EXHIBIT 4
EXECUTION COPY
SHAREHOLDERS' AGREEMENT
BY AND AMONG
GEMINI SYSTEMS CORPORATION N.V.,
TOSCAL N.V.,
OZF LTD.,
VISIONVEST CORPORATION N.V.,
WALTHROUP CORPORATION N.V.,
S-C INDIGO CV,
HEWLETT-PACKARD EUROPE B.V.,
HEWLETT-PACKARD COMPANY,
AND
INDIGO N.V.
DATED AS OF
SEPTEMBER 13, 2000.
TABLE OF CONTENTS
Page
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RECITALS ....................................................................1
AGREEMENT....................................................................2
ARTICLE 1 DEFINITIONS...................................................2
ARTICLE 2 REPRESENTATION AND WARRANTIES ................................8
2.1 Binding Obligations...........................................8
ARTICLE 3 TRANSFERS OF COMMON SHARES....................................8
3.1 Transfer Restrictions - Purchaser.............................8
3.2 Transfer Restrictions - Major Shareholders ...................13
3.3 Tag-Along Rights..............................................15
3.4 Drag-Along Rights.............................................16
3.5 Anti-dilution Rights ........................................ 17
ARTICLE 4 STANDSTILL PROVISION.........................................19
4.1 On or before the Third Anniversary of the Closing.............19
4.2 After the Third Anniversary of the Closing....................21
ARTICLE 5 SHAREHOLDER VOTING...........................................22
5.1 Board Seats ..................................................22
5.2 Voting........................................................23
ARTICLE 6 FUTURE ISSUANCES ............................................23
6.1 Approval of New Issuance .....................................23
ARTICLE 7 LEGENDS .....................................................24
ARTICLE 8 MISCELLANEOUS ...............................................24
8.1 Additional Acquisition by Purchaser and the Major
Shareholders..................................................24
8.2 HP Undertaking................................................24
8.3 Amendments and Waivers .......................................24
8.4 Governing Law.................................................25
8.5 Notices ......................................................25
8.6 Entire Agreement..............................................28
8.7 Assignment; Successors and Assigns............................28
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8.8 No Agency.....................................................29
8.9 Severability..................................................29
8.10 Counterparts ................................................29
8.11 Headings; References ........................................29
8.12 Further Assurances...........................................29
8.13 Specific Performance.........................................29
8.14 Effectiveness................................................29
8.15 Termination of the Shareholders' Agreement...................30
8.16 Share Purchase by Sub........................................30
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Shareholders' Agreement (this "AGREEMENT"), dated as of September 13, 2000,
among GEMINI SYSTEMS CORPORATION N.V., a company organized under the laws of The
Netherlands Antilles ("GEMINI"), TOSCAL N.V., a company organized under the laws
of The Netherlands Antilles ("TOSCAL"), OZF LTD., a company organized under the
laws of the British Virgin Islands ("OZF"), VISIONVEST CORPORATION N.V., a
company organized under the laws of The Netherlands Antilles and a wholly-owned
subsidiary of Toscal ("VISIONVEST"), WALTHROUP CORPORATION N.V., a company
organized under the laws of The Netherlands Antilles and a wholly-owned
subsidiary of Toscal ("WALTHROUP", and together with Gemini, Toscal, OZF and
Visionvest, the "LFT SHAREHOLDERS"), S-C INDIGO CV, a limited partnership
organized under the laws of The Netherlands Antilles ("S-C", and together with
the LFT Shareholders, the "MAJOR SHAREHOLDERS"), HEWLETT-PACKARD Europe B.V., a
company organized under the laws of The Netherlands ("PURCHASER", and together
with the Major Shareholders, each a "SHAREHOLDER" and collectively, the
"SHAREHOLDERS"), HEWLETT-PACKARD COMPANY, a company organized under the laws of
Delaware ("HP"), and INDIGO N.V., a company organized under the laws of The
Netherlands (the "COMPANY," and together with the Major Shareholders, Purchaser
and HP, each a "PARTY" and collectively, the "PARTIES").
RECITALS
A. Pursuant to a Stock Purchase Agreement dated as of September 13, 2000
(the "SHARE PURCHASE AGREEMENT") between the Company and Purchaser, Purchaser
has agreed to purchase, or cause a newly formed wholly-owned subsidiary
(disregarding for the purpose of determining such ownership any capital stock or
other interest owned by any other Person for the purpose of complying with the
corporate governance laws of any jurisdiction or securities market or exchange
or for tax planning purposes) of Purchaser ("Sub") to purchase, and the Company
has agreed to issue and sell to Purchaser or Sub, subject to the terms and
conditions therein, 14,814,814 newly issued Common Shares (as defined below), at
US$6.75 per share, for an aggregate purchase price of US$99,999,994.50.
B. Contemporaneously with the Closing of the transactions contemplated in
the Share Purchase Agreement, the Company and Purchaser will enter into a
Registration Rights Agreement.
C. Contemporaneously with the Closing of the transactions contemplated in
the Share Purchase Agreement, the Company will issue to Purchaser acquisition
warrants pursuant to an Acquisition Warrant (the "ACQUISITION WARRANT").
D. Contemporaneously with the Closing of the transactions contemplated in
the Share Purchase Agreement, the Company will issue to Purchaser performance
warrants pursuant to a Performance Warrant (the "PERFORMANCE WARRANT," and
together with the Acquisition Warrant, the "WARRANTS").
E. Contemporaneously with the execution of this Agreement, the Company and
HP are entering into a Jericho Co-Development Agreement (the "JERICHO
AGREEMENT").
F. Contemporaneously with the execution of this Agreement, the Company and
HP are entering into an OEM Agreement (the "OEM AGREEMENT," and together with
the Jericho Agreement, the "COMMERCIAL AGREEMENTS").
G. The Shareholders and the Company desire to provide for certain mutual
rights and obligations and the interests of the Company with respect to the
Common Shares now owned by or hereafter acquired by the Shareholders by imposing
certain restrictions and obligations on themselves with respect to the transfer
and voting of the Common Shares and the other matters set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company, the Shareholders and HP agree as follows:
AGREEMENT
ARTICLE 1
DEFINITIONS
When used herein, the following terms shall have the following meanings:
"AFFILIATE" shall mean, when used with respect to a specified Person, a
general partner of such Person or another Person that directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with the Person specified, where "control" means possession,
directly or indirectly, of power to direct or cause the direction of management
or policies of the specified Person (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"AGREEMENT" shall have the meaning assigned to such term in the
introductory paragraph hereof.
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"ANTI-DILUTION RIGHTS" shall have the meaning assigned to such term in
Section 3.5.
"ANTI-DILUTION PRO RATA SHARE" shall have the meaning assigned to such term
in Section 3.5.
"APPLICABLE LAW" shall mean with respect to any specified Person, any
domestic or foreign statute, law, ordinance, rule, administrative interpretation
or guidance, regulation, order, writ, injunction, directive, judgment, decree or
other requirement of any Governmental Authority, that is applicable to such
Person, or any of its respective properties or assets.
"ACQUISITION WARRANT" shall have the meaning assigned to such term in
RECITAL C.
"BOARD" shall mean the supervisory board of the Company.
"CHANGE OF CONTROL" shall mean (a) the acquisition of ownership, directly,
or indirectly, beneficially or of record, by any Person or group other than HP
or an Affiliate of HP or the LFT shareholders or an Affiliate of the LFT
Shareholders, of shares representing more than 50% of the aggregate voting power
represented by the issued and outstanding share capital of the Company; (b)
occupation of a majority of the seats (other than vacant seats) on either the
Management Board or the Board by Persons who were not nominated to such board by
a majority of the members of such board which members are, in respect of each
board, either (1) members of such board as of the date hereof, (2) nominees of a
majority of such members, (3) nominees of a majority of such nominees or such
members or (4) nominees of a majority of any members described by the foregoing
clauses (1), (2) or (3); or (c) the acquisition of the power, directly or
indirectly, to direct or cause the direction of the management or policies of
the Company, whether through the ability to exercise voting power, by contract
or otherwise.
"CLOSING" shall have the meaning assigned to such term in the Share
Purchase Agreement.
"COMBINED BOARD" shall mean the combined board of the supervisory board and
the Management Board of the Company.
"COMMERCIAL AGREEMENTS" shall have the meaning assigned to such term in
Recital F.
