Exhibit 10(m)
INTERACTIVE NETWORKS INCORPORATED
SHAREHOLDERS' AGREEMENT
This Agreement, dated as of April 16, 1993, by and among Interactive
Networks Incorporated, a North Carolina corporation (the "Corporation"), and all
of the undersigned shareholders of the Corporation (collectively referred to as
the "Shareholders").
BACKGROUND STATEMENT
All of the issued and outstanding shares of the Corporation are owned
and held of record by the Shareholders.
The parties hereto desire to promote their mutual interests and the
interests of the Corporation by restricting transfer of the shares of the
Corporation and by imposing certain rights and obligations upon the parties with
respect to the Corporation and said shares.
STATEMENT OF AGREEMENT
In consideration of the premises and of the mutual covenants and
conditions herein contained, the parties agree for themselves, their successors
and assigns as follows:
1. Definitions. When used in this Agreement, the following
terms shall have the following meanings:
(a) "Collateral Shares" means all of the Shares securing an
Investor Group Note which, in the aggregate, equal 1,560,131 Shares.
(b) "Defaulted Note" means an Investor Group Note with respect
to which a Note Default has occurred.
(c) "Defaulting Investor Group Shareholder" means the Investor
Group Shareholder who executed the Defaulted Note.
(d) "Default Shares" means 78% of the Collateral Shares of
each Investor Group Shareholder.
(e) "Fair Market Value" of any noncash consideration offered
for Shares means the sum of (i) the fair market value of such noncash
consideration in the usual sense of that term, plus (ii) the value of
any special benefits to the Offeror of such noncash consideration to
the extent such benefits can be reasonably identified and valued, plus
(iii) the amount of any additional expense or cost (including
additional taxes) incurred by the Offeror in accepting cash instead of
such noncash consideration in each case based upon a realistic
appraisal of noncash consideration, special benefits, expenses, or
costs agreed
upon by the Offeror and the Corporation or by three independent
qualified appraisers selected, respectively, by the Offeror, the
Corporation, and the other two so selected.
(f) "Future Investment" means that loan to the Corporation in
the aggregate amount of $1,600,000 to be made by the Investor Group
Shareholders in the amounts set forth opposite each Investor Group
Shareholder's name on Schedule A attached hereto.
(g) "Investor Group Note" means a Nonrecourse Promissory Note
of even date herewith executed by an Investor Group Shareholder in
favor of the Corporation.
(h) "Investor Group Shareholders" means all of the
Shareholders as of the date hereof except Clearing Systems, Inc., a
Delaware corporation.
(i) "Issue" means all issue, whether natural, adopted, or in
the process of adoption.
(j) "Note Default" means a default in the payment of any
amount due to the Corporation under an Investor Group Note by July 22,
1993 or immediately following successful installation of the
Corporation's "GNS" System in four locations, whichever is later.
(k) "Offeror" means any Shareholder who offers to sell Shares
to any other Shareholder or the Corporation pursuant to Section 4
hereof.
(l) "Purchase Value" means the book value per share of the
Corporation as of the end of the calendar month immediately preceding
the date the Shares are purported to be transferred involuntarily, as
determined in accordance with generally accepted accounting principles
consistently followed by the Corporation for prior periods.
(m) "Related Party" means a spouse, Issue, spouse of Issue, or
ancestor, except that any spouse living separate and apart from the
other spouse with the intention by either to cease their matrimonial
cohabitation is not a Related Party; a trust for the sole benefit of
one or more persons thus defined as a Related Party; or, with respect
to any corporate Shareholders, any shareholder of such corporate
Shareholder on the date of this Agreement.
(n) "Shares" means the issued and outstanding shares of the
common stock of the Corporation together with all shares of the common
stock of the Corporation hereafter issued by the Corporation and any
shares distributed with respect to any Shares in a share split, share
dividend, or other recapitalization.
(o) "Shareholder" means each of the undersigned shareholders
and any other person who shall at any time become a holder of Shares.
