EXHIBIT 2
STOCKHOLDERS' AGREEMENT
This Stockholders Agreement (this "Agreement") is made as of November
22, 2006 by and among xxxxxxxx.xxx, inc., a Delaware corporation (the
"Company"), Xxxxxxx X. Xxxx, Xxxxxx X. Xxxxxxxx, E&C Capital Partners, LLLP, a
Florida limited liability limited partnership ("E&C"), E&C Capital Partners II,
Ltd., a Florida limited partnership ("E&C II"), Dancing Bear Investments, Inc.,
a Florida corporation ("Dancing Bear"), and Xxxx Xxxxxxxx. Xxxxxxx X. Xxxx,
Xxxxxx X. Xxxxxxxx, E&C, E&C II and Dancing Bear are collectively referred to
herein as the "Existing Stockholders." Xxxx Xxxxxxxx is referred to herein as
"Xxxxxxxx." The Existing Stockholders and Xxxxxxxx are collectively referred to
herein as the "Stockholders."
RECITALS
WHEREAS, the Existing Stockholders are the owners and holders of an
aggregate of Fifty-Three Million Three Hundred Two Thousand Six Hundred Fifteen
(53,302,615) shares of common stock, $.001 par value ("Common Stock"), of the
Company;
WHEREAS, Xxxxxxxx is the owner and holder of warrants to acquire an
aggregate of 10,000,000 shares of the Company's Common Stock (the "Warrants").
Such Warrants were issued to Xxxxxxxx in connection with (i) that certain
Marketing Services Agreement, dated as of the date hereof, between the Company
and Universal Media of Miami, Inc. and (ii) that certain Marketing Services
Agreement, dated as of the date hereof, between the Company and Trans Digital
Media, LLC (the "Marketing Services Agreements").
WHEREAS, each share of Common Stock that is issued to Xxxxxxxx upon his
exercise of the Warrants are referred to herein as the "Xxxxxxxx Shares;"
WHEREAS, the Xxxxxxxx Shares, together with all shares of the Company's
capital stock that are owned by an Existing Stockholder at any time during the
Term of this Agreement, are collectively referred to herein as the "Shares;" and
WHEREAS, it is a condition to the execution of the Marketing Services
Agreements that the parties enter into this Agreement.
NOW, THEREFORE, for good and valuable consideration and intending to be
legally bound, the parties agree as follows:
1. Certain Definitions. For purposes of this Agreement, the following
terms have the following meanings:
(a) "Affiliate" means (A) any Person directly or indirectly
controlling, controlled by, or under common control with such other Person; and
(B) any officer, director or partner of such other Person. "Control" for the
foregoing purposes shall mean the possession directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting interests,
by contract or otherwise.
(b) "Approved Sale" means a Sale of the Company approved by the
Existing Stockholders and by all requisite corporate action.
(c) "Five Percent Owner" means any person who owns five percent (5%)
or more of the issued and outstanding capital stock of the Company on a
fully-diluted basis.
(d) "Independent Third Party" means any person who, immediately
prior to the contemplated transaction, is not a Five Percent Owner, an Existing
Stockholder or a Related Party of or to such Five Percent Owner or Existing
Stockholder.
(e) "Major Sale" means an agreement entered into during the Term by
one or more Existing Stockholders to sell shares of his/her/its Common Stock to
an Independent Third Party or group of Independent Third Parties, which shares
of Common Stock represent, in the aggregate, at the time of such agreement,
fifty percent (50%) or more of the aggregate number of shares of Common Stock
owned among all of the Existing Stockholders.
(f) "Person" means any natural person, corporation, partnership,
trust, unincorporated organization, association, limited liability company,
regulatory authority or other entity.
(g) "Related Party" means, with respect to any Person, (i) any
Affiliate of such Person, or (ii) anyone who is the spouse, child, grandchild or
parent of such Person.
