Exhibit 10.2
MTM TECHNOLOGIES, INC.
SHAREHOLDERS' AGREEMENT
This SHAREHOLDERS' AGREEMENT (this "Agreement"), dated as of May
21, 2004, and effective at the time described in Section 3.8, is among (a) MTM
TECHNOLOGIES, INC., a New York corporation (the "Company"), (b) the shareholders
of the Company listed on signature pages hereto under the heading "Principal
Shareholders" (each a "Principal Shareholder" and, collectively, the "Principal
Shareholders"), (c) PEQUOT PRIVATE EQUITY FUND III, L.P. and PEQUOT OFFSHORE
PRIVATE EQUITY PARTNERS III, L.P. (each a "Pequot Shareholder" and,
collectively, the "Pequot Shareholders") and (d) each other Person who becomes a
party to this Agreement, subject to the conditions set forth herein, by
executing an Instrument of Accession ("Instrument of Accession") in the form of
Schedule I hereto.
WHEREAS, pursuant to a Purchase Agreement, dated as of even date
herewith (as the same may be amended or supplemented, the "Purchase Agreement"),
among the Company and the Pequot Shareholders, providing for the issuance and
sale by the Company to the Pequot Shareholders of shares of Series A-1
convertible preferred stock, $0.001 par value per share, of the Company (the
"Series A-1 Preferred Stock"), and the issuance and possible sale by the Company
to the Pequot Shareholders of shares of Series A-2 convertible preferred stock,
$0.001 par value per share, of the Company (the "Series A-2 Preferred Stock")
and shares of Series A-3 convertible preferred stock, $0.001 par value per
share, of the Company (the "Series A-3 Preferred Stock", and together with the
Series A-1 Preferred Stock and Series A-2 Preferred Stock, the "Series A
Preferred Stock"), pursuant to the Purchase Agreement; and
WHEREAS, the Principal Shareholders, in consideration of a cash
payment of $150,000 paid to each such Principal Shareholder by the Company, the
Pequot Shareholders and the Company desire to promote their mutual interests by
imposing certain restrictions and obligations on the Company and the
Shareholders (as defined herein) from and after the date hereof.
NOW, THEREFORE, the parties to this Agreement hereby agree as
follows:
'SS' 1. DEFINITIONS. For all purposes of this Agreement,
including the preamble, except as otherwise defined herein, the following terms
shall have the meanings set forth below:
Board of Directors. Board of Directors shall mean the board of
directors of the Company.
Certificate of Incorporation. Certificate of Incorporation shall
mean the Certificate of Incorporation of the Company as amended and restated by
the Restated Certificate of Incorporation of the Company in substantially the
form attached as an exhibit to the Purchase Agreement.
Common Stock. Common Stock shall mean (a) the Company's Common
Stock, $.001 par value per share (the "Common Stock") and (b) any shares of any
other class of capital stock of the Company hereafter issued which are (i) not
preferred as to dividends or assets over any
class of stock of the Company or (ii) issued to the holders of shares of Common
Stock upon any reclassification thereof.
Employment Agreements. Employment Agreements shall mean each of
those certain employment agreements entered into by the Company and (x) ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and (y) ▇▇▇▇▇▇ ▇▇▇▇▇▇, dated on or about the date hereof.
Instrument of Accession. Instrument of Accession shall have the
meaning ascribed to it in the preamble to this Agreement.
Offered Securities. Offered Securities means the Securities that
are the subject of a proposed Transfer.
Other Securities. Other Securities shall mean (a) all of the
shares of the Company's capital stock owned by any of the Principal Shareholders
other than the Pequot Securities, (b) all shares of the Company's capital stock
issued or issuable upon conversion of such shares and (c) all shares of the
Company's capital stock issued with respect to such shares by way of stock
dividend or stock split or in connection with any merger, consolidation,
recapitalization or other reorganization affecting the Company's capital stock.
Other Securities will continue to be Other Securities in the hands of any holder
and each transferee thereof will succeed to the rights and obligations of a
holder of Other Securities hereunder; provided that shares of Other Securities
will cease to be Other Securities following a transfer (i) to the Company, (ii)
to any Pequot Shareholders or (iii) pursuant to a Public Sale.
