The Company Board shall fill any vacancies that may
arise upon the resignation, removal, death or disability of any Designated
Director with a new director designated by the Designator. The
initial Director Nominees shall be Xxxxxxx Xxxxxxx, Xxxxxxx XxxXxxxxxx and
Xxxxxxx X. Xxx.
(iii) The
Company Board shall nominate for election and recommend that the Company’s
stockholders vote to elect the Company’s Chief Executive Officer to serve as a
director (upon such election, the “CEO Director”) of the
Company until the Company’s next Annual Meeting of Stockholders. The initial CEO
Director shall be Xxxx X. Xxxxxx.
(iv) The
Company shall provide at least forty-five (45) days’ prior written notice of all
intended mailings of notices to the Company’s stockholders for a meeting at
which directors are to be elected (or an action by written consent pursuant to
which directors are to be elected) to the Designator, and the Designator shall
notify the Company in writing, at least thirty (30) days prior to such mailing,
of the person(s) so designated as nominees for election as directors in
accordance with this Section 1.1(a). The Designator shall use
reasonable best efforts to cause the persons so designated to provide the
Company with all information about such person required to be disclosed in the
Company’s notice to stockholders, including, without limitation, the information
required by Schedule 14A promulgated under the Securities Exchange Act of 1934,
as amended (the “Director
Information”), to the Company at least twenty (20) days prior to such
mailing. If the Designator shall fail to give notice to the Company
as provided above, then the Company Board shall nominate the incumbent
Designated Director(s). If any designated person shall fail to timely
provide the Company with his or her Director Information, then the Company Board
shall nominate an incumbent Designated Director in lieu of such designated
person, except where such failure to timely provide Director Information does
not prejudice the Company’s ability to provide a timely notice of a meeting at
which directors are to be elected that complies, in all material respects, with
applicable Legal Requirements.
(v) Each
Holder agrees to vote, and cause each of its Affiliates to vote, all of his, her
or its securities entitled to vote on the election of the Company’s directors
(the “Voting
Securities”) from time to time and at all times as
follows: (A) for the election to the Company Board of each person
nominated as a director of the Company pursuant to this Section 1.1(a); (B)
against the removal of any director elected pursuant to this Section 1.1(a)
except for cause unless such removal is directed or approved by the Designator;
(C) for the removal of any director elected pursuant to this Section 1.1(a) if
such removal is directed or approved by the Designator; and (D) for the election
of a nominee designated to fill any vacancy created by the resignation, removal,
death or disability of a Designated Director or the CEO Director pursuant to
this Section 1.1(a). All Holders agree to execute, and to cause their
Affiliates to execute, any written consents required to effectuate the
obligations of this Agreement.
(vi) The
Company shall take such action as is necessary to convene meetings of the
Company Board and, if applicable, meetings of the Company’s stockholders for the
appointment and election of the directors (or to act by written consent) in
order to elect the Designated Directors and the CEO Director in accordance with
this Section 1.1(a).
(b)
During the period beginning at the Effective Time and ending
on the earlier of the expiration of the Designation Period and the date
immediately preceding the date of the second (2nd) Annual
Meeting of Stockholders of the Company following the Effective Time (the “Continuing Director
Period”):
2
(i) At
the first Annual Meeting of Stockholders of the Company following the Effective
Time, the Company Board shall nominate for election and recommend that the
Company’s stockholders vote to elect two (2) individuals, each of whom must have
been serving on the Company Board immediately prior to the Effective Time (upon
election, or appointment pursuant to the next sentence, a “Continuing Director”)
to serve as directors of the Company until the Company’s next Annual Meeting of
Stockholders. The Company Board shall fill any vacancy that may arise
upon the resignation, removal, death or disability of any Continuing Director
with a new director who was serving on the Company Board immediately prior to
the Effective Time. In the event that no individual who was serving
on the Company Board immediately prior to the Effective Time is available or
willing to serve as a director of the Company, then the identity of the nominee
or new director, as the case may be, shall be at the discretion of the Company
Board provided that any such nominee or new director shall not be an “affiliate”
of the Designator or Merger Partner (other than in connection with such proposed
directorship) as that term is defined in Rule 405 of the Securities Act of 1933,
as amended, and upon election or appointment, as the case may be, such
individual shall be considered a “Continuing Director.”
(ii) The
Designator agrees to vote, and cause each of its Affiliates to vote, all of his,
her or its Voting Securities from time to time and at all times as
follows: (A) for the election to the Company Board of each person
nominated as a director of the Company pursuant to this Section 1.1(b); (B)
against the removal of any director elected pursuant to this Section 1.1(b)
except for cause unless such removal is directed or approved by the remaining
Continuing Director, if any; (C) for the removal of any director elected
pursuant to this Section 1.1(b) if such removal is directed or approved by the
remaining Continuing Director; and (D) for the election of a nominee designated
to fill any vacancy created by the resignation, removal, death or disability of
a Continuing Director pursuant to the provisions of this Section 1.1(b).
