Page 16 of 49 Pages
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.,
deering 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
<PAGE>
Page 17 of 49 Pages
TABLE OF CONTENTS
Page
----
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.............................................14
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............................................21
5.1 Board Seats..................................................21
5.2 Voting.......................................................22
ARTICLE 6 FUTURE ISSUANCES..............................................23
6.1 Approval of New Issuance.....................................23
ARTICLE 7 LEGENDS.......................................................23
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................................................24
8.5 Notices......................................................24
8.6 Entire Agreement.............................................28
8.7 Assignment; Successors and Assigns...........................28
8.8 No Agency....................................................28
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
i
<PAGE>
Page 18 of 49 Pages
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"), DEERING CORPORATION N.V., ("Deering", and
together with Gemini, Toscal, OZF, Visionvest and Walthroup, 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").
<PAGE>
Page 19 of 49 Pages
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.
"Anti-dilution Rights" shall have the meaning assigned to such term in
--------------------
Section 3.5.
2
<PAGE>
Page 20 of 49 Pages
"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.
"Common Share Equivalents" shall mean any outstanding options,
--------------------------
warrants, preferred stock or other rights to purchase or convert into Common
Shares.
3
<PAGE>
Page 21 of 49 Pages
"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.
----------------
4
<PAGE>
Page 22 of 49 Pages
"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.
5
<PAGE>
Page 23 of 49 Pages
"Performance Warrant" shall have the meaning assigned to such term in
--------------------
Recital D.
"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.
6
<PAGE>
Page 24 of 49 Pages
"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.
7
<PAGE>
Page 25 of 49 Pages
"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.
8
<PAGE>
Page 26 of 49 Pages
(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 Transfer Notice by delivering to Purchaser, with a copy to
all of the Major Shareholders, no later than twenty (20) calendar days after
9
<PAGE>
Page 27 of 49 Pages
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.
(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
10
<PAGE>
Page 28 of 49 Pages
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 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
11
<PAGE>
Page 29 of 49 Pages
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.
(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
12
<PAGE>
Page 30 of 49 Pages
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 under the Jericho
Agreement), 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
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
13
<PAGE>
Page 31 of 49 Pages
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 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
14
<PAGE>
Page 32 of 49 Pages
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
------------------------------
shallnot 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 pursuant to the Share Purchase Agreement 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 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.
15
<PAGE>
Page 33 of 49 Pages
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
interests 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, 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
16
<PAGE>
Page 34 of 49 Pages
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 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
17
<PAGE>
Page 35 of 49 Pages
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 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
18
<PAGE>
Page 36 of 49 Pages
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, 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;
19
<PAGE>
Page 37 of 49 Pages
(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;
(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,
20
<PAGE>
Page 38 of 49 Pages
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.
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.
21
<PAGE>
Page 39 of 49 Pages
(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 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
22
<PAGE>
Page 40 of 49 Pages
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.
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.
23
<PAGE>
Page 41 of 49 Pages
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 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
24
<PAGE>
Page 42 of 49 Pages
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
<PAGE>
Page 43 of 49 Pages
To: Company To: S-C
5 Limburglaan c/o The Chatterjee Group
6221 SH Maastricht 888 Seventh Avenue, 26th Floor
The Netherlands New York, NY 10106
Telephone: 31-43-356-5656 Telephone: 212-397-5556
Telecopier: 31-43-356-5605 Telecopier: 212-489-2005
With copies to: With copies to:
General Counsel Peter A. Hurwitz, Esq.
Indigo Electronic Printing Systems Ltd. The Chatterjee Group
P.O. Box 150 888 Seventh Avenue, Suite 3000
Rehovot, Israel 76101 New York, NY 10106
Telephone: 972-8938-1818 Telephone: 212-333-9888
Telecopier: 972-8938-1333; and Telecopier: 212-489-2005
Dennis J. Friedman, Esq.
