LOCKUP AGREEMENT
This Lockup Agreement having an effective date of September 29, 1997
("Agreement"), is entered into by and between Xx. Xxxxx X. Xxxxx, Xx. Xxxxxx
Xxxx, Xx. Xxxxxxx Xxxxx, Xx. Xxxxxx Xxxxx and Xx. Xxxx Xxxxxxx Xxxxx (together,
the "Shareholders"), and The ForeFront Group, Inc., a Delaware corporation (the
"Company").
WHEREAS, the Company, LanProfessional Inc. (the "Subsidiary") and the
Shareholders are parties to that certain Acquisition Agreement dated the date
hereof (the "Acquisition Agreement") whereby the Shareholders have agreed to
sell and transfer to the Company all of the outstanding special shares of the
Subsidiary in exchange for cash.
WHEREAS, pursuant to the Acquisition Agreement, the Vendors have
received Exchangeable Shares of the Subsidiary which may be exchanged for shares
of the Company pursuant to the Exchangeable Share Provisions;
WHEREAS, the Shareholders have agreed as part of the Acquisition
Agreement, to enter into this Agreement with respect to the outstanding common
stock of the Company and the Exchangeable Shares of the Subsidiary owned by them
as a result of such transaction;
WHEREAS, the Company and the Shareholders believe that the success of
the Company requires the active interest and support of its major shareholders
and therefore desire to promote the best interests of the Company and their
mutual interests by agreeing to limit their ability to transfer by sale or
otherwise the shares of Common Stock of the Company and the Exchangeable Shares
of the Subsidiary owned by the Shareholders as defined below.
NOW THEREFORE, for and in consideration of the above stated premises
and the mutual covenants hereinafter set forth, and for other good and valuable
consideration, the parties hereby agree as follows:
SECTION 1. DEFINITIONS.
"Change of Control" shall mean the acquisition by any Person or Persons
of fifty percent (50%) or more of the combined voting power of the Company's
then outstanding equity securities having the right to vote at elections of
directors as a result of a merger, consolidation, recapitalization, sale of
assets, or any other combination of the above, as a result of which a majority
of the board of directors of the Company is replaced by directors who were not
nominated and approved by the board of directors.
"Common Stock" means the Common Stock, $.01 U.S. par value, of the
Company and/or the Subsidiary.
"Effective Date" means the date set out at the outset of this
Agreement.
"Exchangeable Shares" means the Exchangeable Shares of the Subsidiary
owned by Shareholders.
"Lockup Shares" shall mean all shares of Exchangeable Shares and Common
Stock to which all right, title and interest are owned by the Shareholders,
jointly or individually, as of the Effective Date of this Agreement or which are
acquired by the Shareholders, or any of them, at any time during the Term of
this Agreement, including any Exchangeable Shares and Common Stock now owned by
any Shareholder and his spouse as community property or as separate property.
All references herein to such stock owned by a Shareholder includes the
community property interest of such Shareholder's spouse in such stock and all
obligations of a Shareholder under this Agreement include like obligations on
the part of the spouse. The termination of the marital relationship of any
Shareholder and his or her spouse for any reason shall not have the effect of
removing any stock of the Company otherwise subject to this Agreement from the
coverage hereof.
"Person" shall include an individual, a corporation, a partnership, a
trust or any other organization or entity.
"Sale" "sell" or "sold" shall mean and include, either directly or
indirectly, any sale, contract to sell, or other disposition of Lockup Shares,
including but not limited to a disposition by gift, pledge, or other form of
intervivos transfer, voluntary or involuntary, provided however, that such
definition shall not include the exercise by any Shareholder of options or
warrants to acquire Common Stock of the Company, other than an exchange of
Exchangeable Shares of the Subsidiary for Common Stock of the Company as
provided in the Exchange Rights Agreement or the Exchangeable Share provisions.
"Shareholder(s)" shall mean the parties named as Shareholders above,
and their respective heirs, legal representatives, administrators and
successors.
"Term" shall mean the period from the Effective Date of this Agreement
through and including the expiration of its term, as provided in Section 11.
SECTION 2. LIMITATION ON SALE OF LOCKUP SHARES. Each Shareholder,
severally and not jointly, agrees that, from and after the Effective Date and up
to and including the expiration of the Term of this Agreement, no Lockup Shares
shall be Sold by such Shareholder under any circumstances.
SECTION 3. EVENTS OF TERMINATION. This Agreement shall also terminate
upon a Change of Control of the Company. A dissolution or liquidation of the
Company shall not be deemed to be a Change of Control for purposes of this
Agreement; provided however, that a dissolution or liquidation of the Company
within one year following the sale of all or substantially all of the assets of
the Company in exchange for stock or securities shall be considered a Change of
Control of the Company.