For the avoidance of doubt, the Designator’s obligations under this Section
1.1(b) shall not apply to any vote or proxy relating to the election of
directors at the second (2nd) or any
subsequent Annual Meeting of Stockholders of the Company following the Effective
Time. The Designator agrees to execute, and to cause its Affiliates to execute,
any written consents required to effectuate the obligations of this
Agreement.
(c) The
Company hereby represents and warrants that as of the date hereof the
transactions contemplated hereby are not inconsistent with the Company’s
Certificate of Incorporation or Bylaws and agrees that until such time as the
obligations under this Section 1.1 have expired, the Company will not take any
action or amend its Certificate of Incorporation or Bylaws in a manner inconsistent
with or in derogation of this Agreement.
(d) Each
Holder hereby grants, and shall cause its Affiliates to grant, to the Secretary
of the Company, in the event that such Holder fails to vote, or fails to cause
any of its Affiliates to vote, its Voting Securities as required by this
Agreement a proxy coupled with an interest in all Voting Securities beneficially
owned by such Holder or such Affiliates, as applicable, to vote such Voting
Securities in accordance with this Section 1.1, which proxy is irrevocable until
the expiration of the Designation Period.
(e) The
Designator hereby grants, and shall cause its Affiliates to grant, to the
Secretary of the Company, in the event that the Designator fails to vote, or
fails to cause any of its Affiliates to vote, its Voting Securities as required
by this Agreement, a proxy coupled with an interest in all Voting Securities
beneficially owned by the Designator or such Affiliates, as applicable, to vote
such Voting Securities in accordance with this Section 1.1, which proxy is
irrevocable until the expiration of the Continuing Director Period.
3
ARTICLE
2
MISCELLANEOUS
2.1 Expenses.
Except as
otherwise provided herein, each of the parties hereto will pay its own expenses
incurred by or on its behalf in connection with this Agreement or any
transaction contemplated by this Agreement, whether or not such transaction
shall be consummated, including without limitation all fees of its respective
legal counsel and accountants.
2.2 Notices.
All
notices, requests, demands, consents or waivers and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or by fax (with immediate confirmation),
one (1) business day after being sent if by nationally recognized overnight
courier or if mailed, then four (4) days after being sent by certified or
registered mail, return receipt requested with postage prepaid:
If to the
Holders, to the address set forth in the stock records of the
Company.
If to the
Designator:
RWWI
Holdings LLC:
c/o
Ampersand Ventures
00
Xxxxxxx Xx., Xxx. 000
Xxxxxxxxx,
XX 00000
Facsimile:
(000) 000-0000
Attention:
J. Xxxxx Xxxxxx, Esq.
With a
copy to:
Xxxxxxx
Xxxxxx Xxxxxx & Dodge LLP
000
Xxxxxxxxxx Xxxxxx
Xxxxxx,
XX 00000-0000
Facsimile: (000)
000-0000
Attention: Xxxxx
X. Xxxxxxx, Esq.
4
If to the
Company:
Avatech
Solutions, Inc.
00000 Xxx
Xxx Xxxxxxxxx, Xxxxx 000
Xxxxxx
Xxxxx, XX 00000
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Telephone:
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(000)
000-0000
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Facsimile:
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(000)
000-0000
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Attention:
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Corporate
Secretary
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With a
copy to:
Xxxxxx,
Feinblatt, Rothman, Hoffberger & Xxxxxxxxx, LLC
The
Xxxxxxx Building
000 Xxxx
Xxxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxxx 00000-0000
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Telephone:
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(000)
000-0000
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Facsimile:
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(000)
000-0000
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Attention:
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Abba
Xxxxx Xxxxxxxxx, Esq.
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Xxxxxx X. Xxxxxx, Esq.
or, in
each case, to such other person or address as any party shall furnish to the
other parties in writing.
2.3 Binding; No
Assignment.
This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties, except by operation of law and
except that the Company may assign all or part of this Agreement and its rights
hereunder (a) to an Affiliate of the Company or (b) from and after the Closing
to a person, not a party to this Agreement, who acquires substantially all of
the assets of the Company and who assumes all of the obligations of the Company
hereunder, provided in each such case that no such assignment shall release the
Company from its duties and obligations hereunder.
2.4 Severability.
If in any
jurisdiction, any provision of this Agreement or its application to any party or
circumstance is restricted, prohibited or unenforceable, such provision shall,
as to such jurisdiction, be ineffective only to the extent of such restriction,
prohibition or unenforceability without invalidating the remaining provisions
hereof and without affecting the validity or enforceability of such provision in
any other jurisdiction or its application to other parties or
circumstances. In addition, if any one or more of the provisions
contained in this Agreement shall for any reason in any jurisdiction be held to
be excessively broad as to time, duration, geographical scope, activity or
subject, it shall be construed by limiting and reducing it, so as to be
enforceable to the extent compatible with the applicable Legal Requirements of
such jurisdiction as it shall then appear.
