Exhibit 3.11
SHAREHOLDERS AGREEMENT
THIS AGREEMENT ("AGREEMENT"), made this 24th day of September, 1999, by
and among ID Technologies Corporation, a North Carolina corporation (the
"COMPANY"); those shareholders of Company listed on Schedule 1 attached hereto
(the "SHAREHOLDERS"); and those investors in Company listed on Schedule 2
attached hereto (the "INVESTORS").
W I T N E S S E T H:
WHEREAS, Shareholders are the holders of certain of the issued and
outstanding shares of Company's Common stock (the "COMMON STOCK");
WHEREAS, Investors are the holders of Convertible Debentures
convertible into shares of Company's Series A Preferred stock (collectively, the
"DEBENTURES"); and
WHEREAS, the parties desire to enter into this Agreement for the
purpose of promoting continuity in the ownership of the capital stock of
Company.
NOW, THEREFORE, in consideration of the premises, and the mutual terms
and conditions set forth herein, it is hereby agreed by and among Company,
Shareholders and Investors that all the shares of capital stock of Company
(which for purposes of this Agreement include options, warrants and other rights
to acquire capital stock) owned or held at any time by any Investor, Shareholder
or by any transferee thereof (the "SHARES") shall be subject to the following
agreements:
1. Transfer of Shares. No transfer or sale by any Shareholder of the
Shares shall be permitted (except pursuant to the provisions of this Agreement),
including without limitation, a sale or transfer of Shares to any entity not a
party to this Agreement, except pursuant to the provisions of this Agreement;
PROVIDED, HOWEVER, that all or any portion of the Shares may be transferred by a
Shareholder in a Permitted Transfer. For purposes of this Agreement, "PERMITTED
TRANSFER" shall mean: (a) a transaction not involving a change in beneficial
ownership; (b) transactions involving distribution without consideration by a
partnership to any of its partners, retired partners, or to the estate of any of
its partners, or by a limited liability company to any of its members, retired
members or to the estate of any of its members, (c) transfers by an individual
to a trust for the benefit of such individual or his family; (d) transfers by
gift, will or intestate succession to the spouse, lineal descendants or
ancestors of any Shareholder or spouse of a Shareholder; or (e) transfers
permitted pursuant to Rule 144 under the Securities Act of 1933, as amended.
Each transferee in a Permitted Transfer after the date of this Agreement shall
execute and deliver to Company a counterpart of this Agreement as a condition to
the effectiveness of such Permitted Transfer. Upon such execution and delivery,
copies of such counterparts shall be delivered by Company to Shareholders and
Investors.
2. Procedure for Disposition of Shares.
a. Restriction on Transfer. Any Shareholder who desires to
sell all or any portion of the Shares held by such person (as used in this
Section, the "SELLING SHAREHOLDER")
and who has received from a non-related party a bona fide offer to purchase the
Shares, shall only transfer the Shares in accordance with the following
provisions of this Section 2.
b. Offer to Company. The Selling Shareholder shall give to
Company and all Investors a written notice (the "NOTICE") of its intention to
sell the Shares (the "OFFERED SHARES"), which Notice shall specify the
following:
i. Name, address and telephone number of the proposed
purchaser;
ii. Price and proposed terms of payment;
iii. Number of Shares to be purchased;
iv. Date of proposed sale; and
v. Any other material terms of the sale.
Company shall then have the right to purchase all the Offered Shares in
accordance with the terms set forth in the Notice; PROVIDED, HOWEVER, that
Company must notify the Selling Shareholder within five (5) days of its receipt
of such Notice of its intention to purchase all the Offered Shares.
c. Offer to Investors. In the event Company shall decide not
to purchase all the Offered Shares, it shall so notify all Investors of such
decision. The Investors shall have the right to purchase all the Offered Shares
in accordance with the terms set forth in the Notice, on a pro rata basis
determined by each such party's proportionate ownership interest of all
outstanding Shares determined on an as-converted, as-exercised, fully-diluted
basis (which for purposes of this Agreement shall include Shares issuable upon
conversion of the Debentures, and Series A Preferred stock issued or issuable
upon conversion thereof, and exercise of vested warrants held by Investors,
other than warrants of Investors issued on the date hereof to purchase up to
Five Hundred Thousand Dollars ($500,000) of Common Stock to the extent not
exercised); PROVIDED, HOWEVER, that each Investor must notify the Selling
Shareholder and all of the other Investors within twelve (12) days from the date
the Notice was delivered to Company and to Investors of its intention to
purchase its proportionate interest of the Offered Shares. In the event any
Investor elects not to acquire its proportionate interest, the remaining
Investors shall be entitled to acquire such interest on a pro rata basis as
described above; PROVIDED, HOWEVER, that the other Investors must notify the
Selling Shareholder of their intention to purchase such shares within fifteen
(15) days from the date the Notice was delivered to Company and to Investors.
