Exhibit 10.3
TULIX SYSTEMS, INC.
SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement (the "Agreement") is made as of May 31, 2004
by and among Tulix Systems, Inc., a Georgia corporation (the "Company"), HomeCom
Communications, Inc., a Delaware corporation ("HomeCom"), and the holders of the
Company's Common Stock, $.01 par value (the "Common Stock"), listed on Schedule
1 attached hereto (the "Founding Shareholders").
RECITALS
A. HomeCom and the Company, and for purposes of Section 9(b) thereof, the
Founding Shareholders, are parties to that certain Asset Purchase Agreement,
dated as of March 27, 2003 (the "Asset Purchase Agreement"), pursuant to which
HomeCom has sold to the Company, and the Company has purchased from HomeCom,
substantially all of the assets used in the operation of HomeCom's hosting and
website maintenance business in exchange for consideration that includes, among
other things, fifteen percent (15%) of the outstanding shares of Common Stock.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereto agree as follows:
1. Certain Defined Terms. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "HomeCom Holder" shall mean HomeCom and those direct and indirect
transferees, assignees and successors of HomeCom that own shares of Common Stock
of record at the relevant time. The transferees, assignees and successors of
HomeCom that shall be considered "HomeCom Holders" for purposes of this
Agreement shall be limited to the first five (5) direct or indirect transferees,
assignees and successors of HomeCom.
(b) "Initial Public Offering" shall mean the closing of the sale of
the Company's Common Stock in a firm commitment, underwritten public offering
registered under the Securities Act of 1933, as amended, (other than a
registration relating solely to a transaction under Rule 145 under such Act or
any successor thereto or to an employee benefit plan of the Company).
(c) "Securities" shall mean and include all shares of capital stock of
the Company, any shares of capital stock of the Company or another entity that
may be issued in exchange for or in respect of shares of capital stock of the
Company (whether pursuant to stock split, stock dividend, combination,
reclassification, reorganization, or any other means), and any right or
instrument that contains any feature, conditional or otherwise, whereby any
shares of such capital stock of the Company may be obtained.
(d) "Shareholders" shall mean the HomeCom Holders and the Founding
Shareholders.
(e) "Shareholder's Pro Rata Percentage" shall mean, at any time, that
percentage calculated by dividing the number of shares of Common Stock held by a
Shareholder by the aggregate number of shares of Common Stock held by all
Shareholders at such time.
(f) "Shares" shall mean and include all Securities now owned or
hereafter acquired by the Shareholders.
2. Right of First Offer.
(a) General. Subject to the terms and conditions specified in this
Section 2, the Company hereby grants to the Shareholders a right of first offer
with respect to future sales by the Company of its Securities ("Later
Securities"). A Shareholder who chooses to exercise the right of first offer may
designate as purchasers under such right itself or its affiliates in such
proportions as it deems appropriate.
(b) Mechanics. Each time the Company proposes to offer any Later
Securities, the Company shall first make an offering of such Later Securities to
the Shareholders in accordance with the following provisions:
(i) The Company shall give written notice ("Offer Notice") to
each Shareholder stating (A) its bona fide intention to offer such Later
Securities, (B) the number of such Later Securities to be offered, (C) the price
and terms, if any, upon which it proposes to offer such Later Securities, and
(D) such Shareholder's respective Shareholder's Pro Rata Percentage.
(ii) Within twenty (20) calendar days after receipt of the Offer
Notice, each Shareholder may elect, by written notice to the Company (the "Reply
Notice"), to purchase or obtain, at the price and on the terms specified in the
Offer Notice, up to that number of such Later Securities determined by
multiplying such Shareholder's Pro Rata Percentage by the total number of Later
Securities specified in the Offer Notice. The Company shall sell to each
Shareholder the number of Later Securities specified in each Shareholder's Reply
Notice promptly following receipt of such Reply Notice.