"COMMON SHARES" shall mean the Company's common shares, par value NLG 0.04
per share.
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"COMMON SHARE EQUIVALENTS" shall mean any outstanding options, warrants,
preferred stock or other rights to purchase or convert into Common Shares.
"COMPANY" shall have the meaning assigned to such term in the introductory
paragraph hereof.
"DRAG-ALONG NOTICE" shall have the meaning assigned to such
term in SECTION 3.4.
"DRAG-ALONG RIGHTS" shall mean the rights of the Major Shareholders to
require Purchaser to participate in certain proposed transfers of Common Shares
under SECTION 3.4.
"DRAG-ALONG SALE" shall have the meaning assigned to such term in SECTION
3.4.
"GEMINI" shall have the meaning assigned to such term in the introductory
paragraph hereof.
"GOVERNMENTAL AUTHORITY" shall mean any foreign, domestic, national,
provincial, territorial or local governmental authority, quasi-governmental
authority, court, government organization, commission or any regulatory,
administrative or other agency, or any political or other subdivision,
department or branch of any of the foregoing.
"HP" shall have the meaning assigned to such term in the introductory
paragraph hereof.
"INTERMEDIARY FEES" shall have the meaning assigned to such term in SECTION
3.4.
"JERICHO AGREEMENT" shall have the meaning assigned to such term in RECITAL
E.
"LFT SHAREHOLDERS" shall have the meaning assigned to such term in the
introductory paragraph hereof.
"MAJOR ACTION" shall mean an action with respect to (i) any merger or
consolidation of the Company, (ii) any disposition of the Company's assets,
which disposition requires a vote of the shareholders of the Company under Dutch
law, (iii) any Change of Control of the Company or (iv) any liquidation of the
Company.
"MAJOR SHAREHOLDERS" shall have the meaning assigned to such term in the
introductory paragraph hereof.
"MANAGEMENT BOARD" shall mean the management board of the Company.
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"MARKET PRICE" of any security of the Company shall mean the weighted
average of the trading prices of such the security's sales on all securities
exchanges on which such security may at the time be listed, or, if there has
been no sales on any such exchange on any day, the weighted average of the bid
and asked prices on the primary exchange on which such security is listed at the
end of such day, or, if on any day such security is not so listed, the weighted
average of the bid and asked prices quoted in the Nasdaq Stock Market as of the
close of trading, or, if on any day such security is not quoted in the Nasdaq
Stock Market, the weighted average of the bid and asked prices on such day in
the domestic over-the-counter market as reported by Pink Sheets LLC or any
similar successor organization, in each such case averaged over a period of
twenty (20) consecutive business days ending on the day prior to the day "Market
Price" is being determined. If at any other time such security is not listed on
any securities exchange or quoted in the Nasdaq Stock Market or the
over-the-counter market, the "Market Price" will be the fair value thereof
determined by the Board in good faith. If Purchaser or any of the Major
Shareholders objects to the determination of the Board or if the Board is unable
to reach agreement, in each case within a reasonable period of time, such market
price will be determined by an independent appraiser selected by the Board. If
Purchaser or any of the Major Shareholders objects to the appraiser selected by
the Board, the Board and the Purchaser and/or the Major Shareholders, as the
case may be, shall each select an appraiser, and the two appraisers shall select
a third appraiser, in which case the market value shall be the median of these
appraisers, which appraised value shall be binding on all parties. The fees and
expenses of all appraisers hereunder shall be borne equally by the Company,
and/or Purchaser and/or the Major Shareholders, as the case may be.
"MINIMUM HOLDING" shall have the meaning assigned to such term in SECTION
5.1.
"NEW SECURITIES" shall have the meaning assigned to such term in SECTION
3.5.
"OEM AGREEMENT" shall have the meaning assigned to such term in RECITAL F.
"OFFERED SHARES" shall have the meaning assigned to such term in SECTION
3.1.
"OZF" shall have the meaning assigned to such term in the introductory
paragraph hereof.
"PARTY" OR "PARTIES" shall have the meaning assigned to such term in the
introductory paragraph hereof.
"PERFORMANCE WARRANT" shall have the meaning assigned to such term in
RECITAL D.
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"PERSON" shall mean any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Securities Exchange Act.
"PURCHASE NOTICE" shall have the meaning assigned to such term in SECTION
3.1.
"PURCHASER" shall have the meaning assigned to such term in the
introductory paragraph hereof.
"PURCHASER PURCHASE NOTICE" shall have the meaning assigned to such term in
SECTION 3.4.
"QUALIFIED PURCHASE NOTICE" shall have the meaning assigned to such term in
SECTION 3.1.
"QUALIFIED SALE" shall have the meaning assigned to such term in SECTION
3.1.
"QUALIFIED SALE NOTICE" shall have the meaning assigned to such term in
SECTION 3.1.
"REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering of the effectiveness of such
registration statement.
"RESTRICTED TRANSACTION" shall have the meaning assigned to such term in
SECTION 3.2.
"RESTRICTED TRANSACTION NOTICE" shall have the meaning assigned to such
term in SECTION 3.2.
"RIGHT OF FIRST OFFER" shall mean the rights afforded to the Company and/or
the Major Shareholders in SECTION 3.1.
"RIGHT OF FIRST REFUSAL" shall mean the rights afforded to the Company
and/or the Major Shareholders in SECTION 3.1.
"S-C" shall have the meaning assigned to such term in the introductory
paragraph hereof.
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"SEC" shall mean the United States Securities and Exchange Commission (or
any successor agency thereto).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"SELLING MAJOR SHAREHOLDERS" shall have the meaning assigned to such term
in SECTION 3.4.
"SELLING SHAREHOLDER" shall have the meaning assigned to such term in
SECTION 3.3.
"SERIES A PREFERRED SHARES" shall mean the Series A Convertible Preferred
Shares of the Company.
"SHARE PURCHASE AGREEMENT" shall have the meaning assigned to such term in
RECITAL A.
"SHAREHOLDER(S)" shall have the meaning assigned to such term in the
introductory paragraph hereof.
"Sub" shall have the meaning assigned to such term in RECITAL A.
"TAG-ALONG NOTICE" shall have the meaning assigned to such term in SECTION
3.3.
"TAG-ALONG RIGHTS" shall mean the rights of Purchaser to participate in
certain proposed transfers of Common Shares by the Major Shareholders as set
forth in SECTION 3.3.
"TOSCAL" shall have the meaning assigned to such term in the introductory
paragraph hereof.
"TRANSFER," with respect to any Common Shares, shall mean to sell, assign,
transfer or otherwise dispose of, place or permit any encumbrance or other
restriction upon, or grant any right or interest in, any of such Common Shares.
"TRANSFER NOTICE" shall have the meaning assigned to such term in SECTION
3.1.
"VISIONVEST" shall have the meaning assigned to such term in the
introductory paragraph hereof.
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"WALTHROUP" shall have the meaning assigned to such term in the
introductory paragraph hereof.
"WARRANTS" shall have the meaning assigned to such term in RECITAL D.
ARTICLE 2
REPRESENTATION AND WARRANTIES
2.1. BINDING OBLIGATIONS. (a) Each Shareholder, with respect to itself
only, hereby represents and warrants that this Agreement has been duly
authorized, executed and delivered by it and constitutes a valid and binding
obligation of such Shareholder enforceable against such Shareholder in
accordance with its terms, except that (1) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium, rehabilitation, liquidation,
conservatorship, receivership or other similar laws now or hereafter in effect
relating to creditors' rights generally and (2) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(b) The Company hereby represents and warrants that this Agreement has been
duly authorized, executed and delivered by the Company, and constitutes a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except that (1) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium, rehabilitation, liquidation,
conservatorship, receivership or other similar laws now or hereafter in effect
relating to creditors' rights generally and (2) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
ARTICLE 3
TRANSFERS OF COMMON SHARES
3.1. TRANSFER RESTRICTIONS - PURCHASER.
(a) ON OR BEFORE THE FIRST ANNIVERSARY OF THE CLOSING. On or before the
first anniversary of the Closing, Purchaser shall not, and shall cause Sub not
to, directly or indirectly, Transfer any of its Common Shares or enter into any
commitment to do any of the foregoing.
