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Exhibit 10.3
SHAREHOLDERS' AGREEMENT
AGREEMENT, made as of the 25 day of July, 1996, by and among Triton
Systems, Inc., a Mississippi corporation (the "Company"), Xxxxxx X. Xxxxxxxx,
Xxxxxx X. Xxxxxx and Xxxxx X. Xxxxx, Xx. (collectively the "Management
Shareholders"), and Summit Ventures IV, L.P., Summit Investors III, L.P. and
Summit Subordinated Debt Fund, L.P. (collectively, the "Investors" and, together
with the Management Shareholders, the "Shareholders").
WHEREAS, the Investors are acquiring an aggregate of 114,000 shares of
Series A Senior Preferred Stock, par value $.01 per share, of the Company, and
4,160,000 shares of Common Stock, par value $1.00 per share, of the Company (the
"Common Stock"), pursuant to the terms of a Stock Purchase and Redemption
Agreement dated as of the date hereof among the Company, the Investors and the
Management Shareholders (the "Purchase Agreement");
WHEREAS, following the redemption contemplated by the Purchase
Agreement, the Management Shareholders will be the owners of an aggregate of
3,279,999 shares of Common Stock and 97,614 shares of Series B Preferred Stock,
par value $.01 per share (the "Series B Preferred Stock"); and
WHEREAS, it is a condition to the obligations of the parties under the
Purchase Agreement that this Agreement be executed by the parties hereto, and
the parties are willing to execute this Agreement and to be bound by the
provisions hereof.
NOW, THEREFORE, in consideration of the foregoing, the agreements set
forth below, and the parties' desire to provide for continuity of ownership of
the Company to further the interests of the Company and its present and future
shareholders, the parties hereby agree with each other as follows:
1. Definition of Shares. As used in this Agreement, "Shares" shall mean
and include all shares of the Common Stock and other equity securities of the
Company with rights to vote for the election of directors now owned or hereafter
acquired by a Shareholder. Other terms used as defined terms herein and not
otherwise defined shall have the meanings set forth in the Purchase Agreement.
2. Prohibited Transfers. No Management Shareholder shall sell, assign,
transfer, pledge, hypothecate, mortgage, encumber or dispose of all or any of
his Shares except in compliance with the terms of this Agreement.
Notwithstanding anything to the contrary contained in this Agreement, (a) a
Management Shareholder may transfer without the necessity of prior approval all
or any of his Shares by way of gift to his spouse, to any of his lineal
descendants or ancestors, or to any trust for the benefit of any one or more of
the Management Shareholder, his spouse or his lineal descendants or ancestors,
and (b) a Management Shareholder may transfer all or any of his Shares by will
or the laws of descent and distribution; provided that any such transferee under
clause (a) or (b) of this Section 2 (referred to herein as
2
"Permitted Transferees") shall agree in writing with the Company and the other
Shareholders, as a condition to such transfer, to be bound by all of the
provisions of this Agreement to the same extent as if such transferee were the
Management Shareholder transferring such Shares. In addition, after the
consummation of a Qualified Public Offering, a Management Shareholder and his
Permitted Transferees may transfer without necessity of complying with Section 4
hereof (which shall survive such Qualified Public Offering as to the Management
Shareholders and his Permitted Transferees) all or any of his Shares, provided
that the amount of Shares sold, together with all sales of such Shares by the
Management Shareholder within the preceding three months, shall not exceed the
greater of (i) one percent of the shares of Common Stock then outstanding (as
shown by the most recent report or statement published by the Company), or (ii)
the average weekly reported volume of trading in the Common Stock on all
national securities exchanges and/or reported through the automated quotation
system of a registered securities association during the four calendar weeks
preceding the sale of such Shares.
