Exhibit 10.19
STREAMLINE, INC.
SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement (this "AGREEMENT"), is made as of
this 18th day of September 1998 by and among:
(i) Streamline, Inc., a Delaware corporation (the "COMPANY");
(ii) Xxxxxxx X. XxXxxxx and the undersigned officers of the Company
(collectively, together with Xx. XxXxxxx, the "Officers");
(iii) Nordstrom, Inc., a Washington corporation; and
(iv) each person or entity who subsequently becomes party hereto
pursuant to Section 1 or Section 3 hereof.
For purposes of this Agreement, the holders of record, from time to
time, of shares of the Company's Series D Convertible Preferred Stock, par value
$1.00 per share (the "SERIES D PREFERRED STOCK") are referred to herein as
"SERIES D PREFERRED SHAREHOLDERS," and together with the Officers, are referred
to herein as the "SHAREHOLDERS".
WHEREAS, in connection with the Company's sale and issuance of shares
of Series D Preferred Stock and the Officers wish to extend to the Series D
Preferred Shareholders certain rights and obligations contained herein;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, the parties hereto hereby agree as follows:
1. FIRST-REFUSAL AND CO-SALE RIGHTS AS TO STOCK TRANSFERS.
(a) RESTRICTION ON TRANSFERS. No Shareholder may assign, exchange,
encumber, pledge, transfer, or otherwise dispose of (any such action referred to
hereinafter as a "TRANSFER") any shares of capital stock of the Company or any
other securities of the Company held by such Shareholder ("SHARES") in whole or
in part except pursuant to the terms of this Agreement.
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Any transfer or attempted Transfer of Shares in violation of the provisions of
this Agreement shall be void, and the Company and its transfer agent shall not
recognize such Transfer, record it on the books and records of the Company, or
issue stock certificates in connection therewith. In addition to any other legal
or equitable remedies which it may have, the Company may enforce its rights by
actions for specific performance (to the extent permitted by law) and may refuse
to recognize any transferee as one of its shareholders for any purpose,
including without limitation for purposes of dividend and voting rights, until
all applicable provisions hereof have been complied with.
(b) TRANSFER NOTICE. At least 30 days prior to any proposed Transfer
(other than a Permitted Transfer, as defined in Section 1(d)) by a Shareholder,
such Shareholder (the "TRANSFERRING SHAREHOLDER") shall give written notice (the
"TRANSFER NOTICE"), in accordance with Section 4 hereof, to the Company, setting
forth (i) the number and class of equity securities proposed to be sold by the
Transferring Shareholder (the "OFFERED SECURITIES"), (ii) the anticipated date
of the proposed Transfer and the names and addresses of the proposed
transferees, and (iii) the material terms of the proposed Transfer, including
the cash and/or other consideration to be received in respect of such Transfer.
(c) COMPANY'S AND SHAREHOLDERS' OPTIONS. Upon the giving of any
Transfer Notice, then subject to all of the provisions of this Section 1(b), the
Company and the Shareholders shall have certain rights and options, as follows:
(i) RIGHTS OF FIRST REFUSAL. Upon receipt of a Transfer Notice
relating to a proposed Transfer of shares of Series D Preferred Stock, the
Company shall have the option, but not the obligation, to purchase all of such
Offered Securities on the same terms as are specified in the Transfer Notice,
including any deferred payment terms, PROVIDED, that the Company shall have the
right to substitute cash in the amount of the fair market value of any non-cash
consideration proposed to be received from the proposed transferee(s). Within 30
days after receipt of the Transfer Notice, the Company shall give written notice
to the Transferring Shareholder stating whether it elects to exercise such
option. Failure by the Company to give such notice within such time period shall
be deemed an election by the Company not to exercise its option. The closing of
the purchase and sale of the Offered Securities shall take place as soon as is
reasonably practicable at such date, time, and place as the Company exercising
its purchase option hereunder may reasonably determine. If the Company does not
elect hereunder to purchase the Offered Securities, subject to the provisions of
Section 1(c)(ii) hereof, the Transferring Shareholder shall thereafter be free
for a period of 90 days to consummate the Transfer described in the Transfer
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Notice to the transferee(s) specified therein, at the price and on the other
terms set forth therein; PROVIDED, that such transferee(s) shall first execute
and deliver to the Company an Instrument of Adherence in the form of EXHIBIT A
annexed hereto, which executed Instrument of Adherence shall become a part of
this Agreement upon acceptance by the Company, whereupon each such transferee
shall become a "Series D Preferred Shareholder" party to this Agreement.
