Exhibit 3(f)
Preferred Shareholder Agreement
PREFERRED STOCKHOLDERS AGREEMENT
THIS PREFERRED STOCKHOLDERS AGREEMENT is made and entered into this 2nd
day of November, 1998, by and between XXXXXXX XXXXXX (hereinafter "Xx. Xxxxxx")
and XXXXX XXXXXXX (hereinafter "Xx. Xxxxxxx") (Xx. Xxxxxx and Xx. Xxxxxxx being
hereinafter sometimes referred to individually as "Stockholder" and collectively
as "Stockholders") and ALOTTAFUN!, INC., a Delaware corporation (hereinafter the
"Corporation").
W I T N E S S E T H:
WHEREAS, the Stockholders shall each own 1,000,000 shares of Series A
Preferred Stock of the Corporation (the shares of Xx. Xxxxxxx to be issued upon
his execution of this Agreement); and
WHEREAS, the Stockholders desire to assure and provide for continuity
in the management of the Corporation and to avoid the introduction of outside
investors who might interfere with said management; and
WHEREAS, the Stockholders desire to establish certain terms and
conditions with regard to their ownership of the shares of Series A Preferred
Stock of the Corporation and with regard to the management and operation of the
business of the Corporation;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and promises hereinafter set forth, the Stockholders and the
Corporation agree as follows:
1. Shareholdings.
Each Stockholder acknowledges that each of the outstanding shares of
Series A Preferred Stock of the Corporation will be validly issued, fully paid
and non-assessable, and that said outstanding shares of Series A Preferred Stock
will be held of record as follows:
Number of Shares
Name of Stockholder Held of Record Certificate No.
------------------- -------------- --------------
Xxxxxxx Xxxxxx 1,000,000 P1
Xxxxx Xxxxxxx 1,000,000 P2
Each Stockholder represents that he is or will be the beneficial owner of all of
the shares registered in his name as set forth in the aforesaid schedule
("Preferred Stock").
2. Preemptive Rights.
If in the future the Corporation issues new shares of stock of the same
kind, class and series as that which is already owned by the Stockholders,
including, without limitation, the issuance of previously authorized but
unissued shares, then each Stockholder shall have the preemptive right to
purchase his pro-rata share of the additional capital shares issued, and that
such preemptive rights may not be eliminated except with the written consent of
both of the Stockholders.
3. Restrictions on Conversion, Sale or Transfer.
Neither Stockholder shall convert his Preferred Stock to common stock
or gift, sell, transfer, hypothecate, pledge, assign or otherwise dispose of all
or any part of his shares of Preferred Stock or any beneficial interest therein
("Beneficial Interest") without the prior written consent of the other
Stockholder, which may be withheld for any reason in his sole discretion without
liability. However, a Stockholder may pledge or encumber his Preferred Stock if
the proceeds of such loan, which is secured by such stock, is used by or
advanced to the Corporation. It is the intention of the parties that no court in
any bankruptcy, divorce, competency or other proceeding shall have the right to
involuntarily force such transfer or encumbrance or any change in Beneficial
Interest without the prior written consent and waiver of the other Stockholder.
Such consent may be withheld for any reason in such Stockholder's sole
discretion without liability.
4. Right of First Refusal.
a. Offering Notice. If either Stockholder receives a bona-fide offer
for the purchase of all or any of the shares of the Preferred Stock owned by him
(the recipient of any such offer being hereinafter called the "Offeror"), which
is received during a period when sale of shares of the Preferred Stock is
allowed and which the Offeror desires and intends to accept, before accepting
such offer, he shall give notice (the "Offering Notice") to the other
Stockholder (the "Offeree") which shall include a true copy of such offer.
To constitute a bona-fide offer, any offer (i) shall be made by a
principal identified in the offer, and not an agent acting on behalf of an
undisclosed principal, (ii) shall be accompanied by a certified check of the
prospective purchaser for a sum equal to at least two (2%) percent of the
proposed purchase price, and (iii) the Offeror shall not prior to delivering the
Offering Notice have been in violation or default of any material provision of
this Agreement.
In the Offering Notice, the Offeror shall offer to the Offeree the
right to purchase the stock of the Offeror referred to in said offer at the same
price and subject to the same terms and conditions as set forth in said offer.