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10017
Telephone: 212-351-3900
Telecopier: 212-351-4035
To: Purchaser To: HP
Hewlett-Packard Company Hewlett-Packard Company
(if by mail) (if by mail)
P.O. Box 15, MS 310 P.O. Box 15, MS 310
Boise, ID 83707 Boise, ID 83707
(if by other than mail) (if by other than mail)
11311 Chinden Boulevard, MS 310 11311 Chinden Boulevard, MS 310
Boise, ID 83714 Boise, ID 83714
Attention: Neal Martini Attention: Neal Martini
Telephone: 208-396-7808 Telephone: 208-396-7808
Telecopier:208-396-7686 Telecopier:208-396-7686
26
<PAGE>
Page 44 of 49 Pages
With copies to: With copies to:
Hewlett-Packard Company Hewlett-Packard Company
3000 Hanover Street, MS20-BT 3000 Hanover Street, MS20-BT
Palo Alto, California 94304 Palo Alto, California 94304
Attention: Corporate Development Attention: Corporate Development
Portfolio Manager Portfolio Manager
Telephone: 650-857-1501
Telecopier:650-852-8342; Telephone: 650-857-1501
Telecopier:650-852-8342;
Hewlett-Packard Company
3000 Hanover Street, MS20-BQ Hewlett-Packard Company
Palo Alto, California 94304 3000 Hanover Street, MS20-BQ
Attention: General Counsel Palo Alto, California 94304
Attention: General Counsel
Telephone: 650-857-1501
Telecopier: 650-857-4392; and Telephone: 650-857-1501
Telecopier: 650-857-4392; and
Skadden, Arps, Slate, Meagher
& Flom LLP
525 University Avenue Skadden, Arps, Slate, Meagher
Palo Alto, California 94306 & Flom LLP
Attention: Kenton J. King 525 University Avenue
Palo Alto, California 94306
Telephone: 650-470-4500 Attention: Kenton J. King
Telecopier:650-470-4570
Telephone: 650-470-4500
Telecopier:650-470-4570
To: Toscal To: Visionvest
Attn.: Tis Prager Attn.: Urs Brunner
c/o Prager Dreiffus c/o Prager Dreiffus
Muhlebachstrasse 6 Muhlebachstrasse 6
CH-8008 Zurich CH-8008 Zurich
Telephone: 011-41-1-254-5555 Telephone: 011-41-1-254-5555
Telecopier: 011-41-1-254-5599 Telecopier: 011-41-1-254-5599
27
<PAGE>
Page 45 of 49 Pages
To: Walthroup To: OZF
Attn.: Urs Brunner Attn. Tis Prager
c/o Prager Dreiffus c/o Prager Dreiffus
Muhlebachstrasse 6 Muhlebachstrasse 6
CH-8008 Zurich CH-8008 Zurich
Telephone: 011-41-1-254-5555 Telephone: 011-41-1-254-5555
Telecopier: 011-41-1-254-5599 Telecopier: 011-41-1-254-5599
To: Gemini
Attn. Tis Prager
c/o Prager Dreiffus
Muhlebachstrasse 6
CH-8008 Zurich
Telephone: 011-41-1-254-5555
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.
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
28
<PAGE>
Page 46 of 49 Pages
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
<PAGE>
Page 47 of 49 Pages
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
<PAGE>
Page 48 of 49 Pages
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/ Benzion Landa By: /s/ Purnendu Chatterjee
------------------------------ ------------------------------
Name: Benzion Landa Name: Purnendu Chatterjee
Title:Chairman and CEO Title:President
HEWLETT-PACKARD EUROPE B.V. HEWLETT-PACKARD COMPANY
By: /s/ Robert P. Wayman By: /s/ Robert P. Waman
------------------------------ -------------------------------
Name: Robert P. Wayman Name: Robert P. Wayman
Title:Managing Director Title:Executive VP Finance and
Administration/CFO
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. DEERING CORPORATION N.V.
By: /s/ Intertrust (Curacao) N.V. By: /s/ Intertrust (Curaco) N.V.
------------------------------ -------------------------------
Name: Intertrust (Curacao) N.V. Name: Intertrust (Curacao) N.V
Title:Managing Director Title:Managing Director
31