3. Right of First Refusal on Dispositions.
(a) If at any time a Management Shareholder (a "Selling
Management Shareholder") desires to sell or otherwise transfer all or any part
of his Shares pursuant to a bona fide offer from a third party (the "Proposed
Transferee"), the Selling Management Shareholder shall submit a written offer
(the "Offer") by delivering the Offer to the Company and the Investors, to sell
such Shares (the "Offered Shares") to the Company and the Investors on terms and
conditions, including price, not less favorable than those on which the Selling
Management Shareholder proposes to sell such Offered Shares to the Proposed
Transferee. The Offer shall disclose the identity of the Proposed Transferee,
the number of Offered Shares proposed to be sold, the total number of Shares
owned by the Selling Management Shareholder, the terms and conditions, including
price, of the proposed sale, and any other material facts relating to the
proposed sale. The Offer shall further state (i) that the Company and the
Investors may acquire, in accordance with the provisions of this Agreement, any
of the Offered Shares for the price and upon the other terms and conditions set
forth therein and (ii) that if all such Offered Shares are not purchased by the
Company and the Investors, the Investors who have not purchased any such Offered
Shares pursuant to this Section 3 may exercise their rights provided pursuant to
Section 4 hereof.
(b) The Company shall have the right to purchase the Offered
Shares. If the Company desires to purchase all or any part of the Offered
Shares, it shall communicate in writing its election to purchase any of the
Offered Shares to the Selling Management Shareholder and the Investors, which
communication shall state the number of Offered Shares that the Company desires
to purchase and the number of Offered Shares, if any, remaining for purchase by
the Investors pursuant to Section (c) below, and shall be given within 20 days
of the date the Offer was made.
(c) If the Company does not elect to purchase all of the Offered
Shares within the time period specified above, each Investor shall have the
right to purchase that number of
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remaining Offered Shares as shall be equal to the number of such Offered Shares
multiplied by a fraction, the numerator of which shall be the number of Shares
then owned by such Investor and the denominator of which shall be the aggregate
number of Shares then owned by all of the Investors who elect to purchase the
remaining Offered Shares. The amount of such Offered Shares that each Investor
is entitled to purchase under this Section 3(c) shall be referred to as its "Pro
Rata Fraction".
(d) The Investors shall have a right of oversubscription such
that if any Investor fails to accept the Offer as to its full Investor Pro Rata
Fraction, the remaining Investors shall, among them, have the right to purchase
up to the balance of the remaining Offered Shares not so purchased. Other
Investors may exercise such right of oversubscription by accepting the Offer for
the remaining Offered Shares as to more than their Investor Pro Rata Fraction.
If, as a result thereof, such oversubscriptions exceed the total number of the
Offered Shares available in respect of such oversubscription privilege, the
oversubscribing Investors shall be cut back with respect to over subscriptions
on a pro rata basis in accordance with their respective Investor Pro Rata
Fractions or as they may otherwise agree among themselves.
(e) Those Investors who desire to purchase all or any part of
the remaining Offered Shares shall communicate in writing their election to
purchase to the Selling Management Shareholder, which communication shall state
the number of remaining Offered Shares said Investors desire to purchase and
shall be provided to the Selling Management Shareholder within 30 days of the
date the Offer was made. Such communication, together with the communication of
the Company specified above, shall, when taken in conjunction with the Offer, be
deemed to constitute a valid, legally binding and enforceable agreement for the
sale and purchase of such Offered Shares (subject to the aforesaid limitations
as to the right of the Investors to purchase more than their Pro Rata Fraction).
Sales of such Offered Shares to be sold to the Company and the Investors
pursuant to this Section 3 shall be made at the offices of the Company within 60
days following the date the Offer was made.
(f) If the Company and the Investors do not purchase all of the
Offered Shares, the remaining Offered Shares may be sold by the Selling
Management Shareholder at any time within 120 days after the date the Offer was
made, subject to the provisions of Section 4. Any such sale shall be to the
Proposed Transferee, 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 Offer. Any remaining Offered Shares not sold within such
120-day period shall continue to be subject to the requirements of a prior offer
pursuant to this Section 3. If Offered Shares are sold pursuant to this Section
3 to any purchaser who is not a party to this Agreement, the purchaser of such
Offered Shares shall execute a counterpart of this Agreement as a precondition
of the purchase of such Offered Shares and any Offered Shares sold to such
purchaser shall continue to be subject to the provisions of this Agreement.
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4. Right of Participation in Sales.
