GOVERNANCE AGREEMENT
THIS GOVERNANCE AGREEMENT (this "Agreement"), dated as of February 14,
2000, is entered into by and between Phoenix International Ltd., Inc., a Florida
corporation (the "Company"), and London Bridge Software Holdings plc., a
corporation organized under the laws of England and Wales ("London Bridge").
WHEREAS, the Company and London Bridge contemporaneously are entering
into a Stock Purchase Agreement of even date herewith (as amended, the "Purchase
Agreement"), pursuant to which London Bridge has agreed to purchase, and the
Company has agreed to sell, shares of the Company's common stock, $0.01 par
value per share (the "Common Stock") on the terms and conditions set forth
therein (the "Purchase"); and
WHEREAS, London Bridge will Beneficially Own (as defined herein)
approximately 9.16% of the outstanding Common Stock of the Company as a result
of the Purchase and otherwise; and
WHEREAS, as a condition to the willingness of the Company to enter into
the Purchase Agreement, and each party, in order to induce the other to enter
into such agreement, has agreed to execute and deliver, or cause to be executed
and delivered, this Agreement concurrently with the closing of the Purchase
under the Purchase Agreement; and
WHEREAS, the Company and London Bridge desire to establish in this
Agreement certain terms and conditions concerning the corporate governance of
the Company after the closing of the Purchase under the Purchase Agreement; and
WHEREAS, the Company and London Bridge also desire to establish in this
Agreement certain terms and conditions concerning the acquisition and
disposition of securities of the Company by London Bridge.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly, through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, such first Person.
"Associate" has the meaning set forth in Rule 12b-2 under the Exchange
Act as in effect on the date of this Agreement.
"Beneficial Ownership" and any derivative thereof has the meaning set
forth in Rule 13d-3 under the Exchange Act as in effect on the date of this
Agreement.
"Board" means the Board of Directors of the Company.
"Buyout Transaction" means a tender offer, merger, stock purchase or
exchange, sale of all or substantially all of the Company's assets, business
combination or any similar transaction involving the Company or any of its
Subsidiaries, on the one hand, and London Bridge or any Affiliate or Associate
of London Bridge, on the other, that offers each holder of Voting Securities
(other than, if applicable, London Bridge or any Affiliate or Associate of
London Bridge) the opportunity to dispose of all Voting Securities Beneficially
Owned by such holder.
"Closing" shall have the meaning set forth in the Purchase Agreement.
"Common Stock" has the meaning set forth in the recitals to this
Agreement.
"Company" has the meaning set forth in the recitals to this Agreement.
"Control" and any derivation thereof shall have the meaning specified
in Rule 12b-2 under the Exchange Act as in effect on the date of this Agreement.
"Exchange Act" means the United States Securities and Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Governmental Entity" means any court, administrative agency,
regulatory body, commission or other governmental authority, board, bureau or
instrumentality, domestic or foreign and any subdivision thereof.
"Group" has the meaning set forth in Section 13(d) of the Exchange Act
as in effect on the date of this Agreement.
"Liens" shall mean all liens, encumbrances, mortgages, security
interests, charges, pledges, equities, hypothecations, rights in or to, and
other similar rights.
"London Bridge" has the meaning set forth in the recitals to this
Agreement.
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"Other Holders" means the holders of the Other Shares.
"Other Shares" means Voting Securities not Beneficially Owned by London
Bridge.
"Purchase" has the meaning set forth in the recitals to this Agreement.
"Purchase Agreement" has the meaning set forth in the recitals to this
Agreement.
"Person" means any individual, group, corporation, firm, partnership,
public limited company, private limited company, limited liability company,
joint venture, trust, business association, organization, Governmental Entity or
other entity.
"Purchased Common Stock" means the Common Stock purchased by London
Bridge pursuant to the Purchase Agreement and any stock or other securities of
the Company paid as a dividend with respect thereto.
"SEC" means the United States Securities and Exchange Commission or any
successor Governmental Entity.