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(b) AFTER THE FIRST ANNIVERSARY OF THE CLOSING. After the first anniversary
of the Closing, Purchaser or Sub may only Transfer its Common Shares pursuant to
(1) a registration statement filed under the Securities Act with the SEC or any
similar authority outside the United States, (2) pursuant to Rule 144
promulgated under the Securities Act or any successor Rule thereunder or (3)
pursuant to any other exemption from registration under the Securities Act,
subject to receipt of an opinion of counsel, in form and substance reasonably
satisfactory to the Company, that such Transfer is exempt from such
registration.
(c) TRANSFER TO AN AFFILIATE. Notwithstanding Sections 3.1(a) and (b),
Purchaser or Sub may Transfer all of its Common Shares to HP or a direct or
indirect wholly-owned subsidiary of HP (disregarding for the purpose of
determining such ownership any capital stock or other interest owned by any
other Person for the purpose of complying with the corporate governance laws of
any jurisdiction or securities market or exchange or for tax planning purposes),
PROVIDED, that prior to such Transfer, the prospective subsidiary transferee (1)
agrees in writing, in form and substance reasonably satisfactory to the Major
Shareholders and the Company, to be bound by the terms and conditions of this
Agreement as if it were "Purchaser" hereunder and (2) delivers to the Company an
opinion of counsel, reasonably satisfactory in form and substance to the
Company, to the effect that the agreement referred to in subsection (1) above is
a legal, valid and binding obligation of such prospective subsidiary transferee,
enforceable against it in accordance with its terms and that the Transfer, if
consummated, will be in accordance with, or pursuant to an exemption from, any
applicable securities laws and any other Applicable Laws.
(d) RIGHT OF FIRST REFUSAL OF THE COMPANY AND THE MAJOR SHAREHOLDERS. (1)
Any proposed Transfer of Common Shares by Purchaser occurring after the first
anniversary of the Closing but on or before the second anniversary of the
Closing (other than pursuant to Section 3.1(c) and except in the case of a
Qualified Sale (as defined in Section 3.1(e)), shall be made in accordance with
this Section 3.1(d). Prior to any such proposed Transaction, Purchaser shall
give the Company and the Major Shareholders written notice (the "TRANSFER
NOTICE"), which notice shall include (a) the number of Common Shares proposed to
be transferred by Purchaser (the "OFFERED SHARES"), (b) the identity of the
prospective transferee, (c) the per share price which the prospective transferee
has agreed to pay and all other material terms of the proposed purchase in
reasonable detail and (d) a statement that the terms specified in the Transfer
Notice are a bona fide offer to purchase by such proposed transferee and a
representation by HP that, to the best knowledge of HP after reasonable inquiry,
the proposed transferee is a principal and not an agent acting on behalf of an
undisclosed principal.
(2) Upon receiving the Transfer Notice, the Company shall have the right to
purchase some or all of the Offered Shares on the same terms as those as set
forth in the
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Transfer Notice by delivering to Purchaser, with a copy to all of the Major
Shareholders, no later than twenty (20) calendar days after receipt of the
Transfer Notice, a written notice of its intention to do so (the "PURCHASE
NOTICE"). The Purchase Notice shall specify the number of shares of Offered
Shares which the Company intends to purchase. If the Company does not intend to
purchase all of the shares of Offered Shares, each of the LFT Shareholders and
S-C shall have the right to purchase up to its pro rata portion of the remaining
Offered Shares on the same terms as those as set forth in the Transfer Notice by
delivering to Purchaser, with a copy to all of the other Major Shareholders, no
later than twenty-five (25) calendar days after the Company's receipt of the
Transfer Notice a Purchase Notice specifying the maximum number of shares of
Offered Shares which such shareholder agrees to purchase. If, and to the extent
that, either the LFT Shareholders or S-C does not elect to purchase its entire
pro rata portion of the Offered Shares, the other shareholder who has elected to
purchase its entire pro rata portion of the Offered Shares not being purchased
by the Company shall have the right to purchase the remaining shares of the
Offered Shares on the same terms as those set forth in the Transfer Notice, by
delivering to Purchaser no later than thirty (30) calendar days after the
Company's receipt of the Transfer Notice a Purchase Notice specifying the
maximum number of shares of Offered Shares, which such other shareholder agrees
to purchase. The term "PRO RATA PORTION," as used in this Section 3.1(d)(2),
shall be determined by multiplying the number of Offered Shares not purchased by
the Company, by a fraction, the numerator of which is the number of Common
Shares beneficially owned by the LFT Shareholders or S-C, as the case may be, at
such time and the denominator of which is equal to the aggregate number of
Common Shares beneficially owned by all of the Major Shareholders.
(3) The consummation of the purchase and sale pursuant to the rights of the
Company and/or the Major Shareholders, as the case may be, set forth above in
this Section 3.1(d) shall take place on such date, not later than forty-five
(45) calendar days after the last acceptance by the Company, the LFT
Shareholders or S-C pursuant to Section 3.1(d)(2) and on the terms set forth in
the Transfer Notice. Upon the consummation of such purchase and sale, Purchaser
shall (a) cause to be delivered certificates evidencing the Common Shares
purchased and sold duly endorsed or accompanied by written instruments of
transfer in form reasonably satisfactory to the Company and/or the Major
Shareholders, as the case may be, duly executed by Purchaser, free and clear of
any liens and (b) assign all of its rights hereunder with respect to the Common
Shares purchased and sold pursuant to an instrument of assignment reasonably
satisfactory to the Company and/or the Major Shareholders, as the case may be,
against payment therefor by wire transfer of immediately available funds. The
Company shall and shall cause any transfer agent of the Company to cooperate in
the issuance of such certificates and such assignment.
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(4) If and to the extent that the Company and the Major Shareholders do not
elect to purchase all of the Offered Shares in accordance with Sections
3.1(d)(1) and (2), Purchaser may Transfer such Offered Shares not elected to be
so purchased to the prospective transferee identified in, and on the terms
specified in, the Transfer Notice. Purchaser's Transfer of Offered Shares to the
prospective transferee pursuant to this subsection 3.1(d)(4) shall be
consummated ninety (90) calendar days after the earlier of (a) the date on which
Purchaser receives notice that neither the Company nor any of the Major
Shareholders intends to acquire all of the Offered Shares and (b) the date on
which all applicable time periods during which the Company and/or any of the
Major Shareholders have the right to purchase the Offered Shares have expired.
In the event the Transfer to the prospective transferee hereunder is not
consummated within such time period, Purchaser may not thereafter Transfer the
Offered Shares to any Person without first re-offering the Offered Shares to the
Company and the Major Shareholders as provided in this Section 3.1(d) or Section
3.1(e).
(e) RIGHT OF FIRST OFFER OF THE COMPANY AND THE MAJOR SHAREHOLDERS. (1)
Subject to Section 3.1(b), after the first anniversary of the Closing but on or
before the second anniversary of the Closing, Purchaser may Transfer its Common
Shares in any underwritten offering pursuant to a registration statement filed
under the Securities Act or a broker-intermediated transaction in which, to the
best knowledge of Purchaser, no ultimate purchaser acquires more than two
percent (2%) of the aggregate Common Shares outstanding at the time of such
proposed Transfer (each a "QUALIFIED SALE"), provided that Purchaser complies
with this Section 3.1(e). In connection with any proposed Qualified Sale,
Purchaser shall deliver to the Company and the Major Shareholders written notice
thereof (a "QUALIFIED SALE NOTICE") which notice shall include (a) the number of
Common Shares proposed to be transferred ("QUALIFIED OFFERED SHARES"), (b) a
statement that Purchaser intends to effect a Qualified Sale at the then-current
market price of Common Shares at the time of such Transfer, (c) the underwriter
discount or commission of the entity expected to execute the
broker-intermediated transaction, as the case may be, to be paid to effect the
Qualified Sale (the "INTERMEDIARY FEES"), (d) the proposed date of consummation
of the Qualified Sale and (e) a statement signed by an underwriter or a broker,
as the case may be, that the Intermediary Fees reflect the current customary
discount or fee, as the case may be, for such proposed Transfer.