(h) "Sale of the Company" means the sale of the Company during the
Term to an Independent Third Party or group of Independent Third Parties
pursuant to which such party or parties acquire (A) a majority of the issued and
outstanding capital stock of the Company (whether structured as a merger,
consolidation or sale or transfer of stock) or (B) all or substantially all of
the Company's assets determined on a consolidated basis.
2. Term of Agreement. The term of this Agreement (the "Term") shall
expire on the date that neither Xxxxxxxx nor any of his Related Parties owns any
Xxxxxxxx Shares.
3. Irrevocable Proxy. In consideration of the issuance of the Warrants,
Xxxxxxxx hereby irrevocably appoints and constitutes E&C as his proxy, with full
power of substitution, and hereby authorizes E&C to vote (or give or withhold
consent), during the Term of this Agreement, all Xxxxxxxx Shares with respect to
which Xxxxxxxx has the right to vote, at one or more meetings of the
stockholders of the Company (and/or in connection with any written consent) that
may be held for any purpose prior to the expiration of this proxy; except that
no such proxy will exist with respect to a vote on any matter in which any
Existing Stockholder or any Related Party of an Existing Stockholder is a party
or participant in a capacity other than his, her or its status as a Company
stockholder. XXXXXXXX UNDERSTANDS AND AGREES THAT THIS PROXY IS IRREVOCABLE, MAY
NOT BE REVOKED, AND IS COUPLED WITH AN INTEREST. XXXXXXXX ALSO UNDERSTANDS AND
AGREES THAT THIS PROXY SHALL BE BINDING UPON HIS HEIRS, LEGAL REPRESENTATIVES,
EXECUTORS, ADMINISTRATORS AND ASSIGNS.
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4. Right of First Refusal on Disposition by Xxxxxxxx.
(a) If, at any time during the Term, Xxxxxxxx desires to sell,
assign or otherwise dispose of or transfer (collectively, "Transfer") all or any
part of his Xxxxxxxx Shares pursuant to a bona fide offer (a "Third Party
Offer") from a third party (the "Proposed Transferee"), then Xxxxxxxx shall
submit a written offer (the "First Refusal Offer") to sell such Xxxxxxxx Shares
(the "First Refusal Shares") to the Existing Stockholders on terms and
conditions, including price, not less favorable to them than those on which
Xxxxxxxx proposes to sell such First Refusal Shares to the Proposed Transferee.
The First Refusal Offer shall disclose the identity of the Proposed Transferee,
the number of First Refusal Shares proposed to be sold, the terms and
conditions, including price, of the proposed sale and any other material facts
relating to the proposed sale. The First Refusal Offer shall further state that
the Existing Stockholders may acquire, in accordance with the provisions of this
Agreement, all of the First Refusal Shares for the price and upon the other
terms and conditions, including deferred payment (if applicable), set forth
therein (except that the Existing Stockholders shall have the right to
substitute cash in an amount equal to the fair value of any non-cash
consideration specified in the Third Party Offer).
(b) The Existing Stockholders will have the option, exercisable by
written notice to Xxxxxxxx within ten (10) days after their receipt of the First
Refusal Offer, to purchase any or all of the First Refusal Shares for the
consideration and on the terms and conditions set forth in the First Refusal
Offer. Such notice of exercise shall, when taken in conjunction with the First
Refusal Offer, be deemed to constitute a valid, legally binding and enforceable
agreement, for the sale and purchase of such First Refusal Shares (subject to
the cut-backs set forth in subsection (d) below with regard to an Existing
Stockholder's right to purchase more than his Percentage, as defined below).
(c) Each Existing Stockholder shall have the absolute right to
purchase that number of First Refusal Shares equal to the number of First
Refusal Shares multiplied by a fraction, the numerator of which shall be the
number of Shares then owned by such Existing Stockholder on a fully-diluted
basis and the denominator of which shall be the aggregate number of Shares then
owned by all of the Existing Stockholders on a fully-diluted basis. The
percentage amount of First Refusal Shares that each Existing Stockholder is
entitled to purchase under this Section 4(c) shall be referred to as his, her or
its "Percentage."
