"Exhibit C"
STANDSTILL AGREEMENT
June 2, 1999
Xxxx Xxxxxx
00000 Xxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxxx Xxxxxxxx
00000 Xxxx Xxxxx
Xxxxxxxx, XX 00000
Argoquest 7, LLC
00000 Xxxx Xxxxx
Xxxxxxxx, XX 00000
Gentlemen:
In connection with your investment in Synthonics Technologies, Inc., (the
"COMPANY") pursuant to that certain that certain Subscription Agreement, dated
as of June 2, 1999 by and between the Company and you. (the "SUBSCRIPTION
AGREEMENT") you agree as follows:
1. For a period commencing on the date hereof and extending through the
fifth anniversary of the date of this letter, you will not, nor will
you permit any of your "AFFILIATES" or "ASSOCIATES" (as such terms are
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")), directly or indirectly (except as
provided in Paragraph 2 below), (i) except as a result of a stock
split, stock dividend or similar recapitalization by the Company,
directly or indirectly acquire, offer to acquire, or agree to acquire
by purchase, individually or by joining a partnership, limited
partnership, syndicate or other "GROUP" (as such term is used in
Section 13(d)(3) of the Exchange Act, such term to have such meaning
throughout this letter) (any such act, to "ACQUIRE"), any securities
of the Company entitled to vote in the election of directors of the
Company (collectively, "VOTING SECURITIES"), any securities directly
or indirectly convertible into or exchangeable for Voting Securities,
any direct or indirect
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rights, warrants or options to acquire any Voting Securities or any
right to vote any Voting Securities if, immediately after such
acquisition, you and your affiliates and associates collectively would
"BENEFICIALLY OWN" (as defined in Rules 13d-3 and 13d-5 of the
Exchange Act) in excess of 20% of the fully diluted voting power of
the Company's outstanding Voting Securities; (ii) make, or in any way
participate in, directly or indirectly, any "SOLICITATION" of
"PROXIES" (as such terms are defined or used in Regulation 14A under
the Exchange Act) or become a "PARTICIPANT" in any "ELECTION CONTEST"
(as such terms are defined or used in Rule 14a-11 under the Exchange
Act) with respect to the Company, or initiate, propose or otherwise
solicit stockholders of Company for the approval of one or more
stockholder proposals with respect to the Company or induce or attempt
to include any other person to initiate any stockholder proposal;
(iii) deposit any Voting Securities into a voting trust or subject
them to any voting agreement or other agreement or arrangement with
respect to the voting of such Voting Securities; (iv) otherwise act,
directly or indirectly, alone or in concert with others, to seek to
control the management, Board of Directors, policies or affairs of the
Company, or solicit, propose, seek to effect or negotiate with any
other person with respect to any form of business combination
transaction with the Company or any affiliate thereof, or any
restructuring, recapitalization or similar transaction with respect to
the Company or any affiliate thereof, solicit, make or propose or
encourage or negotiate with any other person with respect to, or
announce an intent to make, any tender offer or exchange offer for any
Voting Securities, or disclose an intent, purpose, plan or proposal
with respect to the Company or any Voting Securities inconsistent with
the provisions of this letter, including an intent, purpose, plan or
proposal that is conditioned on or would require the Company to waive
the benefit of or amend any provision of this letter, or assist,
participate in, facilitate, encourage or solicit any effort or attempt
by any person to do or seek to do any of the foregoing; or (v)
encourage or render advice to or make any recommendation or proposal
to any person, or directly or indirectly participate, aid and abet or
otherwise induce any person, to engage in any of the actions
prohibited by this paragraph 1 (including this clause (v)) or to
engage in any actions inconsistent with such prohibitions, including
the accumulation of voting securities with any intent or objective
inconsistent with this paragraph 1.
2. Notwithstanding the provisions of paragraph 1 above to the contrary,
you and your affiliates and associates may purchase or otherwise
acquire beneficial ownership of any Voting Securities if you and/or
your affiliates or associates are specifically invited or permitted in
writing to do so by the Board of Directors of the Company.
3. Xxxx Xxxxxx and Xxxxx Xxxxxxxx hereby make the following
representations: (i) Xxxx Xxxxxx represents that as of the date
hereof, he is the owner of 50% of the membership interests of
Argoquest 7, LLC and (ii) Xxxxx Xxxxxxxx represents that as of the
date hereof he is the owner of 50% of the membership interests of
Argoquest 7, LLC.
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4. For purposes of this letter, all calculations of the fully diluted
outstanding Voting Securities shall assume the conversion or exchange
of all outstanding securities convertible into or exchangeable for
Voting Securities and the exercise of all outstanding rights, warrants
and options to purchase Voting Securities regardless of whether such
rights of conversion, exchange or purchase are then exercisable.
5. This letter shall be governed and construed in accordance with the
internal, substantive laws of the State of California without regard
to conflict of laws principles. No failure or delay by the Company in
exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise of any such right, power or
privilege. This letter shall be binding upon, and inure to the benefit
of each of the parties hereto and their respective successors and
assigns. In addition to all other rights and remedies which either
party hereto may have hereunder, at law, in equity, by statute or
otherwise, the prevailing party in any litigation to enforce the
provisions of this letter shall be entitled to recover attorneys' fees
and expenses and court costs. This letter may be modified only by an
agreement in writing signed by all parties hereto. This letter
constitutes the final agreement of the parties concerning the matters
herein and supersedes all prior and contemporaneous agreements and
understandings, whether oral or written, between them respecting the
subject matter hereof. If any of the provisions of this letter are
determined to be illegal, invalid or otherwise unenforceable, in whole
or in part, they shall be deemed severable from, and shall in no way
affect the validity or enforceability of, the remaining provisions of
this letter.
6. You hereby recognize, acknowledge and agree that the agreements and
undertakings set forth herein relate to matters that are of a special,
unique and extraordinary character which gives them a peculiar and
special value impossible of replacement, and for the breach of which
the non-breaching party cannot reasonably or adequately be compensated
in damages, and that any breach by you of any of the terms or
provisions hereof will cause the Company irreparable injury and harm.
Therefore you hereby agree that, in addition to any and all rights and
remedies which the Company may have at law, in equity, by statute or
otherwise, the Company shall be entitled to injunctive or other
equitable relief to prevent the continuing breach by you of each and
all of the terms and provisions hereof or to otherwise secure the
enforcement of each and all of the terms and provisions hereof.
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Please acknowledge your agreement to the foregoing by countersigning
this letter and the enclosed copy in the space provided below and returning the
executed copy to us.
Very truly yours,
SYNTHONICS TECHNOLOGIES, INC.
/s/ F. XXXXXXX XXXX
--------------------------
By: F. XXXXXXX XXXX
-----------------------
Its: PRESIDENT
----------------------
Received and consented to
the 2nd day of June, 1999
/s/ XXXX XXXXXX
-----------------------------
Xxxx Xxxxxx
/s/ XXXXX XXXXXXXX
-----------------------------
Xxxxx Xxxxxxxx
ARGOQUEST 7, LLC
/s/ XXXX XXXXXX
-----------------------------
By: Xxxx Xxxxxx
Its: General Manager
