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EXHIBIT 10.3
STOCKHOLDERS AGREEMENT
Agreement made this 16th day of August, 1994 by and among ViaGrafix
Corporation, an Oklahoma corporation (the "Company"), those stockholders of the
Company whose names are set forth on Schedule A attached hereto (the
"Stockholders"), and those persons and entities whose names are set forth on
Schedule I to the Series A Convertible Preferred Stock Purchase Agreement dated
as of the date hereof, by and among the Investors, the Company and certain
principal shareholders of the Company (the "Series A Preferred Stock Purchase
Agreement") attached hereto (the "Investors").
WHEREAS, each Stockholder owns the number of shares of Common Stock of
the Company (the "Common Stock") as set forth opposite his or her name on
Schedule A attached hereto;
WHEREAS, the Investors are acquiring on the date hereof, 1,710,000
shares of Series A Convertible Preferred Stock of the Company (the "Purchased
Shares") pursuant to the Series A Preferred Stock Purchase Agreement; and
WHEREAS, one of the conditions to the investment by the Investors is
the execution and delivery of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company, the Stockholders and
the Investors hereby agree as follows:
1. DEFINITIONS
"Founders' Shares" shall mean and include all shares of Common Stock
of the Company owned by the Stockholders, whether presently held or hereafter
acquired.
"Shares" shall mean all the Founders' Shares and all of the Purchased
Shares.
As used herein, the term "Qualified Public Offering" shall mean an
underwritten public offering of shares of Common Stock pursuant to a
registration statement filed with the Commission under the Securities Act, in
which net proceeds, after deducting underwriters, discounts and commissions and
offering expenses, to the Company equal or exceed $5,000,000 deducting
underwriters' discounts and commissions and offering discounts.
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2. CO-SALE AND RIGHT OF FIRST REFUSAL
Section 2.1. Right of First Refusal on Sales.
(a) Sales to Third Parties. If at any time a Stockholder or an
Investor desires to sell for cash all or any part of his or its Shares pursuant
to a bona fide offer from a third party (the "Proposed Transferee"), such
Stockholder or Investor (the "Selling Party") shall submit a written offer (the
"Offer") to sell such Shares (the "Offered Shares") to the other parties hereto
(the "Purchasing Parties") on terms and conditions, including price, not less
favorable to the Purchasing Parties than those on which the Stockholder
proposes to sell such Offered Shares to the Proposed Transferee. The Offer
shall disclose the identity of the Proposed Transferee, the offered Shares
proposed to be sold, the total number of Shares owned by the Selling Party, 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
that the Purchasing Parties may acquire, in accordance with the provisions of
this Agreement, all (but not less than all) the Offered Shares for the price
and upon the other terms and conditions, including deferred payment (if
applicable), set forth therein.
(b) Purchasing Parties' Right of First Refusal. Each Purchasing
Party shall have the right to purchase that number of Offered Shares as shall
be equal to the number of Offered Shares multiplied by a fraction, the
numerator of which shall be the number of Shares then owned by such Purchasing
Party and the denominator of which shall be the aggregate number of Shares then
owned by all of the Purchasing Parties; provided, that no party shall have a
right of first refusal with respect to any Offered Shares unless the Purchasing
Parties as a group purchase all the Offered Shares. For purposes of Sections 2,
3, 9, and 10, all of the shares of Common Stock which a party has the right to
acquire from the Company upon the conversion, exercise or exchange of any of
the securities of the Company then owned by such party shall be deemed to be
Shares then owned by such party. (The amount of Offered Shares that each
Purchasing Party is entitled to purchase under this Section 2.1(b) shall be
referred to as its "Pro Rata Fraction").
(c) Right of Oversubscription. The Purchasing Parties shall have a
right of oversubscription such that if any Purchasing Party fails to accept the
Offer as to its Pro Rata Fraction, the other Purchasing Parties shall, among
them, have the right to purchase up to the balance of the Offered Shares not so
purchased. Such right of oversubscription may be exercised by a Purchasing
Party by accepting the Offer as to more than its Pro Rata Fraction. If, as a
result thereof, such oversubscriptions exceed the total number of Offered
Shares available in respect of such oversubscription privilege, the
oversubscribing Purchasing Parties shall be cut back with respect to their
oversubscriptions
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on a pro rata basis in accordance with their respective Pro Rata Fractions or
as they may otherwise agree among themselves.
(d) Closing on Offered Shares. If a Purchasing Party desires to
purchase all or any part of the Offered Shares, said Purchasing Party shall
communicate in writing its election to purchase to the Selling Party, which
communication shall state the number of Offered Shares said Purchasing Party
desires to purchase and shall be given to the Selling Party in accordance with
Section 5 below within thirty days of the date the Offer was made. Such
communication 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 a
Purchasing Party's right to purchase more than its Pro Rata Fraction and the
requirement that all the Offered Shares be purchased). Sales of the Offered
Shares to be sold to a Purchasing Party pursuant to this Section 2.1 shall be
made at the offices of the Company on the 45th day following the date the Offer
was made (or if such 45th day is not a business day, then on the next
succeeding business day). Such sales shall be effected by the Selling Party's
delivery to the Purchasing Party of a certificate or certificates evidencing
the Offered Shares to be purchased by it, duly endorsed for transfer to such
Purchasing Party, against payment to the Selling Party of the purchase price
therefor by such Purchasing Party.