(d) The Existing Stockholders shall have the right of
oversubscription such that if any Existing Stockholder fails to accept the First
Refusal Offer as to his, her or its Percentage, then the other Existing
Stockholders shall, among them, have the right to purchase up to the balance of
the First Refusal Shares not so purchased. Such right of oversubscription may be
exercised by an Existing Stockholder by accepting the First Refusal Offer as to
more than his, her or its Percentage. If, as a result thereof, such
over-subscriptions exceed the total number of First Refusal Shares available in
respect of such oversubscription privilege, the oversubscribing Existing
Stockholders shall be cut back with respect to their over-subscriptions on a pro
rata basis in accordance with their respective Percentages or as they may
otherwise agree.
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(e) Sales of the First Refusal Shares pursuant to this Section 4
shall be made at the offices of the Company on the 15th day following the date
the First Refusal Offer is accepted (or if such 15th day is not a business day,
then on the next succeeding business day) or on such other date as the
purchaser(s) and Xxxxxxxx agree. Such sales shall be effected by the delivery by
Xxxxxxxx to the purchaser(s) of a certificate or certificates evidencing the
First Refusal Shares to be purchased by such purchaser(s) (to the extent the
same are certificated), duly endorsed for transfer to such purchaser(s) against
payment by wire transfer to Xxxxxxxx of the purchase price therefor.
(f) If the Existing Stockholders collectively do not communicate
their desire to purchase the number of Shares equal to all of the First Refusal
Shares, then all of the First Refusal Shares may be sold by Xxxxxxxx to the
Proposed Transferee, at any time within 90 days after the date the First Refusal
Offer is made. Any such sale shall be at not less than the price and upon other
terms and conditions, if any, not more favorable to the Proposed Transferee than
those specified in the First Refusal Offer. Any First Refusal Shares not sold
within such 90-day period shall continue to be subject to the requirements of a
prior offer pursuant to this Section 4.
5. Drag Along Rights of the Existing Stockholders.
(a) In the event of a Major Sale or an Approved Sale, the Existing
Stockholders (with regard to a Major Sale) or the Company (with regard to an
Approved Sale) will deliver twenty (20) days prior written notice thereof to
Xxxxxxxx (which notice must contain all of the principal terms and conditions of
any such Major Sale or Approved Sale, as the case may be, including without
limitation the name and address of the proposed transferee(s) and the proposed
amount and form of consideration and terms and conditions of payment offered by
the proposed transferee(s) for each share of Common Stock. Xxxxxxxx agrees that
he will vote for, consent to and raise no objections to, bring a claim against
or contest such Major Sale or Approved Sale. If the Approved Sale is structured
as a merger or consolidation, Xxxxxxxx will waive any dissenter's rights,
appraisal rights or similar rights in connection with such merger or
consolidation. If the Major Sale or the Approved Sale is structured as a sale of
stock, Xxxxxxxx will sell all (or, with regard to a Major Sale, any portion or
all) of his Xxxxxxxx Shares on the terms and conditions approved by the Existing
Stockholders. Regardless of the structure of the Approved Sale or the Major
Sale, Xxxxxxxx agrees to execute such merger or acquisition agreement and other
documents as are executed by the Existing Stockholders. Further, Xxxxxxxx agrees
to take such other commercially reasonable actions is connection with the
consummation of the Approved Sale or the Major Sale as are reasonably requested
by the Existing Stockholders.
(b) Xxxxxxxx'x obligations with respect to an Approved Sale or a
Major Sale are subject to the satisfaction of the condition that upon the
consummation of such transaction, Xxxxxxxx will receive for his Xxxxxxxx Shares
the same form of consideration that the Existing Stockholders will receive and a
pro rata portion of the total consideration paid in the Approved Sale or the
Major Sale, as the case may be (based on his percentage ownership in the
Company).