(2) Upon receiving the Qualified Sale Notice, the Company shall have the
right to purchase some or all of the Qualified Offered Shares at the Market
Price as of the date of the Qualified Sale Notice, less the Intermediary Fees,
by delivering to Purchaser, with a copy to all of the Major Shareholders, no
later than twenty (20) calendar days after its receipt of the Transfer Notice, a
written notice of its intention to do so (the "QUALIFIED PURCHASE NOTICE"). The
Qualified Purchase Notice shall specify the number of shares of Offered Shares
which the Company intends to purchase. If the Company does not intend to
purchase all of the shares of
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Qualified Offered Shares, each of the LFT Shareholders and S-C shall have
the right to purchase up to its pro rata portion of the remaining Qualified
Offered Shares at the Market Price as of the date of the Qualified Sale Notice,
less the Intermediary Fees related to the number of shares such Major
Shareholder elects to purchase, by delivering to Purchaser, with a copy to all
of the other Major Shareholders, no later than twenty-five (25) calendar days
after the Company's receipt of the Qualified Sale Notice, a Qualified Purchase
Notice specifying the maximum number of Offered Shares which such shareholder
agrees to purchase. If and to the extent that either the LFT Shareholders or S-C
does not elect to purchase its entire pro rata portion of the Qualified Offered
Shares, the other shareholder who has elected to purchase its entire pro rata
portion of the Qualified Offered Shares not being purchased by the Company shall
have the right to purchase the remaining Qualified Offered Shares at the Market
Price as of the date of the Qualified Sale Notice, less the Intermediary Fees
related to the additional number of shares such other shareholder elects to
purchase, by delivery to Purchaser, no later than thirty (30) calendar days
after the Company's receipt of the Qualified Sub Notice, a Qualified Purchase
Notice specifying the maximum additional number of Qualified Offered Shares
which such other shareholder agrees to purchase on the same terms as those set
forth in the Qualified Sale Notice. The term "PRO RATA PORTION," as used in this
Section 3.1(e)(2) shall be determined by multiplying the number of Offered
Shares not purchased by the Company, by a fraction, the numerator of which is
the number of Common Shares beneficially owned by either the LFT Shareholders or
S-C, as the case may be, at such time and the denominator of which is equal to
the aggregate number of Common Shares beneficially owned by all of the Major
Shareholders.
(3) The consummation of such purchase and sale pursuant to the rights of
the Company and/or the Major Shareholders set forth in Section 3.1(e) shall take
place on such date, not later than forty-five (45) calendar days after the last
acceptance by the Company, LFT Shareholders or S-C pursuant to Section 3.1(e)(2)
above at the Market Price less Intermediary Fees as of the date of the Qualified
Purchase Notice. Upon the consummation of such purchase and sale, Purchaser
shall (a) cause to be delivered certificates evidencing the Common Shares
purchased and sold duly endorsed or accompanied by written instruments of
transfer in form reasonably satisfactory to the Company and/or the Major
Shareholders, as the case may be, duly executed by Purchaser, free and clear of
any liens and (b) assign all its rights hereunder with respect to the Common
Shares purchased and sold pursuant to an instrument of assignment reasonably
satisfactory to the Company and/or to the Major Shareholders, as the case may
be, against payment therefor by wire transfer of immediately available funds.
The Company shall and shall cause any transfer agent of the Company to cooperate
in the issuance of such certificates and such assignment.
12
(4) If and to the extent that the Company and/or the Major Shareholders do
not elect to purchase all of the Qualified Offered Shares not elected to be so
purchased in accordance with Sections 3.1(e)(1) and (2), Purchaser may Transfer
the Qualified Offered Shares in an underwritten offering or a
broker-intermediated transaction on the terms specified in the Qualified Sale
Transfer Notice. The Qualified Sale of the Qualified Offered Shares pursuant to
this Section 3.1(e)(4) shall be consummated by the later of (a) ninety (90)
calendar days after the earlier of (1) the date on which Purchaser receives
notice that neither the Company nor any of the Major Shareholders intends to
acquire all of the Qualified Offered Shares and (2) the date on which all
applicable time periods during which the Major Shareholders have the right to
purchase the shares of Qualified Offered Shares have expired or (b) thirty (30)
calendar days after effectiveness of a demand registration exercised by
Purchaser, if applicable. In the event the Qualified Sale is not consummated
within such time period, Purchaser may not thereafter Transfer the Qualified
Offered Shares to any Person without first re-offering them to the Company and
the Major Shareholders as provided in this Section 3.1(d) or Section 3.1(e).
(f) LAPSE OF PURCHASER RIGHTS. In the event Purchaser Transfers (other than
pursuant to Section 3.1(c)) any of its Common Shares, the following rights and
interests of Purchaser shall immediately terminate: (1) all interests and rights
set forth in the Acquisition Warrant and (2) the rights set forth in Section
3.2(a) (Minimum Equity Position of Major Shareholders), Section 3.2(b) (Right of
First Refusal upon a Restricted Transaction), Section 3.5 (Anti-dilution Rights)
and Section 5.1 (Board Seats) of this Agreement; PROVIDED, HOWEVER, that in the
event of a Material Breach (as defined in the Jericho Agreement) by the Company,
Purchaser may Transfer up to 50% of the Common Shares held by it as of the
Closing without termination of any of the foregoing.
3.2 TRANSFER RESTRICTIONS - MAJOR SHAREHOLDERS.
(a) MINIMUM EQUITY POSITION OF THE MAJOR SHAREHOLDERS. On or before the
second anniversary of the Closing, neither the LFT Shareholders nor S-C shall
directly or indirectly Transfer more than 37 1/2% of the Common Shares held by
it as of the Closing.
(b) RIGHT OF FIRST REFUSAL OF PURCHASER UPON A RESTRICTED TRANSACTION. (1)
Until the earlier of (a) the third anniversary of the Closing or (b) HP's
failure to make any of the Jericho funding payments pursuant to Section 5.4 of
the Jericho Agreement (other than as a result of the Company's failure to make a
required funding payment when due), the Company and/or the Major Shareholders
shall not enter into any Restricted Transaction (as defined below) without
giving Purchaser a written notice thereof and a right to enter into such
Restricted Transaction with the Company as set forth herein. Prior to entering
into any Restricted Transaction, the Company and/or the Major Shareholders shall
provide Purchaser a written
13
notice thereof (a "RESTRICTED TRANSACTION NOTICE"). The Restricted Transaction
Notice shall include (i) the nature of the proposed transaction, including the
number of Common Shares proposed to be transferred, if applicable, (ii) the
identity of the prospective buyer or such other counterparty to the proposed
transaction, (iii) the amount of consideration to be received by the Company or
the Shareholders of the Company, as the case may be, including the per share
price which the prospective transferee has agreed to pay, if applicable and all
other terms of the proposed transaction in reasonable detail, (iv) the proposed
date of consummation of the Restricted Transaction and (v) a statement from the
prospective buyer or such other counterparty that the terms specified reflect a
bona fide terms of offer for the Restricted Transaction and a representation by
the Company and/or the Major Shareholders, that to the best of its/their
knowledge after reasonable inquiry, it is a principal and not an agent acting on
behalf of an undisclosed principal. As used herein, a "RESTRICTED TRANSACTION"
shall mean any agreement or arrangement between the Company and/or the Major
Shareholders and a third party, including, without limitation, issuing any
securities of the company senior to the Common Shares, that would prevent
Purchaser from purchasing all or substantially all of the assets or all or
substantially all of the outstanding capital stock of the Company (or all of the
Common Shares then held by the Major Shareholders at the time of the Restricted
Transaction Notice).
(2) Upon receiving a Restricted Transfer Notice, Purchaser shall have the
right to enter into such agreement with respect to Restricted Transaction with
the Company and/or the Major Shareholders on substantially the same terms as
those set forth in the Restricted Transaction Notice by delivering to the
Company and/or the Major Shareholders, as the case may be, no later than thirty
(30) calendar days after receipt of the Restricted Transaction Notice, a written
notice of its intention to do so (the "PURCHASER PURCHASE NOTICE").
(3) If Purchaser so chooses to exercise its right hereunder, the
consummation of such Restricted Transaction with Purchaser shall take place, not
later than forty-five (45) calendar days after receipt by the Company and/or the
Major Shareholders of the timely Purchaser Purchase Notice.