Investors holding a majority of the Shares owned by Investors (determined on an
as-converted, as-exercised, fully-diluted basis) may waive for Company and
Investors the rights of first refusal contained herein if such Investors deem
the transfer of the Shares of the Selling Shareholder to the person named in the
Notice to be in the best interest of Investors and/or Company. In the event the
Investors elect to purchase the Offered Shares, the closing of such purchase(s)
shall occur not less than forty-five (45) days after the expiration of the
periods set forth above for the election by the Investors to purchase the
Offered Shares, unless otherwise agreed in writing by the Investors purchasing
the Offered Shares.
d. Sale to Third Party. In the event Company and Investors do
not notify the Selling Shareholder of its or their intention to exercise the
rights set forth in subsections 2.b. and 2.c. hereof within the time period
specified therein to purchase all of the Offered Shares, the Selling Shareholder
shall have the right for ninety (90) days to consummate the transaction outlined
in the Notice subject to the provisions of subsection 2.e. hereof and the other
provisions of this Agreement (other than this Section 2) including Section 3 and
4 hereof; PROVIDED, HOWEVER, that no sale shall be made hereunder unless the
purchaser agrees to be bound by the terms of this Agreement and has executed an
agreement to that effect on terms reasonably satisfactory to Investors. Upon the
expiration of the ninety (90) day period set forth above, the Selling
Shareholder must comply with all the provisions of this Section prior to making
any further sale of such Shares.
e. Right of Co-Sale. In the event a Selling Shareholder
disposes of Shares pursuant to subsection 2.d. hereof, Investors shall have the
right to sell a proportionate number of shares of capital stock to the third
party acquiring the Selling Shareholder's Shares, on the same terms as outlined
in the Notice, in accordance with the following procedure:
i. The Selling Shareholder shall, prior to sale, give written
notice to each Investor of its right of co-sale.
ii. Each Investor shall have ten (10) days to determine if it
desires to sell Shares to the third party acquiring the Selling
Shareholder's Shares.
iii. If any Investor elects to sell pursuant to this Section,
it shall have the right to sell a number of Shares of the total number
of Shares to be sold that is proportionate to its interest in all
outstanding Shares (determined on an as-converted, as-exercised,
fully-diluted basis, including Shares issuable upon conversion of the
Debentures, and Series A Preferred stock issued or issuable upon
conversion thereof, and exercise of vested warrants held by Investors).
f. Failure to Deliver Shares. If a Selling Shareholder becomes
obligated to sell to an Investor under this Agreement any Shares, and the
Selling Shareholder fails to comply with its obligations hereunder relating to
the delivery of certificates for the Shares, such Investor may, at its option,
in addition to all other remedies it may have, send to Company for the benefit
of such Selling Shareholder the purchase price for such Shares as is herein
specified. Thereupon, Company upon written notice to such Selling Shareholder
(i) shall cancel on its books the certificate(s) representing the Shares to be
sold, and (ii) shall issue, in lieu thereof, in the name of such Investor, a new
certificate(s) representing such Shares, and thereupon all of such Selling
Shareholder's rights in and to such Shares shall terminate. Company may exercise
a similar remedy in enforcing its rights hereunder.
3. Prohibition Against Transfer to Competitors. Notwithstanding any
provision of this Agreement, no Shareholder shall sell or otherwise transfer any
Shares to any person or entity which is a competitor of the Company.
4. Prohibition Against Pledge of Stock. Without the prior written
consent of the Investors, which consent shall not be unreasonably withheld, no
Shareholder shall pledge, hypothecate or grant a security interest in all or any
part of the Shares other than pledges, hypothecations or security interests
granted to lenders in connection with loans to purchase Shares.
