SHAREHOLDER AGREEMENT
THIS AGREEMENT made and entered into this 25th day of July, 1996, by and
between XXXXXX X. XXXXXXXXX ("Xxxxxxxxx") and NATIONAL WIRELESS HOLDINGS INC.
("National") a Delaware corporation (Xxxxxxxxx and National are hereinafter
sometimes referred to individually as a "Shareholder" or collectively as
"Shareholders") and ELECTRONIC DATA SUBMISSION SYSTEMS, INC., a Colorado
corporation, (hereinafter referred to as the "Company").
RECITALS
Xxxxxxxxx has granted to National an option, expiring November 20, 1996,
(the "Option") to purchase an aggregate of 2,908 shares of common stock in the
Company. Xxxxxxxxx and National have agreed that National may exercise a portion
of the Option and purchase 1,000 shares of the Company's common stock from
Xxxxxxxxx. The Shareholders are the beneficial owners and holders of record of
all of the issued and outstanding common voting stock of the Company. The
individual ownership of each Shareholder is as follows:
Number of Shares
Name of Common Stock Issued
---- ----------------------
XXXXXX X. XXXXXXXXX 7,724
NATIONAL WIRELESS HOLDINGS, INC. 1,000
-----
Total 8,724
=====
The Shareholders and the Company desire to provide for the retention of a
high degree of ownership of the Company by the Shareholders. The Shareholders in
consideration hereof desire to place certain restrictions on the right of a
Shareholder to sell or otherwise dispose of its shares and to allow their sale
by a Shareholder and purchase by the Company or other Shareholders upon the
occurrence of certain conditions.
NOW, THEREFORE, in consideration of these recitals and the mutual covenants
and conditions contained in this Agreement, the parties hereto mutually agree as
follows:
1. Stock Legend. The following legend shall be endorsed upon each
certificate representing the shares prior to its delivery to the Shareholder:
The shares of stock represented by the within certificate are not
registered securities within the provisions of the Federal Securities Act
of 1933
or the Colorado Securities Law and the transferability or resale of such
shares is restricted thereby.
The shares of capital stock which are evidenced by this certificate
may not be sold, transferred or otherwise disposed of by the registered
owner thereof except in accordance with and subject to the terms and
conditions of a Shareholder Agreement dated July 25, 1996, by and among
Electronic Data Submission Systems, Inc., a Colorado corporation (the
"Company"), and the shareholders thereof, a copy of which Agreement is on
deposit with the Secretary of the Company.
2. General Restriction on Transfer. Without the prior approval of the
Company's Board of Directors, each Shareholder shall not sell, transfer or
otherwise dispose of all or any part of his or her shares in the Company except
in accordance with the provisions of this Agreement. Notwithstanding anything in
this Agreement to the contrary, a Shareholder may transfer some or all of his or
its shares in the Company to an "affiliate" (as hereinafter defined) without
the prior consent of the Company so long as the transferee agrees in writing to
be bound by the terms of this Agreement. For purposes of this Agreement,
"affiliate" shall mean as to an individual, any spouse, parent, sibling, or
child of such individual or any corporation, trust, partnership or limited
liability company controlled by such individual. or as to any corporation, any
corporation controlling such corporation, any corporation controlled by such
corporation, or any shareholder individually or group of shareholders
collectively in control of such corporation.
3. Optional Redemption Upon Death of Xxxxxxxxx. Upon the death of a
Xxxxxxxxx, Xxxxxxxxx'x estate may offer all, but not less than all, of the
shares owned by Xxxxxxxxx to the Company for redemption. If Xxxxxxxxx'x estate
so elects, the Company shall, if it is not prohibited by the Colorado
Corporation Act, any successor statute, or any other applicable corporate law
from doing so, have the option to redeem all, but not less than all, of the
shares owned by Xxxxxxxxx at the time the Company receives written notice of his
death (the "Death Date") at the prices set forth in Section 6 hereof to be
determined as of the Death Date. The Company shall have the option to pay for
such shares either in a lump sum within 90 days following written notice to the
Company of the Death Date or in installments as set forth in Section 7.
