SHAREHOLDERS AGREEMENT
AGREEMENT made as of this 19th day of November, 1996, by and among DocuNet
Inc., a Pennsylvania corporation (hereafter called "DocuNet" or the "Company"),
Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxx, G. Xxxxxx Xxxxxxxxxx, III (the "GBL
Shareholders") and Xxxxx X. Xxx, Xx., and Xxxxx X. Xxxxxxxx together with any
other person or entity which hereafter may become a shareholder of DocuNet, so
long as they are shareholders of DocuNet, are sometimes hereinafter collectively
called the "Shareholders" or individually called "Shareholder."
WITNESSETH:
DocuNet is a corporation with a principal place of business at 000 Xxxxxx'x
Xxxx Xxxx, Xxxxxxxxx, XX 00000. The Shareholders presently own 650,000 shares of
common stock, no par value (The "Common Stock"), and 150,000 shares of Series A
Convertible Preferred Stock, no par value ("Series A Preferred Stock", together
with the Common Stock, the "Shares").
The Shareholders of DocuNet desire to agree to certain provisions as
hereinafter set forth relating to the rights of the Shareholders, and those of
such other persons who may hereafter become shareholders of DocuNet, to
purchase, transfer, encumber or otherwise acquire or dispose of the Shares which
they may own or may hereafter acquire, and the rights of DocuNet to permit the
transfer of Shares.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, conditions and agreements herein contained, the parties hereto, each
intending to be legally bound hereby, agree as follows:
1. Representations and Warranties. Each Shareholder hereby makes with
respect to himself the following representations and warranties to DocuNet and
to one another:
(a) Authority; Binding Agreement. Each Shareholder has full power and
authority to execute and deliver this Agreement and has taken all necessary
action to authorize its execution and delivery and the transactions contemplated
hereby. This Agreement constitutes a valid and legally binding obligation of
such Shareholder, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency or other
similar laws affecting creditors' rights generally. The execution and delivery
of this Agreement will not violate or conflict with any law or regulation, or
conflict with or constitute a breach of, or a default under, any agreement or
instrument to which he is a party or which is binding on his assets.
(b) Investment Purpose. Each Shareholder is acquiring Shares for his own
account, for investment purposes and not with a view to any resale, distribution
or other disposition thereof. He understands that the Shares have not been
registered under the Securities Act of 1933, as amended (the "Act"), by reason
of a specific exemption from the registration provisions thereof which depends
upon, among other things, the bona fide nature of such Shareholder's investment
intent as expressed herein, and that the Shares will bear the legend and be
subject to the restrictions on transfer set forth in Paragraph 10 hereof.
2. Redemption of Shareholders' Shares.
(a) Death or Disability. Upon the death or disability (as hereinafter
defined) of a Shareholder (who in the case of disability, at the time of such
disability is an employee of DocuNet), the GBL Shareholders shall have the
option, for thirty (30) days from the date of such death or disability, to
repurchase, on a pro rata basis based on ownership of the Company's outstanding
securities on a fully-diluted basis, the Shares held by such deceased or
disabled Shareholder for the Fair Market Value (as hereinafter defined) thereof.
If the GBL Shareholders
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decline to purchase all of such shares (or the thirty (30) day period expires),
the Company shall then have the right to repurchase the remaining shares (those
not purchased by the GBL Shareholders) for the Fair Market Value thereof.
(b) Fair Market Value. The Fair Market Value of the Shares shall be
determined from time to time, but no less than once per year within 90 days
after the end of DocuNet's fiscal year, by the Board of Directors of DocuNet
according to either (1) a valuation determined by an independent professional
firm that generally provides company valuations, including the Company's
auditors, or (2) the most recent sale price of Common Stock and Preferred Stock
by the Company (if prior to the Company's underwritten initial public offering
of Common Stock (an "IPO")).
3. Restrictions on Transfer and Issuance.
(a) Restrictions on Shareholders. No Shareholder shall sell, assign,
transfer, give, bequeath, devise, donate or otherwise dispose of, or pledge,
deposit or otherwise encumber, in any way or manner whatsoever, whether
voluntary or involuntary any of the Shares now or hereafter owned beneficially
by such Shareholder except as expressly provided for in this Agreement and in
accordance with its terms and conditions. Notwithstanding the foregoing
sentence, provided that each transferee hereunder shall execute the appropriate
documentation as set forth in Paragraph 11 of this Agreement, the following
transfers are permitted:
(i) transfers of Shares from one Shareholder to another if approved
by the Board of Directors;
(ii) gifts or bequeaths to spouses, parents, children or
grandchildren or trusts for the benefit of any one or more of the foregoing; or
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(iii) transfers from an estate to any spouse or lineal descendent of
the decedent or any trust or trusts defined in the preceding subparagraph for
the benefit of any one or more of the foregoing.
