EXHIBIT 99.4
NOMINATION AND STANDSTILL AGREEMENT
THIS AGREEMENT is dated as of July 4, 2003
AMONG
INFOWAVE SOFTWARE, INC., a company continued under the laws of
Canada
(the "Company")
AND:
XXXXXX X. XXXXXXX, an individual resident in Saint Xxxx, Minnesota,
USA
(the "Trooien")
AND:
HIDDENMIND TECHNOLOGY LLC, a company incorporated under the laws of
Delaware
("HiddenMind")
WHEREAS pursuant to the Asset Purchase Agreement and the
Subscription Agreement, the Investors have each agreed to certain standstill
provisions set forth herein.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
acquisition of Common Shares by the Investors and other good and valuable
consideration (the receipt and sufficiency of which is hereby acknowledged by
each of the parties), the parties hereby agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions. In this Agreement, unless the context otherwise requires, the
following terms shall have the following meanings, respectively:
(a) "Asset Purchase Agreement" means the asset purchase agreement dated
as of May 28, 2003 between the Company and HiddenMind;
(b) "Affiliate" has the meaning set forth in the Company Act (British
Columbia);
(c) "Associate" has the meaning set forth in the Securities Act (British
Columbia);
(d) "Common Shares" means the common shares without par value in the
capital of the Company or any securities that such shares may be
converted, changed,
-2-
exchanged, renamed, reclassified, redivided, redesignated,
subdivided or consolidated into;
(e) "Competitor" means any of the following:
(i) any Person (the "Competitive Entity") that engages or
participates in a "competing business," which shall mean the
design, development, marketing, sale or service of any
products or services similar to those sold by the Company;
(ii) any Person that holds, directly or indirectly, securities in
the Competitive Entity (except for (i) ownership of 2% or less
of any entity whose securities have been registered under the
Securities Act of 1933 or Section 12 of the Securities
Exchange Act of 1934 or (ii) ownership of an interest in a
fund which invests in entities that may compete with the
Company provided that the shareholder (A) does not exercise
control of the fund, (B) has only a passive investment
interest, and (C) does not act as a technical or business
advisor to the fund);
(iii) any lender to the Competitive Entity;
(iv) any director, officer, employee, partner, proprietor or agent
of a Competitive Entity;
(v) any Affiliate or Associate of any of the foregoing; and
(vi) any person acting jointly or in concert with any of the
foregoing.
(f) "Investors" means collectively Trooien and HiddenMind;
(g) "Investors Securities" means the Common Shares, and all warrants,
options and other rights to acquire Common Shares, now owned or
hereafter acquired by the Investors;
(h) "person" has the meaning specified in the Securities Act (British
Columbia);
(i) "offer to acquire" and "offeror's securities" has the meaning
specified in the Securities Act (British Columbia);
(j) "security" or "securities" has the meaning as set out in the
Securities Act (British Columbia);
(k) "Subscription Agreement" means the subscription agreement dated as
of May 22, 2003 between the Company and Trooien; and
(l) "Substantial Interest" means greater than 20% of the issued and
outstanding Common Shares calculated on a non-diluted basis.
-3-
1.2 Additional Definitions Incorporated by Reference. All capitalized terms used
herein, which are not otherwise defined, shall have the meaning ascribed to them
in the Asset Purchase Agreement.
ARTICLE 2
STANDSTILL
2.1 Restrictions on Resale for Four Months. The Investors agree that, for a
period of four months from the Closing Date, they will not, directly or
indirectly, sell, assign, transfer or otherwise dispose of, any Investors
Securities and will not permit any Affiliate, to dispose of any Investors
Securities without the prior consent of the board of directors of the Company,
which consent shall be at the sole and absolute discretion of the board of
directors of the Company.
2.2 Restrictions on Resale of "Control" for Two Years. The Investors
further agree that, for a period from four months from the Closing
Date until the earlier of the date upon which the Investors no
longer hold a Substantial Interest and 24 months from Closing Date,
they will not, directly or indirectly, sell, assign, transfer or
otherwise dispose of any of the Investors Securities, pursuant to an
offer to acquire where the Investors Securities subject to the offer
to acquire, together with the offeror's securities, constitute in
the aggregate 15 percent or more of the outstanding common shares of
the Company at the date of completion of such sale provided that
this Section 2.2 shall not apply if the Investors Securities are
sold, assigned, transferred or otherwise disposed of:
(a) pursuant to a "formal bid" or "issuer bid" (as those terms are
defined in the Securities Act (British Columbia) made to all members
of the Company;
(b) pursuant to an amalgamation, arrangement or business combination
involving the Company which is approved by the board of directors of
the Company;
(c) to the Investors' Affiliates or Associates or to the other Investor
or any of its Affiliates or Associates provided that such assignee
agrees to be bound by the terms and conditions of this Agreement; or
(d) to a person who is not a Competitor provided that the person agrees
to be bound by the terms and conditions of this Agreement.
