Exhibit 7.4
EXECUTION VERSION
SHAREHOLDERS AGREEMENT
AGREEMENT, dated as of January 16, 1998 by and among
CHECKMATE ELECTRONICS INC., a Georgia corporation ("Checkmate"),
IVI CHECKMATE CORP., a Delaware corporation ("Parent"), and the
other parties signatory hereto, the names and addresses of which
are set forth on Schedule I hereto (each, a "Shareholder").
Capitalized terms used but not defined herein shall have the
meanings set forth in the Combination Agreement, dated the date
hereof (as such agreement may be amended from time to time, the
"Combination Agreement") by and among Checkmate, Parent,
International Verifact Inc., a Canadian corporation ("IVI"), and
Checkmate Merger Corporation, a Georgia corporation and a wholly
owned subsidiary of Parent ("Merger Sub").
WHEREAS, the Boards of Directors of IVI and Checkmate have
each determined that it is advisable and in the best interests of
their respective shareholders to carry out the transactions
contemplated by the Combination Agreement upon the terms and
subject to the conditions set forth therein;
WHEREAS, in furtherance of such transactions, the Board of
Directors of IVI has approved the reorganization of the capital
of IVI whereby each of the issued and outstanding common shares
in the capital of IVI (the "IVI Common Shares") will be
exchanged, at the holder's election, for either one (the "IVI
Exchange Ratio") share of common stock, $.01 par value of Parent
(the "Parent Common Stock"), or one Exchangeable Share (as
defined in the Combination Agreement) of IVI and certain
ancillary agreements will be entered into including the Voting
and Exchange Trust Agreement and the Support Agreement (such
reorganization referred to herein as the "Arrangement");
WHEREAS, the Exchangeable Shares are exchangeable by the
holders thereof for shares of Parent Common Stock on a
one-for-one basis at any time, subject to the terms of the
Arrangement;
WHEREAS, the Arrangement shall be effected under Section 192
of the Canada Business Corporations Act (the "CBCA") pursuant to
the terms hereof and the Plan of Arrangement;
WHEREAS, each Shareholder desires that IVI, Parent,
Checkmate and Merger Sub enter into the Combination Agreement and
each such Shareholder has agreed to enter into this Agreement
with Checkmate and Parent as an inducement to Checkmate, Parent
and Merger Sub to enter into and execute the Combination
Agreement.
NOW, THEREFORE, in consideration of the execution and
delivery by Checkmate, Parent and Merger Sub of the Combination
Agreement and the mutual agreements contained herein, and
intending to be legally bound, the parties hereby agree as
follows:
Section 1. Certain Definitions. The following terms,
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when used in this Agreement, shall have the following meanings
(such definitions to be equally applicable to both singular and
plural terms of the terms defined):
"beneficially own" or "beneficial ownership" with respect to
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any securities shall mean having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the
Exchange Act), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative
counting of the same securities by the same holder, securities
beneficially owned by a Person shall include securities
beneficially owned by all other Persons with whom such Person
would constitute a "group" as described in Section 13(d)(3) of
the Exchange Act.
"Shares" means the Existing Shares, together with any IVI
Common Shares acquired of record or beneficially by such
Shareholder in any capacity after the date hereof and prior to
the termination hereof, whether upon exercise of any Rights;
provided, however, that in the event of a stock dividend or
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distribution, or any change in the IVI Common Shares by reason of
any stock dividend, split-up, recapitalization, combination,
exchange of shares or the like, the term "Shares" shall be deemed
to refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for
which any or all of the Shares may be changed or exchanged.
Section 2. Representations and Warranties of
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Shareholders. ((1)) Each Shareholder hereby, severally and
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not jointly, represents and warrants to Checkmate and Parent as
follows:
(A) Such Shareholder is the record and beneficial
owner of the number of IVI Common Shares as is set forth
opposite such Shareholder's name on Schedule I hereto (the
"Existing Shares").
(B) On the date hereof, the Existing Shares set forth
opposite such Shareholder's name on Schedule I hereto
constitute all of the outstanding IVI Common Shares owned of
record or beneficially by such Shareholder. Such Shareholder
does not have record or beneficial ownership of any Shares
not set forth on Schedule I hereto.
