Exhibit 2.
EXHIBIT OF SHAREHOLDERS AGREEMENT BETWEEN XXXXXXXXX.XXX
NETWORKS, INC. AND BICKHAMS MEDIA, INC.
SHAREHOLDERS AGREEMENT
This Shareholders Agreement (the "Agreement") is entered into
as of July 2, 2001 (the "Agreement") by and between Bickhams Media, Inc., a
Delaware corporation ("Bickhams") and XxxxxXxxx.Xxx Networks, Inc., a California
corporation ("VideoDome"), with reference to the following:
A. VideoDome is engaged in business providing corporate and
enterprise level digital (streaming) media management and publishing solutions
for the entertainment, new media and corporate industries.
B. Bickhams is in the business of locating, financing and
supporting internet, e-commerce and emerging technologies companies.
C. Bickhams and VideoDome are parties to that certain Amended
and Restated Stock Option Agreement (the "Stock Option Agreement"), dated
October 31, 2000, relating to the acquisition by Bickhams of shares of Series A
Preferred Stock of VideoDome.
D. Pursuant to the Stock Option Agreement, Bickhams has
acquired shares of the Series A Preferred Stock of VideoDome.
E. VideoDome and Bickhams now desire to terminate the Stock
Option Agreement and enter into this Agreement to restate the relationship
between the parties, including compensation payable to Xxxx Xxxxx.
NOW, THEREFORE, in consideration of the foregoing premises and
for other good and valuable consideration, the adequacy of which is
acknowledged, the parties hereby agree as follows: 1. Termination of the Stock
Option Agreement. On the Effective Date, as defined below, the Stock Option
Agreement shall be terminated and, as of the Effective Date, shall be of no
further force or effect.
2. Additional Investments in VideoDome. In lieu of any other obligations or
rights to invest any sums in VideoDome, Bickhams agrees as follows:
2.1 Bickhams shall, not later than July 15, 2001, invest an
additional $230,000 in VideoDome, of which VideoDome acknowledges receipt,
directly or indirectly, of $80,000 as of the date of this Agreement.
2.2 In the event that, commencing on the date of this
Agreement and prior to July 31, 2001, Xxxxxxx'x parent company, I.T. Technology,
Inc. ("IT"), raises an additional $1,000,000 pursuant to its Initial Public
Offering, Bickhams shall invest an additional $370,000 in VideoDome.
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2.3 If, prior to the date that Bickhams completes the
investment of $230,000 in VideoDome as provided in paragraph 2.1 above,
VideoDome receive a firm offer from an independent third party to invest at
least $1,000,000 in equity securities to be issued by VideoDome on terms
reasonably acceptable to Bickhams and VideoDome, then Bickhams shall have seven
days from the date of the receipt of a copy of such firm offer to complete the
$230,000 investment, and VideoDome shall complete all actions required or
contemplated to be taken on or prior to the Effective Date, in all cases before
the issuance of equity securities to such third party.
3. Exchange of Shares. On the Effective Date, Bickhams shall surrender all of
its shares of Series A Preferred Stock in return for a number of shares of the
common stock of VideoDome equal to the number of shares of common stock of
VideoDome then outstanding, including any options, warrants or any other rights
to acquire shares of VideoDome's common stock (other than related to the Series
A Preferred Stock).
4. Amendment of the Articles of Incorporation. Promptly after execution of this
Agreement, VideoDome shall amend its Articles of Incorporation to retire the
existing Series A Preferred Stock and to increase the authorized number of
shares of common stock of VideoDome from 5,000,000 shares to 20,000,000 shares,
and to take such other steps as may be necessary or appropriate to effect the
terms of this Agreement.
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5. I.T. Option Agreement. Following the Effective Date, IT shall enter into a
stock option agreement (the "IT Option") with Xxxxxx Xxxxxxxxx and Xxxxxx Xxxxx
providing for the grant of options to Aharonoff and Xxxxx, jointly, to acquire
an aggregate of shares of I.T. Technology's common stock at an exercise price of
$.10 per share, exercisable for three years after the date of grant, conditioned
on achievement of the following milestones and such other terms as may be
contained in the IT Option:
5.1 Options to acquire 300,000 shares shall vest when
VideoDome has recorded $360,000 in gross revenue during a period of twelve
consecutive calendar months.