2.3 Restrictions on Control for Two Years. The Investors each agree that, until
the earlier of the date upon which the Investors no longer hold a Substantial
Interest and the date which is 24 months from the Closing Date, neither it nor
any of its Affiliates (regardless of whether such person is an Affiliate on the
date hereof) will, without the prior consent of the board of directors of the
Company, which consent shall be at the sole and absolute discretion of the board
of directors of the Company, directly or indirectly:
(a) make, or in any way participate, directly or indirectly, in any
solicitation of proxies to vote, or seek to advise or influence any
person with respect to the voting of any voting securities of the
Company in any manner or influence any other person in respect of
such a "solicitation" except a proxy solicitation by management for
a general meeting of shareholders;
-4-
(b) make or in any way participate, directly or indirectly, in a
requisition of a meeting of the members of the Company or influence
any other person with respect of such a "requisition";
(c) vote any securities of the Company in favour of any resolution to
remove any or all of the directors of the Company;
(d) vote any securities of the Company in a manner to elect to the board
of directors of the Company more than one director who is, directly
or indirectly, nominated by or representatives of either Investor or
their respective Affiliates;
(e) form, join or in any way participate in a group acting in concert
with respect to any voting securities of the Company;
(f) make any public announcement with respect to, or submit to the
Company or its board of directors, a definitive or binding proposal
for (with or without conditions) any take-over bid, acquisition,
merger, amalgamation, arrangement or business combination or
extraordinary transaction involving the Company or any of its
subsidiaries or any of their respective securities or assets;
(g) otherwise act alone or in concert with others to seek control of the
management, board of directors or policies of the Company;
(h) form, join, or in any way participate in a group which is acting in
concert or in connection with any of the foregoing; and
(i) request publicly or otherwise that any provision of this Section 2.3
be waived or amended.
2.4 Termination of Restrictions. This Article 2 shall cease to apply:
(a) in the event Xxxxxx Xxxx, or such successor agreed to by the
Investors, is no longer the Chairman of the Company;
(b) in the event that, at a general meeting of the shareholders of the
Company, there is elected a majority of directors who were not the
nominees of Company management;
(c) in the event the Company ceases to operate, or announces that it
intends to cease operating, primarily as a developer of wireless
software solutions; or
(d) in the event the Company acquires a company, partnership or other
entity or business and, as a result, the Company on a consolidated
basis is no longer primarily a developer of wireless software
solutions.
-5-
ARTICLE 3
AGREEMENT TO NOMINATE DIRECTORS
3.1 Right to Nominate Directors. The Company agrees that:
(a) from the date of this Agreement until such time as the Investors and
their Affiliates collectively no longer hold a Substantial Interest,
the Company shall nominate one nominee of Trooien for election to
the board of directors of the Company;
(b) in the event the Investors and their Affiliates collectively at any
time no longer hold a Substantial Interest, Trooien shall
immediately cause his nominee on the board of directors of the
Company to resign; and
(c) the Company shall include in any management information circular
relating to the election of directors of the Company such
information as is required under applicable law with respect to the
election of the person nominated by Trooien under paragraph 3.1(a)
above and the Company shall use an equal effort to elect such
nominees as it uses to elect all other nominees for election of
directors by its members, including, without limitation,
recommending the election of the person nominated by Trooien and
soliciting from the shareholders of the Company proxies in favour of
such nominees.
3.2 Casual Vacancies of Trooien Nominee. In the event that any nominee of
Trooien appointed to the board of directors of the Company under Section 3.1
above ceases to hold the office of director between annual general meetings of
the Company, the Company shall use its reasonable commercial efforts to cause
the board of directors of the Company to fill the resulting casual vacancy with
another nominee of Trooien.
3.3 Information Rights. For greater certainty, the board of directors of the
Company, unless precluded by law, will always consult with the nominee appointed
to the board of directors under Section 3.1 with respect to:
(a) changes in senior management of the Company;
(b) any financing which could result in the Company increasing the
number of common shares outstanding on a fully-diluted basis by
greater than 50%; and
(c) the Company ceasing to operate primarily as a developer of wireless
software solutions.
3.4 Directors' Indemnities. In the event the Company is continued under the
Canada Business Corporations Act, the Company agrees to use its reasonable
commercial efforts to ensure that its By-Laws contain substantially the
provisions attached hereto as Schedule "A". The Company, concurrent with the
entering into of this Agreement, shall enter into the Directors Indemnity
Agreement attached hereto as Schedule "B".
-6-
ARTICLE 4
GENERAL PROVISIONS
4.1 Time of the Essence. Time shall be of the essence of this Agreement.
4.2 Further Acts. Each of the parties to this Agreement shall at the request of
any other party, and at the expense of the Company, execute and deliver any
further documents and do all acts and things as that party may reasonably
require in order to carry out the true intent and meaning of this Agreement.
4.3 Assignment. This Agreement shall only be assigned with the written consent
of the other parties hereto.
4.4 Governing Law. This Agreement shall be exclusively construed and governed by
the laws in force in British Columbia and the laws of Canada applicable therein.
4.5 Entire Agreement. This Agreement constitutes the entire agreement between
the parties to this Agreement with respect to the subject matter hereof and
supersedes all prior negotiations, proposals and agreements, whether oral or
written, with respect to the subject matter of this Agreement.