5. Legend. Each certificate for capital stock in Company held by any
Shareholder shall be presented to Company and the following legend shall be
placed on the face thereof:
"The shares represented by this Certificate may not be sold or
transferred without compliance with the terms of a Shareholders
Agreement dated as of September 24, 1999 among Company and certain
shareholders of Company, a copy of which Agreement is on file in the
office of the Secretary of Company. The Agreement provides for certain
restrictions on transfer and rights to purchase."
6. Termination. This Agreement shall remain in full force and effect
until the closing of the sale of shares of Company's Common Stock by Company in
an underwritten public offering registered under the Securities Act of 1933 (the
"1933 ACT") (other than a registration relating solely to employee benefit plans
or to a transaction under Rule 145 under the 1933 Act or any successor rule
thereto) in which (before deduction of underwriter commissions and selling
expenses) the public offering price is equal to or exceeds Five Dollars ($5.00)
per share of Common Stock (subject to adjustment for stock splits, reverse stock
splits and other similar corporate reorganizations) and the gross proceeds to
Company equal or exceed Fifteen Million Dollars ($15,000,000.00) (hereinafter, a
"QUALIFIED PUBLIC OFFERING").
7. Notice Provisions. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery or upon confirmed delivery by facsimile or telecopy, or
on the fifth day (or the tenth day if to a party with a foreign address)
following mailing by registered or certified mail, return receipt requested,
postage prepaid, addressed: (a) if to a Shareholder, at such Shareholder's
address as set forth on Schedule 1 attached hereto, or at such other address as
such Shareholder shall have furnished to the other parties hereto in writing;
(b) if to an Investor, at such Investor's address as set forth on Schedule 2
attached hereto, or at such other address as such Investor shall have furnished
to the other parties hereto in writing, with a copy to:
Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx, L.L.P.
Attn: Xxxxxx X. Xxxxxx, Esq.
Two Hannover Square
Suite 1900 (27601)
Post Office Box 1070 (27602)
Raleigh, North Carolina
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) if to Company, at the address noted below, or at such other address as
Company shall have furnished to the other parties hereto in writing:
ID Technologies Corporation
Attn: X. Xxxxxxxx X. Xxxxxxxx
NCSU Centennial Campus
000 Xxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx, L.L.P.
Attn: Xxxxx X. X'Xxxxx III
0000 Xxxxxxxx Xxxxxx
Post Office Xxx 00000
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
8. Amendment and Waiver. Except as otherwise expressly provided herein,
(a) any matter requiring the approval or consent of Investors shall require the
approval or consent of Investors, or their transferees, holding greater than
fifty percent (50%) of the Shares held by the Investors, and (b) any term of
this Agreement may be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance, either
retroactively or prospectively, and either for a specified period of time or
indefinitely) with the written consent of Company and Investors (or their
transferees) holding greater than fifty percent (50%) of the Shares held by the
Investors; PROVIDED, HOWEVER, that no such amendment or waiver shall increase
the obligation of a Shareholder or an Investor hereunder, or directly or
indirectly reduce the equity percentage of a Shareholder or Investor (on an
as-converted, as-exercised, fully-diluted basis), without the written consent of
such party; and PROVIDED, FURTHER, that no such amendment or waiver shall reduce
the aforesaid percentage of Shares, the holders of which are required to consent
to any waiver or supplemental agreement, without the consent of the holders of
all of such Shares. Any amendment or waiver effected in accordance with this
Section 8 shall be binding upon Company, Shareholders, Investors and each of
their future transferees. Upon the effectuation of each such amendment or
waiver, Company shall promptly give written notice thereof to the holders of the
Shares who have not previously consented thereto in writing.
9. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of North Carolina, as applied to agreements among
North Carolina residents made and to be performed entirely within the State of
North Carolina, and without regard to the conflicts of law principles as may
otherwise be applicable.
10. Jurisdiction and Venue. Each party to this Agreement hereby
irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereunder may be
brought in the courts of Wake County in the State of North
Carolina or of the United States of America for the Eastern District of North
Carolina, and hereby expressly submits to the personal jurisdiction and venue of
such courts for the purposes thereof and expressly waives any claim of improper
venue and any claim that such courts are an inconvenient forum. Each party
hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding, by the mailing of
copies thereof by registered or certified mail, postage prepaid, to its address
set forth in this Agreement, such service to become effective ten (10) days
after such mailing.
11. Binding on Successors. This Agreement shall bind and inure to the
benefit of the parties hereto, their respective heirs, executors,
administrators, successors and permitted assigns, including any transferees
permitted under Section 1 hereof.