Pequot Majority in Interest. Pequot Majority in Interest shall
mean the Pequot Shareholders holding at least a majority of the shares of Common
Stock issued or issuable, directly or indirectly, upon the conversion or
exercise of the Pequot Securities.
Pequot Securities. Pequot Securities shall mean (a) the Pequot
Shares, (b) the Pequot Warrants, (c) all other interests in the Company owned
from time to time by any Pequot Shareholder, (d) all shares of the Company's
capital stock issued or issuable upon conversion or exercise of any security
described in (a), (b), (c) or (d) and (e) all shares of the Company's capital
stock issued with respect to any such securities by way of stock dividend or
stock split or in connection with any merger, consolidation, recapitalization or
other reorganization affecting the Company's capital stock. Pequot Securities
will continue to be Pequot Securities in the hands of any holder (including,
without limitation) a Principal Shareholder and each transferee thereof will
succeed to the rights and obligations of a holder of Pequot Securities
hereunder; provided that shares of Pequot Securities will cease to be Pequot
Securities following a transfer (i) to the Company or (ii) pursuant to a Public
Sale.
Pequot Shares. Pequot Shares shall mean all shares of Series A
Preferred Stock issued to the Pequot Shareholders and all shares of Common Stock
issued or issuable on conversion of the Series A Preferred Stock owned by such
Pequot Shareholders.
Pequot Shareholders. Pequot Shareholders shall mean (i) Pequot
Private Equity Fund III, L.P., (ii) Pequot Offshore Private Equity Partners III,
L.P. and (iii) any other Person to whom the rights to acquire any Series A
Preferred Stock have been assigned by either, or both, of Pequot Private Equity
Fund III, L.P. or Pequot Offshore Private Equity Partners III, L.P., in each
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case, for so long as such Persons hold Pequot Securities and any other Person to
whom Pequot Securities are transferred for so long as such Person holds any
Pequot Securities; provided, however, that any such transferee shall be a Pequot
Shareholder only in connection with the Pequot Securities held by such Person.
Pequot Warrants. Pequot Warrants shall mean the warrants of the
Company for the purchase of shares of Common Stock issued to the Pequot
Shareholders pursuant to the Purchase Agreement and any warrants issued upon
transfer, exchange or replacement thereof.
Person. Person shall mean an individual, partnership,
corporation, limited liability company, association, trust, joint venture,
unincorporated organization, or any government, governmental department or
agency or political subdivision thereof.
Principal Shareholder Majority in Interest. Principal Shareholder
Majority in Interest shall mean, subject to Section 2 and Section 3 of this
Agreement, those Principal Shareholders who are then subject to the rights and
obligations set forth in Section 2 and Section 3 of this Agreement applicable to
such Principal Shareholders and who hold at least a majority of the shares of
Common Stock held by all such Principal Shareholders.
Public Offering. Public Offering shall mean a public offering
pursuant to an effective registration statement under the Securities Act
covering the offer and sale of shares of Common Stock.
Public Sale. Public Sale shall mean any sale of Common Stock to
the public pursuant to a Public Offering or to the public through a broker or
market-maker pursuant to the provisions of Rule 144 (or any successor rule)
adopted under the Securities Act.
Purchase Agreement. Purchase Agreement shall mean the Purchase
Agreement, dated January 29, 2004, among the Company and the Pequot
Shareholders.
Securities. Securities shall mean the Pequot Securities and the
Other Securities.
Securities Act. Securities Act shall mean the Securities Act of
1933, as amended.
Series A-1 Closing. Series A-1 Closing shall mean the closing of
the purchase and sale of Series A-1 Preferred Stock as contemplated by the
Purchase Agreement.
Shareholder(s). Shareholder shall mean each party hereto other
than the Company and Shareholders shall mean, collectively, the parties hereto
other than the Company.