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6. Co-Sale Rights of Xxxxxxxx.
(a) Delivery of Co-Sale Notice. At least thirty (30) days prior to
any proposed Transfer by one or more Existing Stockholders and/or their
Affiliates (each, a "Selling Existing Stockholder") of a number of shares of
Common Stock equal to ten percent ("10%") or more of the number of shares of
Common Stock then owned by the Existing Stockholders, E&C will give written
notice (a "Co-Sale Notice") to Xxxxxxxx setting forth the identity of the
proposed purchaser, the number of shares of Common Stock proposed to be sold by
the Selling Existing Stockholder(s) (the "Co-Sale Shares"), the terms and
conditions, including price, of the proposed sale and any other material facts
relating to the proposed sale.
(b) Right of Participation. Upon receipt of a Co-Sale Notice from
E&C, Xxxxxxxx may elect to participate in the contemplated sale by delivering
written notice to such effect to E&C within ten (10) days after the date of
delivery of such Co-Sale Notice. Xxxxxxxx, if he has timely made such election,
will be entitled to sell in the contemplated sale, at the same price and on the
same terms as specified in the Co-Sale Notice, a number of Xxxxxxxx Shares equal
to the total number of shares of Common Stock to be sold in the proposed
transaction, multiplied by a fraction, the numerator of which is the number of
Xxxxxxxx Shares then owned by Xxxxxxxx and the denominator of which is the sum
of (i) the number of Xxxxxxxx Shares then owned by Xxxxxxxx, plus (ii) the
number of shares of Common Stock then owned by the Selling Existing
Stockholder(s). The Selling Existing Stockholder(s) will be entitled to sell in
the contemplated sale the balance of the shares of Common Stock proposed to be
sold. The Selling Existing Stockholder(s) will use commercially reasonable
efforts to obtain the agreement of the prospective purchaser(s) to allow the
participation of Xxxxxxxx in any contemplated sale of Common Stock to which the
rights of Xxxxxxxx under this Section 5 apply. Subject to the foregoing, the
Selling Existing Stockholder(s) may, within 90 days after the date of the
Co-Sale Notice, Transfer the Co-Sale Shares (reduced by the number of shares of
Common Stock with respect to which Xxxxxxxx has elected to participate, if any)
to the purchaser identified in the Co-Sale Notice at a price and on terms no
more favorable to the Selling Existing Stockholder(s) than specified in the
Co-Sale Notice. If such sale is not consummated within such 90 day period,
however, then the Selling Existing Stockholder(s) will not Transfer any of the
Co-Sale Shares that have not been purchased within such period without again
complying with all of the provisions of this Section 6.
(c) Certain exceptions to Co-Sale Rights. For the avoidance of
doubt, the rights of co-sale set forth in this Section 6 shall not apply to any
Transfer, by gift or otherwise, of Common Stock by any Existing Stockholder to
any of its Related Parties or to another Existing Stockholder or any of such
Existing Stockholders' Related Parties; provided, however, that as a condition
to any such Transfer, such Existing Stockholder must obtain and furnish to the
Company the written acknowledgment of the transferee whereby such transferee
approves and adopts all of the provisions of this Agreement, as the same may
have been amended, and agrees to be bound by all of the provisions of this
Section 6.
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7. Miscellaneous.
(a) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given when delivered, if by hand
delivery, or three business days after deposit in the mail, if mailed by
registered or certified mail, postage prepaid, to the relevant addressee at its
respective address set forth on Schedule I to this Agreement, or to such other
address as the addressee shall have furnished to the other parties hereto in the
manner prescribed herein.
(b) Specific Performance. The parties acknowledge that money damages
may not be an adequate remedy for violations of this Agreement and that any
party may, in its sole discretion, apply to a court of competent jurisdiction
for specific performance or injunctive or such other relief as such court may
deem just and proper to enforce this Agreement or to prevent any violation
hereof and, to the extent permitted by applicable law, each party waives any
objection to the imposition of such relief in appropriate circumstances. Such
remedy shall, however, be cumulative and nonexclusive and shall be in addition
to any other remedy that such parties may have at law or in equity.