"Securities Act" means the United States Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Stockholder Vote" means, as to any matter to be presented to the
holders of Voting Securities, a vote at a duly called and held annual or special
meeting of the holders of Voting Securities entitled to vote on such matter.
"Subsidiary" means, with respect to any Person, as of any date of
determination, any other Person as to which such Person owns, directly or
indirectly, or otherwise Controls, more than 50% of the voting shares or other
similar interests.
"Third Party Offer" means a bona written fide offer to enter into a
tender offer, merger, stock purchase or exchange, sale of all or substantially
all of the Company's assets, business combination or any similar transaction
involving the Company, made by a Person other than London Bridge, an Affiliate
of London Bridge or any Associate of or other Person acting on behalf of London
Bridge or any Affiliate of London Bridge.
"Total Voting Power of the Company" means the total number of votes
that may be cast in the election of directors of the Company if all Voting
Securities outstanding or treated as outstanding pursuant to the final sentence
of this definition were present and voted at a meeting held for such purpose.
The percentage of the Total Voting Power of the Company Beneficially Owned by
any Person is the percentage of the Total Voting Power of the Company that is
represented by the total number of votes that may be cast in the election of
directors of the Company by Voting Securities Beneficially Owned by such Person.
In determining the Voting Securities Beneficially Owned by any Person, Voting
Securities that
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are not outstanding but are then subject to immediate issuance upon exercise or
exchange of rights of conversion or any options, warrants or other rights (the
"Rights") Beneficially Owned by such Person shall be deemed to be outstanding
and shall be included in Voting Securities Beneficially Owned by such Person for
the purpose of computing the percentage of the Total Voting Power represented by
Voting Securities Beneficially Owned by such Person, but any Rights Beneficially
Owned by any other Person shall not be deemed to be outstanding for purpose of
computing the percentage of the Total Voting Power represented by Voting
Securities Beneficially Owned by the Person with respect to whom the calculation
is being performed.
"Voting Securities" means Common Stock, any other securities of the
Company or any Subsidiary of the Company entitled to vote generally in the
election of directors of the Company or such Subsidiary of the Company, and any
securities convertible into or exercisable or exchangeable for, any of the
foregoing.
ARTICLE II
STANDSTILL PROVISIONS
SECTION 2.1 Standstill.
(a) Except as otherwise expressly provided in this Agreement or as
specifically approved in writing by 66-2/3% of the members of the Board, for a
period of three (3) years from the date of this Agreement, neither London
Bridge, nor any of its Affiliates or Associates, nor any Group which London
Bridge Controls shall, directly or indirectly:
(i) by purchase or otherwise, acquire, agree to acquire or
offer to acquire Beneficial Ownership of, or any Liens with respect to,
any Voting Securities or direct or indirect rights or options to
Beneficially Own Voting Securities (including any voting trust
certificates representing such securities);
(ii) enter into, propose to enter into, solicit or support any
Buyout Transaction or Third Party Offer, or purchase, acquire or
propose to purchase, acquire, solicit or support the purchase or
acquisition of any portion of the business or assets of the Company or
any of its Subsidiaries by London Bridge or by any of its Affiliates or
Associates or by any other Person;
(iii) form, join or in any way participate in a Group (other
than a Group that may be formed in the future consisting solely of
London Bridge and its Affiliates) formed for the purpose of acquiring,
holding, voting or disposing of or taking any other action with respect
to Voting Securities other than the Purchased Common Stock;
(iv) solicit proxies by or on behalf of any Person other than
the Company with respect to any Voting Securities, become a
"participant" in an "election contest"
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(as such terms are used in Rule 14a-11 of Regulation 14A under the
Exchange Act) relating to the Board, or otherwise attempt to acquire or
alter Control of the business or affairs of the Company;
(v) deposit any Voting Securities in a voting trust or enter
into any voting agreement or arrangement with respect thereto (other
than this Agreement) which would entitle any Person to Control more
than 10% of the Total Voting Power of the Company;
(vi) publicly propose to do or permit any of the foregoing,
publicly propose to revise any of the standstill provisions of this
Agreement, or otherwise take any action challenging the validity or
enforceability of the foregoing or which would be inconsistent with the
foregoing; or
(vii) assist, advise, encourage, provide funds for, negotiate
or otherwise participate with or support any Person with respect to, or
otherwise seek to do, any of the foregoing or, except as set forth in
Section 2.3 below, participate, assist, advise, encourage, provide
funds for or otherwise support any Third Party Offer.
