EXHIBIT 99.6
CONTROLLING SHAREHOLDER AGREEMENT
This Controlling Shareholder Agreement (this "Agreement") is made as
of December 29, 2000, by and among Emergent Information Technologies, Inc., a
California corporation (the "Company"), the purchasers of the Company's Senior
Subordinated Notes and Common Stock who are signatories to this Agreement (the
"Purchasers"), and Xxxxxx X. Xxxxx (the "Common Stockholder").
RECITALS
A. The Common Stockholder is the owner of the number of shares of the
Company's common stock, no par value per share (the "Common Stock") set forth
herein.
B. The Company and the Purchasers are entering into the Note and
Stock Purchase Agreement of even date herewith (the "Purchase Agreement") and
are acquiring Notes and shares of Common Stock.
C. In order to induce the Purchasers to enter into the Purchase
Agreement, the Company and the Common Stockholder desires to enter into this
Agreement with the Purchasers, which pertains to sales of certain securities by
the Common Stockholder. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings ascribed to such terms in the Purchase
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Restrictions on Sale. The Common Stockholder represents and warrants
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that he owns beneficially 3,598,029 shares of Common Stock of the Company,
excluding shares held by Xxxxx Xxxxx over which Common Stockholder has voting
control (such 3,598,029 shares constituting the "Shares") free and clear of all
liens and encumbrances, and that his entry into this Agreement does not violate
or constitute a default under, any agreement to which he is subject or by which
the Shares are bound. The Shares also include any additional shares of Common
Stock that the Common Stockholder shall receive by way of stock dividend, stock
split or upon the exercise of options. The Common Stockholder agrees that the
Shares may not be sold or otherwise transferred for so long as the principal and
interest on the Notes has not been paid in full in cash, except as set forth in
Section 3 below.
2. Co-Sale Right Among Purchasers and Common Stock Holder ("Tag Along").
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2.1 General. After principal and interest on all the Notes has been
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paid in full in cash, and so long as the Purchasers own in the aggregate at
least 450,000 shares of Common Stock (as adjusted for stock splits, reverse
stock splits, stock dividends and similar transaction), if the Common
Stockholder proposes to sell or otherwise transfer any of his Shares, the Common
Stockholder shall deliver to the Company and the Purchasers a written notice
(the "Notice") stating: (i) the Common Stockholder's bona fide intention to sell
or otherwise transfer such Shares (the "Offered Shares"); (ii) the name of each
proposed purchaser or other transferee
("Proposed Transferee"); (iii) the number of Offered Shares to be transferred to
each Proposed Transferee; and (iv) the bona fide cash price for which the Common
Stockholder proposes to transfer the Offered Shares (the "Offered Price"); and
(v) the estimated closing date of such transfer of such shares, and the Common
Stockholder shall offer to the Purchasers the right to participate in such sale
or transfer as provided herein.
2.2 Participation. Each of the Purchasers may notify the Common
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Stockholder in writing if such Purchaser elects to participate in the proposed
transfer of the Offered Shares with the Common Stockholder. Each participating
Purchaser shall then have the right to sell, at the same price and on the same
terms as the Common Stockholder, an amount of shares equal to the number of
Offered Shares multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock (assuming conversion of any securities
convertible into Common Stock) held by the participating Purchaser and the
denominator of which shall be the sum of the number of shares of Common Stock
(assuming conversion of any securities convertible into Common Stock) held by
the Common Stockholder and all participating Purchasers. To the extent that the
Proposed Transferee refuses to purchase shares from the Purchasers, the Common
Stockholder shall purchase such shares or other securities from the Purchasers
on the same terms and conditions offered by the Proposed Transferee and may then
sell such shares to the Proposed Transferee without the need to provide a new
Notice.
2.3 Closing. The participating Purchasers shall enter into an
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agreement with the Proposed Transferee on terms and conditions identical, to the
extent feasible, with the agreement entered into by the Common Stockholder
providing representations and warranties and other terms and conditions agreed
to by the Common Stockholder.