The Offeree shall notify the Offeror of his election within thirty (30) days of
the date of his receipt of the Offering Notice. If the offer is accepted by the
Offeree and notice in writing is given, the closing of the purchase shall take
place at the principal office of the Corporation, or other mutually agreeable
place on a mutually acceptable date, not more than sixty (60) days after receipt
by the Offeror of the Offeree's notice of election to purchase.
b. Right to Sell to Third Party. If the Offeree has not timely accepted
the offer as provided in subparagraph a. above, the offer shall be deemed to
have been declined by the Offeree, and the Offeror shall be free to sell his
shares to the third-party maker of the offer at a price and upon terms and
conditions not less favorable than those set forth in the Offering Notice within
thirty (30) days from the expiration of the right of the Offeree to elect to
purchase, and all rights of the Offeree under this section with respect to such
stock shall be deemed void and of no further force or effect, but the Offeree
shall continue to enjoy the rights granted in this paragraph with respect to any
and all subsequent sales. If the said stock is not so sold and the transfer not
consummated within said sixty (60) day period, the said stock shall then again
become subject to all the provisions hereof.
5. Voting Rights Upon Death, Disability or Termination of Employment of
a Stockholder.
Upon the occurrence of any one of the following events ("Voting Trust
Event"), the shares of Preferred Stock owned by the affected Stockholder shall
automatically be transferred to the other Stockholder for the purpose of vesting
in such other Stockholder as voting trustee, pursuant to ss.218 of the Delaware
General Corporation Law, the exclusive right to vote such shares. Such right
shall remain in effect on a permanent basis in the event of the death of a
Stockholder, or for the period of time, as applicable, of the continuation of
any disability of a Stockholder or the period of time during which a Stockholder
is not employed by the Corporation.
Any one of the following shall be a Voting Trust Event:
a. Death. In the event of the death of a Stockholder.
b. Disability. In the event that a Stockholder shall become physically
or mentally disabled whereby he is unable to perform for the Corporation
substantially the same services as he performed before he became disabled and
such disability continues for at least one hundred and twenty (120) consecutive
days, or for shorter periods aggregating at least one hundred and twenty (120)
days during any consecutive twelve (12) month period.
c. Termination of Employment. In the event a Stockholder's employment
with the Corporation is terminated for any reason.
Upon the occurrence of a Voting Trust Event, the certificate or
certificates representing the shares of Preferred Stock owned by the
Stockholder affected by the Voting Trust Event shall be surrendered to the
Corporation by such Stockholder or by his personal representative, as
applicable, for cancellation by the Corporation and a new certificate for such
shares shall be issued to the other Stockholder as voting trustee with said
new certificate stating thereon that it is issued pursuant to the voting trust
provisions of this Agreement. Notwithstanding the foregoing, the owner of such
shares shall retain all other rights with respect to the shares, including,
but not limited to, the right to receive sales proceeds, dividends and
distributions.
6. Voting Agreement.
Each Stockholder agrees to vote 100% of his shares of the Preferred
Stock at all applicable times to (i) elect Xxxxxxx Xxxxxx and Xxxxx Xxxxxxx as
the sole directors of the Corporation and (ii) as recommended by the Board of
Directors of the Corporation from time to time on all other issues that are
submitted to a vote of the shareholders of the Corporation.
7. Covenant not to Compete, Solicit or Disclose.
a. Non-Competition. Xx. Xxxxxx and Xx. Xxxxxxx each hereby individually
covenant and agree that during the term of this Agreement and for a period of
two (2) years after the sale or transfer of all of his Preferred Stock as
provided hereunder, he will not directly or indirectly as a sole proprietor,
independent contractor, employee, consultant, agent, partner or joint venturer,
or as an officer, director, stockholder, agent, servant or employee of any firm,
person, entity, partnership or corporation, or otherwise, engage or participate
in, or attempt to engage or participate in, any business that competes with the
products offered by the Corporation.
b. Enforcement.
(1) It is agreed and understood by and among the parties to this
Agreement that the restrictive covenants set forth in subparagraph (a) above is
an essential element of this Agreement. Further, Xx. Xxxxxx and Xx. Xxxxxxx each
acknowledge that the restrictions contained in subparagraph (a) above are
reasonable and necessary to accomplish the mutual objectives of the parties and
to protect their legitimate interests and the Corporation's business and
business relationships. Xx. Xxxxxx and Xx. Xxxxxxx further acknowledge that
enforcement of the restrictions contained herein will not deprive them of the
ability to earn a reasonable living and that any violation of the restrictions
contained in this Agreement will cause irreparable injury to the Corporation.
