EXHIBIT 10.12
SHAREHOLDERS AGREEMENT
THIS AGREEMENT is made and entered into this 13th day of February,
1998, by and among SELLTEL #1, INC., a Georgia corporation (the "CORPORATION");
-----------
ARNOLD DORFMAN, an individual resident of the State of Florida ("A. DORFMAN");
----------
SCOTT DORFMAN, an individual resident of the State of Georgia ("S. DORFMAN");
----------
and INNOTRAC CORPORATION, a Georgia corporation ("INNOTRAC"), (A. Dorfman, S.
--------
Dorfman and Innotrac (should it become a shareholder of the Corporation as
permitted hereunder) are sometimes collectively referred to hereinafter as
"SHAREHOLDERS" and individually as a "SHAREHOLDER.")
- ------------- -----------
W I T N E S S E T H :
- - - - - - - - --- -
WHEREAS, A. Dorfman is the record and beneficial owner of ten (10)
shares of the no par value common stock of the Corporation, and S. Dorfman is
the record and beneficial owner of ninety (90) shares of the no par value common
stock of the Corporation, which together constitutes all of the issued and
outstanding shares of the Corporation (these shares together with any other
shares issued by the Corporation and hereafter acquired by the Shareholders are
collectively referred to herein as the "SHARES"); and
------
WHEREAS, the Corporation and the Shareholders desire to set forth
certain agreements with respect to the Corporation and the respective interests
of the Shareholders in the Corporation;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. TRANSFER RESTRICTIONS
1.1 (a) Except as provided in SECTION 1(C) OR ARTICLE 2 hereof, no
Shareholder may, for a period of two years after the date hereof, sell,
transfer, convey, assign, pledge, hypothecate or otherwise dispose of any of the
Shares now owned or hereafter acquired by him or any interest therein.
(b) Any purported gift, sale, transfer, assignment, pledge, or
hypothecation of all or any of the Shares other than pursuant to the terms of
this Agreement shall be null and void, and the Corporation may not recognize any
such gift, sale, transfer, assignment, pledge, or hypothecation as passing any
interest in such Shares.
(c) Notwithstanding anything in this ARTICLE 1 to the contrary,
S. Dorfman may at any time and from time to time transfer, sell, convey or
assign all of any portion of his
Shares to (i) any one or more entities, the majority of whose voting securities
are owned by S. Dorfman, and/or (ii) one or more trusts for the benefit of any
dependents of S. Dorfman.
2. CALL PROVISIONS
2.1 A. Dorfman hereby grants to each of the Corporation and Innotrac,
acting singly or jointly, the right and option to purchase all, but not less
than all, of the Shares in the Corporation owned by A. Dorfman for an aggregate
purchase price of $595,972 (the "CALL OPTION"). The Call Option may be
-----------
exercised at any time on or after December 15, 1998, by the Corporation's and/or
Innotrac's giving of two (2) days' prior written notice thereof to A. Dorfman.
2.2 Each of the Corporation and Innotrac hereby grants to A. Dorfman
the right and option to sell all, but not less than all, of the Shares in the
Corporation owned by A. Dorfman for an aggregate purchase price of $595,972 (the
"PUT OPTION"). The Put Option may be exercised at any time on or after December
----------
15, 1998, by A. Dorfman's giving of two (2) days' prior written notice thereof
to each of the Corporation and Innotrac. Upon receipt of such notice, the
Corporation and Innotrac shall decide, as between them, which of such entities
shall purchase such Shares.
2.3 The closing of the exercise of either the Put Option or the Call
Option shall occur at the principal office of Innotrac at such date and time as
shall be mutually agreeable to the relevant parties. Against delivery of the
stock certificates representing the Shares to be sold, duly endorsed for
transfer and free and clear of any and all claims, liens, encumbrances, security
interests or rights of others, either the Corporation or Innotrac, as
appropriate, shall deliver the purchase price therefor to A. Dorfman.
2.4 The rights and options granted in SECTIONS 2.1 and 2.2 may not be
exercised at any time unless the purchase and sale of the shares is exempt from
registration under the Securities Act of 1933, as amended (the "1933 ACT") or
--------
any other applicable securities or "Blue Sky" laws, or the shares have been
registered under such laws.
2.5 The options granted pursuant to SECTIONS 2.1 and 2.2 may not be
sold, assigned, pledged, hypothecated, alienated or otherwise disposed of or
transferred in any manner other than by will or the laws of descent or
distribution and may be exercised during the lifetime of Arnold Dorfman only by
him. The terms of the options shall be binding upon the executors,
administrators, heirs, successors and assigns of the parties hereto.
3. VOTING AND LEGEND
3.1 The Shareholders must vote their Shares at all times in such
manner as to effectuate the agreements, covenants, restrictions, and policies of
this Agreement.
-2-
3.2 Each Certificate representing the Shares of the Corporation now
or hereafter issued or now or hereafter acquired by any party or any transferee,
successor, or assignee of any party, shall bear the following legend:
"Transfer of any of the Shares represented by this Certificate
and the exercise of the voting rights of these Shares are
restricted by and entitled to the benefits of a Shareholders
Agreement by and among the Corporation and its Shareholders, a
copy of which may be inspected at the principal office of the
Corporation."