(iii) In the event that some Shareholders do not elect to fully
subscribe for any Later Securities during the period specified in Section
2(b)(ii) above, the Company shall deliver, promptly upon the expiration of the
period specified in Section 2(b)(ii) above, a notice (the "Second Offer Notice")
to the Shareholders who have elected to purchase Later Securities in accordance
with the provisions of Section 2(b)(ii) (the "Subscribing Shareholders"), which
Second Offer Notice shall state (A) the number of unsubscribed Later Securities
and (B) the number of such unsubscribed Later Securities that each Subscribing
Shareholder is entitled to purchase, which number shall be calculated for each
Subscribing Shareholder by multiplying the number of unsubscribed Later
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Securities by a fraction, the numerator of which is the number of Later
Securities for which such Subscribing Shareholder subscribed pursuant to Section
2(b)(ii) above and the denominator of which is the total number of Later
Securities for which all Subscribing Shareholders subscribed pursuant to Section
2(b)(ii) above. Within ten (10) calendar days after receipt of the Second Offer
Notice, each Subscribing Shareholder shall give written notice to the Company
specifying the number of unsubscribed Later Securities that such Subscribing
Shareholder elects to purchase, and the Company shall sell such number of Later
Securities to such Subscribing Shareholder promptly after receipt of such
notice.
(c) The Company may, during the ninety (90) calendar day period
following the expiration of both of the periods referenced in subsections
2(b)(ii) and 2(b)(iii) hereof, offer the remaining unsubscribed portion of the
Later Securities to any person or persons at a price not less than, and upon
terms no more favorable to the offeree than, those specified in the Offer
Notice. If the Company does not enter into an agreement for the sale of the
Later Securities within such period, or if such agreement is not consummated
within ninety (90) calendar days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Later Securities shall not be
offered unless first reoffered to the Shareholders in accordance herewith.
(d) The right of first offer granted pursuant to this Section 2 shall
not apply to the issuance of any Exempt Securities, as that term is defined in
Section 4(b) below.
3. Right of Co-Sale.
(a) The Shareholders shall not sell, assign, transfer, pledge,
hypothecate, mortgage, encumber or dispose of all or any of their Shares except
to the other Shareholders, to the Company or as expressly provided in this
Agreement.
(b) Notwithstanding the foregoing paragraph (a), each Shareholder may
transfer all or any of its Shares on one or more occasions (i) by way of gift to
any member(s) of his family or to any trust or custodianship for the benefit of
any such family member(s) or the Shareholder, provided that any such transferee
shall agree in writing with the Company and the Shareholders, as a condition to
such transfer, to be bound by all of the provisions of this Agreement to the
same extent as if such transferee were a Shareholder (unless such transferee is
a transferee of HomeCom not entitled to rights as a HomeCom Holder pursuant to
Section 1(a)), (ii) by will or the laws of descent and distribution, in which
event each such transferee shall be bound by all of the provisions of this
Agreement to the same extent as if such transferee were a Shareholder (unless
such transferee is a transferee of HomeCom not entitled to rights as a HomeCom
Holder pursuant to Section 1(a)), or (iii) by pledge of the Shares to any lender
or creditor, provided that the restrictions set forth in Section 3 hereof shall
apply in connection with any sale of such Shares upon foreclosure or acceptance
of such Shares in lieu of foreclosure, or (iv) if the transferring Shareholder
is a HomeCom Holder, by transfer of any or all of such HomeCom Holder's Shares
on one or more occasions to a person that is, or upon completion of such
transfer will be, a HomeCom Holder, provided that each HomeCom Holder shall be
bound by all the provisions of this Agreement. As used herein, the word "family"
shall include any spouse, lineal ancestor or descendant (natural or adopted),
brother or sister, or their spouses.