5.2 Options to purchase an additional 300,000 shares shall
vest when VideoDome records $720,000 in gross revenues in a period of twelve
consecutive calendar months.
5.3 Options to purchase an additional 300,000 shares shall
vest when VideoDome records $1,000,000 in gross revenues in a period of twelve
consecutive calendar months.
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5.4 Options to purchase an additional 300,000 shares shall
vest when VideoDome records $1,500,000 in gross revenues in a period of twelve
consecutive calendar months.
5.5 Options to purchase an additional 300,000 shares shall
vest when VideoDome records $2,000,000 in gross revenues within a period of
twelve consecutive calendar months.
5.6 Options to purchase an additional 300,000 shares shall
vest when VideoDome records $3,000,000 in gross revenues in a period of twelve
consecutive calendar months.
6. Composition of Board of Directors; Day to Day Operations. Bickhams and the
other shareholders of VideoDome agree to vote their shares so as to provide for
Board of Directors [four] individuals, two of them shall be selected by Bickhams
and two of them shall be selected by the remaining shareholders of VideoDome.
Subject to the Board of Directors, Xxxxxx Xxxxxxxxx shall be responsible for the
day-to-day operations of VideoDome.
7. Xxxx Xxxxx Compensation. Subject to the completion by Bickhams of the
investments contemplated in Section 2.1 above, VideoDome agrees to pay to Xxxx
Arial ("Arial") in exchange for and in lieu of any rights to Capital Stock or
equity in VideoDome a "Distribution Share" and a "Sale Bonus", as defined below
(the "Arial Distributions"). The terms of the Arial Distributions shall be as
follows:
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7.1 Arial shall receive a "Distribution Share", as hereinafter
defined, in the event any "Dividends", as hereinafter defined, are hereinafter
paid or distributed to the shareholders of VideoDome;
7.2 the Distribution Share shall only be payable to Arial in
the event VideoDome makes a payment in cash or property (but not in stock of
VideoDome) to its shareholders in general as a dividend or distribution after
the date hereof (the "Dividend"), in which case the Distribution Share due Arial
will be payable at the same time and in the same manner as the Dividend;
7.3 in the event that no Dividend is paid to VideoDome's
shareholders during any year, Arial's rights to any Distribution Share for that
year shall be null and void and shall not be added to nor aggregated with any
Distribution Share paid in any subsequent year;
7.4 in addition to the Distribution Share, Arial shall be
entitled to receive from VideoDome the "Pro-Rata Share", as hereinafter defined,
of the proceeds actually received by its shareholders from a "Sale Transaction",
as hereinafter defined. For the purposes hereof the "Pro-Rata Share" shall be
equal to the product of the total consideration distributed to the holders of
Capital Stock in connection with such Sale Transaction multiplied by the
"Applicable Percentage", as hereinafter defined;
7.5 for the purposes of this Agreement, the Distribution Share
shall be equal to the Applicable Percentage multiplied by the aggregate amount
of the Dividend being distributed to all of the shareholders of VideoDome;
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7.6 for the purposes of this Agreement the Applicable Share
shall initially be four percent (4%) (the "Initial Percentage"); provided
however, in the event Arial has received of any prior payments of the Pro-Rata
Share, the Applicable Share shall prior to any subsequent payment of any
subsequent Distribution Share or Pro-Rata Share, be adjusted to reflect such
payments, so that the Applicable Share then in effect shall be equal to the
product of the Initial Percentage multiplied by a fraction the numerator of
which is the number of shares of Capital Stock outstanding as of the Effective
Date (the "Initial Shares") and the denominator of which is equal to the number
of shares of Capital Stock outstanding at the time of the Dividend or
immediately preceding the consummation of next Sale Transaction, as the case may
be (excluding any shares that have been issued or retired as a result of stock
splits, stock dividends, reverse stock splits or similar transactions) (the
"Outstanding Shares"). In the event the shareholders of VideoDome receive
consideration other than cash, Arial shall receive, at VideoDome's discretion,
either such consideration or its value in cash;
7.7 for the purposes hereof a "Sale Transaction" shall be
defined as a transaction or a series of related transactions pursuant to which:
(a) all or substantially all of the outstanding Capital Stock is sold; or (b)
VideoDome's merger with or into another entity, the result of which is that the
holders of VideoDome's outstanding Capital Stock immediately prior to the
consummation of the transaction(s) do not own a majority of the Capital Stock in
the surviving entity immediately following the transaction. Notwithstanding
anything to the contrary contained elsewhere herein, no transaction shall be
considered a Sale Transaction unless the definitive agreement with respect to
such transaction is entered.