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Throughout this Agreement the masculine gender shall be deemed to include the
neutral and the feminine, the singular the plural, and the plural the singular.
Section headings are for the convenience of reference only and shall not be
considered terms of the Agreement.
2. General Restrictions on Transfer.
(a) Each Shareholder agrees that, without the prior written
consent of the other Shareholders, which consent may be withheld in the
sole discretion of the other Shareholders, none of the Shares owned by
him may be transferred, sold, assigned, pledged, hypothecated,
encumbered, donated or otherwise disposed of except in strict
compliance with the terms and provisions of this Agreement.
(b) The Corporation, by its execution of this Agreement,
agrees that it will not cause or permit the transfer of any of the
Shares to be made on its books except in accordance with this
Agreement. The Corporation further agrees not to issue any additional
Shares from the Corporation's authorized but unissued Shares, unless
the person or entity to whom such additional Shares are issued agrees
in writing that he or it, his heirs, and its successors and assigns,
and such additional Shares, shall be subject to and bound by this
Agreement.
3. Transfer to Related Party. Each Shareholder's Shares may be
transferred, during such Shareholder's lifetime to any Related Party of such
Shareholder or by testamentary or intestate transfer if the transferee agrees to
join in and be bound by this Agreement. No further transfer of such Shares shall
be made by such transferee except to the Shareholder who originally owned them
or to a Related Party of such Shareholder who originally owned them, or except
in accordance with the provisions of Section 4 or 5 hereof.
4. Transfer to Outsiders. No Shares shall be transferred voluntarily
except as permitted under Section 3, 6 or 7 hereof or in accordance with the
following provisions:
(a) Any Shareholder intending to transfer any Shares, except
as permitted under Section 3, 6 or 7 hereof, shall first submit to the
Corporation a written offer to sell such shares to the Corporation at
the same price per share and upon the same terms of payment for which
the intended transfer is to be made. Every written offer submitted to
the Corporation in accordance with the provisions of this Section 4(a)
shall continue to be a binding offer to sell until expressly accepted
or rejected by an officer or director of the Corporation acting
pursuant to a resolution adopted by the holders of a majority of the
outstanding Shares entitled to vote on the acceptance or rejection of
such offer or until the expiration of a period of thirty (30) days
after the delivery of such offer to the Corporation and the other
Shareholders, whichever is earlier. Upon delivery to the Corporation
and the other Shareholders of any written offer submitted in accordance
with the provisions of this Section 4(a), any officer or director of
the Corporation, acting before the termination of the offer and
pursuant to a resolution adopted by the holders of a majority
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of the outstanding Shares entitled to vote or acceptance or rejection
of such an offer may bind the Corporation to purchase all or any part
of the Shares so offered.
(b) Upon termination of the offer referred to in subsection
(a) above, the Offeror shall then submit to all of the other
Shareholders written offers to sell, at the same price per share and
upon the same terms of payment previously offered to the Corporation,
any of the offered Shares not purchased by the Corporation, such Shares
to be allocated among such holders pro rata in accordance with the
percentage of Shares then owned by them. Each such offer shall continue
to be a binding offer to sell until expressly accepted or rejected by
the offeree (which acceptance or rejection shall be by notice in
writing to the Offeror and to each of the other Shareholders) or until
the expiration of ten (10) days after its delivery to the offeree,
whichever time is earlier. If any such offeree does not elect to
purchase all of the Shares offered to him, any other such offeree may
purchase all or any part of the unpurchased shares by giving to the
Offeror written notice of his election so to purchase not later than
ten (10) days after the termination of the original offer to the
offeree who did not elect to purchase all such Shares. If more than one
offeree together elect to purchase more than the unpurchased Shares
available, such Shares shall be allocated to such offerees pro rata in
accordance with their then respective holdings of Shares.