(b) Nothing in this Agreement shall (i) prohibit or restrict London
Bridge from responding to any inquiries from any Other Holders as to London
Bridge's intention with respect to the voting of any Voting Securities
Beneficially Owned by it so long as such response is consistent with the terms
of this Agreement; (ii) prohibit London Bridge from Beneficially Owning Voting
Securities issued as dividends or distributions in respect of, or issued upon
conversion, exchange or exercise of, securities which London Bridge is permitted
to Beneficially Own under this Agreement; (iii) prohibit any employee or agent
of London Bridge from purchasing or otherwise acquiring Voting Securities so
long as he or she is not a member of a Group that includes London Bridge or any
of its Affiliates or Associates or is not otherwise acting on behalf of London
Bridge or any of its Affiliates or Associates; or (iv) prohibit London Bridge
from disclosing in accordance with its obligations (if any) under the federal
securities laws or other applicable law (if any) that the Company has become the
subject of a Buyout Transaction or a Third Party Offer.
SECTION 2.2 Buyout Transaction. Nothing in this Agreement shall
prohibit or restrict London Bridge from proposing, participating in, supporting
or causing the consummation of a Buyout Transaction if (i) 66-2/3% of the
Company's Board approve in advance and in writing the Buyout Transaction and
(ii) the Buyout Transaction is consummated in accordance with the terms and
conditions approved by the Board.
SECTION 2.3 Third Party Offers. In the event that the Company becomes
the subject of a Third Party Offer not involving the participation of London
Bridge in any way, London Bridge may not support such Third Party Offer, vote in
favor of such Third Party Offer or tender or sell its Voting Securities to the
Person making such Third Party Offer unless the Third Party Offer is made
available to all of the Company's shareholders and each of the Other
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Holders are entitled to participate in the Third Party Offer on the same terms
and under the same conditions as London Bridge.
ARTICLE III
VOTING RESTRICTIONS
SECTION 3.1 Irrevocable Proxy. London Bridge shall execute and deliver
to the Company, as a condition to Closing, a proxy in the form attached hereto
as "Exhibit A," which shall be deemed to be coupled with an interest and
irrevocable for a period of one year from the date of this Agreement.
SECTION 3.2 Termination of Proxy. The Company agrees that the proxy
shall not be effective with respect to any Voting Securities transferred by
London Bridge in accordance with the transfer restrictions set forth in Article
IV below.
ARTICLE IV
TRANSFER RESTRICTIONS
SECTION 4.1 Restrictions.
(a) Except as provided in Section 2.3 or with the written consent of at
least 66-2/3% of the members of the Board, London Bridge shall not, directly or
indirectly, sell, transfer or otherwise dispose of any Voting Securities prior
to February 14, 2003 except as follows:
(i) in the public U.S. securities market, in accordance with
the volume and manner of sale limitations of Rule 144 under the
Securities Act (regardless of whether such limitations are applicable)
and otherwise subject to compliance with the Securities Act;
(ii) in the public U.S. securities market, in a registered
public offering pursuant to the terms and conditions of the
Registration Rights Agreement of even date herewith between the Company
and London Bridge; or
(iii) in a private sale, and subject to the provisions of
Section 4(b) below, if the purchaser agrees in writing, delivered by
the Company at least three business days in advance of such sale, (and
the terms of which are reasonably satisfactory to the Company), to be
bound by the terms and conditions of this Agreement.