4.6 Waiver. Failure by any party hereto to insist in any one or more instances
upon the strict performance of any one of the covenants contained herein shall
not be construed as a waiver or relinquishment of such covenant. No waiver by
any party hereto of any such covenant shall be deemed to have been made unless
expressed in writing and signed by the waiving party.
4.7 Severability. The unlawfulness or invalidity or unenforceability of any
provision in this Agreement or of any covenant herein contained on the part of
any party shall not affect the validity or enforceability of any other provision
or covenant hereof or herein contained and the parties hereby undertake to
renegotiate in good faith, with a view to concluding arrangements as nearly as
possible the same as those herein contained.
4.8 Amendments. No term or provision hereof may be amended except by an
instrument in writing signed by parties to this Agreement.
4.9 Counterparts. This Agreement may be executed in several counterparts
(including by fax), each of which when so executed shall be deemed to be an
original and shall have the same force and effect as an original and such
counterparts together shall constitute but one and the same instrument.
4.10 Notices. All notices, demands and payments under this Agreement must be in
writing and may be delivered personally or by facsimile transmission to the
addresses and facsimile numbers as provided for under the Asset Purchase
Agreement or the Subscription Agreement, as the case may be, unless changed in
accordance with the terms thereof.
-7-
IN WITNESS WHEREOF the parties have duly executed this agreement as
of the date first written above.
INFOWAVE SOFTWARE, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------------
Authorized Signatory
HIDDENMIND TECHNOLOGY, LLC
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Authorized Signatory
XXXXXX XXXXXXX
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
SCHEDULE "A"
INDEMNITY
Subject to the Act, the Corporation shall indemnify a director or an officer, a
former director or officer, or another individual who acts or acted at the
Corporation's request as a director or officer, or an individual acting in a
similar capacity, of another entity, and their heirs and legal representatives,
against all costs, charges and expenses, including an amount paid to settle an
action or satisfy a judgment, reasonably incurred by the individual in respect
of any civil, criminal, administrative, investigative or other proceeding in
which the individual is involved because of that association with the
Corporation, or other entity, if such individual (a) acted honestly and in good
faith with a view to the best interests of the Corporation, or, as the case may
be, to the best interests of the other entity for which the individual acted as
director or officer or in a similar capacity at the Corporation's request; and
(b) in the case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, the individual had reasonable grounds for
believing that the individual's conduct was lawful.
SCHEDULE "B"
INFOWAVE SOFTWARE, INC.
July 4, 2003
Xx. Xxxx Xxxxx
Chairman and CEO
The Promar Group LLC
X.X. Xxx 0000
Xxxx XX 00000 XXX
Dear Xx. Xxxxx:
Re: Infowave Software, Inc. (the "Corporation")
In consideration for your acting as a director of the Corporation at
our request, we agree that, to the extent permitted by law, we hereby indemnify
you and save you harmless from and against:
Any liability and all costs, charges and expenses that you actually
and reasonably sustain or incur in respect of any action, suit or proceeding
that is proposed or commenced against you for or in respect of anything done or
permitted by you in respect of the execution of your duties as:
(a) a director of the Corporation,
(b) a member of any committee to which you are appointed by the
directors of the corporation, or
(c) a holder of any office to which you are appointed by the directors
of the corporation
provided that we are given prompt written notice of any such action, suit
or proceeding, and an opportunity to participate and, upon our accepting
full liability, to the extent we are permitted to do so by law, to defend
the same. Excluded from this indemnity shall be any claim, issue or matter
where it is judicially adjudged:
(i) that you did not act honestly and in good faith with a view to
the best interests of the Corporation, and
(ii) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, that you
had no reasonable ground for believing that your conduct was
lawful; and
B-2
All other costs, charges and expenses that you actually and
reasonably sustain or incur in respect of the affairs of the Corporation;
provided that prompt notice and accountings are given to us of all such costs,
charges or expenses actually and reasonably sustained or incurred by you.
Costs, charges and expenses actually and reasonably sustained or
incurred by you in defending a civil or criminal action, suit or proceeding
shall be paid by us, as incurred, in advance of the final disposition of such
action, suit or proceeding, provided that we first receive from you an
undertaking that you will repay such amount if it shall ultimately be determined
that you are not entitled to be indemnified as authorized by this letter.
You may resign as a director of the Corporation at any time and our
obligations hereunder shall survive your ceasing to act as a director whether by
reason of resignation or otherwise.
We will obtain and provide you with a copy of our director's
liability insurance as soon as is practicable.
The foregoing indemnity shall also extend to your heirs and legal
representatives and, to the extent your liability as a director extends to
Blake, Xxxxxxx & Xxxxxxx LLP, of which you are an associate, and with respect to
any successor firm, that firm shall also be indemnified as provided above. The
costs, charges and expenses referred to in the preceding paragraph shall include
the value of legal services actually and reasonably sustained by Blake, Xxxxxxx
& Xxxxxxx LLP or any such successor firm in respect of any such civil or
criminal action, suit or proceeding.
Yours very truly,
INFOWAVE SOFTWARE, INC.
By:
--------------------------
Authorized Signatory
