1
EXHIBIT 10.18
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT ("the Agreement") is entered into as of the
18th day of March, 1997 by and between C3, INC., a North Carolina corporation
(the "Company"), C. ERIC HUNTER ("Hunter") and GENERAL ELECTRIC PENSION TRUST
("GEPT").
WHEREAS, GEPT desires to purchase certain shares of 1997 Series B
Preferred Stock ("the Series B Preferred Stock") pursuant to the Summary of the
Offering of the Company dated January 3, 1997, which Series B Preferred Stock is
convertible into shares of common stock of the Company ("Common Stock") as set
out in the Company's Articles of Incorporation; and
WHEREAS, Hunter is the sole and direct owner of 592,680 shares of common
stock of the Company, which shares constitute a majority of the issued and
outstanding voting shares of the Company; and
WHEREAS, the Company, Hunter and GEPT believe that it would be in the best
interests of the Company if they agree, as provided in this Agreement, on
certain matters relating to the Company and its management.
NOW, THEREFORE, in consideration of the premises hereto and of the mutual
covenants and agreements contained herein, the parties agree as follows:
1. Election of Directors.
(a) At all times before (i) the Company effects its initial public
offering pursuant to the Securities Act of 1933, as amended (the "Act"), and,
(ii) for so long as GEPT shall be the beneficial owner of any Series B Preferred
Stock or Common Stock issued upon conversion of the Preferred Stock, Hunter
shall (i) vote all of his shares of Common Stock in person or by proxy to cause
the Company not to increase the size of the Board of Directors of the Company
without the consent of GEPT and (ii) vote all his shares of Common Stock in
person or by proxy for the election of one person designated by GEPT to serve as
director. IF GEPT fails to designate a person for election as director in any
specific election, Hunter agrees to vote all of his shares to re-elect the
person previously designated by GEPT. GEPT shall have the right, upon written
request to Hunter, to require Hunter to request that the Company call a special
meeting of shareholders at any time and from time to time, for the sole purpose
of removing from the Board of Directors of the Company, such director originally
designated by it, and in such event, Hunter shall vote all of his Common Stock
in person or by proxy to effect the removal from the Board of Directors of the
Company of the person designated for such removal from the Board of Directors by
GEPT and to elect as director of the Company the person designated by GEPT as
replacement thereof. Hunter agrees that for so long as the provisions of this
Section 1(a) are effective, he will not transfer his Common Stock without
requiring the transferee to be bound to the provisions of this Section 1(a). The
Company agrees that it will not issue after the date hereof, any new voting
securities without first obtaining
2
the written consent of the purchaser or transferee of such voting securities to
be bound by the terms hereof, as if a party hereto, if as a result of such
issuances of voting securities, the aggregate shares of voting securities owned
by Hunter would represent less than a majority of the outstanding voting
securities of the Company.
(b) At any time after (i) the Company effects its initial
registered public offering pursuant to the Act, and, (ii) for so long as GEPT
shall be the beneficial owner of any Preferred Stock or Common Stock issued upon
the conversion of the Preferred Stock, the Company (a) will nominate and
recommend as candidate for election to the Board of Directors of the Company one
person designated by GEPT and reasonably acceptable to the Board of the Company
(the "Designee") and (b) will not increase the size of the Board of Directors of
the Company without the consent of GEPT, which consent shall not be unreasonably
withheld. If at any time such Designee is not a member of the Board of Directors
of the Company, (i) the Company will notify such Designee, concurrently with
notice given to members of the Board of Directors of the Company, of all
meetings of the Board of Directors, and, as soon as available, will provide to
such Designee all reports, financial statements or other information distributed
to the Board of Directors of the Company, (ii) the Company will permit such
Designee to attend all such meetings of the Board of Directors as an observer
and to participate as an elected member with all rights of an elected member,
voting excepted, and (iii) the Company will permit GEPT, or any person designed
by GEPT in writing to be acting on its behalf, to visit and inspect any of the
properties of the Company and to discuss the affairs, finances and accounts of
the Company with the principal officers and the auditors of the Company, all at
such reasonable time during business hours and as often as GEPT may reasonably
request.
2. Proposed Amendments to the Articles of Incorporation. The Company
shall submit the amendment to the Articles of Incorporation set out on Exhibit A
for approval by the shareholders as soon as possible after the date hereof.
Hunter shall vote all of his shares of Common Stock in favor of amending the
Articles of Incorporation of the Company as set out on Exhibit A attached
hereto.
3. Binding Effect and Benefit. This Agreement shall be binding upon,
and inure to the benefit of the Company, Hunter and GEPT and their respective
successor and assigns. The stock certificates representing the shares owned by
Hunter shall bear a legend acknowledging the existence of the voting provisions
set forth in this Agreement.
4. Waivers, Entire Agreement, Modifications. No party shall be deemed
to waive any rights hereunder, unless such waiver be in writing and signed by
him. A waiver in writing on one occasion shall not be construed as a consent to
or a waiver of any right or remedy on any future occasion. This writing contains
the full, final and exclusive statement of the agreement of the parties hereto
with respect to the matters contained herein, and no promises, agreements or
representations shall be binding upon any of the parties unless set forth
herein. This Agreement may be amended or modified in whole or in part only by an
instrument in writing signed by the Company, Hunter, and by GEPT.
2
3
5. Governing law, Construction. This Agreement shall be governed by and
construed and enforced in accordance with the law of North Carolina. Wherever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision thereof
shall be prohibited by or invalid under any such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating or nullifying the remainder of such provision or any other
provisions of this Agreement.
6. Termination. This Agreement shall terminate upon the first to occur
of (a) the date upon which GEPT ceases to be the beneficial owner of any
Preferred Stock or Common Stock, or (b) the tenth anniversary of the date of
this Agreement.
IN WITNESS WHEREOF, the undersigned hereby execute this Shareholders
Agreement as of the 18th day of March, 1997.
C3, INC.
By: /s/ Jeff N. Hunter
-------------------------------
Jeff N. Hunter, President
THE TRUSTEES OF THE GENERAL
ELECTRIC PENSION TRUST
By: /s/ Alan M. Lewis
-------------------------------
Alan M. Lewis, Trustee
/s/ C. Eric Hunter
----------------------------------
C. Eric Hunter
3