4. Company's Right of First Refusal. If any Shareholder desires to sell,
transfer or otherwise dispose of all or any part of the shares which he or it
then owns or if a Shareholder is required by law to transfer some or all of his
or its shares due to divorce, dissolution, liquidation, corporate
reorganization, bankruptcy or for any other reason, he or it shall first deliver
written notice thereof to the Company (the "Company Notice"), specifying the
number of shares which he or it desires or is required to dispose of, the name,
address, telephone number, and social security number of the proposed
transferee, the proposed price (if any), terms and all conditions of the
proposed sale, transfer or disposition, and the names
2
of the shareholders or beneficiaries of any proposed transferee which is a
trust, estate, or corporation (the "Third Party Offer"). Upon the delivery of
such written notice (the "Company Notice Date"), the Company shall, to the
extent that it is permitted to do so by the Colorado Corporation Act, any
successor statute, or any other applicable corporate statute have the option
(the "Company Option"), but shall not be required, to buy all or any part of the
shares owned by the Shareholder which he or it has specified in the Company
Notice are to be transferred at the price and on all of the terms and conditions
set forth in the Third-Party Offer. The Company shall give the selling
Shareholder written notice of its election to exercise the Company Option within
30 days of the Company Notice Date.
5. Contingent Option of Remaining Shareholders. If the Company is
prohibited by the Colorado Corporation Act, any successor statute, or any other
applicable corporate law from buying any of the shares offered for sale to it by
the Shareholder pursuant to Sections 3 or 4 or if the Company elects not to buy
any of the shares offered for sale to it by the Shareholder pursuant to Section
4 of this Agreement, then the other Shareholder will have the option to buy all,
but not less than all, of the shares which the Company is so prohibited from
buying or so elects not to buy, at the same price which the Company would have
been required to pay for the said shares pursuant to Section 3 or 4 of this
Agreement. In the foregoing events, the Company will, not later than 30 days
from the Company Notice Date, notify each of the Shareholders in writing
thereof, specifying the number of the said shares which it is so prohibited from
buying or has so elected not to buy and the price which it would have been
required to pay for the said shares pursuant to Section 3 or 4 of this
Agreement. The other Shareholder shall have the option to purchase the shares
within 30 days following the date on which the Company delivers said written
notice to the other Shareholder (the "Shareholder Notice Date").
To the extent that neither the Company nor the other Shareholder elect to
exercise the aforesaid options, the offering Shareholder shall be entitled, for
an ensuing period of 30 days from and after the expiration of the option periods
provided hereinabove, to sell, transfer, or otherwise dispose of the shares
owned by the Shareholder so long as the transferee executes this Agreement and
agrees to be bound by all terms hereof; provided, however, that any such sale,
transfer, or disposition pursuant to the provisions of paragraph 4 hereof shall
be only upon the price, terms, conditions, and to the offeree stated in the
Third-Party Offer. If no such sale or other transfer is consummated within said
30-day period, the restrictions and options herein provided shall be restored
and shall continue in full force and effect. So long as these restrictions and
options remain in effect, the offering Shareholder and any transferee shall not
thereafter sell or otherwise transfer any shares in the Company without first
giving the Company and the other Shareholder, where required hereby, notice as
herein provided and otherwise complying with the foregoing provisions.
6. Valuation of Shares. The price to be paid for any shares of stock of the
Company to be redeemed, sold and/or purchased pursuant to Section 3 this
Agreement shall be determined as follows:
3
(a) During the balance of the calendar year 1996, the price shall be
$_______ per share.
(b) On or before January 1, 1997, and/or or before January 1 of each
subsequent year, Shareholders owning not less than eighty percent (80%) the
Company's stock and the Company shall stipulate the agreed value of the shares
of stock to be effective during such calendar year. Such stipulation shall be
made, from time to time, by filing the following statement, signed by
Shareholders owning not less than eighty percent (80%) of the outstanding shares
of the Company's stock, with the Secretary of the Company.
"The value of each share of the common capital stock of Electronic
Data Submission Systems, Inc., for the year ___________, for the purposes
of the Shareholder Agreement between the undersigned dated July 25, 1996,
shall be $______________ per share."