Transfer or Transferred. Transfer or Transferred shall mean and
include any sale, assignment, encumbrance, hypothecation, pledge, conveyance in
trust, gift, transfer by request, devise or descent, or other transfer or
disposition of any kind, including, but not limited to, transfers to receivers,
levying creditors, trustees or receivers in bankruptcy proceedings or general
assignees for the benefit of creditors, whether voluntary or by operation of
law, directly or indirectly, of any of the Securities.
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'SS' 2. TRANSFERS OF SECURITIES.
2.1. General. (a) No Transfer of any Securities made in
violation of this Agreement shall be effective, and no such Transfer shall be
recorded on the stock record books of the Company. All such Transfers shall be
conducted in accordance with all applicable federal and state securities laws.
(b) Any Transfer by a Shareholder of Securities to a Person who
is not a party to this Agreement shall be made only pursuant to the terms of
this Agreement and on the condition that such Person shall become a party to
this Agreement, agreeing in writing to be bound by all of its terms.
(c) Any Shareholder making a Transfer shall promptly notify the
Company, and the Company shall promptly notify the other Shareholders, if any,
of the name of each transferee and the date of such Transfer.
2.2. Restrictions on Transfer - All Shareholders. Each
Shareholder agrees that such Shareholder shall not Transfer any Securities owned
by such Shareholder prior to the first anniversary of the Series A-1 Closing.
2.3. Restrictions on Transfer - Principal Shareholders. In
addition to the restrictions set forth in Section 2.2, each Principal
Shareholder agrees that during the term of his employment by the Company such
Principal Shareholder shall not Transfer Securities owned by such Principal
Shareholder as follows:
(a) from and after the first anniversary of the Series A-1
Closing to but not including the second anniversary of the Series A-1 Closing,
each Principal Shareholder shall not Transfer more than 25%, in the aggregate,
of the Securities owned by such Principal Shareholder;
(b) in addition to any Securities that such Principal Shareholder
was permitted to Transfer pursuant to Section 2.3(a) that such Principal
Shareholder did not Transfer prior to the second anniversary of the Series A-1
Closing, from and after the second anniversary of the Series A-1 Closing to but
not including the third anniversary of the Series A-1 Closing, each Principal
Shareholder shall not Transfer more than 35%, in the aggregate, of the
Securities owned by such Principal Shareholder; and
(c) subject to the Section 2.4 and Section 2.5, on or after the
third anniversary of the Series A-1 Closing, the Principal Shareholders may
Transfer Securities owned by such Principal Shareholder without regard to the
restrictions set forth in this Section 2.3.
2.4. Right of First Refusal.
(a) During the term of each Principal Shareholder's employment by
the Company and for a period of two years following the termination of such
Principal Shareholder's employment with the Company, for any reason or without
reason, each Principal Shareholder (the "Transferring Shareholder") shall give
the Company and the Pequot Shareholders notice of the terms of any proposed bona
fide sale of Offered Securities, including (i) the number of shares that are
proposed to be Transferred, (ii) the anticipated date of the proposed Transfer,
(iii) the name and
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address of each Person to whom the Transfer is proposed to be made and (iv) the
material terms of the proposed Transfer, including the cash and/or other
consideration to be received in respect of such Transfer, at least twenty (20)
days prior to any proposed Transfer (a "Transfer Notice"); provided, however,
that in connection in connection with a Transfer pursuant to a Public Sale, the
Transferring Shareholder shall deliver the Transfer Notice to the Company and
each Pequot Shareholder at least three (3) business days, or any other time
period as may be mutually agreed upon by the parties hereto, prior to any such
proposed Transfer. Any such Transfer Notice shall be deemed an irrevocable bona
fide third party offer to sell such shares to the Pequot Shareholders on such
terms as set forth in such Transfer Notice and shall be deemed a representation
by the Transferring Shareholder that the Transfer is a bone fide transaction.