However, if such Transfer is not consummated within such 90-day period, the
Transferring Shareholder shall not Transfer any of the Offered Securities
without again complying with all of the provisions of this Section 1.
(ii) CO-SALE RIGHTS WITH RESPECT TO TRANSFERS BY AFFILIATES.
Within 10 days of receipt of one or more Transfer Notices relating to a proposed
Transfer by one or more Officers, in one transaction or a series of related
transactions, of Shares representing greater than 5% of the then outstanding
number of shares of the Company's Common Stock, par value $0.01 per share, (the
"Common Stock") (assuming the conversion into shares of Common Stock of all then
outstanding shares of preferred stock of the Company), the Company shall deliver
a copy of such Transfer Notice(s) to each holder of record of at least 10% of
the then outstanding shares of Series D Preferred Stock. Each such Series D
Preferred Shareholder may elect to participate in the contemplated Transfer by
delivering written notice to the Transferring Shareholder within 30 days after
such Series D Preferred Shareholder's receipt of such Transfer Notice(s). The
Transferring Shareholder(s) shall use his or her (or their) best efforts to
obtain the agreement of the prospective transferee(s) to purchase the Offered
Securities plus such number of shares of Common Stock (or a number of shares of
capital stock of the Company convertible into such number of share of Common
Stock) that each such Series D Preferred Shareholder wishes to include in such
Transfer. If the Transferring Shareholder(s) fail(s) to obtain the agreement of
the prospective transferee(s) to purchase all such shares, then each Series D
Preferred Shareholder electing to participate in the Transfer will be entitled
to sell in the Transfer, at the same price and on the same terms as specified in
the Transfer Notice, a number of shares of Common Stock (or a number of shares
of capital stock of the Company convertible into such number of shares of Common
Stock) equal to and not less than the product of (i) the quotient determined by
dividing (A) the number of shares of Common Stock into which the shares of
Series D Preferred Stock then held of record by such Series D Preferred
Shareholder are then convertible, by (B) the number of outstanding shares of
Common Stock (assuming conversion into shares of Common Stock of all the
outstanding shares of preferred stock of the Company), multiplied by (ii) the
aggregate number of Shares constituting the Offered Securities to be sold in the
proposed Transfer. The Transferring Shareholder(s) will be entitled to
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sell in the contemplated Transfer the balance of the Offered Securities (after
reducing the total number of Offered Securities proposed to be included in the
Transfer by the number of shares of Common Stock (or a number of shares of
capital stock of the Company convertible into such number of shares of Common
Stock) with respect to which any of the Series D Preferred Shareholders have
elected to participate, if any). The Transferring Shareholder(s) shall use his
or her (or their) best efforts to obtain the agreement of the prospective
transferee(s) to the participation of the Series D Preferred Shareholders in any
contemplated Transfer and shall not Transfer any Shares to such prospective
transferee(s) unless such prospective transferee(s) allows the participation of
the Series D Preferred Shareholders on the terms specified herein. Subject to
the foregoing, the Transferring Shareholder(s) may, within 90 days after the
expiration of the 30-day period referred to above for notice to be provided by
Series D Preferred Shareholders, transfer the Offered Securities (reduced by the
number of shares of Common Stock (or shares of capital stock of the Company
convertible into such number of shares of Common Stock) with respect to which
any of the Series D Preferred Shareholders have elected to participate, if any)
to the transferee(s) identified in the Transfer Notice at a price and on terms
no more favorable to the Transferring Shareholder(s) than specified in the
Transfer Notice. However, if such Transfer is not consummated within such 90-day
period, the Transferring Shareholder(s) shall not transfer any of the Offered
Securities as have not been purchased within such period without again complying
with all of the provisions of this Section 1.