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7.8 for the purposes of this Agreement, the determination by
the Board of Directors of VideoDome of the Distribution Share or the Pro-Rata
Share shall be final and binding on Arial. In addition, nothing contained herein
shall require VideoDome to declare or pay a Dividend during any year in which a
Distribution Share would thereupon become due; the determination as to whether
or not VideoDome shall declare or pay a Dividend shall remain within the sole
discretion of VideoDome's Board of Directors.
8. Financial Statements. VideoDome agrees that commencing immediately, it shall
provide quarterly unaudited and annual audited financial statements in a form
and at time adequate to allow I.T. Technology to meet its obligations as a
public reporting company under the United States Securities Exchange Act of
1934. Bickhams shall assist in arranging financing to cover the cost of
preparing such financial statements until such time as VideoDome has raised at
least $500,000 in debt or equity finances, which shall include $230,000 invested
in VideoDome by Bickhams prior to the date of this Agreement.
9. Accrued Salary. The parties recognize that VideoDome is indebted to Xxxxxx
Xxxxxxxxx in the sum of $31,000 for accrued salary ending in June and $7,000 for
every month thereafter, or the difference between a given months actual salary
and the base monthly salary of $15,000. Such sum shall be paid at such time as
VideoDome has raised at least $500,000 or more including $230,000 invested by
VideoDome prior to the date of this Agreement.
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9. Effective Date. As used in this Agreement, the "Effective Date" shall be the
date on which the last of the following occur: (a) amended articles of
incorporation for VideoDome are accepted for filing with the California
Secretary of State as contemplated by paragraph 3 above; (b) the shares of
common stock contemplated by paragraph 2 above are issued to Bickhams; and
(c)the payment contemplated by Section 2.1 is made. VideoDome agrees to take all
actions necessary or appropriate to fulfill the conditions precedent to the
Effective Date at the earliest possible time, so that upon the completion of
Xxxxxxx'x investment provided in Section 2.1 above, all actions necessary for
the Effective Date shall have been taken.
11. No Other Issuance. The parties recognize that the purpose of this Agreement
is to ensure that Bickhams acquires at least fifty percent (50%) of the equity
securities of VideoDome in exchange for its past and contemplated investments in
and services to VideoDome. Consequently, the parties agree that, except for an
issuance of shares pursuant to Section 2.3 above, VideoDome shall not, prior to
the Effective Date, issue any shares of equity securities or any instruments
convertible or exchangeable for equity securities, or agree to do any of the
foregoing, without the prior written consent of Bickhams. Furthermore, following
the Effective Date, Videodome shall not, without the prior written consent of
the Directors selected by Bickhams, issue any shares of its capital stock; and
the parties agree to take any steps necessary, including amending VideoDome's
charter documents in order to implement such limitation.
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12. Notices. Unless applicable law requires a different method of giving notice,
any and all notices, demands or other communications required or desired to be
given hereunder by any party shall be in writing and shall be validly given or
made to another party if served personally or if deposited in the United States
mail, certified or registered, postage prepaid or if transmitted by telegraph,
telecopy or other electronic written transmission device. If such notice, demand
or other communication is served personally, service shall be conclusively
deemed made at the time of such personal service. If such notice, demand or
other communication is given by mail, such shall be conclusively deemed given
seventy-two (72) hours after the deposit thereof in the United States mail, or,
if by telegraph or if by other carrier service, upon confirmation of delivery by
the carrier, addressed to the party to whom such notice, demand or other
communication is to be given at the address set forth on the signature page set
forth hereinbelow. Any party hereto may change its address for the purpose of
receiving notices, demands and other communications as herein provided by a
written notice given in the manner aforesaid to the other party or parties
hereto.
13. Independent Counsel. Each party hereto warrants and represents that such
party has been advised that such party should be represented by counsel of such
party's own choosing in the preparation and analysis of this Agreement; that
such party is fully aware that such s counsel has not acted or purported to act
on such party's behalf; that such party has been represented by independent
counsel or has had the opportunity to be represented by independent counsel; and
that such party has read this Agreement with care and believes that such party
is fully aware of and understands the contents thereof and its legal effect.