2.4 Other Co-Sale Rights.
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(a) The Common Stockholder represents that he is obligated under
a confidential marital settlement agreement with Xxxxx Xxxxx to provide a
notice and rights of co-sale substantially similar to those included in
this Section 2 as to shares of Common Stock owned by her. In the event
Xxxxx Xxxxx exercises her rights in such a transaction, to the extent the
Purchaser is not willing to purchase all of the shares requested to be
included, (i) Xxxxx Xxxxx' rights to include her shares in the sale shall
be effected, and then (ii) the Purchasers shall have the right to include
their shares in the sale based upon the adjusted number of Shares included
by the Common Stockholder in such sale. For the sake of clarity, Xxxxx
Xxxxx shall have the right to sell shares of Common Stock without any
restriction or encumbrance created by this Agreement.
(b) The Common Stockholder further represents to the Purchasers
that Xxxxx Xxxxx has the right to sell for her own account 50,000 shares of
Common Stock per quarter under the confidential marital settlement
agreement. The Common Stockholder agrees to oppose, and shall not consent
to, any amendment to the marital settlement agreement that would result in
Xxxxx Xxxxx having the right to sell in excess of 50,000 shares of Common
Stock in any quarter (as such number may be adjusted for stock splits,
reverse stock splits, stock dividends and similar transactions), without
such sales being subject to the restrictions or Section 2.1 and 2.2 of this
Agreement.
3 Controlling Shareholder Agreement
3. Limitations on Purchasers Rights.
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3.1 Agreement Does Not Apply. The restrictions on the Common
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Stockholder set forth in Sections 1 and 2 of this Agreement shall not apply
where the transfer of securities by a Common Stockholder is:
(a) to such Common Stockholder's spouse, parents, siblings,
children or grandchildren, or other members of the Common Stockholder's
immediate or extended family (including relatives by marriage), or to a
custodian, trustee or other fiduciary for the account of the Common
Stockholder or members of the Common Stockholder's immediate or extended
family in connection with an estate planning transaction; provided that
such transferee agrees in writing to the restrictions herein as to such
transferred Shares;
(b) by operation of law, and after such transfer the
restrictions herein shall continue to apply to such transferred Shares;
(c) by way of bequest; provided that such transferee agrees in
writing to the restrictions herein as to such transferred Shares;
(d) to a Purchaser;
(e) by way of bona fide gift not for value; provided that such
transferee agrees in writing to the restrictions herein as to such
transferred Shares, and provided further that the recipient of a bona fide
charitable gift to a tax-exempt organization, so long as the Common
Stockholder retains no income or other interest in the Shares donated, need
not agree to any restrictions.
(f) to sales in the public market of up to 25,000 Shares in any
quarter (as such number may be equitably adjusted for stock splits, stock
dividends, reverse stock splits or similar transactions).
(g) to sales of shares of Common Stock acquired after the date
of this Agreement.
4. Obligation to Sell Securities ("Drag Along"). For so long as the
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Purchasers have Tag Along rights hereunder, if the Common Stockholder secures a
third-party buyer to which he sells all of the Shares of Common Stock held by
him and his permitted transferees and assignees under Section 3 (whether such
sale is by way of purchase, merger, or other form of transaction), and such sale
would constitute a Change of Control under the Note Purchase Agreement, upon the
request of the Common Stockholder, each of the Purchasers shall sell all of the
shares of Common Stock then beneficially owned by such Purchaser to such third-
party buyer pursuant to substantially the same terms and conditions negotiated
by the Common Stockholder for the sale of shares of Common Stock held by the
Common Stockholder. Each of the Purchasers agrees to consent to such sale, and
to execute such agreements, instruments of transfer, powers of attorney, voting
proxies or other documents and instruments as may be necessary to consummate
such sale. Each Purchaser further explicitly agrees not to exercise any
dissenters' rights or similar appraisal rights in connection with such a sale.
Each of the Purchasers further agrees timely to take other actions as the Common
Stockholder may reasonably request as necessary in connection with the approval
of the consummation of such
4 Controlling Shareholder Agreement
sale, including voting all shares of Common Stock or other voting securities
they may hold in favor of such sale. Any "drag along" sale hereunder may only be
for cash and freely-tradable common stock of a domestic corporation traded on
the New York or American Stock Exchanges or the Nasdaq/NMS stock markets with a
minimum average closing trading price of $5.00 per share, on the trading days
that are between five (5) and ten (10) trading days prior to the closing date of
such Change of Control transaction, and no Purchaser shall be required to make
any representations or warranties (other than as to title to the shares to be
sold, authority, organization and good standing) nor shall it be subject to any
indemnification obligation other than such as may be satisfied by an escrow or
holdback applicable to all shareholders of the Company.