(a) If at any time any Shareholder desires to sell all or any
part of the Shares owned by him or it to any third party (the "Selling
Shareholder"), and those Shares to be transferred have not been purchased by the
Company and the Investors under Section 3, or the Management Shareholders under
Section 5, as the case may be, each of the Shareholders (other than those who
have elected to purchase Shares pursuant to Section 3 or Section 5, as the case
may be) shall have the right to sell to the third party, as a condition to such
sale by the Selling Shareholder, at the same price per share and on the same
terms and conditions as involved in such sale by the Shareholder, a pro rata
portion of the amount of Shares proposed to be sold to the third party. The "pro
rata portion" of Shares which a Shareholder shall be entitled to sell to the
third party shall be that number of Shares as shall equal the number of Shares
proposed to be sold to the third party multiplied by a fraction, the numerator
of which is the aggregate of all shares of Common Stock which are then held by
the Shareholder wishing to participate in the sale, and the denominator of which
is the aggregate of all shares of Common Stock which are then held by the
Management Shareholder and all Investors wishing to participate in any sale
under this Section 4, including the Selling Shareholder.
(b) If the Selling Shareholder wishes to make a sale to a third
party which is subject to this Section 4, the Selling Shareholder shall, after
complying with the provisions of Section 3 or 5, as the case may be, give to
each Shareholder notice of such proposed sale, and stating that all Shares were
not purchased pursuant to the Offer as discussed in Section 3 or 5. Such notice
shall be given at least 20 days prior to the date of the proposed sale to the
third party. Each Shareholder wishing to so participate in any sale under this
Section 4 shall notify the Selling Shareholder in writing of such intention
within 15 days after such Shareholder's receipt of the notice described in the
preceding sentence.
(c) The Selling Shareholder and each participating Shareholder
shall sell to the third party all, or at the option of the third party, any part
of the Shares proposed to be sold by them at not less than the price and upon
other terms and conditions, if any, not more favorable to the third party than
those in the notice provided by the Selling Shareholder under subparagraph (b)
above; provided, however, that any purchase of less than all of such Shares by
the third party shall be made from the Selling Shareholder and each
participating Shareholder pro rata based upon the relative number of the Shares
that the Selling Shareholder and each participating Shareholder is otherwise
entitled to sell pursuant to Section 4(a).
(d) If any Shares are sold pursuant to this Section 4 to any
purchaser who is not a party to this Agreement, the purchaser of such Shares
shall execute a counterpart of this Agreement as a precondition to the purchase
of such Shares and such Shares shall continue to be subject to the provisions of
this Agreement.
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5. Right of First Offer on Dispositions by Investors.
(a) If at any time any of the Investors desire to sell or
otherwise transfer any of the Shares held by such Investor (other than permitted
transfers as specified in Section 5(e)) in a bona fide transaction to a third
party, the Investors wishing to sell Shares (the "Selling Investors") shall
notify in writing the Company and the Management Shareholders of their intent to
sell specifying the aggregate number of Shares which they intend to sell (the
"Investor Offered Shares"). The Management Shareholders shall have 20 days after
receipt of such notice within which to make an offer to purchase all, but not
less than all, of the Investor Offered Shares which the Selling Investors
propose to sell (the "Offer to Buy"). The Offer to Buy shall include a complete
description of the terms of the proposal including the purchase price to be
paid, terms of payment and all other material terms thereof.
(b) In no event will the Selling Investors be under any
obligation to accept the Offer to Buy and the Selling Investors shall be free,
for a period of 120 days after the date of the initial notice of their intent to
sell the Investor Offered Shares, to sell the Investor Offered Shares to a third
party in a bona fide transaction; provided, however, that no such transfer to
any third party may be at a purchase price that is less than, or on other terms
in the aggregate materially less favorable to the Selling Investor than as were
contained in the Offer to Buy.
(c) In the event that the Selling Investors accept the Offer to
Buy, such acceptance shall be made in writing to the Management Shareholders and
the sale contemplated thereby shall be made at the offices of the Company no
later than 90 days from the date of such acceptance. In the event that the
transaction shall fail to close by the 90th day after the date of the Selling
Investors' acceptance of the Offer to Buy, the Selling Investors shall be free
to sell the Investor Offered Shares to any third party without complying with
the provisions of this Section 5.
(d) If the Investor Offered Shares are transferred to a third
party in accordance with the terms of this Section 5, such third party shall
take such Shares free of the restrictions on transfer imposed by this Section 5.