(c) Every written offer submitted in accordance with the
provisions of this Section 4 shall specifically name the person or
persons to whom the Offeror intends to transfer the Shares, the number
of Shares that he intends so to transfer to each person, and the price
per share and other terms upon which each intended transfer is to be
made.
(d) If the Corporation and the other Shareholders do not elect
to purchase all of the Shares of the Offeror pursuant to Sections 4(a)
and 4(b) above, no elections to purchase a portion of such shares shall
be effective, and the Offeror shall, for a period of thirty (30) days
thereafter, be free to transfer the offered Shares to the person or
persons named in the offer to sell submitted to the Corporation and the
other Shareholders at a price no less than the price per share and upon
the other terms so named in the written offer.
(e) If any consideration to be received by the Offeror for the
Shares offered is property other than cash, then the price per share
shall be measured to that extent by the Fair Market Value of such
noncash consideration.
(f) The closing of the purchase of Shares of the Offeror
pursuant to this Section 4 shall be held on a date selected by the
Offeror and the purchasers or purchasers of such shares, but no later
than sixty (60) days after the offer to sell submitted pursuant to
Section 4(a) above has been delivered to the Corporation and the other
Shareholders.
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5. Involuntary Transfer. The Corporation shall have the option to
purchase, at the Purchase Value, any Shares that are purported to be transferred
involuntarily, including, without limitation, any Purported transfer by or
pursuant to bankruptcy, attachment, divorce, equitable distribution, or
operation of law, but excluding a transfer upon death. An officer or director of
the Corporation acting pursuant to a resolution adopted by the Board of
Directors may exercise this option by giving written notice to the Shareholders
and to the purported transferee at any time within three (3) months after the
Corporation receives written notice of such purported transfer. The purchase
price shall be paid in full in cash to the Shareholder no later than the date
six (6) months after the date the Corporation exercises the option.
6. Note Default. Upon the occurrence of a Note Default, the Defaulting
Investor Group Shareholder shall submit to all of the other Investor Group
Shareholders written offers to assign the Defaulted Note and convey all or a
portion of the Collateral Shares to the other Investor Group Shareholders in
exchange for the assumption of all or a portion of the obligations of the
Defaulting Investor Group Shareholder under the Defaulted Note, the assignment
of the Defaulted Note and the conveyance of the Collateral Shares to be
allocated among the other Investor Group Shareholders on the basis of the
percentage of Shares then owned by them. Each such offer shall continue to be a
binding offer to assign the Defaulted Note and convey all of the Collateral
Shares until expressly accepted or rejected by the offeree (which acceptance or
rejection shall be by notice in writing to the Defaulting Investor Group
Shareholder and to each of the other Investor Group Shareholders) or until the
expiration of twenty (20) days after its delivery to the offeree, whichever time
is earlier. If any such offeree does not elect to assume the obligations of the
Defaulting Investor Group Shareholder under the Defaulted Note offered to him,
any other offeree may assume all or any part of such unassumed obligations under
the Defaulted Note by giving to the Defaulting Investor Group Shareholder
written notice of his election so to assume not later than ten (10) days after
the termination of the original offer to the offeree who did not elect to assume
all such obligations offered to him. If such offerees elect to assume more of
the obligations of the Defaulting Investor Group Shareholder under the Defaulted
Note than are available, such Defaulted Note (and Collateral Shares) shall be
allocated to such offerees in accordance with the allocation agreed upon by such
offerees or, in the absence of such agreement, in proportion to their then
respective holdings of Shares. Every written offer submitted in accordance with
the provisions of this Section 7 shall specifically name the amount of the
obligation of the Defaulting Investor Group Shareholder under the Defaulted Note
and the number of Collateral Shares. Alternatively, at the option of the
Defaulting Investor Group Shareholder and with the consent of a majority in
interest of the Investor Group Shareholders, the Defaulting Investor Group
Shareholder may direct the Corporation to sell such portion of his Collateral
Shares as shall be necessary to satisfy his Note to an identified third party or
parties, and, upon completion of the sales, the remaining Collateral Shares
shall be released by the Corporation to the Defaulting Investor Group
Shareholder; provided, that no sale of Collateral Shares may be made except in
compliance with applicable federal and state securities laws. it is the
intention of the Investor Group Shareholders that they will cooperate with each
other in such sales so as to sell Shares pro rata in accordance with their
respective shareholdings.