5. Termination. This Agreement shall terminate immediately prior to the
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earliest to occur of any one of the following events:
(a) The liquidation, dissolution or permanent cessation of the
business operations of the Company;
(b) The sale, conveyance or encumbrance of all or substantially
all of the Company's property or business or the Company's merger into or
consolidation with any other corporation where the shareholders of the
Company immediately prior to such merger or consolidation own fifty percent
(50%) or less of the equity of such corporation (by value), directly or
indirectly, after such merger or consolidation due to their ownership of
the Company's securities or if the Company effects any other transaction or
series of related transactions in which more than fifty percent (50%) of
the voting power of the Company is transferred, provided that this Section
5.1(b) shall not apply to a merger effected for the purpose of changing the
domicile of the Company.
(c) At such time as the Purchasers hold fewer than 450,0000
shares of Common Stock (as adjusted for stock splits, reverse stock splits,
stock dividends or similar transactions) and the principal and interest
owing on the Notes has been paid in full in cash.
6. Legends
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6.1 Certificates. The Shares are currently held in an account in the
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name of Common Stockholder at Xxxxxxx Xxxxx Xxxxxx. Common Stockholder
represents that he has in writing instructed Xxxxxxx Xxxxx Barney not to
transfer any such Shares except in compliance with the terms of this Agreement.
After the closing, all certificates of the Common Stockholder representing any
Shares (including any Shares issued upon exercise of options) subject to the
provisions of this Agreement shall have promptly endorsed and maintained thereon
the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO,
AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH, AN AGREEMENT
DATED AS OF DECEMBER 29, 2000 AMONG THE COMPANY, THE HOLDER
OF THESE SECURITIES AND CERTAIN OTHER PURCHASERS OF THE
COMPANY'S SECURITIES, WHICH INCLUDES CO-SALE RIGHTS, A COPY
OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY."
5 Controlling Shareholder Agreement
6.2 Stop Order. The Company will not transfer any of the Shares on
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its books without first ascertaining compliance with all of the applicable
provisions of this Agreement with respect to such transfer.
6.3 Further Assurances. In recognition of the fact that the Shares
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are not available at the Closing for verification of the legend described in
Section 6.1 above, from time to time following the Closing, Common Stockholder
shall execute and deliver, or cause to be executed and delivered, to Purchasers
such other instruments as Purchasers may reasonably request or as may be
otherwise necessary to more effectively convey and transfer to, and vest in,
Purchasers the rights granted herein and to use his best efforts jointly with
Purchasers to secure to Purchasers the benefits thereof.
7. Successors and Assigns. Except as otherwise provided herein, this
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Agreement and the rights and obligation of the parties hereunder shall inure to
the benefit of, and be binding upon, the parties' respective successors, assigns
and legal representatives, provided that for this purpose the successors of the
Purchasers shall only be those persons who succeed to the rights of the
Purchasers under the Registration and Antidilution Rights Agreement, and Common
Stockholder may not assign his obligations hereunder except as expressly
permitted in Section 3 hereof. The Common Stockholder may require that any such
successor of a Purchaser wishing to receive the benefits of this Agreement
acknowledge in writing its drag along obligations under Section 4 hereof.
8. Amendment. Except for Section 4, any provision of this Agreement may
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be amended or the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the holders of a majority of the outstanding
shares of Common Stock held by the Purchasers. Section 4 may be amended or the
observance thereof waived with the written consent of Common Stockholder and the
holders of a majority of the outstanding shares of Common Stock held by the
Purchasers. No amendment may adversely affect the rights or obligations, or
increase the burdens on, the Common Stockholder or any Purchaser without the
consent of the Common Stockholder or Purchaser.
9. Governing Law. THIS AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE
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PARTIES ARISING HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO CONFLICTS OF LAWS
PROVISIONS.
10. Entire Agreement; Agreement Binding. The Note Documents, and the
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documents referred to herein and therein constitute the entire agreement between
the parties hereto pertaining to the subject matter hereof and expressly
supersede the Commitment Letter executed with respect to the subject matter
hereof and any and all other written or oral agreements relating to the subject
matter hereof existing between the parties hereto are expressly canceled.