(C) Such Shareholder has sole power of disposition
with respect to all of the Existing Shares set forth
opposite such Shareholder's name on Schedule I and sole
voting power with respect to the matters set forth in
Section 3 hereof and sole power to demand dissenter's or
appraisal rights, in each case with respect to all of the
Existing Shares set forth opposite such Shareholder's name
on Schedule I, with no restrictions on such rights, subject
to applicable federal securities laws and the terms of this
Agreement.
(1) Such Shareholder will have sole power of disposition
with respect to Shares other than Existing Shares, if any, which
become beneficially owned by such Shareholder and will have sole
voting power with respect to the matters set forth in Section 3
hereof and sole power to demand dissenter's or appraisal rights,
in each case with respect to all Shares other than Existing
Shares, if any, which become beneficially owned by such
Shareholder with no restrictions on such rights, subject to
applicable federal securities laws and the terms of this
Agreement.
(2) Such Shareholder has the legal capacity, power and
authority to enter into and perform all of such Shareholder's
obligations under this Agreement. This Agreement has been duly
and validly executed and delivered by such Shareholder and
constitutes a valid and binding agreement of such Shareholder,
enforceable against such Shareholder in accordance with its
terms. There is no person whose consent is required for the
execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby. If such Shareholder is
married and such Shareholder's Shares constitute community
property, this Agreement has been duly authorized, executed and
delivered by, and constitutes a valid and binding agreement of,
such Shareholder's spouse, enforceable against such person in
accordance with its terms.
(3) Except for filings under the HSR Act, if applicable,
(i) no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by such Shareholder
and the consummation by such Shareholder of the transactions
contemplated hereby and (ii) neither the execution and delivery
of this Agreement by such Shareholder nor the consummation by
such Shareholder of the transactions contemplated hereby nor
compliance by such Shareholder with any of the provisions hereof
shall (A) conflict with or result in any breach of any applicable
trust, partnership agreement, trust agreement, voting agreement,
shareholders agreement, voting trust or other agreement or
organizational document applicable to such Shareholder, (B)
result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise
to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or
other instrument or obligation of any kind to which such
Shareholder is a party or by which such Shareholder or any of
such Shareholder's properties or assets may be bound or (C)
violate any order, writ, injunction, decree, judgment, statute,
rule or regulation applicable to such Shareholder or any of such
Shareholder's properties or assets.
(4) Such Shareholder's Shares and the certificates
representing such Shares are now and at all times during the term
hereof will be held by such Shareholder, or by a nominee or
custodian for the benefit of such Shareholder, free and clear of
all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other
encumbrances whatsoever, except for any such encumbrances or
proxies arising hereunder.
(5) No broker, investment banker, financial adviser or
other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with
the transactions contemplated hereby based upon arrangements made
by or on behalf of such Shareholder in his or her capacity as
such.
(6) Such Shareholder understands and acknowledges that IVI,
Parent, Checkmate and Merger Sub are entering into the
Combination Agreement in reliance upon such Shareholder's
execution and delivery of this Agreement. Such Shareholder
acknowledges that the irrevocable proxy set forth in Section 3 is
granted in consideration for the execution and delivery of the
Combination Agreement by IVI, Parent and Merger Sub.
Section 3. Agreement to Vote; Proxy
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(a) Each Shareholder hereby, severally and not jointly,
agrees that, until the Termination Date (as defined in Section
9), at any meeting of the shareholders of IVI, called to vote
upon the Combination Agreement or the Arrangement, or at any
adjournment thereof or in connection with any written consent of
the shareholders of IVI for such purpose (the "Shareholders
Meeting"), such Shareholder shall vote (or cause to be voted) the
Shares held of record or beneficially by such Shareholder (i) in
favor of the Arrangement, the execution and delivery by the IVI
of the Combination Agreement and the approval of the terms
thereof and each of the other actions contemplated by the
Combination Agreement and this Agreement and any actions required
in furtherance hereof and thereof; and (ii) against any action or
agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement
of IVI under the Combination Agreement or this Agreement. Such
Shareholder shall not enter into any agreement or understanding
with any person or entity to vote or give instructions in any
manner inconsistent with clauses (i) or (ii) of the preceding
sentence.