(c) If at any time a Shareholder (a "Selling Shareholder") desires to
sell all or any part of the Shares owned by him (the "Selling Shareholder
Shares") to any person or entity other than one or more of the other
Shareholders (the "Purchaser") and other than pursuant to Section 3(b) above (an
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"Offer"), such Selling Shareholder shall give written notice of such proposed
sale or transfer to all of the Shareholders (the "Co-Sale Notice"), which
Co-Sale Notice shall identify the Purchaser and specify the number of Selling
Shareholder Shares, the price and the payment terms of the proposed sale. Each
of the other Shareholders shall have the right to sell to the Purchaser, as a
condition to such sale by the Selling Shareholder, at the same price per share
and on the same terms and conditions as involved in such sale by the Selling
Shareholder, a number of Shares calculated by multiplying (i) the total number
of Selling Shareholder Shares by (ii) such Shareholder's respective
Shareholder's Pro Rata Percentage.
(d) Each Shareholder wishing to so participate in any sale under this
Section 3 (a "Participating Shareholder") shall notify the Selling Shareholder
in writing of such intention as soon as practicable after such Shareholder's
receipt of the Co-Sale Notice delivered pursuant to Section 3(c), and in any
event within twenty (20) calendar days after the date of receipt of such Co-Sale
Notice from the Selling Shareholder, with such Participating Shareholder's
notice to specify the number of Shares to be sold by the Participating
Shareholder.
(e) In the event that some Shareholders do not elect to fully
participate in the Offer during the period specified in Section 3(d) above, the
Selling Shareholder shall deliver a notice (the "Second Co-Sale Notice") to the
Participating Shareholders, which Second Co-Sale Notice shall state (A) the
aggregate number of Shares that the Shareholders were eligible to sell pursuant
to Section 3(c) but did not elect to sell (the "Unsold Shares") and (B) the
number of Unsold Shares that each Participating Holder is entitled to sell to
Purchaser, which number shall be calculated by multiplying the number of Unsold
Shares by a fraction, the numerator of which is the number of Shares that each
Participating Shareholder elected to sell to Purchaser pursuant to Section 3(d)
above and the denominator of which is the aggregate number of Shares that all
Participating Shareholders elected to sell to Purchaser pursuant to Section 3(d)
above. Within ten (10) calendar days after receipt of the Second Co-Sale Notice,
each Participating Shareholder shall give written notice to the Company
specifying the number of Unsold Shares that such Participating Shareholder
elects to sell to Purchaser.
(f) Following the expiration of both of the periods referred to in
Section 3(d) and Section 3(e), or at such earlier time as the Selling
Shareholder, the Participating Shareholders and the Purchaser may agree upon,
the Selling Shareholder and each Participating Shareholder shall sell to the
Purchaser all or, at the option of the Purchaser, any part of the Shares
proposed to be sold by them at not less than the price and upon other terms and
conditions, if any, not more favorable to the Purchaser than those in the Offer
provided by the Selling Shareholder under Section 3 above; provided, however,
that any purchase of less than all of such Shares by the Purchaser shall be made
from the Selling Shareholder and each Participating Shareholder pro rata based
upon the relative amount of the Shares that the Selling Shareholder and each
Participating Shareholder had decided to sell after complying with Section 3(c),
Section 3(d) and Section 3(e).
(g) Any Shares sold by a Shareholder to a Purchaser pursuant to this
Section 3, other than Shares transferred pursuant to Section 3(b), shall no
longer be subject to the restrictions imposed by this Agreement and shall no
longer be entitled to the benefits conferred by this Agreement.
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4. Anti-Dilution Protection.
(a) In the event that the Company shall, at any time or from time to
time after the date hereof, sell or issue any Securities (any sale or issuance
of Securities other than pursuant to clauses (i) or (ii) below being referred to
herein as a "Subsequent Issuance") other than issuances (i) of Exempt Securities
as defined in subsection (b) immediately below, or (ii) to Shareholders pursuant
to rights of first offer granted pursuant to Section 2 hereof, unless, in such
instance, the only Securities being issued pursuant to Section 2 are being
issued to Founding Shareholders, in which case the issuance of such Securities
shall be considered a Subsequent Issuance, then, upon each Subsequent Issuance,
the Company shall issue to the HomeCom Holders additional shares of Common Stock
such that the aggregate ownership interest of the HomeCom Holders shall remain
at fifteen percent (15.0%) of the outstanding shares of Common Stock, on a
fully-diluted basis. In such instances, the Company will issue to each HomeCom
Holder a number of shares of Common Stock calculated by multiplying the total
number of shares to be issued by the Company to all the HomeCom Holders by a
fraction, the numerator of which is the number of Shares held by such HomeCom
Holder and the denominator of which is the number of Shares held by all HomeCom
Holders at such time. For purposes of this Agreement, the term "fully-diluted"
shall mean the number of shares of Common Stock outstanding plus the number of
shares of Common Stock then issuable upon conversion or exercise of all
outstanding Securities.