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7. Future Investment. Each Investor Group Shareholder shall be
obligated on October 22, 1993 or three months following the profitable (in
accordance with generally accepted accounting principles) installation of the
Corporation's "GNS" System in four locations, whichever is later; either (i) to
make his portion of the Future Investment in the form of a loan to the
Corporation (in the amount set forth on Schedule A) or (ii) to arrange for
another person or entity to acquire Shares as contemplated by this Section
and/or to lend to the Corporation a sum equal to or greater than said Investor
Group Shareholder's portion of the Future Investment. An Investor Group
Shareholder may, with the consent of the majority in interest of the other
Investor Group Shareholders (based upon their holdings of Shares), surrender any
or all of his Shares to the Corporation for sale to any other person or entity,
regardless of whether or not such person or entity is a Shareholder at the time
of such transfer, in connection with such Shareholder's making or arranging for
said other person's or entity's making his portion of the Future Investment, in
which case the price received by the Corporation for such Shares will be deemed
to be a portion of the Shareholder's Future Investment; provided, that no sale
of Collateral Shares may be made except in compliance with applicable federal
and state securities laws. It is contemplated that the Investor Group
Shareholders will cooperate with each other in raising additional funds for the
Corporation to the extent they elect not to lend funds to the Corporation
themselves and that their shareholdings will be diluted on a pro rata basis with
respect to any sales of Shares in connection with such efforts without dilution
of the percentage shareholdings of Clearing Systems, Inc. If any Investor Group
Shareholder does not lend or obtain his or her loan for the Corporation, he or
she will forfeit to the Corporation such percentage of the Default Shares as
shall equal the percentage of his or her loan not provided, whereupon such
Investor Group Shareholder's obligations under this section shall terminate.
8. Pledge as Collateral. The provisions of Section 4 shall not apply to
the bona fide, good faith pledge of any Shares as collateral for a loan, but the
provisions of Section 5 shall apply to any attempted sale or other disposition
of Shares under any such pledge (whether by foreclosure, consent, public or
private sale, or otherwise) otherwise than in accordance with this Agreement.
9. Transferees. Every transferee of Shares that are transferred in
accordance with the provisions of this Agreement shall be deemed a Shareholder
and all such transferees shall be bound by all of the provisions of this
Agreement. Any purported or attempted transfer of Shares that does not comply
with the provisions of this Agreement shall be null and void and the purported
transferee shall not be deemed to be a Shareholder of the Corporation and shall
not be entitled to vote the Shares or to receive a stock certificate or any
dividends or other distributions on or with respect to such Shares. For the
purposes of this Agreement, a purported transfer of Shares that causes such
shares to be subject to an option under Section 4 shall be deemed to comply with
the provisions of this Agreement only after the expiration of such option.
10. Management of the Corporation. So long as he owns Shares, each
Shareholder agrees to vote his Shares to require that, in order to be effective,
any action by the Board of Directors of the Corporation, including, without
limitation, any amendment of the Bylaws of the
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Corporation, must receive the approval of the greater of (i) a majority of the
directors then constituting the Board of Directors of the Corporation or (ii)
four of the directors of the Corporation.
11. Share Certificates. Every certificate representing Shares of the
Corporation shall bear the following legend prominently displayed:
"The shares represented by this certificate, and the transfer thereof,
are subject to the provisions of that certain Shareholders' Agreement,
dated as of April 16, 1993, a copy of which is on file in, and may be
examined at, the principal office of the Corporation."