(b) Restrictions on DocuNet. DocuNet shall not, except in accordance
with the terms and conditions of this Agreement, cause or permit the transfer of
any Shares to be made on its books.
4. Shareholder's Limited Right to Dispose of Shares During His Lifetime.
(a) Bona Fide Offer to Purchase Shares. If any Shareholder shall desire
to sell all or a portion of his Shares, such Shareholder (hereinafter sometimes
called the "Selling Shareholder") shall first obtain a bona fide written offer
which he desires to accept (hereinafter called the "Offer") to purchase all or a
portion of his Shares for a fixed cash price (which may be payable over time)
(the "Offered Shares"). The Offer shall set forth its date, the proposed price
per Share, and the other terms and conditions upon which the purchase is
proposed to be made, as well as the name and address of the prospective
purchaser. In order to be considered a valid offer hereunder, such offer may not
contain any contingencies, except that the offer may contain an expiration date
which is no less than sixty-eight (68) days after the date of the offer.
"Prospective Purchaser" as used herein shall mean the prospective record owner
or owners of the Shares subject of the Offer and all other persons and entities
proposed to have a beneficial interest in such Shares. The Selling Shareholder
shall transmit copies of the Offer to DocuNet and to the other Shareholders
within seven (7) days after his receipt of the Offer.
(b) Option of DocuNet. Transmittal of the Offer to DocuNet by the
Selling Shareholder shall constitute an offer by the Selling Shareholder to sell
all of the Offered Shares to DocuNet at the price and upon the terms set forth
in the Offer. For a period of thirty
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(30) days after the submission of the Offer to DocuNet, DocuNet shall have the
option, exercisable by written notice to the Selling Shareholder with a copy to
each of the other Shareholders, to accept the Selling Shareholder's offer as to
all or any of the Offered Shares.
(c) Options of Offeree Shareholders. In the event that DocuNet does not
exercise its option with respect to all of the Offered Shares, the Selling
Shareholder shall, upon notice from DocuNet of DocuNet's decision not to accept
the Selling Shareholder's Offer as to all of the Offered Shares (or upon
expiration of the thirty-day option period referred to in the preceding
subparagraph if DocuNet fails to give notice as aforesaid), offer in writing to
sell the remaining Offered Shares (those not to be sold to DocuNet) to the other
Shareholders ("Offeree Shareholders") at the price and upon the terms set forth
in the Offer (the "Purchase Option"). The Offeree Shareholders shall have a
period of thirty (30) days from the receipt of such offer from the Selling
Shareholder to exercise the Purchase Option by providing written notice to the
Selling Shareholder with a copy to DocuNet and to each of the other offeree
Shareholders stating the maximum number of Shares he or she is willing to
Purchase. However, the maximum must not be less than that proportionate part of
the Offered Shares which the number of Shares owned by such Offeree Shareholder
bears to the total number of Shares owned by all Offeree Shareholders. If the
total of the Offered Shares specified in the elections pursuant to this
subparagraph exceeds the number of Offered Shares, each electing Offeree
Shareholder shall have priority as to such proportion of the Offered Shares as
the number of the Company's Shares that he holds bears to the total of the
Company's Shares held by all electing Remaining Shareholders.
(d) Acceptance of the Bona Fide Offer. If, at the end of the option
periods described in subparagraphs 4(b) and 4(c) options have not been exercised
by the
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Company and/or the Offeree Shareholders to purchase all of the Offered Shares,
then the Selling Shareholder shall be free for a period of ninety (90) days
thereafter to sell any Offered Shares not purchased by DocuNet or Offeree
Shareholders to the Prospective Purchaser at the price and upon the terms and
conditions set forth in the Offer. If such Shares are not so sold within the
aforesaid ninety (90) day period, the Selling Shareholder shall not be permitted
to sell such Shares without again complying with this Paragraph 4.
(e) Consolidation or Merger; Sale of Assets. In accordance with its
stated intent, DocuNet may merge into another entity or sell all or
substantially all of its assets if such is authorized by the Board of Directors
and the Shareholders in accordance with state law.