(b) The Pequot Shareholders shall have a period of (i) in
connection with a Transfer pursuant to a Public Sale, five (5) business days and
(ii) in connection with any other Transfer, ten (10) business days, from the
receipt of the Transfer Notice from the Transferring Shareholder within which to
elect to purchase their respective pro rata shares of the Offered Securities at
the same price and subject to the same material terms and conditions as
described in the Transfer Notice. Each Pequot Shareholder may exercise such
purchase option, and thereby purchase all or any portion of its pro rata share
of the Offered Securities, by notifying the Transferring Shareholder in writing,
before the expiration of such five (5) or ten (10) business day period, as the
case may be, as to the number of such shares that it wishes to purchase. For the
purpose of the preceding sentence, each Pequot Shareholder's pro rata share
shall be a fraction of the Offered Securities, the numerator of which shall be
the number of shares of Common Stock (including shares of Common Stock issuable
upon conversion of Series A Preferred Stock) owned by such Pequot Shareholder on
the date of the Transfer Notice and the denominator of which shall be the total
number of shares of Common Stock (including shares of Common Stock issuable upon
conversion of Series A Preferred Stock) held by all Pequot Shareholders on the
date of the Transfer Notice. Each Pequot Shareholder shall have a right of
reallotment such that, if any other Pequot Shareholder fails to exercise the
right to purchase its full pro rata share of the Offered Securities, the other
participating Pequot Shareholders may exercise an additional right to purchase,
on a pro rata basis, the Offered Securities not previously purchased. If a
Pequot Shareholder gives the Transferring Shareholder notice that it desires to
purchase its pro rata share of the Offered Securities and, as the case may be,
its allotment, then payment for the Offered Securities shall be in cash, by
check or wire transfer or in such other consideration as set forth in the
Transfer Notice, against delivery of the Offered Securities to be purchased at a
place agreed upon between the parties and at the time of the scheduled closing
therefor.
(c) If all the Offered Securities are not so purchased, and
subject to the right of co-sale set forth in Section 2.5 herein below, the
Transferring Shareholder shall be free for a period of sixty (60) days after
expiration of the time periods referred to above to consummate the proposed
transaction upon terms not less favorable to the Transferring Shareholder than
those set forth in the Transfer Notice with respect to any Offered Securities
not sold to any Pequot Shareholder pursuant to this Section 2.4. Promptly upon
the consummation of any such transaction, the Transferring Shareholder shall
confirm in writing to the Company and the Pequot Shareholders the terms of the
transaction as so consummated, including the number of shares involved, the
consideration received, and the name of the party to whom the Transfer was made.
After the expiration of said sixty (60) day sale period, subject to the time
period set forth in Section 2.4(a), if such Transferring
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Shareholder again wishes to Transfer any shares of Securities, such Transferring
Shareholder shall again offer the shares in accordance with the provisions of
this Section 2.4.
(d) Should the purchase price specified in the Transfer Notice be
payable in property other than cash or evidences of indebtedness, the Pequot
Shareholders shall have the right to pay the purchase price in the form of cash
equal in amount to the value of such property. If the Transferring Shareholder
and the Pequot Shareholders cannot agree on such cash value within five (5) or
ten (10) business days, as the case may be, after the receipt of the Transfer
Notice, the valuation shall be made by an appraiser of recognized standing
selected by the Pequot Shareholders and the Transferring Shareholder. The cost
of such appraisal shall be shared equally by the Pequot Shareholders and the
Transferring Shareholder (with the half of the cost borne by the Pequot
Shareholders borne pro rata by each based on the number of shares each such
Pequot Shareholder was interested in purchasing pursuant to this Section).