(4) If and to the extent that Purchaser does not elect to enter into such
agreement with respect to the Restricted Transaction in accordance with Section
3.2(b)(2), the Company and/or the Major Shareholders may enter into the
Restricted Transaction with the prospective counterparty identified in, and on
the terms specified in, the Restricted Transaction Notice within ninety (90)
calendar days after the date on which the applicable time period during which
Purchaser had the right to enter into an agreement with respect to the
Restricted Transaction has expired. After such time period, the Company and/or
the Major Shareholders
14
may not enter into a Restricted Transaction without first re-offering to
Purchaser such Restricted Transaction as provided in this Section 3.2.
3.3 TAG-ALONG RIGHTS.
(a) IN GENERAL. Subject to Section 3.3(b) below, after the second
anniversary of the Closing, in the event a Major Shareholder ("SELLING
SHAREHOLDER") decides to make a Transfer of any of its Common Shares to a Person
who is not an Affiliate of such Selling Shareholder, then the Selling
Shareholder shall, as a condition precedent to such Transfer, notify Purchaser
of the terms of the proposed Transfer not later than twenty-five (25) calendar
days prior to the expected consummation of the Transfer. The notice shall
include (1) the nature of the proposed transaction, including the number of
Common Shares proposed to be transferred, (2) the identity of the prospective
buyer in the proposed transaction, (3) the per share price which the prospective
transferee has agreed to pay, and all other terms of the proposed transaction in
reasonable detail, (4) the proposed date of consummation of the sale and (5) a
statement signed that the terms specified in the Tag-Along Notice are a bona
fide offer to purchase by such proposed transferee and a representation by
Purchaser that, to the best of knowledge of Purchaser after reasonable inquiry,
the proposed transferee is a principal and not an agent acting on behalf of an
undisclosed principal (a "TAG-ALONG NOTICE"). Purchaser shall then have the
right, upon giving notice to the Selling Shareholder no later than twenty (20)
calendar days following receipt of the Tag-Along Notice, to include in such
Transfer the pro rata portion of the Common Shares held by Purchaser on such
same terms and conditions as set forth in the Tag-Along Notice. The "PRO RATA
PORTION" as used in this Section 3.3(a) shall be calculated such that Purchaser
shall have the right to sell in the Transfer a number of Common Shares equal to
the aggregate number of shares proposed to be sold multiplied by a fraction, the
numerator of which is the aggregate number of Common Shares owned by Purchaser,
and the denominator of which is the sum of the numerator plus the aggregate
number of Common Shares owned by the Selling Shareholder. For purposes of such
calculation, Common Shares shall include Common Shares issuable upon the
exercise of options, warrants or other rights. If necessary, the Selling
Shareholder shall reduce the number of its Common Shares to be included in the
Transfer to permit such pro rata participation by Purchaser.
(b) EXCEPTIONS TO TAG-ALONG RIGHTS. The Tag-Along Rights of Purchaser shall
not pertain or apply to (1) any offering or sale of Common Shares by the Major
Shareholders (a) pursuant to a registration statement filed with the SEC or any
similar authority outside the United States in respect of which Purchaser is
given the opportunity to exercise its "piggyback" rights, pursuant to the
registration rights agreement to be entered into by and between Purchaser and
the Company or (b) pursuant to Rule 144 promulgated under the Securities Act or
any successor rule thereunder, in each case, in a transaction pursuant to which
15
no ultimate purchaser, to the best knowledge of the Selling Shareholders,
acquires more than 2% of the aggregate Common Shares outstanding at the time of
such proposed Transfer; or (2) a pledge of Common Shares by any Major
Shareholder which creates a security interest pursuant to a BONA FIDE loan
transaction, or pursuant to an acquisition (by virtue of the exercise of the
security interest created by such pledge in accordance with its terms) or
subsequent sale of such Common Shares by the pledgee.
3.4 DRAG-ALONG RIGHTS.
(a) IN GENERAL. After the fourth anniversary of the Closing and for so long
as the LFT Shareholders, in the aggregate, own at least 62 1/2% of the Common
Shares and Common Share Equivalents held by the LFT Shareholders at the Closing,
if the Major Shareholders holding a majority of the Common Shares and Common
Share Equivalents held by all of the Major Shareholders (the "SELLING MAJOR
SHAREHOLDERS") decide to Transfer all of the Common Shares and Common Share
Equivalents beneficially owned by them to a third party, the Selling Major
Shareholders may, at their option, require Purchaser and the other remaining
Major Shareholders to sell all of the Common Shares and Common Share Equivalents
beneficially owned by them at such time ("DRAG-ALONG RIGHTS") to such
third-party transferee for the same consideration and same terms and conditions
as the Selling Major Shareholders (the "DRAG-ALONG SALE"); PROVIDED, that if the
consideration payable in the Drag-Along Sale is comprised in whole or in part of
securities, then the Selling Major Shareholders shall have no Drag-Along Rights
unless (1) such securities are listed on the New York Stock Exchange or American
Stock Exchange or admitted for quotation on the Nasdaq Stock Market or another
internationally recognized securities exchange or market, (2) Purchaser receives
registration rights in respect of such securities such that may be sold by
Purchaser pursuant to such registration within 180 days after the closing of the
Drag-Along Sale and (3) Purchaser is not subject to any "lock-up" or similar
restriction in connection with the Drag-Along Sale, except for such "lock-ups"
as may be reasonably required if the Drag-along Sale is related to a transaction
that is intended by the parties thereto to be accounted for as a pooling of
interest and which the LFT Shareholders are subject to. The Selling Major
Shareholders electing to exercise the Drag-Along Rights shall provide Purchaser
and the other Major Shareholders with written notice of such Drag-Along Sale not
later than twenty (20) calendar days prior to the proposed Transfer (the
"DRAG-ALONG NOTICE"). The Drag-Along Notice shall identify the prospective
transferee, the price of the proposed sale, the form of consideration, the date
of the proposed Transfer and other material terms and conditions of the
Transfer. Upon receiving the Drag-Along Notice, Purchaser and the remaining
Major Shareholders shall be required to participate in such Transfer on such
terms and conditions as are set forth in the Drag-Along Notice and to tender all
of the Common Shares and Common Share Equivalents beneficially owned by
Purchaser and the other Major Shareholders required as set forth below,
PROVIDED,
16
that Purchaser and the other Major Shareholders required to sell their shares
pursuant to the Drag-Along Rights must be provided with the same terms and
conditions, including price and the right to receive any additional direct or
indirect consideration in connection with the Transfer, as offered to the
Selling Major Shareholders. Not later than ten (10) calendar days prior to the
date of Transfer, each of Purchaser and the remaining Major Shareholders shall
deliver to a representative of the Selling Major Shareholders designated in the
Drag-Along Notice certificates representing all Common Shares and Common Share
Equivalents owned by it and required to be sold pursuant to such Drag-Along
Sale, duly endorsed, together with all other documents required to be executed
in connection with such Drag-Along Sale. If either Purchaser or any of the other
remaining Major Shareholders fails to deliver such certificates, the Company
shall cause the books and records of the Company to show that such securities
are transferred in accordance with the Drag-Along Rights upon payment to such
Shareholder.
(b) The Selling Major Shareholders shall have a period of ten (10)
calendar days from the last date of timely receipt from Purchaser and the other
Major Shareholders of the certificates representing the required Common Shares
and Common Share Equivalents to consummate the Drag-Along Sale on the terms and
conditions set forth in such Drag-Along Notice. If the Drag-Along Sale is not
consummated during such period, the Selling Major Shareholders shall return to
Purchaser and the other Major Shareholders the certificates representing Common
Shares and Common Share Equivalents that Purchaser and the other Major
Shareholders delivered for transfer pursuant hereto, together with any documents
in the possession of the Selling Major Shareholders executed by Purchaser and/or
the other Major Shareholders in connection with such proposed Transfer, and all
the restrictions on Transfer contained in this Agreement or otherwise applicable
at such time with respect to Common Shares and Common Share Equivalents owned by
Purchaser and the other Major Shareholders shall again be in effect.
(c) Concurrently with the consummation of the Transfer of Common
Shares and Common Share Equivalents owned by Purchaser and certain Major
Shareholders pursuant to this Section 3.5, the Selling Major Shareholders shall
give notice thereof to Purchaser and the other Major Shareholders, and shall
remit upon receipt to Purchaser and such other Major Shareholders, the total
consideration (by wire transfer of immediately available funds if any part of
such consideration is in the form of cash) for the share certificates
surrendered by Purchaser and the other Major Shareholders and transferred
pursuant hereto in proportion to their relative interest therein.