(b) In addition to the restrictions set forth in Section 4.1(a), London
Bridge agrees as follows:
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(i) for a period of six months after Closing, it shall not,
without the prior written consent of the Company (which shall not be
unreasonably withheld), sell, transfer, assign, convey, dispose of or
otherwise reduce its risk of ownership with respect to, in whole or in
part, the Purchased Common Stock or any other securities of the
Company, or any rights with respect thereto; and
(ii) it shall not sell, transfer, assign or convey any Common
Stock or other securities of the Company, or any rights with respect
thereto, to a known competitor of the Company; provided, however, that
the foregoing transfer restriction of this Section 4.1(b) shall not
limit London Bridge's ability to sell Common Stock or other securities
of the Company pursuant to the Registration Rights Agreement or in
accordance with the terms and provisions of Rule 144 under the U.S.
Securities Act of 1933, as amended, unless such sales are conducted in
a manner whereby the purchaser(s) are identified to London Bridge or
its selling agents prior to such sale (in which case the prohibition on
sales to known competitors would still apply).
SECTION 4.2 Legends.
(a) Except as set forth in Section 4.2(b) below, during the term of
this Agreement, all certificates representing Voting Securities Beneficially
Owned by London Bridge shall bear an appropriate restrictive legend indicating
that such Voting Securities are subject to restrictions pursuant to this
Agreement.
(b) Upon any transfer or proposed transfer of Beneficial Ownership by
London Bridge of any Voting Securities to any Person that is permitted pursuant
to this Agreement, the Company shall, upon receipt of timely notice and such
certificates, opinions and other documentation as shall be reasonably requested
by the Company, cause certificates representing such transferred Voting
Securities to be issued (i) without any legend if upon consummation of such
transfer such Voting Securities are no longer "restricted securities" as defined
in Rule 144 under the Securities Act or (ii) without any reference to this
Agreement if upon consummation of such transfer such Voting Securities continue
to be "restricted securities."
SECTION 4.3 Effect. Any purported transfer of Voting Securities that is
inconsistent with the provisions of this Article IV shall be null and void and
of no force or effect.
ARTICLE V
TERMINATION
SECTION 5.1 Automatic Termination. This Agreement shall terminate
automatically on February 14, 2003.
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SECTION 5.2 Early Termination of Standstill and Voting Provisions. The
terms of Articles II and III above shall terminate and be of no further force or
effect prior to the termination of this Agreement pursuant to Section 5.1 above
if, but only if:
(i) the Board recommends to the Company's shareholders
approval of an agreement for a Third Party Offer in accordance with the
terms of the Company's Articles of Incorporation and Bylaws; or
(ii) the Company publicly announces that it is soliciting any
Third Party Offer.
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ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing in accordance with the
provisions for delivery of notices identified in the Purchase Agreement.
SECTION 6.2 Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "included," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." Nothing contained in this Agreement shall be
construed to prohibit or restrict the Company's ability to determine and
vigorously implement and defend the Company's strategic business objectives. In
addition, the parties acknowledge and agree that they have had the assistance of
counsel in the preparation of this Agreement and, therefore, this Agreement
shall be construed and interpreted without presumption against the party causing
this Agreement to be drafted.
SECTION 6.3 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is found to be invalid or unenforceable in any jurisdiction
(a) a suitable and equitable provision shall be substituted therefor, upon the
agreement of all of the parties hereto, in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
SECTION 6.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute a single agreement.
SECTION 6.5 Entire Agreement; No Third Party Beneficiaries. This
Agreement, together with the Purchase Agreement, the Confidentiality Agreement,
the Registration Rights Agreement and the other agreements contemplated hereby
and thereby, (a) 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; and (b) is not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
SECTION 6.6 Further Assurances. Each party shall execute, deliver,
acknowledge and file such other documents and take such further actions as may
be reasonably requested
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from time to time by the other party hereto to give effect to and carry out the
transactions contemplated herein.