2.5. Co-Sale Rights. Except in connection with a Transfer
pursuant to a Public Sale, during the term of each Principal Shareholder's
employment by the Company and for a period of two years following the
termination of such Principal Shareholder's employment with the Company, for any
reason or without reason, at least ten (10) days prior to any proposed Transfer
by a Principal Shareholder, such Principal Shareholder shall give a Transfer
Notice to the Pequot Shareholders (which Transfer Notice may be the same
Transfer Notice as that described in Section 2.4 above). Upon receipt of a
Transfer Notice, if the Pequot Shareholders have not exercised to the full
extent their rights of first refusal pursuant to Section 2.4 hereof, such Pequot
Shareholders may elect to participate in the proposed Transfer by delivering
written notice to the Transferring Shareholder within ten (10) business days of
the date of receipt of such Transfer Notice. The Pequot Shareholders shall have
the right to sell to the proposed transferee(s), as a condition to such Transfer
by the Transferring Shareholder(s), at the same price per share of Securities
and on the same terms and conditions as are specified in the Transfer Notice,
the lesser of (x) two shares (on an as converted basis including shares of
Common Stock issuable upon conversion of Series A Preferred Stock) for every one
share owned by the Principal Shareholders or (y) that number of Securities equal
to the Offered Securities (on an as converted basis including shares of Common
Stock issuable upon conversion of Series A Preferred Stock) owned by the Pequot
Shareholders, multiplied by a fraction, the numerator of which is the Pequot
Securities and the denominator of which is the number of Securities (on an as
converted basis including shares of Common Stock issuable upon conversion of
Series A Preferred Stock). The Transferring Shareholder will be entitled to sell
in the proposed Transfer the balance of the Offered Securities proposed to be so
sold. If the Pequot Shareholders elect to participate in such Transfer, the
Transferring Shareholder shall use his, her or its best efforts to obtain the
agreement of the prospective transferee(s) to the participation of the Pequot
Shareholders in any proposed Transfer and shall not Transfer any shares of the
capital stock of the Company to such prospective transferee(s) unless such
prospective transferee(s) allow(s) the participation of the Pequot Shareholders
on the terms specified in the Transfer Notice. Subject to the foregoing, the
Transferring Shareholder(s) may, within sixty (60) days after the expiration of
the ten (10) business day period referred to above, Transfer the Offered
Securities (reduced by the number of shares of Securities with respect to which
the Pequot Shareholders have elected to participate, if any) to the
transferee(s) identified in the Transfer Notice at a price and on the terms no
more favorable to the Transferring Shareholder(s) than specified in the Transfer
Notice; provided, that, prior to any Transfer such transferee(s) shall first
execute and deliver to the Company a written agreement to be bound by all of the
provisions of this Agreement
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applicable to the transferor(s). However, if such Transfer is not consummated
within such sixty (60) day period, the Transferring Shareholder(s) shall not
Transfer any shares of the Offered Securities as have not been purchased within
such period without again complying with all of the provisions of Sections 2.4
and 2.5 hereof. Any attempt by a Transferring Shareholder to Transfer shares of
Securities in violation of Section 2.4 or 2.5 hereof shall be void and the
Company agrees that it will not effect such a Transfer nor will it treat any
alleged transferee as the holder of such shares of Securities without the
consent of the Pequot Shareholders.
2.6. Termination of Right of First Refusal and Co-Sale Rights.
Notwithstanding anything contained in this Section 2 to the contrary, the rights
granted to the Pequot Shareholders pursuant to Section 2.4 and 2.5 shall
terminate on the earlier of (x) the date that the Pequot Shareholders own less
than 10% of the Pequot Shares and (y) the date that the Principal Shareholders
own less than 10% of the number of shares of Common Stock owned by such
Principal Shareholders on the date hereof.
'SS' 3. BOARD OF DIRECTORS.
3.1. Boards of Directors; Voting Agreements. (a) From and
after the date hereof to, but not including, the fifth anniversary of the date
hereof, and subject to paragraphs (b),(c) and (d) below, in any and all
elections of directors of the Company (whether at a meeting or by written
consent in lieu of a meeting), each Shareholder shall vote, or cause to be
voted, or cause such Shareholder's designees as directors to vote, all
Securities owned by such Shareholder or over which such Shareholder has voting
control so as to nominate and elect such directors of the Company as follows:
(i) The Chief Executive Officer of the Company;
(ii) Three directors designated by Pequot Private Equity
Fund III, L.P. (the "Pequot Designees"), for so long as the
Pequot Shareholders own at least 75% of the Pequot Shares, who
shall initially be ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇; provided, however, that if the Pequot Shareholders own
less than 75% of the Pequot Shares but at least 33 1/3% of the
Pequot Shares, then the Pequot Shareholders will only be entitled
to designate two directors; and provided, further, however, that
if the Pequot Shareholders own less than 33 1/3% of the Pequot
Shares, then the Pequot Shareholders will only be entitled to
designate one director; and, in each case, each director
designated by the Pequot Designees shall be entitled to serve as
director for the remainder of such director's elected term;
(iii) Three "independent directors" (as such term is used in
the applicable regulations promulgated by Nasdaq or any other
national stock exchange on which the Company's Common Stock is
listed on the date of the Series A-1 Closing) who shall be
selected initially by the Board of Directors immediately prior to
the Series A-1 Closing, and, thereafter by the Company's
nominating and corporate governance committee, as established
pursuant to Section 3.2; provided, that, in any
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event, such independent directors shall not be selected by the
Pequot Shareholders, their Affiliates or any other holder of the
Pequot Shares;
(iv) Two "independent directors" (as such term is used in
clause (iii) above) selected by the Chief Executive Officer of
the Company and reasonably acceptable to the Pequot Shareholders
and initially, reasonably acceptable to the members of the Board
of Directors who were such directors immediately prior to the
Series A-1 Closing and, thereafter, to the Company's nominating
and corporate governance committee;
(v) Subject to Section 3.1(b), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇.