5. Legal Proceedings Against Shareholders. The parties agree that the
interests of DocuNet and its Shareholders would be seriously affected by any
sale or disposition of any Shareholder's Shares or by any legal or equitable
proceedings against such Shareholder. Accordingly, it is hereby covenanted and
agreed that in the event that (a) any Shareholder shall be adjudicated a
bankrupt or make an assignment for the benefit of creditors, or (b) bankruptcy,
insolvency, reorganization, arrangement, debt adjustment, liquidation or
receivership proceedings in which any Shareholder is alleged to be insolvent or
unable to pay his debts as they mature are instituted by or against such
Shareholder and, if instituted against such Shareholder, such Shareholder shall
consent thereto or admit in writing the material allegations of the petitions
filed in said proceedings or said proceedings shall remain undismissed for sixty
(60) days, or (c) there is an entry of a decree or order for relief by a court
having jurisdiction in the premises in respect of any Shareholder in an
involuntary case under the federal bankruptcy laws against any Shareholder or
any Shareholder commences a voluntary case under such laws, or (d) any of the
Shares of any Shareholder are attached, or (e) any judgment is obtained in any
legal or equitable
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proceedings against any Shareholder and the sale of any of his Shares is
contemplated or threatened under legal process as a result of such judgment, or
(f) any execution process is issued against any Shareholder or against any of
his Shares, or (g) there is instituted by or against any Shareholder any other
form of legal proceeding or process by which the sale or transfer of any of the
Shares of such Shareholder becomes imminent (i.e., such Shares may be sold or
transferred either voluntarily or involuntarily within sixty (60) days), then
and in any such event DocuNet and the other Shareholders shall have the option
to purchase all of such Shareholder's Shares in accordance with the provisions
of Paragraph 4 in the same manner as if DocuNet and the other Shareholders had
received notice of an Offer under subparagraph 4(a) on the date that DocuNet
receives notice of an event described above. The price per share shall be the
Fair Market Value.
6. Settlement.
(a) Settlement for the purchase of Shares by DocuNet or by a Shareholder
pursuant to subparagraph 2(a) or subparagraphs 4(b), or 4(c), or Paragraph 5
shall be made within sixty (60) days following the date of exercise of the last
option exercised or the occurrence of the event giving rise to the purchase.
(b) All settlements for the purchase and sale of Shares shall, unless
otherwise agreed to by all of the purchasers and sellers, be held at the
principal executive offices of DocuNet during regular business hours. The
precise date and hour of settlement shall be fixed by the purchaser or
purchasers (within the time limits allowed by the provisions of this Agreement)
by notice in writing to the seller given at least five (5) days in advance of
the settlement date specified. In the event that more than one purchase is
involved in a settlement and the purchasers cannot agree on a precise time of
settlement, the precise time of settlement
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shall be fixed by the Chairman of the Board of DocuNet by five (5) or more days'
written notice to the purchasers and seller.
(c) At settlement, the stock certificate or certificates representing
the Shares being sold shall be delivered by the seller to the purchaser or
purchasers, duly endorsed for transfer or with executed stock powers attached,
with any necessary documentary and transfer tax stamps affixed by the seller.
The seller, if a personal representative of a Shareholder, shall, upon request
of a purchaser, provide prior to the date of settlement evidence reasonably
satisfactory to the purchaser of the seller's legal status as personal
representative of such Shareholder.
7. Future Private Placement. If the Company proposes to sell securities of
the Company to third party investors pursuant to an exemption from registration
under the Act (a "Private Financing"), it will give written notice to the
Shareholders of its intention to do so as soon as practicable, and in any event
at last 20 days prior to the anticipated sale. Upon written request given within
10 days after the Company gives such notice, the Shareholders shall have the
right to purchase not less than 25% of the aggregate amount of such securities
to be sold (the "Existing Shareholder Amount"). The Existing Shareholder Amount
will be made available to the Shareholders on an equal basis, not based on the
pro rata share of the then outstanding securities of the Company, and on the
same terms and conditions as offered to third party investors.
8. Copy of Agreement to be Kept on File. DocuNet shall keep on file at its
principal executive offices, and will exhibit to any Shareholder or his duly
authorized representative at any and all reasonable times, an executed copy of
this Agreement and all amendments thereto.
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9. Stock Certificates to be Marked With Legend. All certificates
representing Shares now outstanding or hereafter issued by DocuNet shall be
marked with the following legend:
"The Shares represented by this certificate have not been
registered pursuant to the Securities Act of 1933 as amended, or
under state securities or blue sky laws. Such shares may not be
sold, transferred, or otherwise disposed of unless the same are
registered under the Securities Act of 1933, as amended, and any
applicable state securities or blue sky laws or exempt therefrom
in the opinion of counsel. This certificate and the shares
represented hereby are held subject to the terms, covenants and
conditions of an agreement dated __________, 1996 by and among
this Company and its then shareholders, as it may be amended from
time to time, and may not be transferred or disposed of except in
accordance with the terms and provisions thereof. A copy of said
agreement and all amendments thereto is on file and may be
inspected at the principal executive offices of the Company."
DocuNet shall issue replacement stock certificates without the foregoing
legend to any Shareholder upon request following termination of this Agreement.