Appropriate adjustments in the stipulated value shall be made for any stock
dividends, stock splits, recapitalization or issuance by the Company of
additional outstanding shares occurring after the fixing of the last stipulated
value.
(c) In the event the parties fail to enter into the stipulation
provided in (b) above with respect to any year, the last previous stipulated
value shall be used except as hereinafter provided. If no stipulated value is
entered into for any year preceding the death of a Shareholder, the valuation of
the shares shall be fixed by a board of three (3) arbitrators selected as
follows: The surviving Shareholders (by vote weighted in proportion to their
stock ownership) and the representative of the estate of the deceased
Shareholder shall each select one third-party arbitrator, and the two so
selected shall select one third-party arbitrator, and the decision of a majority
of the three arbitrators with respect to the value of the shares shall be final
and binding upon the parties. The cost of arbitration shall be split equally
between the surviving Shareholders and the estate of the deceased Shareholder.
In determining the value of the shares of stock, the arbitrators shall
disregard: (1) discounts for block sales, minority interest and lack of
marketability, and (ii) the excess of any insurance proceeds or claim arising
out of insurance owned by the Company on the life of the deceased Shareholder,
over and above the cash surrender value thereof at the date of death. The
arbitrators shall first value the Company as a whole on a going-concern basis
and then determine the value of the shares based upon the ratio of the shares to
be valued to the fully-diluted number of shares then outstanding, assuming that
all stock options, stock warrants and convertible stock or securities are
exercised or converted, as the case may be, immediately before calculation of
the number of shares outstanding.
7. Installment Payments. The Company or the acquiring Shareholder, as the
case may be, may elect to pay the purchase price for any shares acquired
hereunder in installments as follows.
4
The purchase price shall be paid:
(a) At least twenty percent (20%) of the purchase price shall be paid
in cash within ninety (90) days after the relevant notice date; and
(b) The balance of the purchase price shall be paid by delivery of the
Company's or the acquiring Shareholder's, as the case may be, promissory note in
an amount equal to said balance of the purchase price (the "Note"). The Note
shall bear interest commencing ninety (90) days after the relevant notice date
at a rate equal to the lowest rate then allowed to be charged under the Internal
Revenue Code without subjecting the recipient to imputed interest, but in no
event less than seven percent (7%) per annum. The term of the Note shall be for
a period not less than five (5) nor greater than seven (7) years from the date
of the Note. Principal and interest shall be amortized over the term of the Note
and payable in equal installments not less frequently than quarterly. The Note
shall contain customary provisions relating to default including but not
limited to reasonable attorneys' fees and acceleration. The maker of the Note
shall have the right to prepay all or part of the principal at any time without
penalty.
8. Conditions Precedent to Obligations. The Company's and the Shareholders'
rights and obligations under this Agreement are subject to the following
additional provisions:
(a) If any party to this Agreement elects to pay in installments for
the shares being purchased by it pursuant hereto, he, she or it shall have the
right at any time to prepay without penalty all or any portion of the unpaid
principal balance of installments plus interest accrued to the date of such
payment.
(b) Properly endorsed certificates for the shares being sold by the
Shareholder or his estate, as the case may be, to the Company or the other
Shareholders pursuant to this Agreement, shall be delivered to the party buying
them by the seller not later than the date of the lump sum payment of the
purchase price therefor. If the party buying the shares elects to pay for them
in installments, the shares shall be placed in escrow with a mutually agreed
upon bank or person (the "Escrow Agent") prior to the date of payment of the
first installment of the purchase price therefor. The Escrow Agent shall hold
the shares as collateral for the installment payment obligations of the party
buying the shares and shall release the shares to the buying party upon payment
in full or to the selling party in the event of a default which is not cured
within thirty (30) days following notice of default. Upon placement of the
shares in escrow, the Shareholder or his estate, as the case may be, shall cease
to be a Shareholder of the Company with respect to such shares and the shares
shall not be voted while in escrow.