(e) Notwithstanding the terms of this Section 5, the
restrictions on transfer contained in this Section 5 shall not apply to: (i) a
transfer of Shares of an Investor which is a partnership to one or more of its
constituent partners or to any person or institution controlled by or under
common control with such partnership, or to a retired or withdrawn partner who
retires or withdraws after the date hereof in full or partial distribution of
his interest in such partnership, or to the estate of any such partner; or (ii)
a transfer by gift, will or intestate succession of any person to his spouse, to
any of his lineal descendants, or to any trust for the exclusive benefit of one
or more of the foregoing; provided that such transferee under clauses (i) and
(ii) shall agree in writing with the Company and the other Shareholders to be
bound by all of the provisions of this Agreement to the same extent as if such
transferee were the Investor transferring the Shares.
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6. Take Along. If, at any time the Investors shall determine to sell or
exchange (in a business combination or otherwise) fifty percent (50%) or more of
the Shares then held by them to a third party, then, upon the written request of
the Investors (the "Sale Request"), each Shareholder shall be obligated to, and
shall (i) sell, transfer and deliver, or cause to be sold, transferred and
delivered, to such third party, that percentage of his or its Shares that is
equal to the percentage of the aggregate holding of the Shares held by the
Investors that is being sold or exchanged to the third party at the same price
per share and on the same terms applicable to the Investors and (ii) if,
stockholder approval of the transaction is required, vote his Shares in favor
thereof.
7. Election of Directors. At each annual meeting of the shareholders of
the Company, and at each special meeting of the shareholders of the Company
called for the purpose of electing directors of the Company, and at any time at
which shareholders of the Company shall have the right to, or shall, vote for
directors of the Company, then, and in each event, the Shareholders shall vote
all Shares owned by them for the election of a Board of Directors consisting of
not more than seven directors, designated in the manner designated below.
(a) one director shall be designated by Summit Ventures IV,
L.P. (which designee shall initially be Xxxxxx X. Xxxxxxx);
(b) one director shall be designated by Summit Subordinated
Debt Fund, L.P. (which designee shall initially be Xxxxx X. Xxxxx);
(c) so long as a Management Shareholder shall own at least
10% of the shares of Common Stock then outstanding, such Management Shareholder
shall be entitled to designate one director, such that on the date hereof the
Management Shareholders shall be entitled to designate three directors (which
designees shall initially be Xxxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxx and Xxxxx X.
Xxxxx, Xx.); and
(d) two directors who are not affiliated with the Company
shall be designated by the Investors after consulting with the Management
Shareholders (which designees shall initially be Xxxxx X. Xxxxxxx and Xxxxx
Xxxxxxxxx).
8. Compensation Committee. There shall be established at all times
during the term of this Agreement a Compensation Committee of the Board of
Directors (the "Compensation Committee") which shall be comprised of three
directors as follows: one of whom shall be one of the directors designated under
Section 7(a) or 7(b); one of whom shall be one of the directors designated under
Section 7(c); and one of whom shall be one of the directors designated under
Section 7(d). The Compensation Committee will determine the compensation of all
senior employees and consultants of the Company (including salary, bonus, equity
participation and benefits), provided that no member of the Compensation
Committee may vote on his own compensation. The compensation of senior employees
and consultants shall be reviewed by the
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Compensation Committee on an annual basis, and the decision by a majority of the
members of the Compensation Committee will control the Committee's actions.
9. Term. This Agreement shall terminate immediately prior to (a) the
consummation of the first Qualified Public Offering, or (b) the tenth
anniversary of the date of this Agreement whichever occurs first, except that
the provisions of Section 4 hereof shall continue after a Qualified Public
Offering until the tenth anniversary of the date of this Agreement with respect
to the sale of any Shares by the Management Shareholders.
10. Failure to Deliver Shares. If any Shareholder becomes obligated to
sell any Shares to another Shareholder under this Agreement and fails to deliver
such Shares in accordance with the terms of this Agreement, such other
Shareholder may, at its option, in addition to all other remedies it may have,
send to the defaulting Shareholder the purchase price for such Shares as is
herein specified. Thereupon, the Company, upon written notice to the defaulting
Shareholder, (a) shall cancel on its books the certificate or certificates
representing the Shares to be sold and (b) shall issue, in lieu thereof, in the
name of such other Shareholder, a new certificate or certificates representing
such Shares, and thereupon all of the defaulting Shareholder's rights in and to
such Shares shall terminate.