10. Term of Agreement.
Unless terminated sooner by unanimous agreement in writing of DocuNet and
its then Shareholders, this Agreement shall terminate on the earlier of the
following dates: (i) upon the death of the last but one of the then Shareholders
(but Paragraph 4 shall apply to the death of such Shareholder), (ii) upon the
successful completion of the Company's firm commitment initial public offering
of its Common Stock in which the Company receives at least $10 million in net
proceeds, or (iii) the agreement of Shareholders owning at least seventy percent
of the Shares to terminate this Agreement.
11. Rights, Obligations and Remedies. The rights and obligations under, and
the remedies to enforce, this Agreement are joint and several as to DocuNet and
each of its
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Shareholders with each being completely free to enforce any or all of the rights
or obligations under this Agreement against any of the others with or without
the concurrence or joinder of any of the others. The Shares are unique, and
recognizing that the remedy at law for any breach or threatened breach by a
party hereto of the covenants and agreements set forth in this Agreement would
be inadequate and that any such breach or threatened breach would cause such
immediate and permanent damage as would be irreparable and the exact amount of
which would be impossible to ascertain, the parties hereto agree that in the
event of any breach or threatened breach of any such covenant or agreement, in
addition to any and all other legal and equitable remedies which may be
available, any party hereto may specifically enforce the terms of this Agreement
and may obtain temporary and/or permanent injunctive relief without the
necessity of proving actual damage by reason of any breach or threatened breach
hereof and, to the extent permissible under the applicable statutes and rules of
procedure, a temporary injunction may be granted immediately upon the
commencement of any such suit and without notice.
12. Subsequent Shareholders to Become Bound. Any person or entity not an
original signatory hereto who becomes a Shareholder shall be bound by all of the
terms and provisions of this Agreement. Before any person or entity not a party
to this Agreement, including any person or entity to whom transfers of Shares
may be made hereunder, shall be entitled to be a shareholder of DocuNet, such
person or entity shall be required first to execute and deliver to DocuNet an
agreement pursuant to which such person or entity agrees to be bound by all of
the terms and conditions of this Agreement, and the failure of any person or
entity so to do shall preclude such person or entity from becoming a shareholder
of DocuNet.
13. Entire Agreement; Amendment, Modification and Termination. This
Agreement contains the entire understanding among the parties hereto with
respect to the subject
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matter hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may be amended, modified or terminated at any time
or times by the agreement in writing of Shareholders owning at least seventy
percent (70%) of the Shares. No such amendment, modification or termination
shall affect the right of any person or entity to receive, or the obligation of
any person or entity to pay, on the terms and conditions of this Agreement, the
purchase price for Shares sold pursuant to this Agreement to such amendment,
modification or termination, or the right or obligation of any person or entity
to sell or purchase Shares, on the terms and conditions of this Agreement, if
the event giving rise to such right or obligation to sell or purchase Shares has
in fact taken place prior to such amendment, modification or termination.
14. Miscellaneous.
(a) Indulgences, Etc. Neither the failure nor any delay on the part of
any party to exercise any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege preclude any other or further exercise of
the same or of any other right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence.
(b) Controlling Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania
(notwithstanding any conflict-of-law doctrines of
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either state or other jurisdiction to the contrary), and without the aid of any
canon, custom or rule of law requiring construction against the draftsman.
(c) Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received when deposited with an
overnight courier service such as Federal Express, for delivery to the intended
addressee or two (2) days following the day when deposited in the United States
mails, first class postage prepaid. All such notices shall be mailed to the
intended addressee at the address which such addressee has provided to DocuNet,
and which DocuNet shall maintain and make available to all of the parties
hereto, at DocuNet's principal place of business.
Any party may alter the address to which communications or copies are to be
sent by giving written notice to DocuNet of such change of address.
(d) Binding Nature of Agreement; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns, except that no party
may assign or transfer its rights or obligations under this Agreement, without
the prior written consent of the other parties hereto.
(e) Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one (1) or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories. Any photographic copy of this Agreement, with all signatures
reproduced on one (1)
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or more sets of signature pages, shall be considered for all purposes as if it
were an executed counterpart of this Agreement.
(f) Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
(g) Paragraph Headings. The paragraph headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
(h) Gender, Etc. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context indicates is appropriate.
(i) Number of Days. In computing the number of days for purposes of this
Agreement, all days shall be counted, including Saturdays, Sundays and holidays;
provided, however, that if the final day of any time period falls on a Saturday,
Sunday or holiday on which Federal banks are or may elect to be closed, then the
final day shall be deemed to be the next day which is not a Saturday, Sunday or
such holiday.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
on the date first above written.
DOCUNET INC.
By: /s/ Xxxxx X. Xxxxxx
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/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
/s/ G. Xxxxxx Xxxxxxxxxx, III
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G. Xxxxxx Xxxxxxxxxx, III
/s/ Xxxxx X. Xxx, Xx.
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Xxxxx X. Xxx, Xx.
/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
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