Section 3.5 ANTI-DILUTION RIGHTS. (a) Until the third anniversary of
the Closing, if the Company proposes to issue and sell any New Securities, the
Company shall give Purchaser written notice of its intention, describing the
type and number of New Securities, and
17
their price and the terms upon which the Company proposes to issue the same.
Purchaser shall have twenty (20) calendar days after any such notice to provide
notice to the Company that it agrees to purchase up to Purchaser's Anti-dilution
Pro Rata Share of such New Securities for terms at least as favorable to
Purchaser as the price and upon the terms specified in the notice by giving
written notice to the Company and stating therein the quantity of New Securities
to be purchased.
"ANTI-DILUTION PRO RATA SHARE" means that number of New
Securities having the same ratio to the aggregate number of New
Securities issued as the ratio of (i) the number of Common Shares
owned by Purchaser immediately prior to the issuance of New Securities
(assuming exercise of all warrants granted or grantable to Purchaser
pursuant to the Warrants, whether or not vested, PROVIDED such number
shall not exceed 14,814,814 Common Shares) to (ii) the total number of
Common Shares outstanding immediately prior to the issuance of New
Securities, assuming full conversion or exercise of all outstanding
securities convertible into Common Shares and rights, options and
warrants to acquire Common shares or securities convertible into
Common Shares.
"NEW SECURITIES" means any capital stock or voting debt of
the Company (including Common Shares and Preferred Shares (as defined
in the Share Purchase Agreement)) whether now authorized or not, and
rights, options or warrants to purchase such capital stock, and
securities of any type whatsoever that are, or may become, convertible
into capital stock; PROVIDED that the term "New Securities" does not
include, (i) securities issued upon exercise of the warrants granted
pursuant to the Warrants, (ii) securities issued pursuant to the
acquisition of another business entity or business segment of any such
entity by the Company by merger, purchase of substantially all the
assets or other reorganization whereby the Company will own more than
50% of the voting power of such business entity or business segment of
any such entity; (iii) any borrowings, direct or indirect, from
financial institutions or other persons by the Company, whether or not
presently authorized, including any type of loan or payment evidenced
by any type of debt instrument, PROVIDED such borrowings do not have
any equity features including warrants, options or other rights to
purchase capital stock and are not convertible into capital stock of
the Company; (iv) securities issued to employees, consultants,
officers or directors of the Company pursuant to any stock option,
stock purchase or stock bonus plan, agreement or arrangement approved
by the Board; (v) securities issued to vendors or customers or to
other persons in similar commercial situations with the Company if
such issuance is approved by the Board; (vi) securities issued in
connection with obtaining lease financing, whether issued to a lessor,
guarantor or other person; (vii) securities issued in connection with
any stock
18
split, stock dividend or recapitalization of the Company; and
(viii) any right, option or warrant to acquire any security
convertible into the securities excluded from the definition of New
Securities pursuant to clauses (i) through (vii) above.
(b) If Purchaser fails to exercise fully the right set forth in
Section 3.5(a), then commencing upon the earlier of (i) the termination of the
twenty (20) calendar day period referenced in Section 3.5(a) or (ii) the
Company's receipt of notice from Purchaser that it declines to exercise its
rights set forth in Section 3.5(a), the Company may sell or enter into an
agreement (pursuant to which the sale of New Securities covered thereby shall be
closed, if at all, within sixty (60) calendar days from the date of said
agreement to sell the New Securities in respect of which Purchaser's right set
forth above was not exercised, at a price and upon terms no more favorable to
the purchasers thereof than specified in the Company's notice to Purchaser
pursuant to Section 3.5(a). In the event the Company has not sold such New
Securities within such sixty (60) calendar day period or entered into an
agreement to sell the New Securities in accordance with the foregoing within one
hundred and twenty (120) calendar days from the date of said agreement, the
Company shall not thereafter issue or sell any New Securities, without first
again offering such securities to Purchaser in the manner provided in Section
3.5(a).
(c) The Major Shareholders hereby undertake to use their best efforts
to cause Section 3.5(a) and 3.5(b) to be applied in respect of any issuance by
the Company of New Securities. Without limiting the generality of the previous
sentence, if the Combined Board or the Board is resolving to issue New
Securities, the Major Shareholders hereby undertake to cause their respective
nominees to the Combined Board to take all actions necessary to permit the
application of Sections 3.5(a) and 3.5(b).
ARTICLE 4
STANDSTILL PROVISION
4.1 ON OR BEFORE THE THIRD ANNIVERSARY OF THE CLOSING. Subject to (a)
the Anti-dilution Rights set forth in the Share Purchase Agreement, (b) the
Right of First Refusal upon a Restricted Transaction as set forth in Section
3.2(b) and (c) the Warrants, each of Purchaser and the Major Shareholders agrees
that until the third anniversary of the Closing, except at the invitation of the
Chief Executive Officer of the Company or the Board, neither it nor any of its
Affiliates will directly or indirectly:
(a) acquire, announce an intention to acquire, offer, seek or
propose to acquire or agree to acquire, by purchase, gift, tender or
exchange offer or otherwise,
19
beneficial or record ownership of any Common Shares or any other
voting securities of the Company, including any rights, warrants,
options or other securities convertible into or exchangeable for
Common Shares or any other voting securities of the Company from the
Company or third parties, except as a result of a stock split, stock
dividend or other pro rata distribution made by the Company to its
shareholders;
(b) form, join or in any way participate in a "group" within
the meaning of Section 13(d)(3) of the Securities Exchange Act with
respect to the Common Shares or any other voting securities of the
Company or otherwise act in concert with any person in respect of any
such securities;
(c) arrange, or in any way participate in, any financing for
the purchase by any person of Common Shares or any other voting
securities or assets or businesses of the Company or any of its
Affiliates;
(d) make, seek to propose or participate in making a
proposal to the Company or any third party (by public announcement,
submission to the Company or a third party or otherwise) in respect of
any extraordinary corporate transaction involving the Company, its
voting securities or any of its affiliates, including a merger,
reorganization, recapitalization, extraordinary dividend, liquidation,
sale or transfer of assets other than in the ordinary course of the
Company's business, or the acquisition or purchase directly or through
any other person of all or any portion of the assets or capital stock
of the Company, whether by merger, consolidation, tender or exchange
offer or otherwise;
(e) (1) solicit proxies for the voting of any voting or
other securities of the Company or otherwise become a "participant,"
directly or indirectly, in any "solicitation" of "proxies" to vote or
become a "participant" in any "election contest" involving the Company
or its securities (all terms used herein having the meanings assigned
them in Regulation 14A promulgated under the Securities Exchange Act),
(2) call or seek to call, directly or indirectly, any special meeting
of shareholders of the Company for any reason whatsoever, (3) seek,
request or take any action to obtain or retain, directly or
indirectly, any list of holders of any voting or other securities of
the Company, (4) engage in any course of conduct with the purpose of
causing shareholders of the Company to vote contrary to the
recommendation of the Board on any matter presented to the Company's
shareholders for their vote or challenging the policies of the Company
or (5) otherwise act, alone or in concert with others, to seek to
control the management, Board, policies or affairs of the Company;
20
(f) seek any change in the composition of the Board or of the
management of the Company, including any plans or proposals to change
the number or term of the Board members or to fill any vacancies on the
Board;
(g) engage in any act or course of conduct causing the Common
Shares to become eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act;
(h) other than holding verbal discussions with the Chief Executive
Officer of the Company, make a request (by submission to the Company,
public announcement or otherwise) in any form that the prohibitions set
forth in this Agreement be waived or that the Company take any action
which would permit the Shareholders or any Affiliates or associates of
the Shareholders to take any of the actions prohibited by this
Agreement, otherwise seek in any fashion a waiver, amendment or
modification of this Agreement or make any statement (to the Company or
a third party or by public announcement) relating to the willingness of
such Shareholders to pursue any such prohibited action conditioned upon
waiver of this Agreement; and
(i) initiate, solicit, assist, finance or encourage any of the
foregoing actions (1) by any other person or (2) in respect of a
substantial portion of the Company's operations, assets or businesses or
enter into any discussions, negotiations, arrangements or understandings
with any third party with respect to any of the foregoing actions.