(e) Sales to Proposed Transferee. If the Purchasing Parties do not
purchase all of the Offered Shares, the Offered Shares not so purchased may be
sold by the Selling Party at any time within 90 days after the date the Offer
was made, subject to the provisions of Section 2.2 and 2.3. 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 Offered Shares not sold within such 90-day
period shall continue to be subject to the requirements of a prior offer
pursuant to this Section 2.1. If Offered Shares are sold pursuant to this
Section 2.1 to any purchaser who is not a party to this Agreement, the Offered
Shares so sold shall no longer be subject to this Agreement.
Section 2.2. Right of Participation in Sales by Stockholder.
(a) Co-Sale Right. If at any time a Stockholder desires to sell
all or any part of the Shares owned by him to any Proposed Transferee in
accordance with Section 2.1, each of the Investors shall have the right to sell
to the Proposed Transferee, as a condition to such sale by the Stockholder, at
the same price per share and on the same terms and conditions as involved in
such sale by the Stockholder, a number of shares of Common Stock issued upon
conversion of such Investor's Purchased Shares ("Conversion Shares") equal to
the total number of
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Conversion Shares owned by such Investor (assuming the conversion of all
Purchased Shares owned by such Investor) multiplied by a fraction, the
numerator of which is the aggregate number of Offered Shares and the
denominator of which is the sum of all Shares owned by such Stockholder.
(b) Notice of Intent to Participate. Each Investor wishing to so
participate in any sale under this Section 2.2 shall notify the Stockholder in
writing of such intention as soon as practicable after such Investor's receipt
of the Offer made pursuant to Section 2.1, and in any event within the time
period specified in Section 2.1. Such notification shall be delivered in person
or mailed to such Stockholder at the address set forth in accordance with
Section 5 below.
(c) Sale to Transferee. The Stockholder and each participating
Investor shall sell to the Proposed Transferee all, or at the option of the
Proposed Transferee, any part of the Founders, Shares and/or Conversion Shares
proposed to be sold at not less than the price and upon other terms and
conditions, if any, not more favorable to the Proposed Transferee than those in
the Offer provided by the Stockholder under Section 2.1 above; provided,
however, that any purchase of less than all of such Founders' Shares and/or
Conversion Shares by the Proposed Transferee shall be made from the Stockholder
and each participating Investor pro rata based upon the relative amount of the
Founders' Shares and/or Conversion Shares that the Stockholder and each
participating Investor is otherwise entitled to sell pursuant to Section
2.2(a).
(d) Continuation of Restrictions. Any Shares sold by the
Stockholder to any third party pursuant to this Section 2.2 shall still be
subject to the restrictions or benefits imposed by this Agreement, and such
third party shall be required to execute a counterpart of this Agreement.
Section 2.3. Prohibited and Permitted Transfers.
(a) A Stockholder shall not sell, assign, transfer, grant an
option to or for, pledge, hypothecate, mortgage, encumber or dispose of all or
any of his Shares except as expressly provided in this Agreement.
(b) Notwithstanding the foregoing, the terms and conditions of
Sections 2.1 and 2.2 hereof shall not apply to any Permitted Transfer by a
Stockholder. For purposes of this Agreement, "Permitted Transfer" means any
transfer by a Stockholder (a) of such Stockholder's Shares to or for the
benefit of any parent, sibling, spouse, child or grandchild of the Stockholder,
or to a trust for the benefit of any of the foregoing, or (b) by will or the
laws of descent and distribution to a Permitted Transferee (any person referred
to in this paragraph being defined as a "Permitted Transferee"), or (c) of
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up to 1% of the shares of common stock of the Company then outstanding on a
fully-diluted basis in any twelve month period; provided, that it shall be a
condition of each such transfer that the Permitted Transferee agree to be bound
by the terms and conditions of this Agreement as a Stockholder and executes a
counterpart of this Agreement.
As used herein, the term "Stockholder" is deemed to include any transferees
of the Stockholder, except as expressly provided otherwise.
Section 2.4. Put Right. In the event of any sale, transfer, assignment
or disposition of any capital stock by a party hereto (in the case of Section
2.1) or Stockholder (in the case of Section 2.2) in violation of any provision
of each of Section 2 or Section 3 hereof, each other party (in the case of
Section 2.1) or Investor (in the case of Section 2.2) shall each have the right
to elect to cause such violating party to purchase, and such violating party
shall be obligated to purchase, from such non-violating party, and at the same
price per share and on the same terms and conditions as involved in such sale
by such violating party, such number of shares of capital stock (calculated on
a fully-diluted basis) equal to the number of shares sold by such violating
party multiplied by a fraction, the numerator of which is the aggregate number
of Shares owned by such non-violating party and the denominator of which is the
sum of all Shares owned by all non-violating parties desiring to sell shares to
such violating party under this Section.