SECTION 4. TRANSFEREES BOUND. The provisions of Section 2 above shall
not apply to a transfer by Sale by a Shareholder of some or all of his Lockup
Shares to his spouse, his lineal descendants (natural or adopted), his parents,
his grandparents, or his siblings, or to an intervivos trust established on
behalf of any such persons or to a corporation which shall at all times be
controlled by the transferor. Any such transferees shall receive and hold the
Lockup Shares subject to the terms of this Agreement, and there shall be no
further transfer of such Lockup Shares, except in accordance with the terms of
this Agreement. Any transferees of Lockup Shares, regardless of the method by
which said transferees acquired said Lockup Shares and provided that the
transfer is not void under Section 2 herein, shall be subject to the terms of
this Agreement, and shall, prior to the receipt of any such Lockup Shares, agree
in writing to be bound by the terms hereof. Any purported transfer which does
not comply with such provision shall be null and void.
SECTION 5. LEGEND ON STOCK CERTIFICATE. The Company shall cause to
appear on all stock certificates representing the Lockup Shares a conspicuous
legend in such form as the Board of Directors may determine, stating that such
shares are subject to an agreement which restricts the transferability of the
shares and the termination date of the agreement, and otherwise circumscribes
the rights which may be exercised by the Shareholders thereof. The Company
shall, upon written request of the Shareholders, remove the legend after the
termination of this Agreement.
SECTION 6. SPECIFIC ENFORCEMENT. In view of the inadequacy of money
damages, if any Shareholder or other Person shall fail to comply with the
provisions of Section 2 hereof, the Company shall be entitled, to the extent
permitted by applicable law, to injunctive relief in the case of violation, or
attempted or threatened violation, by a Shareholder or other person of any of
the provisions of such Section, or to a decree compelling specific performance
by a Shareholder or other Person of any such provisions, or to any other remedy
legally allowed to them.
SECTION 7. VOID TRANSFERS. If any Lockup Shares shall be Sold otherwise
than in accordance with the terms and conditions of this Agreement, such Sale
shall be void. The Persons who would otherwise have been transferees hereunder
regarding such Lockup Shares shall have an "adverse claim" within the meaning of
such term as used within the Uniform Commercial Code of any state. In addition
to, and without prejudice to any and all other rights or remedies which may be
available to the Company and the Shareholders, the Shareholders agree that the
Company may, but shall have no obligation to, hold and refuse to transfer any
Lockup Shares, or any certificate therefor, tendered to it for transfer if the
transfer violates the provisions of this Agreement.
SECTION 8. REISSUANCE OF STOCK SHARES. The Company shall not transfer
or reissue any of its shares of stock in violation of this Agreement or without
requiring proof of compliance with this Agreement.
SECTION 9. NOTICES. All notices and communications required or
permitted to be given or made under this Agreement shall be in writing and shall
be deemed to have been duly
given or made when sent by mail, postage prepaid:
If to the Company: Xxxxx Xxxxxx, President and CEO
The ForeFront Group, Inc.
0000 Xxxx Xxx Xxxx. Xxxxx 0000
Xxxxxxx, Xxxxx 00000
If to Shareholders: To the address on the record books
of the Company.
SECTION 10. BINDING FORCE; AMENDMENT; SEVERABILITY. This Agreement
shall be binding on the parties upon execution by the Company and each of the
Shareholders. This Agreement may only be amended, waived, discharged or
terminated by a written agreement of the Company and Shareholders holding at
least two-thirds of the then outstanding Lockup Shares; provided however, that
if any of the rights of a Shareholder are adversely affected by such amendment
separately from the rights of other Shareholders of the same class of Lockup
Shares, then in such instance the written consent of the Shareholder adversely
affected shall be required. The invalidity or unenforceability of any particular
provisions of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provisions were omitted.
SECTION 11. TERMINATION. This Agreement shall terminate on the
expiration of one year from the aeffective date hereof, unless it is extended by
the written agreement of the parties.
SECTION 12. MISCELLANEOUS. This Agreement (i) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, (ii) may
be executed in several counterparts, each of which shall be deemed an original,
and all of which shall constitute one and the same instrument, shall inure to
the benefit of, and be binding upon, the successors, assigns, legatees,
distributees, legal representatives and heirs of each party and is not intended
to confer upon any Person, other than the parties and their permitted successors
and assigns, any rights or remedies hereunder, and (iv) shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware, without respect to the conflict of laws rules. The captions
in this Agreement are for convenience of reference only and shall not affect its
interpretation in any respect.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first written above.
THE FOREFRONT GROUP, INC.
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: President & CEO
SHAREHOLDERS
/s/ Xxxxx Xxxxx
Xxxxx X. Xxxxx
/s/ Naveen Seth
Naveen Seth
/s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
/s/ Xxxxxx Xxxxx
Xxxxxx Xxxxx
/s/ X X Xxxxx
Xxxx Xxxxxx Sethi