11. Specific Enforcement. Each Shareholder expressly agrees that the
other Shareholders and the Company may be irreparably damaged if this Agreement
is not specifically enforced. Upon a breach or threatened breach of the terms,
covenants and/or conditions of this Agreement by any Shareholder, the other
Shareholders and the Company shall, in addition to all other remedies, each be
entitled to apply for a temporary or permanent injunction, and/or a decree for
specific performance, in accordance with the provisions hereof.
12. Legend. Each certificate evidencing any of the Shares now owned or
hereafter acquired by the Shareholders shall bear a legend substantially as
follows:
"Any sale, assignment, transfer or other disposition of the shares
represented by this certificate is restricted by, and subject to, the
terms and provisions of a certain Shareholders' Agreement dated as of
July 25, 1996. A copy of said Agreement is on file with the Secretary of
the Corporation."
13. Notices. Notices given hereunder shall be deemed to have been duly
given on the date of personal delivery or on the date of postmark if mailed by
certified or registered mail, return receipt requested, to the party being
notified at his or its address specified on Schedule I hereto or such other
address as the addressee may subsequently notify the other parties of in
writing.
14. Entire Agreement and Amendments. This Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof and
neither this Agreement nor any provision hereof may be waived, modified, amended
or terminated except by a written
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agreement signed by the parties hereto; provided, however, that Investors owning
at least a majority of the Shares owned by all Investors may effect any such
waiver, modification, amendment or termination on behalf of all of the Investors
and Management Shareholders owning at least a majority of the Shares owned by
all Management Shareholders may effect any such waiver, modification, amendment
or termination on behalf of all of the Management Shareholders. Each of the
Shareholders represents that he or it is not a party to any other agreement
which would prevent him or it from performing his or its obligations hereunder.
No waiver of any breach or default hereunder shall be considered valid unless in
writing, and no such waiver shall be deemed a waiver of any subsequent breach or
default of the same or similar nature.
15. Governing Law; Successors and Assigns. This Agreement shall be
governed by the internal laws of the State of Mississippi (or the laws of such
other state in which the Company is then incorporated) without giving effect to
the conflicts of laws principles thereof and, except as otherwise provided
herein, shall be binding upon the heirs, personal representatives, executors,
administrators, successors and assigns of the parties, provided that no
Management Shareholder shall be permitted to assign its rights to designate a
director under Section 8(c) hereof.
16. Severability. If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
17. Captions. Captions are for convenience only and are not deemed to
be part of this Agreement.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
* * *
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TRITON SYSTEMS, INC.
SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written.
MANAGEMENT SHAREHOLDERS: COMPANY:
TRITON SYSTEMS, INC.
/s/ Xxxxxx X. Xxxxxxxx
_______________________________
Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
________________________________
Name: Xxxxxx X. Xxxxxxxx
Title: President
/s/ Xxxxxx X. Xxxxxx
_______________________________
Xxxxxx X. Xxxxxx INVESTORS:
SUMMIT VENTURES IV, L.P.
/s/ Xxxxx X. Xxxxx, Xx.
_______________________________
Xxxxx X. Xxxxx, Xx. By: Summit Partners IV, L.P.,
its general partner
By: Stamps, Xxxxxxx & Co. IV,
its general partner
By: /s/ Xxxxxx X. Xxxxxxx
_______________________________
General Partner
SUMMIT INVESTORS III, L.P.
By: /s/ Xxxxxx X. Xxxxxxx
_______________________________
Authorized Signatory
SUMMIT SUBORDINATED DEBT
FUND, L.P.
By: Summit Partners SD, L.P.
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
_______________________________
General Partner
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SCHEDULE 1
COMPANY
Triton Systems, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxxx 00000
Attn: President
MANAGEMENT SHAREHOLDERS
Xxxxxx X. Xxxxxxxx
c/o Triton Systems, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxxx 00000
Xxxxxx X. Xxxxxx
c/o Triton Systems, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxxx 00000
Xxxxx X. Xxxxx, Xx.
c/o Triton Systems, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxxx 00000
INVESTORS
Summit Investors III, L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxx
Summit Ventures IV, L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxx
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Summit Subordinated Debt Fund, L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxx
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