(c) Any written notice required to be delivered pursuant to this
Agreement shall be sent by prepaid first class certified mail, return receipt
requested, and such notice shall be considered to be delivered on the date such
notice is deposited in the United States
5
mail. Any such notice, if sent to the Company, shall be addressed to the Company
at its principal place of business, and if sent to any of the Shareholders it
shall be mailed to him at his address as shown on the Company's stock records,
unless in either case a different address has been designated.
9. Voting Agreement.
9.1 Irrevocable Proxy. Upon complete exercise of both the Option and
Warrant by National, Xxxxxxxxx shall deliver to National an Irrevocable Proxy
(the "Proxy") in the form attached hereto as Exhibit A authorizing National to
vote one (1) share of Xxxxxxxxx'x stock in the Company. The Proxy shall
terminate upon the first to occur of the following events:
a) The effective date of a registration statement allowing a
public offering of the Company's stock;
b) A transfer by National of some or all of its stock in the
Company to anyone other than an affiliate of National;
c) The date on which either Xxxxxxxx Xxxxxxx or Xxxxxxx Xxxxxxx
ceases to be a member of the Company's board of directors and fails to be
replaced with a successor reasonably acceptable to Xxxxxxxxx.
Upon termination of the Proxy for any of the reasons set forth above, National
shall return the Proxy to Xxxxxxxxx and the Proxy shall be cancelled.
9.2 Election of Directors.
a) Prior to delivery of the Proxy, National shall be entitled to
nominate one (1) director, and the Company's board of director's shall have
three (3) members.
b) While the Proxy is effective:
1) If the Company's board of directors has three (3) members,
National shall nominate two (2) members and Xxxxxxxxx shall nominate one (1)
member.
2) If the Company's board of directors has five (5) members,
National shall nominate three (3) members and Xxxxxxxxx shall nominate two (2)
members.
3) National and Xxxxxxxxx shall each vote a sufficient number of
shares in favor of the other party's nominee(s) to assure that such nominee(s)
will be elected to the Company's board of directors.
6
c) Upon the earlier termination of this Agreement or the Proxy,
the provisions of this Section 9.2 shall terminate.
9.3 Supermajority Vote Requirements. Until November 20, 1996, each of
the following actions hall require a ninety percent (90%) majority vote of the
issued and outstanding voting common shares of the Company:
a) amendment of the Certificate of Incorporation and/or By-laws
of the Company,
b) merger or consolidation of the Company with any other
corporation regardless of whether the Company will be the surviving entity,
c) liquidation and/or dissolution of the Company,
d) sale of all or substantially all of the Company's assets, and
e) issuance of any equity securities in the Company, issuance of
any securities convertible into equity securities in the Company, or issuance of
any warrants, options or other rights to acquire any of such securities.
10. Co-Sale Rights
10.1 Co-Sale Rights. Except for any Permitted Transfer, no Shareholder
shall sell for value any shares representing more than 10% of the then
outstanding shares of the Company without permitting the other Shareholders to
participate as a seller in such transaction (the "Co-Sale Rights") such that the
other Shareholders shall be entitled to sell on the same terms as the selling
Shareholder, in connection with such transaction, the number of shares equal to
(i) the total number of shares of Company Stock which the purchaser is willing
to acquire in such transaction, multiplied by (ii) a fraction, the numerator of
which is the number of shares owned by the other Shareholders and the
denominator of which is the total number of the Company's outstanding shares at
the time of such transaction.
10.2 Procedure. Before accomplishing or entering into a binding
contract for any sale for value of any shares that would be covered by the
Co-Sale Rights, each Shareholder agrees to give the other Shareholders prompt
written notice (the "Co-Sale Notice") of any such proposed sale (the "Sale
Proposal"), stating the terms and conditions of the Sale Proposal, including
without limitation the name and address of the buyer, the number of shares which
will be sold in the transaction, the form and amount of consideration and the
payment terms. The other Shareholders shall notify the selling Shareholder in
writing within twenty (20) business days after receipt of the Co-Sale Notice
(the "Co-Sale Election Period") as to whether or not the other Shareholder
wishes to exercise his Co-Sale Rights and participate in the Sale Proposal.