(b) Exempt Securities. The following issuances of Securities ("Exempt
Securities") shall not be a considered Subsequent Issuances for purposes of
Section 4(a) above or issuances of Later Securities for purposes of Section 2
above: (i) the issuance or sale of Securities (and options, warrants or other
rights therefor) to employees, consultants, advisors and directors, pursuant to
plans or agreements approved by the board of directors for the primary purpose
of soliciting or retaining their services or compensating them for their
services; (ii) the issuance of Securities (and options, warrants or other rights
therefor) to customers, business partners, financial institutions or lessors in
connection with bona fide commercial credit arrangements, equipment financings,
or similar transactions for primarily other than equity financing purposes,
provided, however, that the aggregate amount of Exempted Securities issuable
pursuant to the exemptions provided by subsections (i) and (ii) above shall not
exceed the number of shares equal to eight percent (8%) of the number of shares
of Common Stock that are outstanding on the date hereof; (iii) the issuance or
sale of Securities pursuant to the consummation of an Initial Public Offering;
(iv) the issuance of Securities in connection with a bona fide business
acquisition by the Company of another business entity or technologies or
pursuant to a strategic partnership or other business transaction, combination
or relationship; (v) the issuance of securities in connection with a negotiated
"equity financing" in which the Company agrees to sell Securities to an equity
investor or a group of equity investors for cash consideration, provided,
however, that this exclusion shall not apply if a majority of Securities to be
purchased by the group of equity investors would be purchased by Founding
Shareholders; or, (vi) the issuance of Securities in connection with any stock
split, stock dividend, recapitalization, or similar transaction by the Company.
5. Financial Information and Inspection Rights. For so long as HomeCom
Holders continue to own at least twenty-five percent (25%) of the shares of
Common Stock issued to the HomeCom Holders on the date hereof, the Company shall
permit the HomeCom Holders, at the HomeCom Holders' expense, to visit and
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inspect the Company's properties, to examine its books of account and records
and to discuss the Company's affairs, finances and accounts with its officers,
all at such reasonable times as may be requested by the HomeCom Holders;
provided, however, that the Company shall not be obligated pursuant to this
Section 5 to provide access to any information which it reasonably considers to
be a trade secret or similar confidential information and provided, further,
that the HomeCom Holders shall not be entitled to exercise the inspection rights
granted pursuant to this Section 5 more than two times per year. In addition,
the Company shall provide to the HomeCom Holders, upon the written request of
any HomeCom Holder, with copies of the Company's unaudited financial statements,
including a balance sheet, an income statement, and a statement of cash flows
(the "Financial Statements"); provided, however, that the Company shall be
obligated to provide the Financial Statements to the HomeCom Holders not more
than two times per year.
6. Term. This Agreement shall terminate (a) upon the mutual agreement of
the HomeCom Holders and the Founding Shareholders or (b) the fifth anniversary
of the date of this Agreement, whichever occurs first.
7. Specific Enforcement. The parties expressly agree that the HomeCom
Holders will be irreparably damaged if this Agreement is not specifically
enforced. Upon a breach or threatened breach of the terms, covenants and/or
conditions of this Agreement by the Company or any Shareholder, the HomeCom
Holders shall, in addition to all other remedies, be entitled to a temporary or
permanent injunction, without showing any actual damage, and/or a decree for
specific performance, in accordance with the provisions hereof.