(b) EACH SHAREHOLDER HEREBY IRREVOCABLY GRANTS TO, AND
APPOINTS, CHECKMATE AND ANY DESIGNEE OF CHECKMATE, AND EACH OF
THEM INDIVIDUALLY, SUCH SHAREHOLDER'S IRREVOCABLE (UNTIL THE
TERMINATION DATE) PROXY AND ATTORNEY-IN-FACT (WITH FULL POWER OF
SUBSTITUTION), FOR AND IN THE NAME, PLACE AND STEAD OF SUCH
SHAREHOLDER, TO VOTE THE SHARES AS INDICATED IN SECTION 3(a)
ABOVE. EACH SHAREHOLDER INTENDS THIS PROXY TO BE IRREVOCABLE
(UNTIL THE TERMINATION DATE) AND COUPLED WITH AN INTEREST AND
WILL TAKE SUCH FURTHER ACTION AND EXECUTE SUCH OTHER INSTRUMENTS
AS MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY AND
HEREBY REVOKES ANY PROXY PREVIOUSLY GRANTED BY SUCH SHAREHOLDER
WITH RESPECT TO SUCH SHAREHOLDER'S SHARES.
Section 4. Certain Covenants of Shareholders. Except in
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accordance with the terms of this Agreement, each Shareholder
hereby severally covenants and agrees as follows:
(a) Prior to the Termination Date, no Shareholder
shall, in its capacity as such, directly or indirectly
(including through advisors, agents or other
intermediaries), solicit (including by way of furnishing
information) or respond to any inquiries or the making of
any proposal by any person or entity (other than Merger Sub
or any affiliate thereof) with respect to IVI that
constitutes or could reasonably be expected to lead to an
Acquisition Proposal (as defined in Section 10.2 of the
Combination Agreement), provided, however, that the
foregoing shall not restrict a Shareholder who is also a
director of IVI from taking actions in such Shareholder's
capacity as a director to the extent and in the
circumstances permitted by Section 10.2 of the Combination
Agreement. If any Shareholder in its capacity as such
receives any such inquiry or proposal, then such Shareholder
shall promptly inform IVI of the terms and conditions, if
any, of such inquiry or proposal and the identity of the
person making it. Each Shareholder, in its capacity as
such, will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the
foregoing.
(b) Each Shareholder hereby waives any rights of
appraisal, or rights to dissent from the Arrangement and the
transactions contemplated by the Combination Agreement, that
such Shareholder may have.
Section 5. Further Assurances. From time to time, at the
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other party's request and without further consideration, each
party hereto shall execute and deliver such additional documents
and take all such further action as may be necessary or desirable
to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
Section 6. Certain Events. Each Shareholder agrees that
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this Agreement and the obligations hereunder shall attach to such
Shareholder's Shares and shall be binding upon any person or
entity to which legal or beneficial ownership of such Shares
shall pass, whether by operation of law or otherwise, including
without limitation such Shareholder's heirs, guardians,
administrators or successors or as a result of any divorce.
Section 7. Stop Transfer. Each Shareholder agrees with,
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and covenants to, Checkmate that such Shareholder shall not
request that Instant register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest
representing any of such Shareholder's Shares, unless such
transfer is made in compliance with this Agreement.
Section 8. Rule 145 Affiliates. Each Shareholder who is
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an "affiliate" of IVI for purposes of Rule 145 under the
Securities Act of 1933, as amended, hereby agrees to deliver to
Instant, on or prior to the Effective Date (as defined in the
Combination Agreement) a written agreement, substantially in the
form of Exhibit G-2 to the Combination Agreement.
Section 9. Termination. The obligations of the
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Shareholders shall terminate upon the first to occur of (a) the
Effective Time and (b) the date the Combination Agreement is
terminated in accordance with its terms (the "Termination Date");
provided that the provisions of Sections 2, 3 and 10 and any
claim for breach of any representation, warranty, covenant or
other agreement under this Agreement shall survive the Effective
Time and/or the Termination Date, as applicable.