Failure by the other Shareholders to respond in writing
7
within the Co-Sale Election Period shall be deemed to be a waiver by the other
Shareholder of his Co-Sale Rights with respect to only such Sale Proposal. Upon
a waiver by the other Shareholder of his Co-Sale Rights for any Sale Proposal,
the selling Shareholder may sell his or her Shares in accordance with the Sale
Proposal provided that (a) such sale is consummated within 60 days after the
expiration of the Co-Sale Election Period, (b) the transaction involves more
than 10% of the Company's outstanding shares and (c) the terms of the actual
transaction are in all material respects as set forth in the Co-Sale Notice. For
purposes of this Section, transactions involving (a) a single buyer or
coordinated group of buyers and multiple Shareholders as sellers and/or (b)
multiple sales by a single Shareholder within a twelve-month period, shall be
grouped together for purposes of determining whether the number of shares
exceeds 10% of the Company's outstanding shares.
11. Take Along Rights. The provisions of this Section 11 are not intended
to limit or restrict the rights of the Shareholders in their capacity as holders
of the capital stock of the Company, except that the Shareholders shall not be
entitled to exercise dissenters' rights under the Colorado Corporation Act or
any succeeding provisions providing for dissenters' rights with respect to an
Acquisition Transaction effected pursuant to the Take Along Rights under this
Section 11.
11.1 Right to Initiate Sale. Shareholders owning not less than
two-thirds (2/3) of the Company's shares (the "Initiating Shareholders") shall
have the right to sell the Company to an unaffiliated third party under this
Section 11 (the "Take-Along Rights"), whether such sale (a "Sale Transaction")
is in the form of (a) a sale of all or substantially all of the assets of the
Company, (b) a sale of all of the outstanding stock of the Company, (c) a
merger, consolidation or reorganization, or (d) any other transaction which
effectively transfers all or substantially all of the operating assets and
business of the Company. If (a) one or more Shareholders exercise their
Take-Along Rights, and (b) a Sale Transaction is consummated, then each
Shareholder shall be entitled to a pro rata share of the Aggregate Acquisition
Consideration based on the number of Shares owned by such Shareholder.
11.2 Notice of Initiation of Action to Sell. The Initiating
Shareholders agree that, no more than thirty (30) days after the initiation by
the Initiating Shareholders in his, her or their individual capacity of any
action to sell the Company in a Sale Transaction pursuant to this Section 11
(which actions shall include, but not be limited to, solicitations by such
Shareholder of offers to acquire the Company or the engagement of an investment
banking firm by the Company for any purpose relating to the sale of the
Company), such Initiating Shareholders shall notify the other Shareholders and
the Company in writing of the proposed initiation of such action.
11.3 Notice of Acquisition Offer. If an Acquisition Offer shall be
made as a result of the efforts by the Initiating Shareholders which Initiating
Shareholders desire to have the Company accept, the Initiating Shareholders
shall give the Acquisition Notice to the Other Shareholders stating that the
Initiating Shareholders propose that the Acquisition Offer be
8
accepted, which notice shall set forth the name and address of the Acquisition
Offeror and the Aggregate Sale Consideration and shall be accompanied by a
signed copy of the Acquisition Offer and any other documents provided by the
Acquisition Offer or to the Initiating Shareholders in connection therewith. The
Initiating Shareholders shall not receive any consideration in connection with
the consummation pursuant to this Agreement of a Sale Transaction other than his
or her pro rata share of the Aggregate Sale Consideration based on the number of
Shares owned by the Initiating Shareholders.
11.4 Acquisition Offer. The Acquisition Offer shall:
(a) be in writing, signed by the Acquisition Offeror and
addressed to the Company; and
(b) propose to pay the entire Aggregate Sale Consideration
allocated among the holders of the shares of the Common Stock in a manner such
that the fair market value of the consideration paid for each share of Common
Stock outstanding immediately prior to such closing (the "Per Share Acquisition
Consideration") shall be the same for all shareholders of the Company.
11.5 Consummation of Sale Transaction. The Shareholders and any
transferee of Shares shall use their best efforts to consummate the Sale
Transaction all as the Initiating Shareholder may reasonably request.