Notwithstanding anything to the contrary provided in this Section 4.1,
(i) Purchaser shall have the right to make an offer to purchase all or
substantially all of the assets or all of the capital stock of the Company after
the second anniversary of the Closing and (ii) the Major Shareholders and
Purchaser, as the case may be, shall at all times have the right to vote the
Common Shares as provided in Section 5.2. Nothing herein shall be construed in
any way to limit the exercise of any of Purchaser's rights under the Commercial
Agreements or the ability of the member of the Board designated by Purchaser to
participate as a director at the meeting of the Board.
4.2 AFTER THE THIRD ANNIVERSARY OF THE CLOSING. After the third
anniversary of the Closing Purchaser shall have the right to acquire additional
Common Shares only in connection with purchase of all of the capital stock of
the Company but otherwise the restrictions of Section 4.1 shall terminate and
have no further force or effect.
21
ARTICLE 5
SHAREHOLDER VOTING
5.1 BOARD SEATS. (a) For so long as each of the LFT Shareholders, in
the aggregate, and S-C holds at least 62 1/2% of the Common Shares and Common
Share Equivalents held at the time of the Closing by each such Shareholder (the
"MINIMUM HOLDING"), the Shareholders agree that the Board shall include (1) one
designee of Purchaser, (2) two designees of S-C and (3) that number of designees
of the LFT Shareholders as represents a majority of the Board; PROVIDED, that if
Purchaser declines to designate a designee, a designee of Purchaser shall be
entitled to attend each meeting of the Board in a non-voting capacity. In the
event the holding of any of either the LFT Shareholders, in the aggregate, or
S-C falls below such Shareholder's Minimum Holding, the number of designee(s) of
such Shareholder shall be proportionally adjusted to reflect the new holding of
such Shareholder, by rounding down to the nearest number.
(b) REMOVAL OF DIRECTORS. (1) At all times, the Shareholders having
the right to designate a director pursuant to Section 5.1(a) hereof shall have
the right to require the removal, with or without cause, of such director.
(2) In the event that any Shareholder acting as described in Section
5.1(b)(1) hereof shall, in accordance with any rights specified therein, require
the removal of any director or directors with respect to whom they have such
right of election, then each of the other Shareholders which shall be entitled
to vote hereby agrees to join with such acting Shareholder or Shareholders in
recommending such removal as described above, and in causing the Company either
to promptly hold a special meeting of its shareholders and to vote, in person or
by proxy, all of the Common Shares owned or controlled by such Shareholder and
entitled to vote at such meeting, or to execute a written consent in lieu
thereof, as the case may be, in favor of such removal.
(c) VACANCIES. In the event a vacancy is created on the Board by
reason of the death, removal or resignation of any director, (1) such vacancy
may be filled by the remaining directors in accordance with Section 5.1(a)
hereof or (2) if not so filled, each of the Shareholders shall, in its or his
capacity as a shareholder of the Company, elect a director to fill such vacancy
in accordance with the designation procedures set forth in Section 5.1(a)
hereof. Such election shall occur promptly following the designation of the
replacement director by the Shareholders having the right to designate such
director pursuant to Section 5.1(a) hereof, but in no event later than
thirty-five (35) calendar days after such vacancy occurs. Each of the
Shareholders hereby agrees, whether in its or his capacity as a shareholder,
director, member of
22
a committee of the Board or officer of the Company, or otherwise, to use its or
his best efforts to cause the Company either to promptly hold a special meeting
of shareholders or to execute a written consent in lieu thereof, but in no event
later than thirty-five (35) calendar days after such vacancy occurs, and each of
the Shareholders hereby agrees to vote all of the Common Shares owned or
controlled by such Shareholder and entitled to vote at such meeting, in person
or by proxy, or pursuant to such written consent of shareholders, in favor of
the Person designated in accordance with Section 5.1(a) hereof to fill such
vacancy and, if necessary, in favor of removing any director elected to fill
such vacancy other than in accordance with the designation procedures of Section
5.1(a) hereof.
5.2 VOTING. (a) Until the earlier of the (1) fifth anniversary of the
Closing and (2) for such time as the LFT Shareholders, in the aggregate, cease
to own at least its Minimum Holding, Purchaser and S-C shall vote its Common
Shares as the majority of the Major Shareholders direct with respect to any
matter which does not qualify as a Major Action.
(b) It is the Shareholders' intent that all voting control over the
Common Shares, on any and all issues, which does not qualify as a Major Action,
be exercised by the majority of the Major Shareholders. The Parties believe that
the provisions of Section 5.1 are sufficient to accomplish that intent under
current law in most jurisdictions. However, with respect to any Common Shares
where the provisions of Section 5.1 are insufficient or unenforceable (or there
is any doubt or uncertainty as to their sufficiency or enforceability), by
reason of the jurisdiction in which the Company is incorporated or any change
thereof or any change in applicable law, Purchaser shall promptly execute and
deliver to the Company any further documentation requested by the Company
reasonably necessary to effect the intent of Sections 5.1 and 5.2, including but
not limited to, the transfer of Common Shares held by Purchaser to a voting
trust.
ARTICLE 6
FUTURE ISSUANCES
6.1 APPROVAL OF NEW ISSUANCE. The Company shall not issue equity or
equity related securities having rights senior to the Common Shares unless such
issuance has been approved by at least the majority of the members of the Board
who (a) are not nominees of the LFT Shareholders and (b) are not nominees of
Shareholders that intend to purchase such equity or equity related securities
that are proposed to be issued.
23
ARTICLE 7
LEGENDS
7.1 Purchaser and the Majority Shareholders hereby consent to the
placement by the Company of the following legend (and any other appropriate
legends) on each certificate or instrument representing Common Shares:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE AND THE
TRANSFER THEREOF ARE SUBJECT TO THE PROVISIONS OF A
SHAREHOLDERS AGREEMENT DATED AS OF SEPTEMBER 13, 2000, AS
SUCH MAY BE AMENDED AND/OR RESTATED IN ACCORDANCE WITH
ITS TERMS. THE COMPANY WILL FURNISH A COPY OF SUCH
AGREEMENT TO THE HOLDER OF THIS CERTIFICATE UPON REQUEST.
ARTICLE 8
MISCELLANEOUS
8.1 ADDITIONAL ACQUISITION BY PURCHASER AND THE MAJOR SHAREHOLDERS.
Any Major Shareholder who receives or acquires Common Shares in accordance with
Article 3 or otherwise, shall, with respect to such shares, be bound by and have
the benefit of the terms and conditions of this Agreement applicable to the
"Major Shareholders" and their "Common Shares." If Purchaser receives or
acquires Common Shares in accordance with Article 3 or otherwise, including
without limitation, pursuant to the Performance Warrant, Purchaser shall, with
respect to such shares, be bound by and have the benefit of the terms and
conditions of this Agreement applicable to "Purchaser" and its "Common Shares."
8.2 HP UNDERTAKING. HP, on behalf of itself and its Affiliates, agrees
(i) to cause Purchaser or Sub to perform all of its obligations hereunder and
(ii) not to take any actions which Purchaser or Sub would be prohibited from
taking hereunder.
8.3 AMENDMENTS AND WAIVERS. This Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement executed by all of the Parties. By an instrument in writing,
one Party may waive compliance by the other Party with any provision of this
Agreement; PROVIDED, HOWEVER, that such waiver shall not operate as a waiver of,
or estoppel with respect to, any other or subsequent failure or with respect to
a Party that has not executed and delivered any such waiver. No failure to
exercise and no delay in exercising any right, remedy or power hereunder.
24
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy or power hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy or power provided herein or
by law or at equity.
8.4 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York applicable to contracts
executed in and to be performed in that State. Each of the Parties hereby
submits to the nonexclusive jurisdiction of the United States District Court for
the Southern District of New York and of any New York State court sitting in New
York City for purposes of all legal proceedings arising out of or relating to
this Agreement and the transactions contemplated hereby. Each of the Parties
irrevocably waives, to the fullest extent permitted by law, any objection which
they may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.
8.5 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered if delivered personally, the date receipt is
confirmed if mailed by registered or certified mail (postage prepaid, return
receipt requested) or the date electronically confirmed by the sender if
telecopied to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice, except that notices after
giving of which there is a designated period within which to perform an act and
notices of changes of address shall be effective only upon receipt):
25
To: Company To: X-X
0 Xxxxxxxxxxx 0000 c/o The Chatterjee Group
XX Xxxxxxxxxx 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxxxx Xxx Xxxx, XX 00000
Telephone: 00-00-000-0000 Telephone: 000-000-0000
Telecopier: 00-00-000-0000 Telecopier: 000-000-0000
With copies to: With copies to:
General Counsel Xxxxx X. Xxxxxxx, Esq.