(b) Notwithstanding anything contained in Section 3.1(a) to the
contrary, the Pequot Shareholders shall only be obligated under Section
3.1(a)(v) with respect to ▇▇. ▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇ for so long as such
individual (x) has not been terminated by the Company pursuant to Section 4(a)
or (y) has not terminated his employment with the Company other than pursuant to
Section 4(b), in each case of the Employment Agreements and as follows:
(i) From and after the date hereof to, but not including,
the second anniversary of the Series A-1 Closing; and
(ii) From and after the second anniversary of the Series A-1
Closing to, but not including, the third anniversary of the
Series A-1 Closing, to vote their Securities to elect to the
Board of Directors either ▇▇. ▇▇▇▇▇▇ or ▇▇. ▇▇▇▇▇▇▇ as shall be
determined by a majority vote of the Board of Directors (with ▇▇.
▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇ not being entitled to such vote), and the
other shall be entitled to attend each meeting of the Board of
Directors as a non-voting observer, whether such meeting is
conducted in person or by teleconference and shall receive all
communications provided to the Board of Directors, at the same
time and in the same manner that such communications are provided
to such members of the Board of Directors.
(c) Notwithstanding anything contained in Section 3.1(a) to the
contrary, the Principal Shareholders shall not be obligated pursuant to Section
3.1(a)(ii) if (x)(i) the Pequot Shareholders own less than 10% of the Pequot
Shares and (ii) any other shareholders that are introduced to the Company by the
Pequot Shareholders own less than 10% of the shares acquired by such
shareholders from the Company in a transaction not including a public offering
or (y) the Principal Shareholders own less than 10% of the number of shares of
Common Stock owned by such Principal Shareholders on the date hereof.
(d) If any vacancy shall occur in the Board of Directors as a
result of death, disability, resignation or any other termination of a director,
the replacement for such vacating director shall be designated by the Person or
Persons who, pursuant to Section 3.1(a), originally designated such vacating
director. Each Person entitled to designate a director or a replacement for a
director pursuant to Section 3.1(a) shall also be entitled to designate the
removal of such director with or without cause.
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(e) The Pequot Shareholders hereby agree that (i) one of the five
directors designated pursuant to Sections 3.1(a)(iii) and (iv) above shall be
the "financial expert" required on the audit committee of the Company by the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended and (ii) the greatest extent permitted by
applicable law and the rules and regulations of the Nasdaq, the directors
designated by the Pequot Shareholders pursuant to Section 3.1(a)(ii) shall
qualify as "independent directors" (as such term is used in Section 3.1(a)(iii).
(f) To the greatest extent permitted by applicable law and the
rules and regulations of the Nasdaq, at least one of the directors designated by
the Pequot Shareholders pursuant to Section 3.1(a)(ii) above shall be a member
of any committee formed by the Board of Directors including, without limitation,
the compensation committee, audit committee, the nominating and the corporate
governance committee.