12. Additional Rights and Agreements.
12.1 Pre-emptive Rights. Each Shareholder shall have a right of first
refusal to purchase a pro rata portion (as provided below) of any shares of
capital stock of the Company or any other instrument which is exercisable or
convertible into shares of the Company's capital stock which the Company
proposes to sell (a "Proposed Sale"). The notice shall set forth the material
terms and conditions of the Proposed Sale and shall constitute an offer to sell
such securities to the respective Shareholders on such terms and conditions.
Each Shareholder may accept such offer by delivering a written notice of
acceptance to the Company within ten (10) days after receipt of the Company's
notice of the Proposed Sale. The pro rata portion of securities to be sold in
the Proposed Sale that the respective Shareholders may acquire by exercise of
his or her rights hereunder is the ratio that the number of shares of Common
Stock owned by such Shareholder bears to the total number of shares of the
Common Stock issued and outstanding before the Proposed Sale. If any Shareholder
elects to exercise such right of first refusal and does not complete the
purchase of such securities within fifteen (15) days after delivery of its
written notice of acceptance to the Company, or such later date as may be
specified by the Company, the Company may complete the Proposed Sale on the
terms and conditions specified in the Company's notice to the Shareholders. The
rights granted to the Shareholders pursuant to this Section 12 do not apply to
(a) any Public Offering, and (b) any Proposed Sale (including the grant of stock
9
options) of shares of Common Stock to employees (excluding Xxxxxxxxx) of the
Company approved by the Company's Board of Directors, provided that the
aggregate number of shares to be issued to employees, inclusive of all shares
previously issued to employees, does not exceed 10% of the Company's then
outstanding shares.
12.2 Piggyback Registration Rights. Each time the Company shall
determine to proceed with the actual preparation and filing of a registration
statement under the Securities Act in connection with the proposed offer and
sale for money of any of its securities by it or any of its equity security
holders (other than a registration statement on Form S-8 or other limited
purpose form), the Company will give written notice of its determination to the
Shareholders. Upon the written request of any Shareholder given within 15 days
after receipt of any such notice from the Company, the Company will except as
herein provided, cause all or a part of the Shares of such Shareholder(s) to be
included in such registration statement, all to the extent requisite to permit
the sale or disposition to be so registered; provided, however, that nothing
herein shall prevent the Company from, at any time, abandoning or delaying any
registration. If any registration pursuant to this Section 12.2 shall be
underwritten in whole or in part, the Company may require that the Shares
requested for inclusion pursuant to this Section be included in the underwriting
on the same terms and conditions as the securities otherwise being sold through
the underwriters, including any "lock-up." If in the good faith judgment of the
managing underwriter of such public offering the inclusion of all of the Shares
originally covered by a request for registration would reduce the number of
shares to be offered by the Company or interfere with the successful marketing
of the shares of stock offered by the Company, the number of Shares to be
included in the underwritten public offering may be reduced pro rata among the
holders thereof requesting inclusion in such registration. With respect to each
inclusion of Shares in a registration statement pursuant to this Section 12.2,
the Company shall bear the following fees, costs and expenses: all registration,
filing and NASD fees, printing expenses, fees and disbursements of counsel and
accountants for the Company and all legal fees and disbursements and other
expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be registered or
qualified. Fees and disbursements of counsel and accountants for any of the
Shareholders selling Shares, underwriting discounts and commissions and transfer
taxes for such Shares and any other expenses incurred by such Shareholders not
expressly included above shall be borne by the respective shareholders.
12.3 Indemnification.
(a) The Company will indemnify and hold harmless each Shareholder
whose Shares are included in a registration statement pursuant to the provisions
of Section 12.2 and any underwriter (as defined in the Securities Act) for such
Shareholder and each person, if any, who controls such underwriter within the
meaning of the Securities Act, from and against any and all loss, damage,
liability, cost and expense to which such Shareholder or any such underwriter or
controlling person may become subject under the
10
Securities Act or otherwise, insofar as such losses, damages, liabilities, costs
or expenses are caused by any untrue statement or alleged untrue statement of
any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, damage, liability, cost or expense arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with written information furnished by such Shareholder,
such underwriter or such controlling person specifically for use in the
preparation thereof.