(d) PERMITTED TRANSFERS. This Section 1 shall not bar a Transfer of
Shares by a Shareholder to a wholly-owned subsidiary of such Shareholder, or to
a member of such Shareholder's immediate family, or to a trust or limited
partnership the beneficiaries or limited partners of which are members of such
Shareholder's immediate family (such trust or family members (including the
estate of a Shareholder or any other person acquiring Shares by reason of a
Shareholder's death) being referred to herein as "PERMITTED TRANSFEREES"),
PROVIDED, however, that, prior to the effectiveness of any such Transfer, any
such Permitted Transferee must execute an Instrument of Adherence in the form of
EXHIBIT A annexed hereto, which executed Instrument of Adherence shall thereupon
become a part of this Agreement, whereupon such Permitted Transferee shall
become an "Officer" party to this Agreement.
2. VOTING.
(a) NUMBER OF DIRECTORS. The Company and the Shareholders shall
cause the Company to have seven (7) directors.
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(b) BEST EFFORTS. Each Shareholder hereby agrees to use its best
efforts to cause compliance with the provisions of this Section 2.
3. NEW OFFICERS.
The Company shall cause each person who becomes an officer of the
Company to execute an Instrument of Adherence in the form of EXHIBIT A annexed
hereto, which executed Instrument of Adherence shall thereupon become a part of
this Agreement, whereupon such executing officer shall become an "Officer" party
to this Agreement.
4. LEGEND ON CERTIFICATE.
In order to effectuate the terms of this Agreement, each certificate of
stock issued to each of the Shareholders evidencing ownership of Shares shall
bear a legend substantially as follows:
"The shares of stock evidenced by this certificate are subject
to certain restrictions on their transfer contained in a certain
Shareholders' Agreement, dated as of September 18, 1998 to which the
Corporation is a party. The Corporation will furnish a copy of such
agreement to the holder of this certificate upon written request and
without charge."
5. MISCELLANEOUS.
(a) NOTICES. All notices, requests, consents, and other communications
hereunder shall be in writing and shall be deemed effectively given and received
upon delivery in person, or one business day after delivery by national
overnight courier service or by telecopier transmission with acknowledgment of
transmission receipt, or three business days after deposit via certified or
registered mail, return receipt requested, in each case addressed as follows:
(i) if to the Company, to:
Streamline, Inc.
00 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: 000-000-0000
Attention: President
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with a copy to:
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: 000-000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
(ii) if to a Shareholder, to the most recent address or
telecopier number of such Shareholder listed in the Company's books and records;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the other.
(b) TERMINATION. This Agreement shall terminate on the occurrence of
any of the following events:
(i) bankruptcy, receivership or dissolution of the Company or sale
of all or substantially all of the capital stock or assets of
the Company, or merger by the Company with another Company in
which the Company is not the surviving entity;
(ii) the closing of an issuance of shares of the Company's capital
stock in an underwritten public offering, at a price per share
of at least $4.00 (subject to appropriate adjustments for
stock splits, stock dividends, combinations and other similar
recapitalizations affecting such shares), with gross proceeds
to the Company of at least $25,000,000;
(iii) as to any individual Shareholder, when he or her and his or
her executors and administrators no longer own any Shares;
(iv) as to any Officer, other than Xxxxxxx X. XxXxxxx, when he or
she (or, in the case of a Permitted Transferee, when the
officer of the Company that transferred Shares to such
Permitted Transferee) has ceased to be an officer of the
Company for a period of 90 consecutive days; or
(v) the execution of a written agreement of (i) the Company; (ii)
the holders of a majority of the shares of Common Stock
(assuming the conversion into Common Stock of shares of
capital stock of the Company convertible into Common Stock)
held by the Officers who are then parties to this Agreement
and (iii)
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Shareholders holding of record at least fifty
percent (50%) of the shares of Series D Preferred Stock then
outstanding.
(c) BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, their heirs, legal representatives,
successors and assigns.
(d) ENTIRE AGREEMENT. This Agreement constitutes the sole and entire
agreement of the parties with respect to the subject matter hereof.