3.2. PROXY. EACH SHAREHOLDER HEREBY GRANTS TO THE COMPANY AN
IRREVOCABLE PROXY, COUPLED WITH AN INTEREST, TO VOTE ALL OF THE VOTING
SECURITIES OWNED BY SUCH SHAREHOLDER OR OVER WHICH SUCH SHAREHOLDER HAS VOTING
CONTROL TO THE EXTENT NECESSARY TO CARRY OUT THE PROVISIONS OF THIS SECTION 3,
BUT ONLY IN THE EVENT OF AND TO THE EXTENT NECESSARY TO REMEDY ANY BREACH BY
SUCH SHAREHOLDER OF HIS, HER OR ITS OBLIGATIONS UNDER THE VOTING AGREEMENT
CONTAINED HEREIN.
3.3. Action by Shareholders; Voting Agreement. Each Shareholder
further agrees that such Shareholder will not vote any Securities owned by such
Shareholder or over which such Shareholder has voting control, or take any
action by written consent, or take any other action as a shareholder of the
Company, to circumvent the voting arrangements required by this Section 3. Each
Shareholder hereby agrees to vote or cause to be voted or cause such
Shareholder's designees as directors to vote all Securities owned by such
Shareholder or over which such Shareholder has voting control so as to comply
with this Section 3. The provisions set forth herein constitute a voting
agreement under Section 620 of the New York Business Corporation Law, as
amended, and, in connection therewith, the Shareholders expressly consent to the
enforcement of this Section 3 by specific performance.
'SS' 4. MISCELLANEOUS.
4.1. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction to the greatest extent
possible to carry out the intentions of the parties hereto.
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4.2. Entire Agreement; No Third Party Beneficiaries. Each party
hereby acknowledges that no other party or any other person or entity has made
any promises, warranties, understandings or representations whatsoever, express
or implied, not contained in this Agreement and acknowledges that it has not
executed this Agreement in reliance upon any such promises, representations,
understandings or warranties not contained herein and that this Agreement
supersedes all prior agreements and understandings between the parties with
respect hereto. There are no promises, covenants or undertakings other than
those expressly set forth or provided for in this Agreement. This Agreement is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
4.3. Successors and Assigns. This Agreement will bind and inure
to the benefit of and be enforceable by the Company and the Shareholders and
their respective heirs, successors and assigns.
4.4. Counterparts; Facsimile Signatures. This Agreement may be
executed in separate counterparts each of which will be an original and all of
which taken together will constitute one and the same agreement. Any signature
page delivered by a fax machine shall be binding to the same extent as an
original signature page, with regard to any agreement subject to the terms
hereof or any amendment thereto.
4.5. Remedies. The Shareholders will be entitled to enforce their
rights under this Agreement specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights existing in their favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any Shareholder may
in its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief in order to
enforce or prevent any violation of the provisions of this Agreement. In the
event of any dispute involving the terms of this Agreement, the prevailing party
shall be entitled to collect reasonable fees and expenses incurred by the
prevailing party in connection with such dispute from the other parties to such
dispute.
4.6. Notices. All notices and other communications required or
permitted hereunder shall be in writing. Notices shall be delivered personally,
against written receipt therefor, via recognized overnight courier (such as
Federal Express, DHL or Airborne Express) or via certified or registered mail.
Notices may be delivered via facsimile or e-mail, provided that by no later than
two days thereafter such notice is confirmed in writing and sent via one of the
methods described in the previous sentence. Notices to a Pequot Shareholder
shall be sent as provided in connection with notices to the Purchasers in the
Purchase Agreement. Notices to the Company shall be sent as provided in the
Purchase Agreement. Notices to a Principal Shareholder shall be sent to such
address as set forth on the books and records of the Company, or at such other
address or facsimile number as such Principal Shareholder shall have furnished
in writing to the other parties hereto. All notices shall be effective upon
receipt.
4.7. Amendment and Waiver. No modification, amendment or waiver
of any provision of this Agreement will be effective against the Company or the
Shareholders unless such modification, amendment or waiver is approved in
writing by the Company, a Pequot Majority in Interest and a Principal
Shareholder Majority in Interest. Any modification, amendment or waiver
10
signed by the Company, a Pequot Majority and a Principal Shareholder Majority in
Interest shall bind all of the parties hereto. No delay or omission to exercise
any right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such nonbreaching or nondefaulting party nor shall it
be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring.