"The Shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended ("the
Securities Act"), or any state securities laws, but have been
acquired by the registered owner hereof for the purpose of
investment and in reliance upon the statutory exemptions
contained in Section 4(2) of the Securities Act and in applicable
state securities laws. The Shares may not be sold, pledged,
transferred, or assigned except in accordance with those Acts and
other applicable state and federal securities laws."
4. AGREEMENT OF CORPORATION
The Corporation agrees for itself and for its successors and assigns:
(a) to be bound by this Agreement; (b) not to transfer, issue, or reissue any of
the Shares in violation of this Agreement or without requiring proof of
compliance with this Agreement; and (c) to place the legend set forth in SECTION
3.2 on all Certificates for the Shares issued by the Corporation during the term
of this Agreement.
5. TERMINATION
This Agreement terminates (a) upon the written agreement of all
parties hereto; (b) upon the dissolution or liquidation of the Corporation, or
the voluntary filing of a petition in bankruptcy by the Corporation, or the
inability of the Corporation to pay its debts as they become due; or (c) at such
time as there is only one remaining Shareholder of the Corporation.
-3-
6. MISCELLANEOUS
6.1 Notices. All notices, demands or other communications required
-------
or permitted to be given or made hereunder shall be in writing and (a) delivered
personally, or (b) sent by pre-paid, first class, certified or registered air
mail, return receipt requested, or (c) by an express courier service, or (d) by
facsimile transmission to the intended recipient thereof, at its address or
facsimile number set out below. Any such notice, demand or communication shall
be deemed to have been duly given immediately (if given or made by confirmed
facsimile), or three days after mailing or the second day after delivery to an
express courier service, and in proving same it shall be sufficient to show that
the envelope containing the same was duly addressed, stamped and posted (or that
the envelope was delivered to the express courier service), or that receipt of a
facsimile was confirmed by the recipient. The addresses and facsimile numbers
of the parties for purposes of this Agreement are:
(i) If to Innotrac c/o Innotrac Corporation
or SellTel #1: 1828 Meca Way
Norcross, Georgia 30093
Facsimile No.: (770) 717-2111
Attention: Scott D. Dorfman
(ii) If to Scott D. Dorfman: c/o Innotrac Corporation
1828 Meca Way
Norcross, Georgia 30093
Facsimile No.: (770) 717-2111
(iii) If to Arnold Dorfman: Ibis Golf & Country Club
8225 Ibis Boulevard
West Palm Beach, FL 33412
Facsimile No.: 561-624-8002
6.2 Governing Law. The validity and effect of this Agreement shall be
-------------
governed by, and construed and enforced in accordance with, the laws of the
State of Georgia.
6.3 Partial Invalidity. All rights and restrictions contained herein
------------------
may be exercised and are applicable and binding only to the extent that they do
not violate any applicable laws and are intended to be limited to the extent
necessary so that they will not render this Agreement illegal, invalid, or
unenforceable. If any term of this Agreement is held to be illegal, invalid, or
unenforceable, it is the intention of the parties that the remaining terms
hereof shall constitute their agreement with respect to the subject matter
hereof, and that all such remaining terms shall remain in full force and effect.
To the extent legally permissible, any illegal, invalid, or unenforceable
provision of this Agreement shall be replaced by a valid provision that will
implement the commercial purpose of the illegal, invalid, or unenforceable
provision.
-4-
6.4 Waiver. No failure on the part of any party hereto to exercise,
------
and no delay in exercising, any right, power, or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power, or remedy by any such party preclude any other or further exercise
thereof or the exercise of any other right, power, or remedy. No express waiver
or assent by any party hereto to any breach of or default in any term or
condition of this Agreement shall constitute a waiver of or an assent to any
succeeding breach of or default in the same or any other term or condition
hereof.
6.5 Further Documents and Actions. The parties must take such
-----------------------------
further actions and execute and deliver such further documents as may be
necessary or convenient from time to time to more effectively carry out the
intent and purpose of this Agreement and to establish and protect the rights and
remedies created or intended to be created hereunder.
6.6 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions of this Agreement are binding upon and inure to the
benefit of the parties hereto, their successors and assigns, including, without
limitation, all subsequent holders of the Shares.
6.7 Headings. The headings as to the contents of particular sections
--------
of this Agreement are inserted only for convenience and may not be construed as
part of this Agreement nor as a limitation on the scope on any of the terms or
provisions hereof.
6.8 Gender. Where the context requires, the use of the singular form
------
herein includes the plural; the use of the plural includes the singular; and the
use of any gender includes any and all genders.
6.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which is deemed an original, and all of which together
constitute one and the same instrument.
6.10 Entire Agreement. This Agreement supersedes all prior
----------------
discussions and agreements between the parties with respect to the subject
matter hereof, and this Agreement contains the sole and entire agreement among
the parties with respect to the matters covered hereby. This Agreement may not
be modified or amended except by an instrument in writing signed by or on behalf
of the parties hereto.
[Signatures Appear on Following Page]
-5-
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
SellTel #1, Inc.
By: /s/ Scott D. Dorfman
---------------------
Scott D. Dorfman, President
/s/ Arnold Dorfman
-------------------
ARNOLD DORFMAN
Innotrac Corporation
By: /s/ Scott D. Dorfman
----------------------
Scott D. Dorfman, President
/s/ Scott D. Dorfman
---------------------
SCOTT D. DORFMAN
-6-