5
2.5 Governing Law; Consent to
Jurisdiction and Venue.
The
parties acknowledge and agree that this Agreement shall be governed by the laws
of the State of Delaware as to all matters including, but not limited to,
matters of validity, construction, effect, performance and liability, without
consideration of conflicts of laws provisions contained therein and that the
courts of the State of Delaware shall have exclusive jurisdiction of all
disputes with respect to this Agreement, including without limitation, any
dispute relating to the construction or interpretation of the rights and
obligations of any party, which is not resolved through discussion between the
parties. Each party hereto hereby irrevocably and unconditionally
submits to the non-exclusive jurisdiction of any Delaware State or Federal court
sitting in New Castle County in any action or proceeding arising out of or
relating to this Agreement, or any transaction contemplated
hereby. Each party hereto hereby irrevocably waives, to the fullest
extent they may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding, and also irrevocably and
unconditionally consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process by certified mail
to his, her or its address specified in Section 2.2. Each party
hereto further irrevocably and unconditionally agrees that a final judgment in
any such action or proceeding (after exhaustion of all appeals or expiration of
the time for appeal) shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
applicable Legal Requirements.
2.6 Waiver of Jury
Trial.
EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
2.7 Counterparts.
This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
2.8 Headings.
The title
of this Agreement and the headings of the Sections and Articles of this
Agreement are for reference purposes only and shall not be used in construing or
interpreting this Agreement.
2.9 Entire Agreement; Amendment;
Waiver.
This
Agreement and any documents delivered pursuant to the terms hereof, set forth
the entire agreement and understanding of the parties hereto in respect of the
subject matter hereof, and supersedes all prior agreements, promises, covenants,
arrangements, representations or warranties, whether oral or written, by any
party hereto or any officer, director, employee or representative of any party
hereto. No modification or waiver of any provision of this Agreement
shall be valid unless it is in writing and signed by the party to be charged
therewith, provided, however, that the
consent of the Holders comprising two-thirds of the shares of the Company’s
Common Stock then held by all Holders shall be required to amend any provision
of the Agreement impacting the rights of the Holders. The waiver or breach of
any term or condition of this Agreement shall not be deemed to constitute a
waiver of any other breach of the same or any other term or
condition.
6
2.10 Third
Parties.
Except as
specifically set forth or referred to herein, nothing herein expressed or
implied is intended or shall be construed to confer upon or give to any person
or corporation other than the parties hereto and their respective successors or
assigns any rights or remedies under or by reason of this
Agreement.
2.11 Gender; Tense,
Etc.
Where the
context or construction requires, all words applied in the plural shall be
deemed to have been used in the singular, and vice versa; the masculine shall
include the feminine and neuter, and vice versa; and the present tense shall
include the past and future tense, and vice versa.
[Remainder of this page left blank
intentionally; Signature pages follow]
7
IN WITNESS WHEREOF, each of
the undersigned has duly executed this Stockholders’ Agreement as of the date
first written above.
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AVATECH
SOLUTIONS, INC.
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By:
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/s/ Xxxxxxxx Xxxxxxx
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Name:
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Xxxxxxxx
Xxxxxxx
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Title:
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President
and Chief Financial Officer
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RWWI
HOLDINGS LLC
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By:
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AMP-06
Management Company
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Limited
Partnership
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By:
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AMP-06
MC LLC, its General Partner
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By:
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/s/ Xxxxxxx X. Xxxxxxx
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Name:
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Xxxxxxx
X. Xxxxxxx
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Title:
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Principal
Managing Member
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ANNEX
I
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HOLDERS:
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/s/ Xxxxxxx X. Xxxxx, Xx.
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/s/ Xxxxxx X. Xxx
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Xxxxxxx
X. Xxxxx, Xx.
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Xxxxxx
X. Xxx
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/s/ Xxxxxx X. Xxxxx
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/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx
X. Xxxxx
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Xxxxxx
X. Xxxxxxx
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/s/ Xxxx Xxxxxxxxxxxx
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/s/ Xxxxxx X. Post
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Xxxx
Xxxxxxxxxxxx
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Xxxxxx
X. Post
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/s/ Xxxxx X. Xxxxxxx
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/s/ Xxxxxxxx Xxxxxxx
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Xxxxx
X. Xxxxxxx
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Xxxxxxxx
Xxxxxxx
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/s/ Xxxx Xxxx
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Xxxx
Xxxx
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SIGMA
OPPORTUNITY FUND, LLC
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CAPSTONE
VENTURES SBIC, L.P.
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By:
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Sigma
Capital Advisors, LLC,
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By:
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/s/ Xxxxxx X. Xxxxxxx
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as
Managing Member
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Xxxxxx
X. Xxxxxxx, President and
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General
Partner
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By:
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/s/ Xxxx Xxxx
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Xxxx
Xxxx, Managing Member
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