8. Legend. Each certificate evidencing the Shares of the Shareholders shall
bear a legend substantially as follows:
"The shares represented by this certificate are subject to restrictions on
transfer and may not be sold, exchanged, transferred, pledged, hypothecated
or otherwise disposed of except in accordance with and subject to all the
terms and conditions of a certain Shareholders' Agreement dated as of May
31, 2004, a copy of which the Company will furnish to the holder of this
certificate upon request and without charge."
9. Notices. Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed given only if delivered personally or sent by facsimile, air
courier, telegram or by registered or certified mail, postage prepaid, as
follows:
If to the Company:
Tulix Systems, Inc.
3495 Piedmont Road
Suite 110
Atlanta, GA 30305
(404) 237-4646
(404) 233-1977 (facsimile)
Attn: Timothy R. Robinson
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If to HomeCom:
HomeCom Communications, Inc.
3495 Piedmont Road, Suite 110
Atlanta, GA 30305
Attn: President
(404) 237-4646 (404) 233-1977 (facsimile)
With a copy, which shall not constitute notice, to:
Sutherland Asbill & Brennan LLP
First Union Plaza, Suite 2300
999 Peachtree Street, N.E.
Atlanta, GA 30309-3996
Attn: Wade H. Stribling, Esq.
(404) 853-8000 (404) 853-8806 (facsimile)
or to such other address as the addressee may have specified on the signature
pages hereto or in a notice duly given to the sender as provided herein. Such
notice, request, demand, waiver, consent, approval or other communication will
be deemed to have been given as of the date so delivered, transmitted by
facsimile, telegraphed, sent via air courier, or mailed, as the case may be.
10. Entire Agreement and Amendments. This Agreement and the Asset Purchase
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and neither this Agreement nor any provision hereof may be
waived, modified, amended or terminated except by a written agreement signed by
the parties hereto; provided, however, that HomeCom Holders owning more than 50%
of the shares then owned by all HomeCom Holders may effect any such waiver,
modification, amendment or termination on behalf of all of the HomeCom Holders.
11. Governing Law; Successors and Assigns. This Agreement shall be governed
by the laws of the State of Delaware, without regard to the principles of
conflicts of law thereof. Except as otherwise provided herein, the obligations
of the Shareholders hereunder shall be binding upon their heirs, personal
representatives, executors, administrators, successors and assigns. This
Agreement shall inure to the benefit of and be binding upon the HomeCom Holders,
and any transferee thereof who is identified to the Company as a partner,
shareholder or affiliate of a HomeCom Holder. Each of the parties consents to
the exclusive jurisdiction of the federal or state courts in the State of
Delaware in connection with any dispute arising under this Agreement and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non conveniens, to the bringing of any such proceeding
in such jurisdiction. Each party hereto waives its right to trial by jury in any
such proceeding.
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12. Waivers. No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature.
13. Severability. If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
14. Captions. Captions are for convenience only and are not deemed to be
part of this Agreement.
15. 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.
[The remainder of this page has been left blank intentionally.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
TULIX SYSTEMS, INC., a Georgia corporation
By: /s/ Gia Bokuchava
- ---------------------
Gia Bokuchava, President and
Chief Executive Officer
HOMECOM COMMUNICATIONS, INC., a Delaware corporation
By: /s/ Michael Sheppard
- ------------------------
Name: Michael Sheppard
Title: Vice President, Licensed Technologies Division
FOUNDING SHAREHOLDERS:
/s/ Gia Bokuchava
- -----------------
Gia Bokuchava
Address: 630 W. Northway Lane
Atlanta, Georgia 30342
/s/ Nino Doijashvili
- --------------------
Nino Doijashvili
Address: 630 W. Northway Lane
Atlanta, Georgia 30342
/s/ Timothy R. Robinson
- -----------------------
Timothy R. Robinson
Address: 2796 Ridgemore Road
Atlanta, Georgia 30318
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Schedule I
Founding Shareholders
Name of Shareholder Number of Shares Owned by Shareholder
- ------------------- -------------------------------------
Gia Bokuchava 2,833.33
Nino Doijashvili 2,833.33
Timothy R. Robinson 2,833.34