12. Cumulative Voting For Directors. During the term of this Agreement,
the parties hereto agree that each shareholder entitled to vote at an election
of directors shall have the right to cast the number of votes he is entitled to
cast for as many persons as there are directors to be elected, or to cumulate
his votes by giving one candidate as many votes as the number of directors to be
elected multiplied by the number of his votes shall equal, or by distributing
such votes on the same principle among any number of such candidates. This right
of cumulative voting shall not be exercised unless (a) the meeting notice or
proxy statement accompanying the notice states conspicuously that shareholders
are entitled to cumulate their votes, or (b) each shareholder or proxy who has
the right to cumulate his votes announces in open meeting, before the voting for
the directors starts, his intention to vote cumulatively; and if such
announcement is made, the chair shall declare that all shares entitled to vote
have the right to vote cumulatively and shall announce the number of votes
represented in person and by proxy and shall thereupon grant a recess of a
reasonably sufficient period of time in order to allow all shareholders to vote
cumulatively. This right of cumulative voting further shall not be effective
after termination of this Shareholders' Agreement. The parties further agree
that the first sentence of Article III, Section 2 of the Bylaws of the
Corporation will not be amended without the consent of eighty percent (80%) of
the Shareholders during the term of this Agreement.
13. Issuance of Additional Shares. The parties hereto agree that the
Corporation shall not issue any additional Shares, or any other securities
convertible into Shares, if more than one director of the Corporation votes
against such issuance unless (a) a majority of the directors of the Corporation
approve the issuance of such additional Shares or securities, and (b) such
shares are first offered by the Corporation to the existing shareholders pro
rata in accordance with the percentage of Shares then owned by them at the same
price and on the same terms as the Shares or securities are otherwise proposed
to be issued. This Section 13 shall not apply to any issuance of shares in
connection with Sections 6 and 7 hereof.
14. Shareholders' Meetings. During the term of this Agreement, all
meetings of shareholders of the Corporation shall be held within the states of
Connecticut, New York and North Carolina unless each holder of record of more
than 5% of the then outstanding shares of the Company shall consent to some
other location.
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15. Validity and Enforceability. Each Shareholder agrees that each and
every provision of this Agreement is reasonably necessary for the protection of
the rights and interests of each Shareholder and his heirs, successors or
assigns and that monetary damages may not be an adequate remedy for a breach of
this Agreement. Accordingly, and without limiting the generality of the
foregoing statement, should any dispute arise concerning the sale or other
disposition or transfer of any of the Shares by him, each Shareholder consents
and agrees that an injunction may be issued to restrain any such sale or
disposition pending the determination of such controversy. In the event of any
controversy concerning the right of any Shareholder or the Corporation to
purchase any Shares subject to this Agreement, such right to purchase shall be
enforceable in a court of competent jurisdiction by a decree of specific
performance. Notwithstanding the entitlement of any Shareholder or the
Corporation to the remedy of specific performance, such remedy shall be in
addition to, and not in limitation of, any other rights and remedies at law or
in equity that any Shareholder or the Corporation may have.
16. Notices. All notices, offers, acceptances, requests and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered in person or if mailed by prepaid certified or
registered mail, return receipt requested, to the Corporation (Attention: Board
of Directors) at its principal office or such other address of which the
Corporation shall notify the Shareholders pursuant to this Section 15, and to
each Shareholder at his most recent address appearing in the records of the
Corporation or such other address of which he shall notify the Corporation
pursuant to this Section 16.
17. Binding Effect. The terms of this Agreement shall be binding upon
the parties hereto and their respective personal representatives,
administrators, executors, legatees, heirs, successors and assigns. No party may
assign any of his rights or obligations under this Agreement without the written
consent of the Corporation and each person who is then an owner of any Shares.
This Agreement shall be binding upon any person to whom any of the Shares
subject hereto are transferred in violation of the provisions of this Agreement,
and the personal representatives, administrators, executors, legatees, heirs,
successors and assigns of such person.