4.8. Termination. (a) Notwithstanding any other provision of this
Agreement, this Agreement may be terminated in a writing approved by the Company
and a Pequot Majority in Interest. This Agreement will terminate automatically
upon the earliest to occur of (a) the completion of any voluntary or involuntary
liquidation or dissolution of the Company, (b) the sale of all or substantially
all of the Company's assets or of a majority of the outstanding equity of the
Company (determined on a fully diluted basis) to any Person that is not a party
to this Agreement (whether pursuant to a merger, consolidation or otherwise), or
(c) on the date that the Pequot Shareholders are no longer entitled to designate
any directors pursuant to Section 3.1(a)(ii).
4.9. GOVERNING LAW. THE CONSTRUCTION, VALIDITY AND INTERPRETATION
OF THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
4.10. Future Shareholders' Rights; Transfers; Legend. The Company
shall not issue (except in a Public Offering) any Common Stock or securities
convertible into or exercisable for Common Stock unless the Person receiving
such Common Stock executes an Instrument of Accession. No Shareholder shall
Transfer any Securities other than to the Company or pursuant to a Public Sale
unless the Person receiving Transfer of such Securities executes an Instrument
of Accession. Certificates representing the Securities shall be endorsed with
the following legend:
THE SECURITIES REPRESENTED HEREBY MAY BE SUBJECT TO THE TERMS AND
CONDITIONS OF A VOTING AGREEMENT WHICH MAY PLACE CERTAIN
RESTRICTIONS ON THE VOTING OF AND THE TRANSFER OF THE SECURITIES
REPRESENTED HEREBY. ANY PERSON ACCEPTING ANY INTEREST IN SUCH
SECURITIES SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY
ALL THE PROVISIONS OF SUCH AGREEMENT. A COPY OF SUCH AGREEMENT
WILL BE FURNISHED TO THE RECORD HOLDER OF THIS SECURITY WITHOUT
CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE
OF BUSINESS.
[Signature pages follow.]
11
IN WITNESS WHEREOF, the parties hereto have executed this
Shareholders' Agreement on the day and year first above written.
MTM TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: CEO
PEQUOT PRIVATE EQUITY FUND III, L.P.
By: Pequot Capital Management, Inc.,
Its Investment Manager
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: General Counsel
PEQUOT OFFSHORE PRIVATE EQUITY
PARTNERS III, L.P.
By: Pequot Capital Management, Inc.,
Its Investment Manager
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: General Counsel
Signature Page to Shareholders' Agreement
PRINCIPAL SHAREHOLDERS:
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Signature Page to Shareholders' Agreement
Schedule I
Form of Instrument of Accession
Instrument of Accession
Reference is made to that certain Shareholders' Agreement dated
as of __________ ___, 2004, a copy of which is attached hereto (as amended and
in effect from time to time, the "Shareholders Agreement"), among MTM
Technologies, Inc. (the "Company"), and the Shareholders (as defined therein).
The undersigned, ____________________________, in order to become
the owner or holder of [identify Securities being Transferred] (the
"Securities") of the Company hereby agrees that by his execution hereof the
undersigned is a Shareholder party to the Shareholders Agreement subject to all
of the restrictions and conditions applicable to Shareholders set forth in such
Shareholders' Agreement, and all of the Securities purchased by the undersigned
in connection herewith (and any and all debt and equity of the Company issued in
respect thereof) are subject to all the restrictions and conditions applicable
to such Securities as set forth in the Shareholders Agreement. This Instrument
of Accession shall take effect and shall become a part of said Shareholders
Agreement immediately upon execution.
Executed as of the date set forth below under the laws of the
State of New York.
Signature:
----------------------------
Address:
----------------------------
----------------------------
----------------------------
Date:
----------------------------
Accepted:
MTM TECHNOLOGIES, INC.
By:
----------------------------------
Name:
Title:
Date:
Signature Page to Shareholders' Agreement