12. Entire Agreement. This instrument shall constitute the entire
understanding between the parties, superseding any and all previous
understandings, oral or written, pertaining to the subject matter contained
herein.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
SIGNATURE PAGE FOR COMPANY
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the day and year first above written, the corporate parties acting by
their duly authorized officers.
COMPANY:
ATTEST: ID TECHNOLOGIES CORPORATION
/s/ Xxxxxxx X. Xxxx By: /s/ X. Xxxxxxxx X. Xxxxxxxx
------------------------------ ----------------------------------
Asst. Secretary X. Xxxxxxxx X. Xxxxxxxx, President
[Corporate Seal]
SIGNATURE PAGE FOR CENTENNIAL VENTURE PARTNERS, LLC
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the day and year first above written, the corporate parties acting by
their duly authorized officers.
CENTENNIAL VENTURE PARTNERS, LLC (SEAL)
By: Centennial Venture Management, LLC,
Manager (SEAL)
By: /s/ Xxxxx X. Xxxxx
--------------------------------------------
Xxxxx X. Xxxxx, Managing Director and Manager
SIGNATURE PAGE FOR XXXXXXX X. XXXX AND XXXXXXX X. XXXX
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the day and year first above written, the corporate parties acting by
their duly authorized officers.
/s/ Xxxxxxx X. Xxxx (SEAL)
-------------------------------------
Xxxxxxx X. Xxxx
/s/ Xxxxxxx X. Xxxx (SEAL)
-------------------------------------
Xxxxxxx X. Xxxx
SIGNATURE PAGE FOR XXXX X. XXXXX
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the day and year first above written, the corporate parties acting by
their duly authorized officers.
/s/ Xxxx X. Xxxxx (SEAL)
-------------------------------------
Xxxx X. Xxxxx
SIGNATURE PAGE
FOR
INFORMATION RESOURCE ENGINEERING, INC.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the day and year first above written, the corporate parties acting by
their duly authorized officers.
INFORMATION RESOURCE ENGINEERING,
INC. (SEAL)
By: /s/ X. X. Xxxxxx (SEAL)
-------------------------------------
Name: X.X. Xxxxxx
-------------------------------------
Title: President
-------------------------------------
SIGNATURE PAGE FOR XXXXX XXXXX AND XXXXX XXXXX
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the day and year first above written, the corporate parties acting by
their duly authorized officers.
/s/ Xxxxx Xxxxx (SEAL)
-------------------------------------
Xxxxx Xxxxx
/s/ Xxxxx Xxxxx (SEAL)
-------------------------------------
Xxxxx Xxxxx
SIGNATURE PAGE FOR ADDITIONAL INVESTORS
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the day and year first above written, the corporate parties acting by
their duly authorized officers.
___________________________________ (SEAL)
By:_________________________________
Name: ___________________________
Title: ___________________________
SCHEDULE 1
SHAREHOLDERS
===========================================================================================================
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE OF
OF COMMON STOCK SHARES OF COMMON
STOCK
(FULLY-DILUTED)
===========================================================================================================
Xxxxxxx X. Xxxx and Xxxxxxx X. Xxxx 2,427,404 %
0000 Xxxx Xxxx Xxxxxx, Xxxxx X
Xxxxxx, Xxxxx Xxxxxxxx 00000
-----------------------------------------------------------------------------------------------------------
Xxxx X. Xxxxx 1,045,956 %
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
-----------------------------------------------------------------------------------------------------------
Information Resource Engineering, Inc. 1,120,660 %
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
-----------------------------------------------------------------------------------------------------------
Xxxxx and Xxxxx Xxxxx 320,000 %
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
-----------------------------------------------------------------------------------------------------------
Total 4,914,020 %
-----------------------------------------------------------------------------------------------------------
SCHEDULE 2
INVESTORS
===========================================================================================================
NAME AND ADDRESS ORIGINAL PRINCIPAL PERCENTAGE OF
AMOUNT OF ORIGINAL
DEBENTURES PRINCIPAL AMOUNT
===========================================================================================================
Centennial Venture Partners, LLC $300,000 100%
0 Xxxxx Xxxxx
Xxxxxxxx Xxxxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxx
-----------------------------------------------------------------------------------------------------------
Total $300,000 100%
===========================================================================================================