11. Notices, Etc. Except as otherwise specifically provided herein, all
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notices and other communications required or permitted hereunder shall be in
writing and shall be deemed effectively given upon personal delivery to the
party to be notified, upon confirmation of receipt of telecopy or telegram by
the party to be notified or three (3) days after deposit with the United States
mail, by registered or certified mail, postage prepaid, addressed (a) if to a
Purchaser, at
6 Controlling Shareholder Agreement
such Purchaser's address as set forth in the Purchase Agreement or at
such other address as such Purchaser shall have furnished to the
Company in writing in accordance with this Section 11, (b) if to the
Common Stockholder, at such address as such Common Stockholder shall
have last furnished the Company in writing, or (c) if to the Company,
at its principal office.
12. Injunctive Relief. The parties acknowledge that money damages would
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be both difficult to calculate and an insufficient remedy for any breach of this
Agreement by them and that any such breach would cause the other parties
irreparable harm. Accordingly, the parties also agree that in the event of any
breach or threatened breach of this Agreement, the non-breaching parties, shall
be entitled, in addition to any other remedies at law or in equity they may
have, and without the requirement of posting a bond or other security, to
equitable relief, including injunctive relief and specific performance.
13. Attorneys' Fees. If any action at law or in equity is necessary to
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enforce or interpret the terms of any of the Agreements, the prevailing party
shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
14. Severability. If one or more provisions of this Agreement are held to
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be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
15. Delays or Omissions. No delay or omission to exercise any right,
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power or remedy accruing to any party under this Agreement, upon any breach or
default of any other party under this Agreement, shall impair any such right,
power or remedy of such non-breaching or non-defaulting party nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
16. Waiver of Jury Trial. Each of the parties hereto waives to the
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fullest extent permitted by law any right it may have to trial by jury in
respect of any claim, demand, action or cause of action based on, or arising out
of, under or in connection with this Agreement, or any course of conduct, course
of dealing, verbal or written statement or action of any party hereto, in each
case whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise. The parties to this Agreement each hereby agrees that any
such claim, demand, action or cause of action shall be decided by court trial
without a jury and that the parties to this Agreement may file an original
counterpart of a copy of this Agreement with any court as evidence of the
consent of the parties hereto to the waiver of their right to trial by jury.
7 Controlling Shareholder Agreement
17. Rules of Construction. No provision of this Agreement shall be
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construed in favor of or against any of the parties hereto by reason of the
extent to which any such party or its counsel participated in the drafting
thereof. References to sections herein include all subsections subsidiary to
the section referred to. Section headings herein have been inserted for
convenience of reference only, are not a part of this Agreement and shall not be
used in construing this Agreement.
18. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be an original and all of which together shall
constitute one instrument.
8 Controlling Shareholder Agreement
The foregoing Controlling Shareholder Agreement is hereby executed
effective as of the date first forth above.
Issuer: Purchaser:
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Emergent Information Technologies, Inc., Libra Mezzanine Partners, L.P.,
a California corporation a Delaware limited partnership
By: /s/ Xxxxxx X. Xxxxx By: LFM, LLC, its General Partner
Xxxxxx X. Xxxxx
Chairman By: Libra Investors, LLC,
its Managing Member
By: /s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
Managing Director
Purchaser: Purchaser:
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Libra Capital Partners, L.P., Libra Mezzanine Partners II, L.P.,
a Delaware limited partnership, a Delaware limited partnership,
By: LFE, LLC, By: LUSB, L.L.C., General Partner
its general partner
By: LIBRA INVESTORS III, L.L.C.,
By: Libra Investors II, LLC, its Managing Member
its managing member
By: /s/ Xxxxxxx X. Xxxx
By: /s/ Xxxxx X. Xxxxxxxx Xxxxxxx X. Xxxx
Xxxxx X. Xxxxxxxx Managing Director
President
Purchaser: Purchaser:
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Libra Mezzanine Partners II-A, L.P., Rocky Mountain Mezzanine Fund II, L.P.,
a Delaware limited partnership, a Colorado limited partnership
By: Libra Investors III-A, LLC, By: Rocky Mountain Capital Partners LLP,
its general partner its general partner
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxx Xxxxxx X. Xxxxx
Managing Director Managing Partner
Common Stockholder:
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Shares: 3,598,029
Address: _________________________________________
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