Section 10. Miscellaneous.
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(a) All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly received if so
given) by hand delivery, telegram, telex or telecopy, or by
mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service providing proof
of delivery. All communications hereunder shall be
delivered to the respective parties at the following
addresses:
If to the Shareholders, to the addresses set forth on
Schedule I hereto:
If to Checkmate: Checkmate Electronics Inc.
0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
Telecopier:
copy to: Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Hill Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
or to such other address as the person to whom notice is given
may have previously furnished to the others in writing in the
manner set forth above.
(b) At any time prior to the Effective Time, any party
hereto may, with respect to any other party hereto, (i)
extend the time for the performance of any of the
obligations or other acts, (ii) waive any inaccuracies in
the representations and warranties contained herein or in
any document delivered pursuant hereto or (iii) waive
compliance with any of the agreements or conditions
contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
(c) The headings contained in this Agreement are for
the convenience of reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
(d) If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal
substance of the transactions contemplated by the
Combination Agreement is not affected in any manner adverse
to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent
of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated by the
Combination Agreement are fulfilled to the extent possible.
(e) This Agreement, including all exhibits, disclosure
schedules and schedules hereto, constitutes the entire
agreement and supersedes all prior agreements and
undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof and
except as otherwise expressly provided herein.
(f) Except as provided in Section 3(b), neither this
Agreement nor any of the rights or obligations hereunder may
be assigned by any party (whether by operation of law or
otherwise) without the prior written consent of the other
parties hereto. Subject to the preceding sentence, this
Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and
permitted assigns, and no other Person shall have any right,
benefit or obligation under this Agreement as a third party
beneficiary or otherwise.
(g) The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their
specific terms. It is accordingly agreed that the parties
hereto shall be entitled to specific performance of the
terms hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.
(h) No failure or delay on the part of any party
hereto in the exercise of any right hereunder shall impair
such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty
or agreement herein, nor shall any single or partial
exercise of any such right preclude other or further
exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to,
and not exclusive of, any rights or remedies otherwise
available.
(i) Notwithstanding anything herein to the contrary,
no Person executing this Agreement who is, or becomes during
the term hereof, a director of IVI makes any agreement or
understanding herein in his or her capacity as such
director, and the agreements set forth herein shall in no
way restrict any director in the exercise of his or her
fiduciary duties as a director of IVI. Each Shareholder has
executed this Agreement solely in his or her capacity as the
record or beneficial holder of such Shareholder's Shares or
as the trustee of a trust whose beneficiaries are the
beneficial owners of such Shareholder's Shares.
(j) Each party agrees to bear its own expenses in
connection with the transactions contemplated hereby.
(k) This Agreement shall be governed by, and construed
in accordance with, the laws of the Province of Ontario,
without regard to any principles of conflicts of law that
might indicate the applicability of the laws of any
jurisdiction other than the Province of Ontario.
(l) EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THE COMBINATION AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.
(m) This Agreement may be executed in one or more
counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
CHECKMATE ELECTRONICS INC.
By: /s/ X.X. Xxxxxx
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Name:
Title:
IVI CHECKMATE CORP.
By: /s/ L. Xxxxx Xxxxxxx
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Name: L. Xxxxx Xxxxxxx
Title: President & CEO
SHAREHOLDERS:
By: /s/ Xxxxxx Xxxxxxx
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Name: /s/ Xxxxxx Xxxxxxx
Managing Director
By:
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Name:
By:
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Name:
SCHEDULE I
SHAREHOLDERS' AGREEMENT
LIST OF SHAREHOLDERS
XXXXXX XXXXXXX
0, Xxxx xx Xxxx Xxxxxx
00000 Xxxxxxx
Xxxxx, Xxxxxx
J. XXXXXXXX XXXXXX
0000 Xxxxxxx Xxxx
Xxxxxxx, XX
X.X.X. 00000
XXXXXX XXXXX
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX
X.X.X. 00000