SECTION 6.7 Governing Law; Jurisdiction; Equitable Remedies. This
Agreement shall be governed by and construed in accordance with the laws of the
United States of America and the State of Florida, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law. The
Company and the Shareholders irrevocably consent to the exclusive jurisdiction
and venue of the courts of any county in the State of Florida and the United
States Federal District Court of Florida, in any judicial proceeding brought to
enforce this Agreement. The parties agree that any forum other than the State of
Florida is an inconvenient forum and that a lawsuit (or non-compulsory
counterclaim) brought by one party against another party, in a court of any
jurisdiction other than the State of Florida should be forthwith dismissed or
transferred to a court located in the State of Florida. 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 or
were otherwise breached. It is accordingly agreed that the parties hereto shall
be entitled to equitable relief, including in the form of injunctions, in order
to enforce specifically the provisions of this Agreement, in addition to any
other remedy to which they are entitled at law or in equity.
SECTION 6.8 Amendments; Waivers.
(a) No provision of this Agreement may be amended or waived unless such
amendment or waiver is in writing and signed, in the case of an amendment, by
the parties hereto, or in the case of a waiver, by the party against whom the
waiver is to be effective. Notwithstanding any provision herein to the contrary,
if a majority of the members of the Board determine in good faith to do so, such
directors may seek to enforce, in the name and on behalf of the Company, the
terms of this Agreement against London Bridge.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 6.9 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder shall be assigned by either of the parties hereto without
the prior written consent of the other party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
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IN WITNESS WHEREOF, the parties have caused this Governance Agreement
to be duly executed and delivered, all as of the date first set forth above.
Phoenix International Ltd., Inc.
By: /s/ Raju M. Shivdasini
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Name: Raju M. Shivdasini
--------------------
Title: President & CEO
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London Bridge Software Holdings plc.
By: /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
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Title: Chairman
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EXHIBIT A
FORM OF IRREVOCABLE PROXY
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February __, 2000
Xx. Xxxxxx Xxxxxxxxxx
Chairman and CEO
Phoenix International Ltd., Inc.
000 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Xx. Xxxxxxxxxx:
Reference is made to that certain Stock Purchase Agreement (the
"Agreement"), the Governance Agreement and Registration Rights Agreement, each
dated February 14, 2000, between the undersigned and Phoenix International Ltd.,
Inc. (the "Company"), pursuant to which the undersigned has purchased 861,623
shares (the "Shares") of common stock of the Company. Defined terms used herein
which are not otherwise defined shall have the meaning set forth in the
Agreement.
The undersigned hereby irrevocably appoints you, Xxxxxx Xxxxxxxxxx, as
attorney and proxy, with full power of substitution, to vote or express written
consent or dissent in such manner as such attorney and proxy, or its substitute,
shall, in its sole discretion, deem proper and otherwise act (including pursuant
to any corporate action in writing without a meeting) with respect to all of the
Shares and any other securities of the Company issued as a dividend or other
distribution with respect thereto which the undersigned is entitled to vote at
any meeting of shareholders (whether annual or special and whether or not an
adjourned meeting) of the Company, or pursuant to written action taken in lieu
of any such meeting or otherwise.
This Proxy is irrevocable, is coupled with an interest sufficient in
law to support an irrevocable proxy, and is granted in consideration of and as
an inducement to cause you to enter into the transactions contemplated by the
Agreement and related documents and agreements executed in connection therewith.
This proxy shall revoke any other proxy granted by the undersigned at any time
with respect to the Shares and any other securities of the Company issued as a
dividend or other distribution with respect thereto and no subsequent proxies
will be given with respect thereto by the undersigned. In addition, if
subsequent to the date hereof, the undersigned is entitled to vote the Shares
and any other securities of the Company issued as a dividend or other
distribution with respect thereto for any purpose, then the undersigned shall
take all actions necessary to vote the Shares and any other securities of the
Company issued as a dividend or other distribution with respect thereto pursuant
to instructions received from you.
This irrevocable proxy shall continue in full force and effect until
February 14, 2001.
LONDON BRIDGE SOFTWARE HOLDINGS
PLC.
By:
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Its:
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Date:
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