Section 2.5. Sale of Purchased Shares. Immediately prior to the sale of
any Purchased Shares by the Investors to a third party, the Purchased Shares
subject to such sale shall be converted into shares of Common Stock. However,
in consideration for such conversion in the event that Geocapital III, L.P.
sells all of its Shares to one or more buyers, then (a) the Company shall enter
into an agreement with such buyer(s) providing that the benefits of Section 4.8
of the Series A Preferred Stock Purchase Agreement will run to such buyer(s);
and (b) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall enter into a voting agreement
providing that they each will vote to elect as a director of the Corporation a
person designated by such buyer or a majority of the holders of the Shares sold
in such sale.
3. LOCK-UP AGREEMENT
Each of the Investors and Stockholders hereby agree that in connection with
a Qualified Public Offering, upon the request of the Company or the principal
underwriter managing the Qualified Public Offering, not to sell, make any short
sale of, loan, grant an option for the purchase of, or otherwise dispose of any
common stock now owned or hereafter acquired by him without the prior written
consent of the Company or such underwriter, as the case
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may be, for one hundred and eighty (180) days or such other period of time as
such underwriter may specify.
4. TERMINATION
This Agreement, and the respective rights and obligations of the parties
hereto, shall terminate upon the earliest to occur of the following: (i) the
expiration of ten years from the date first written above; or (ii) the
completion of the Company's Qualified Public offering.
5. NOTICES
As the terms "notice" or "notices" are used herein as between the parties,
such term shall mean a written document, explaining in reason for the notice,
and the same shall be mailed by United States Postal Service Via Certified
Mail, Return Receipt Requested, addressed as follows:
to the Company or the Stockholders:
ViaGrafix Corporation
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Five ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy by mail and fax which shall not constitute notice, to:
▇▇▇▇ ▇. ▇▇▇▇, Attorney
▇.▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
to the Investors:
GEO Capital III, L.P.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
with a copy by mail and fax, which shall not constitute notice, to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esquire
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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Such notice shall be deemed to have been given on the date placed in the U.S.
Mails, and sent by fax to counsel, whether actually received by the addressee
or not. The parties shall, as a matter of convenience and courtesy, send each
party receiving notice a copy of said notice by facsimile or electronic means,
or by courier, Federal Express, or similar service, but such notifications
shall not be deemed lawful "notice" as required hereby. The parties may from
time to time amend the above addresses and names by written notice given the
other party.
6. SPECIFIC PERFORMANCE
The rights of the parties under this Agreement are unique and, accordingly,
the parties shall have the right, in addition to such other remedies as may be
available to any of them at law or in equity, to enforce their rights hereunder
by actions for specific performance in addition to any other legal or equitable
remedies they might have to the extent permitted by law.
7. LEGEND
Any certificates representing shares of capital stock subject to this
Agreement shall bear a legend indicating the existence of the restrictions
imposed hereby.
8. ENTIRE AGREEMENT
This Agreement and the Series A Preferred Stock Purchase Agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior oral and written agreements and
understandings between them or any of them as to such subject matter.
9. WAIVERS AND FURTHER AGREEMENTS
Any of the provisions of this Agreement may be waived by an instrument in
writing with the consent of the party or parties whose rights are being waived
and in the event the rights of the Investors are being waived, with the consent
of the holders of at least a majority in interest of the Purchased Shares that
have not been sold to the public. Any waiver of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of that provision or of any other provision hereof. Each of the parties
hereto agrees to execute all such further instruments and documents and to take
all such further action as any other party may reasonably require in order to
effectuate the terms and purposes of this Agreement.
10. AMENDMENTS
This Agreement may be amended by and shall be effective upon the receipt of
the written consent of: (i) the holders of at least a majority in interest of
the Purchased Shares that have
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not been sold to the public, (ii) the Company, and (iii) a majority in interest
of the Stockholders.
11. 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, legal representatives,
successors and permitted transferees, except as may be expressly provided
otherwise herein.
12. 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.
13. 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.
14. SECTION HEADINGS
The headings contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this
Agreement.
15. GOVERNING LAW
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Oklahoma.
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IN WITNESS WHEREOF, the undersigned have executed this Stockholders
Agreement as of the day and year first above written.
VIAGRAFIX CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
INVESTORS:
GEOCAPITAL III, L.P.
By: Geocapital Management, L.P.
By: (ILLEGIBLE)
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General Partner
STOCKHOLDERS:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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SCHEDULE A
STOCKHOLDERS
Number of Shares
Name and Address of Common Stock
---------------- ----------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 4,687,500
▇/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,812,500
▇/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