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14. Attorneys' Fees. Should any party hereto engage an attorney or institute any
action or proceeding at law or in equity, or in connection with an arbitration,
to enforce any provision of this Agreement, including an action for declaratory
relief, or for damages by reason of an alleged breach of any provision of this
Agreement, or otherwise in connection with this Agreement, or any provision
thereof, the prevailing party shall be entitled to recover from the losing party
or parties reasonable attorneys' fees and costs for services rendered to the
prevailing party in such action or proceeding.
15. Full Authority. Each of the parties and signatories to this Agreement
represents and warrants that he has the full right, power, legal capacity and
authority to enter into and perform the parties' respective obligations
hereunder and that such obligations shall be binding upon such party without the
requirement of the approval or consent of any other person or entity in
connection herewith. Each person signing this Agreement on behalf of an entity
represents and warrants that he has the full right, power, legal capacity and
authority to sign this Agreement on behalf of such entity.
16. Time of the Essence. Time is of the essence of this Agreement, and in all
the terms, provisions, covenants and conditions hereof.
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17. Reasonable Notice. Unless expressly provided herein to the contrary, the
reasonable time required in which to perform any act hereunder shall be thirty
(30) days.
18. Miscellaneous.
18.1 Applicable Law. This Agreement shall, in all respects, be
governed by the laws of the State of California applicable to agreements
executed and to be wholly performed within California.
18.2 Severability. Nothing contained herein shall be construed
so as to require the commission of any act contrary to law, and wherever there
is any conflict between any provisions contained herein and any present or
future statute, law, ordinance or regulation, the latter shall prevail; but the
provision of this Agreement which is affected shall be curtailed and limited
only to the extent necessary to bring it within the requirements of the law.
18.3 Further Assurances. Each of the parties hereto shall
execute and deliver any and all additional papers, documents and other
assurances, and shall do any and all acts and things reasonably necessary in
connection with the performance of their obligations hereunder to carry out the
intent of the parties hereto.
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18.4 Modifications or Amendments. No amendment, change or
modification of this Agreement shall be valid, unless in writing and signed by
all of the parties hereto.
18.5 Successors and Assigns. All of the terms and provisions
contained herein shall inure to the benefit of and shall be binding upon the
parties hereto and their respective heirs, legal representatives, successors and
assigns.
18.6 Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties with respect to its subject matter
and any and all prior agreements, understandings or representations with respect
to its subject matter are hereby terminated and cancelled in their entirety and
are of no further force or effect.
18.7 Non-Waiver. No waiver by any party hereto of a breach of
any provision of this Agreement shall constitute a waiver of any preceding or
succeeding breach of the same or any other provision hereof.
18.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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18.9 Number and Gender. In this Agreement, the masculine,
feminine or neuter gender, and the singular or plural number, shall each be
deemed to include the others whenever the context so requires.
18.10 Captions. The captions appearing at the commencement of
the sections hereof are descriptive only and for convenience in reference.
Should there be any conflict between any such caption and the section at the
head of which it appears, the section and not such caption shall control and
govern in the construction of this Agreement.
18.11 Expenses. Each of the parties shall pay all of their own
costs, legal fees, accounting fees, and any other expenses incurred or to be
incurred by it or them in negotiating and preparing this Agreement, and closing
and carrying out the transactions contemplated by this Agreement.
18.12 Parties in Interest. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties and their
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to any
party to this Agreement, nor shall any provision give any third person any right
of subrogation or action over or against any party to this Agreement.
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18.13 Joint and Several Obligations. The obligations of the
parties hereto are joint and several.
18.14 Exhibits. All exhibits attached hereto are hereby
incorporated by reference.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and at the place first above written.
BICKHAMS MEDIA, INC.
By: /s/ Xxxx Xxxxxxx
Its: Chief Executive Officer
XXXXXXXXX.XXX NETWORKS, INC.
By: /s/ Xxxxxx Xxxxxxxxx
Its: Chief Executive Officer
I.T. TECHNOLOGY, INC.
By: /s/ Xxxx Xxxxxxx
Its: Chief Executive Officer
/s/ Xxxxxx Xxxxxxxxx
Xxxxxx Aharanoff
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