(b) Each Shareholder whose Shares are included in a registration
statement to Section 12.2 will indemnify and hold harmless the Company, any
controlling person and any underwriter from and against any and all loss,
damage, liability, cost or expense to which the Company or any controlling
person and/or any underwriter may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
strict conformity with written information furnished by such Shareholder
specifically for use in the preparation thereof.
(c) Within 15 days after receipt by an indemnified party pursuant
to the provisions of paragraph (a) or (b) of this Section of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said paragraph
(a) or (b), notify the indemnifying party of the commencement thereof; but the
omission to so notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than hereunder.
In case such action is brought against any indemnified party and it, she or he
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, if the defendants in any action include both the
indemnified party and the indemnifying party and there is a conflict of interest
which would prevent counsel for the indemnifying party from also representing
the indemnified party, the indemnified party or parties shall have the right to
select separate counsel to participate in the defense of such action on behalf
of such indemnified party or parties. After notice from the
11
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party pursuant to the provisions of said paragraph (a) or (b) for any legal or
other expense subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation, unless (i) the
indemnified party shall have employed counsel in accordance with the proviso of
the preceding sentence, (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of the commencement
of the action, or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party. No
indemnifying party shall be liable for any settlement entered into without its
prior written consent.
13. Restriction on Encumbrances. Each Shareholder agrees not to pledge or
hypothecate any shares owned by him, except as collateral to a note (i) in favor
of the Company or (ii) in favor of a lending institution, if the proceeds of
such loan are used in their entirety to purchase additional shares of common
stock of the Company, providing that the borrowing Shareholder delivers to the
Company a written undertaking of the lender, in form acceptable to the Company,
that such lender will only dispose of said shares in accordance with the
provisions of this Agreement.
14. Application to Newly Authorized Shares. If the Company amends its
articles of incorporation to authorize it to issue shares of any other class of
capital stock, this Agreement shall be deemed to apply to any shares of such
other class of capital stock as though they were and to the same extent it
applies to shares of its class of common stock.
15. Amendment. This Agreement may be amended, restated or revoked only by
the written agreement of all of the parties to this Agreement.
16. Binding Effect. This Agreement shall he binding upon and (unless
inconsistent with its provisions) shall inure to the benefit of the executor,
administrator or personal representative and the heirs and assigns of each of
the Shareholders.
17. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the state in which the Company is incorporated
applicable to contracts made in and to be performed in that State.
18. Counterpart. This Agreement may be executed in any number of
counterparts, each of which so executed together constitute but one shall be
deemed to be an original, but all such counterparts shall and the same
Agreement.
19. Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof and the
agreement shall be construed in all other respects as if such invalid or
unenforceable provision were omitted.
12
20. Prior Agreements. This Agreement cancels, terminates and supersedes all
prior agreements of the parties or any of them respecting any and all subject
matter contained herein.
21. Voting Rights of Jointly-held Shares. If two or more persons hold
shares in the Company in joint ownership, the joint owners shall designate one
person to vote the shares and the other joint owner(s) shall have no voting
rights for so long as such designation is in effect.
22. Termination. This Agreement shall terminate in its entirety upon the
earliest of (i) the effective date of a registration statement of the Company
under the Securities Act of 1933 covering the Company's initial public offering
of Common Stock resulting in gross proceeds of at least $10,000,000, or (ii) the
sale of all or substantially all of the assets or business of the Company, by
sale of assets, merger, consolidation or otherwise.
IN WITNESS WHEREOF, the Shareholders have hereunto set their hands and
seals and the Company has caused these presents to be executed and signed by its
duly authorized officers and its corporate seal to be affixed hereto this day
and year first above written.
ELECTRONIC DATA SUBMISSION
SYSTEMS, INC.
A Colorado Corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxxx, President
ATTEST: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxxx, Secretary
SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
XXXXXX X. XXXXXXXXX
NATIONAL WIRELESS HOLDINGS, INC.
A Delaware Corporation
By: /s/ [ILLEGIBLE]
------------------------------
13