Indigo Electronic Printing Systems Ltd. The Chatterjee Group
X.X. Xxx 000 888 Seventh Avenue, Suite 3000
Xxxxxxx, Xxxxxx 00000 Xxx Xxxx, XX 00000
Telephone: 000-0000-0000 Telephone: 000-000-0000
Telecopier: 000-0000-0000; and Telecopier: 000-000-0000
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
To: Purchaser To: HP
Hewlett-Packard Company Hewlett-Packard Company
(IF BY MAIL) (IF BY MAIL)
X.X. Xxx 00, XX 000 X.X. Xxx 00, XX 000
Xxxxx, XX 00000 Xxxxx, XX 00000
(IF BY OTHER THAN MAIL) (IF BY OTHER THAN MAIL)
00000 Xxxxxxx Xxxxxxxxx, XX 310 00000 Xxxxxxx Xxxxxxxxx, XX 000
Xxxxx, XX 00000 Xxxxx, XX 00000
Attention: Xxxx Xxxxxxx Attention: Xxxx Xxxxxxx
Telephone: 000-000-0000 Telephone: 000-000-0000
Telecopier: 000-000-0000 Telecopier: 000-000-0000
26
With copies to: With copies to:
Hewlett-Packard Company Hewlett-Packard Company
0000 Xxxxxxx Xxxxxx, XX00-XX 0000 Xxxxxxx Xxxxxx, XX00-XX
Xxxx Xxxx, Xxxxxxxxxx 00000 Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Corporate Development Attention: Corporate Development
Portfolio Manager Portfolio Manager
Telephone: 000-000-0000 Telephone: 000-000-0000
Telecopier: 000-000-0000; Telecopier: 000-000-0000;
Hewlett-Packard Company Hewlett-Packard Company
0000 Xxxxxxx Xxxxxx, XX00-XX 0000 Xxxxxxx Xxxxxx, XX00-XX
Xxxx Xxxx, Xxxxxxxxxx 00000 Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: General Counsel Attention: General Counsel
Telephone: 000-000-0000 Telephone: 000-000-0000
Telecopier: 000-000-0000; and Telecopier: 000-000-0000; and
Skadden, Arps, Slate, Xxxxxxx & Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP Xxxx LLP
000 Xxxxxxxxxx Xxxxxx 000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000 Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx Attention: Xxxxxx X. Xxxx
Telephone: 000-000-0000 Telephone: 000-000-0000
Telecopier: 000-000-0000 Telecopier: 000-000-0000
To: Toscal To: Visionvest
Attn.: Tis Prager Attn.: Xxx Xxxxxxx
c/o Prager Dreiffus c/o Prager Dreiffus
Xxxxxxxxxxxxxxxx 0 Xxxxxxxxxxxxxxxx 0
XX-0000 Xxxxxx XX-0000 Xxxxxx
Telephone: 000-00-0-000-0000 Telephone: 000-00-0-000-0000
Telecopier: 011-41-1-254-5599 Telecopier: 011-41-1-254-5599
27
To: Walthroup To: OZF
Attn.: Xxx Xxxxxxx Attn. Tis Prager
c/o Prager Dreiffus c/o Prager Dreiffus
Xxxxxxxxxxxxxxxx 0 Xxxxxxxxxxxxxxxx 0
XX-0000 Xxxxxx XX-0000 Xxxxxx
Telephone: 000-00-0-000-0000 Telephone: 000-00-0-000-0000
Telecopier: 011-41-1-254-5599 Telecopier: 011-41-1-254-5599
To: Gemini
Attn. Tis Prager
x/x Xxxxxx Xxxxxxxx
Xxxxxxxxxxxxxxxx 0
XX-0000 Xxxxxx
Telephone: 000-00-0-000-0000
Telecopier: 011-41-1-254-5599
Notice of change of address shall be effective only when done in
accordance with this Section 8.5.
8.6 ENTIRE AGREEMENT. This Agreement and the other agreements
specifically referenced herein constitute the entire agreement of the Parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral with respect to the
subject matter hereof.
8.7 ASSIGNMENT; SUCCESSORS AND ASSIGNS. Each Party agrees that it
will not assign, sell transfer, delegate or otherwise dispose of, whether
voluntarily or involuntarily, any right or obligation under this Agreement
other than as otherwise required or expressly permitted herein, PROVIDED,
that Purchaser may be able to assign its right or obligation under this
Agreement to a direct or indirect wholly-owned subsidiary of Purchaser. Any
purported assignment, transfer or delegation in violation of this Section 8.7
shall be null and void. Subject to the foregoing limits on assignment and
delegation, this Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors and assigns. Except
for those enumerated above, this Agreement does not create, and shall not be
construed as creating, any rights or claims enforceable by any Person not a
party to this Agreement.
28
8.8 NO AGENCY. Except to the extent expressly provided herein, this
Agreement shall not constitute an appointment of any of the Parties as the legal
representative or agent of any other Party, nor shall any Party have any right
or authority to assume, create or incur in any manner any obligation or other
liability of any kind, express or implied, against, or in the name or on behalf
of, any other party. Nothing herein shall be construed to make the Parties joint
venturers or partners.
8.9 SEVERABILITY. 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 hereby 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 a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the greatest extent possible.
8.10 COUNTERPARTS. 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.
8.11 HEADINGS; REFERENCES. 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.
8.12 FURTHER ASSURANCES. Each Party shall execute and deliver such
instruments and take such other actions as the other Party may reasonably
require in order to carry out the intent of this Agreement.
8.13 SPECIFIC PERFORMANCE. Each of the Parties acknowledges and agrees
that in the event of any breach of this Agreement, the non-breaching Party would
be irreparably harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto will waive the defense in any action
for specific performance that a remedy at law would be adequate and that the
Parties hereto, in addition to any other remedy to which they may be entitled at
law or in equity, shall be entitled to compel specific performance of this
Agreement.
8.14 EFFECTIVENESS. This Agreement will become effective upon the
Closing of the Share Purchase Agreement.
29
8.15 TERMINATION OF THE SHAREHOLDERS' AGREEMENT. Each of the Major
Shareholders hereby agrees that the Shareholders' Agreement dated June 8, 1993,
the Amended and Restated Shareholders' Agreements dated June 1, 1994 and May 7,
1996 and all other related amendments thereto have been terminated and this
Agreement supersedes such agreements.
8.16 SHARE PURCHASE BY SUB. In the event that the Common Shares are
purchased by Sub, instead of Purchaser, the terms and conditions binding upon
Purchaser in this Agreement shall become binding upon Sub.
30
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
written above.
INDIGO N.V. S-C INDIGO CV
By: /s/ Xxxxxxx Xxxxx By: /s/ Puruenda Xxxxxxxxx
-------------------------------- --------------------------------
Name: Xxxxxxx Xxxxx Name: Puruenda Xxxxxxxxx
Title: Chairman and Chief Title: President
Executive Officer
HEWLETT-PACKARD EUROPE B.V. HEWLETT-PACKARD COMPANY
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
-------------------------------- --------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
Title: Managing Director Title: Executive Vice President
Finance and Administration,
Chief Financial Officer
TOSCAL N.V. OZF LTD.
By: /s/ INTERTRUST (Curacao) N.V. By: /s/ INTERTRUST (Curacao) N.V.
-------------------------------- --------------------------------
Name: INTERTRUST (Curacao) N.V. Name: INTERTRUST (Curacao) N.V.
Title: Managing Director Title: Proxyholder
VISIONVEST CORPORATION N.V. WALTHROUP CORPORATION N.V.
By: /s/ INTERTRUST (Curacao) N.V. By: /s/ INTERTRUST (Curacao) N.V.
-------------------------------- --------------------------------
Name: INTERTRUST (Curacao) N.V. Name: INTERTRUST (Curacao) N.V.
Title: Managing Director Title: Managing Director
GEMINI SYSTEMS CORPORATION
N.V.
By: /s/ INTERTRUST (Curacao) N.V.
--------------------------------
Name: INTERTRUST (Curacao) N.V.
Title: Managing Director
31