Such covenants shall be construed as an agreement independent of any other
provision of this Agreement. The existence of any claim or cause of action of a
Stockholder against the Corporation or the other Stockholder, whether predicated
on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Corporation of such restrictive covenants.
(2) It is agreed by the parties hereto that if any provision of the
restrictive covenants set forth in subparagraph (a) is held to be invalid,
unreasonable, arbitrary or against public policy, then such provision shall be
considered divisible both as to time, geographical area and any other relevant
feature, with each month of a specified period being deemed a separate period of
time and each geographical market area being deemed a separate geographical
area, it being the intention of the parties that a lesser period of time,
geographical area or other relevant feature shall be enforced so long as the
same is not unreasonable, arbitrary or against public policy. The parties hereto
further agree that, in the event any court of competent jurisdiction determines
that a specified time period, a specified geographical area or any other
relevant feature is unreasonable, arbitrary or against public policy, a lesser
time period, geographical area or other relevant feature which is determined to
be reasonable, nonarbitrary and not against public policy may be enforced
against a Stockholder and such Stockholder agrees to be bound thereby.
(3) The parties hereto agree that damages at law, including but not
limited to monetary damages, will be an insufficient remedy to the Corporation
and the other Stockholder in the event that the restrictive covenants of
subparagraphs (a) above are violated and that, in addition to any remedies or
rights that may be available to the Corporation, the Corporation and the other
Stockholder also shall be entitled, upon application to a court of competent
jurisdiction, to obtain injunctive relief, including but not limited to a
temporary restraining order or temporary, preliminary or permanent injunction,
to enforce the provisions of this Section as well as an equitable accounting of
all profits or benefits arising out of any such violation.
c. Reasonableness of Restrictions. The Stockholders recognize that the
restrictions set forth in this Section are reasonable and properly required for
the adequate protection of the business of the Corporation.
8. Binding Agreement. This Agreement shall be binding upon the
Stockholders, their heirs, legal representatives, successors or assigns, upon
the Corporation, its successors or assigns and upon any person who may acquire
any shares of the Preferred Stock or any interests therein, whether by voluntary
transfer or by operation of law, and no person shall be permitted to become a
holder of record of any of the shares of the Preferred Stock or any interest
therein without first expressly acknowledging in writing that such shares will
continue to be subject to the terms and provisions of this Agreement.
9. Notices. Any notice or communication required or permitted to be
delivered to either Stockholder under the terms and provisions of this Agreement
shall be deemed to be delivered, whether actually received or not, when
deposited in the United States mail, postage prepaid, certified, return receipt
requested, addressed to such person at his most recent address shown on the
books of the Corporation.
10. Legend on Certificates. All certificates representing shares of the
Preferred Stock shall be endorsed as follows:
The shares of stock represented by this certificate are
subject to restrictions on transferability, voting and other
matters imposed by a Preferred Stockholders' Agreement dated
November __ , 1998, among the Corporation and certain of its
stockholders, which Agreement is available upon request at the
principal business office of the
Corporation.
11. Applicable Law. This Agreement shall be governed by the laws of the
State of Delaware.
12. Complete Agreement; Amendment. This Agreement constitutes the
entire agreement between the parties and supersedes all prior agreements with
respect to the subject matter hereof. This Agreement may not be amended, altered
or modified except by a writing signed by the party against whom such amendment,
alteration, or modification is sought to be enforced.
13. Specific Enforcement. The parties hereby declare that it is
impossible to measure in money the damages that will accrue to a party hereto or
to personal representative of a deceased Stockholder by reason of a failure to
perform any of the obligations under this Agreement. Therefore, if any party
hereto or the personal representative of a decedent shall institute any action
or proceeding to enforce any provision hereof, any person, including the
Corporation, against whom such action or proceeding is brought hereby waives a
claim or defense that such party or such personal representative has an adequate
remedy at law and shall not urge at such action or proceeding the claim or
defense that such a remedy at law exists.
INTENDING TO BE LEGALLY BOUND, the parties hereto have executed this
Agreement as of the date first above written.
---------------------- ALOTTAFUN!, INC.
Xxxxxxx Xxxxxx
By:
-------------------
President
----------------------
Xxxxx Xxxxxxx
dr/175158