(c) Legend. The certificates representing the Shares held by
Xxxxxxxx and the Existing Stockholders shall bear on their face a legend
substantially as follows:
"The shares represented by this certificate are subject to the terms
and conditions of a certain Stockholders' Agreement, dated as of
November, 2006, a copy of which the Company will furnish to the
holder of this certificate upon request and without charge."
(d) Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings between them or any of them
as to subject matter.
(e) Amendments. This Agreement shall not be subject to modification
or amendment in any respect, except by an instrument in writing signed by the
Stockholders.
(f) Assignment; Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors and legal representatives.
(g) Severability. In case any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement and such invalid, illegal
and unenforceable provision shall be reformed and construed so that it will be
valid, legal and enforceable to the maximum extent permitted by law.
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(h) Further Assurances. Each party to this Agreement agrees to
execute, acknowledge, deliver, file and record such further certificates,
amendments, instruments and documents, and to do such other acts and things, as
may be required by law, or as may be necessary or advisable to carry out the
purposes of this Agreement.
(i) Headings, Gender and Number. The headings in this Agreement are
for convenience only and in now way define, limit or otherwise affect the scope
or intent hereof. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the person or persons may require.
(j) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(k) Non Waiver. Any party's failure to seek redress for violation of
or to insist upon the strict performance of any provision of this Agreement will
not prevent a subsequent act, which would originally have constituted a
violation, from having the effect of an original violation.
(l) Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware.
(m) Submission to Jurisdiction. Each of the parties to this
Agreement irrevocably and unconditionally (a) agrees that any suit, action or
other legal proceeding arising out of or relating to this Agreement shall be
brought in the circuit court located in Broward County, Florida or the court of
the United States, Southern District of Florida; (b) consents to the
jurisdiction of each such court located in any such suit, action or proceeding;
(c) waives any objection which it may have to the laying of venue of any such
suit, action or proceeding in any of such courts; and (d) agrees that service of
any court paper may be affected on such party by mail, as provided in this
Agreement or in such other manner as may be provided under applicable laws or
court rules in said state.
(n) Prevailing Parties. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any provision of this
Agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable attorneys' fees, sale and use taxes, court costs and all
expenses even if not taxable as court costs (including, without limitation, all
such fees, taxes, costs and expenses incident to arbitration, appellate,
bankruptcy and post-judgment proceedings), incurred in that action or
proceeding, in addition to any other relief to which such party or parties may
be entitled.
(o) Legal Counsel. Each Stockholder acknowledges that Proskauer Rose
LLP ("Proskauer") has represented the Existing Stockholders in the preparation
of this Agreement. Xxxxxxxx acknowledges and agrees as follows: (i) Proskauer is
not representing his interests, (ii) he is not relying on Proskauer in
determining whether to enter into this Agreement and (iii) he has been advised
to seek independent counsel, to the extent he deems it appropriate, to protect
his interests in connection herewith.
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IN WITNESS WHEREOF, the parties have executed1 this Stockholders'
Agreement as of the date first above written.
XXXXXXXX.XXX, INC.
By /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
/s/ Xxxxxxx X. Xxxx
------------------------------------------------
Xxxxxxx X. Xxxx
/s/ Xxxxxx X. Cespdes
------------------------------------------------
Xxxxxx X. Xxxxxxxx
E&C CAPITAL PARTNERS, LLLP
By: E&C Capital Ventures, Inc., General Partner
By /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title:
E&C CAPITAL PARTNERS II, Ltd.
By: E&C Capital Ventures, Inc., General Partner
By /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title:
DANCING BEAR INVESTMENTS, INC.
By /s/ Xxxxxxx X. Xxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
/s/ Xxxx Xxxxxxxx
------------------------------------------------
Xxxx Xxxxxxxx
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