18. Amendment, Modification and Termination. This Agreement may be
amended or modified at any time or times by the mutual written agreement of the
Corporation and Shareholders holding not less than eighty percent (80%) of the
outstanding Shares; provided, however, that the mutual written agreement of the
Corporation and all of the Shareholders shall be required to amend or modify
Section 6 hereof. No such amendment or modification, however, shall affect the
right of any party to receive, or the obligation of any party to pay, upon the
terms and conditions of this Agreement, the purchase price for Shares sold
pursuant to this Agreement prior to such amendment or modification. This
Agreement shall terminate automatically and without any further action by any
party upon the earliest of: (i) the effective date of a registration statement
filed under the Securities Act of 1933, as amended, pursuant to which a public
offering of capital stock of the Corporation is to be made; (ii) a sale of all
of the outstanding Shares or substantially all of the assets of the Corporation;
(iii) a vote to terminate this Agreement by
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Shareholders holding not less than eighty percent (80%) of the outstanding
Shares; or (iv) 10 years from the date of this Agreement.
19. Dispute Resolution. Before a Shareholder commences a legal action
arising out of or relating to this Agreement, he shall notify the other
Shareholders and the Board of Directors of the Corporation in writing of his
intention to commence an action and of the basis for the action and, except as
hereinafter provided, shall not commence an action for at least 30 days after
such written notification. During such 30-day period, the Shareholders shall
make reasonable and good faith efforts to resolve the dispute that is the
subject of the threatened action, by means of nonbinding arbitration or a
similar nonbinding procedure. Notwithstanding the foregoing, either Shareholder
may commence an action during the aforesaid 30-day period for the purpose of
obtaining a preliminary injunction to preserve the status quo during the 30-day
period.
20. Entire Agreement. This Agreement constitutes the entire agreement
among the parties pertaining to the matters addressed herein and supersedes all
prior agreements and understandings, oral and written, if any there be, with
respect thereto.
21. Severability. If any provision of this Agreement is declared to be
invalid for any reason or to have ceased to be binding on the parties hereto,
such provision shall be severed, and all other provisions herein shall continue
to be effective and binding.
22. Governing Law. This Agreement may be executed in counterparts and
shall be subject to and governed by the laws of the State of North Carolina.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date hereof.
INTERACTIVE NETWORKS INCORPORATED
[Corporate Seal] By:
Title:
Attest:
Secretary
[Corporate Seal] SHAREHOLDERS:
CLEARING SYSTEMS, INC.
ATTEST:
By:
Title:
Secretary
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(SEAL)
L. Richardson Preyer, Jr.
(SEAL)
Haynes G. Griffin
(SEAL)
Stephen R. Leeolou
(SEAL)
William R. Emerson, Jr.
(SEAL)
Peter B. Ruffin, Jr.
(SEAL)
Thomas B. Hubbard, III
(SEAL)
Richard P. Ludington
(SEAL)
Henry Sloan
(SEAL)
Edward N. Boehm
(SEAL)
Steve Carlson
(SEAL)
William H. Blount
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(SEAL)
Theodore H. Koenig
(SEAL)
Robert F. Hutchens
(SEAL)
Charles Lowe
(SEAL)
Chris Lowe
SIGNATURE PAGE TO SHAREHOLDERS' AGREEMENT DATED APRIL 16, 1993
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SCHEDULE A
Shareholder Amount of Loan
L. Richardson Preyer, Jr. $186,747
Haynes G. Griffin 186,747
Stephen R. Leelou 186,747
William P. Emerson, Jr. 168,072
Peter B. Ruffin, Jr. 168,072
T. R. Hubbard III 186,747
Olivia M. Ludington 62,249
Edward N. Boehm 87,149
Steve Carlson 62,249
William H. Blount 62,249
Marilyn M. Koenig 62,249
Robert F. Hutchens 37,349
Charles Lowe 60,420
Chris Lowe 53,659
Henry Sloan 29,296
SHA
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