(e) ENFORCEABILITY. If any of the terms, provisions or conditions of
this Agreement or the application thereof in any circumstances shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement and the
application of such term, provision or condition to circumstances other than
those to which it is held invalid or unenforceable shall not be affected
thereby, and each of the terms, provisions and conditions of this Agreement
shall be valid and enforceable to the fullest extent permitted by law.
(f) GOVERNING LAW. This Agreement shall be governed by and construed
and interpreted in accordance with the internal substantive laws of the State of
Delaware, without regard to conflicts or choice of law provisions.
(g) NO WAIVER. No assent, express or implied, by the Company or any
Shareholder to any breach in or default of any agreement or condition herein
contained on the party of any other Shareholder shall constitute a waiver of or
assent to any succeeding breach in or default of the same or any other agreement
or condition hereof.
(h) INTERPRETATION. In this Agreement, the use of any of the three
genders shall be deemed to include the other two. Furthermore, any notices,
consents, offers, or other actions required by a Shareholder that is not a
natural person, shall be deemed to apply and refer to the trustee or other then
authorized individual of such Shareholder at the time of such notice, consent,
offer or other action.
(i) AMENDMENT. No amendment or modification of this Agreement shall be
valid unless the same is in writing and signed by (i) the Company; (ii) the
holders of a majority of the share of Common Stock (assuming the conversion into
Common Stock of shares of capital stock of the Company convertible into Common
Stock) held by the Officers who are then parties to this Agreement and (iii)
Shareholders holding of record at least fifty percent (50%) of the shares of
Series D Preferred Stock then outstanding.
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(j) HEADINGS. The headings in this Agreement are for convenience of
identification only, do not constitute a part hereof, and shall not affect the
meaning or construction hereof.
(k) SEVERABILITY. If any provision of this Agreement shall be declared
void or unenforceable by a judicial or administrative authority, the validity of
any other provision and of the entire Agreement shall not be affected thereby.
(m) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed an original and all of
which, taken together, shall constitute one and the same agreement. In making
proof of this Agreement it shall not be necessary to produce or account for more
than one such counterpart.
IN WITNESS WHEREOF, this Shareholders' Agreement has been executed
under seal by the parties hereto as of the day and year first above written.
THE COMPANY:
STREAMLINE, INC.
By:/s/ XXXXXXX X. XXXXXXX
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Xxxxxxx X. XxXxxxx
[ADDITIONAL SIGNATURE PAGES TO FOLLOW]
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. XxXxxxx
OFFICERS OF
THE COMPANY:
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
Vice President Marketing and
Merchandizing
/s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx
Vice President Operations,
Assistant Secretary
/s/ Xxxx Xxxxxxxxx
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Xxxx Xxxxxxxxx
Vice President Customer Quality
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
Secretary
HOLDERS OF SERIES D
PREFERRED STOCK:
NORDSTROM, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
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Name:
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Title:
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EXHIBIT A
INSTRUMENT OF ADHERENCE
Reference is made to that certain Shareholders' Agreement dated as of
September 18, 1998, a copy of which is attached hereto (as amended and in effect
from time to time, the "Shareholders' Agreement"), among Streamline, Inc., a
Delaware corporation (the "Company"), and the shareholder parties identified on
the signature pages thereto (collectively, the "Shareholders").
The undersigned, , in order to become the owner or holder of:
shares (the "Purchased Common Shares") of Common Stock, par value
$0.01 per share, of the Company, and;
shares (the "Purchased Preferred Shares") of Series D Convertible
Preferred Stock, par value $0.01 per share, of the Company
hereby agrees that, by the undersigned's execution hereof, all of the Purchased
Common Shares, all of the Purchased Preferred Shares and all other shares of
capital stock of the Company that may from time to time be owned or held by the
undersigned, constitute shares subject to all the restrictions and conditions
applicable to the Shares (as defined in the Shareholders' Agreement). This
Instrument of Adherence shall take effect and shall become a part of the
Shareholders' Agreement immediately upon execution.
Executed as of the date set forth below under the laws of the State of
Delaware.
Signature:
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Address:
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Date:
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Accepted:
STREAMLINE, INC.
By:
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