Exhibit 10.3
SHARE TENDER AGREEMENT
This SHARE TENDER AGREEMENT (this
“ Agreement ”), is dated as of November 28,
2007 (this “ Agreement ”), by and among AG.com,
Inc., an Ohio corporation (“ Parent ”), Photo
Merger Corp., a Washington corporation and a wholly owned
subsidiary of Parent (“ Subcorp ”), PhotoWorks,
Inc., a Washington corporation (“ PhotoWorks ”),
and HZ Partners, FBO Edward Holl, in its capacity as shareholder of
PhotoWorks (the “ Shareholder ”).
W
I T N E S S E T H
WHEREAS, as of the date hereof, the
Shareholder is the beneficial owner of the number of Common Shares
(as defined below) set forth opposite the name of the Shareholder
on Schedule 1 hereto (including any Common Shares acquired
by the Shareholder after the execution of this Agreement,
collectively, the “ Owned Shares ”); and
WHEREAS, Parent, Subcorp, and
PhotoWorks are simultaneously with the execution of this Agreement
entering into an Agreement and Plan of Merger, dated as of the date
of this Agreement (as it may be amended from time to time in
accordance with its terms, the “ Merger Agreement
”), providing for, among other things, Subcorp to commence a
cash tender offer (the “ Offer ”) to purchase
all of the issued and outstanding common shares, par value $0.01,
of PhotoWorks (the “ Common Shares ”), followed
by the subsequent merger of Subcorp with and into PhotoWorks with
PhotoWorks surviving the merger, on the terms and subject to the
conditions set forth in the Merger Agreement (capitalized terms
used herein and not otherwise defined shall have the meanings
ascribed to such terms in the Merger Agreement); and
WHEREAS, as a condition and
inducement to Parent’s and Subcorp’s willingness to
enter into and perform their obligations under the Merger
Agreement, Parent and Subcorp have required that the Shareholder
agree, and the Shareholder has agreed, (i) to tender in the
Offer (and not withdraw) all of the Shareholders’ Owned
Shares, whether upon the exercise of options or warrants,
conversion of convertible securities or otherwise, and any other
voting securities of PhotoWorks (whether acquired prior to or after
the execution of this Agreement) that are beneficially owned by the
Shareholder, and (ii) that in the event that a vote of the
shareholders of PhotoWorks is required in furtherance of the Merger
Agreement or the transactions contemplated thereby, including the
Merger, the Shareholder will vote all of the Owned Shares in favor
of any such proposal, and (iii) to take the other actions described
in this Agreement; and
WHEREAS, the Shareholder desires to
express its support for the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger.
NOW, THEREFORE, in consideration of
the premises and for other good and valuable consideration given to
each party hereto, the receipt of which is hereby acknowledged, the
parties agree as follows:
1. Agreement to Tender and
Vote; Irrevocable Proxy .
1.1
Agreement to Tender . (a) The Shareholder agrees that
as promptly as practicable after the commencement of the Offer, and
in any event no later than the 10 th Business Day
following the commencement of the Offer, the Shareholder shall
irrevocably tender into the Offer all of the Owned Shares owned by
the Shareholder on or prior to the 10 th Business Day
following the commencement of the Offer, free and clear of all
Liens that would prevent Shareholder from tendering the
Shareholder’s shares in accordance with this Agreement or
otherwise complying with the Shareholder’s obligations under
this Agreement. If the Shareholder acquires any Owned Shares after
the 10 th Business Day
following the commencement of the Offer (including during any
subsequent offering period, if any), the Shareholder shall
irrevocably tender into the Offer such Owned Shares on the date
that the Shareholder shall acquire such Owned Shares.
(b) The
Shareholder agrees that once the Owned Shares are tendered into the
Offer, the Shareholder shall not withdraw the tender of such Owned
Shares unless the Offer shall have been terminated or shall have
expired, or the Merger Agreement has been terminated, in each case
in accordance with the terms of the Merger Agreement.
1.2
Agreement to Vote . The Shareholder hereby agrees that,
during the term of this Agreement, at any meeting of the
shareholders of PhotoWorks, however called, or any adjournment or
postponement of such meeting, the Shareholder shall be present (in
person or by proxy) and vote (or cause to be voted) all of the
Owned Shares (to the extent the Owned Shares are not purchased in
the Offer) (a) in favor of adoption of (1) the Merger
Agreement and all the transactions contemplated by the Merger
Agreement, including the Merger, and (2) any other matter that
is required to facilitate the consummation of the transactions
contemplated by the Merger Agreement and in connection with the
Merger Agreement to execute any documents which are necessary or
appropriate in order to effectuate the foregoing; and
(b) against (1) any Takeover Proposal, any agreement or
arrangement related to such Takeover Proposal, (2) any of the
following actions (other than those actions that relate to the
Offer, the Merger and any other transactions contemplated by the
Merger Agreement): (A) any merger, consolidation, business
combination, sale of assets, or reorganization of PhotoWorks or any
PhotoWorks Subsidiary, (B) any sale, lease or transfer of any
significant part of the assets of PhotoWorks or any PhotoWorks
Subsidiary, (C) any reorganization, recapitalization,
dissolution, liquidation or winding up of PhotoWorks or any
PhotoWorks Subsidiary and (D) any material change in the
capitalization of PhotoWorks or any PhotoWorks Subsidiary, or the
corporate structure of PhotoWorks or any PhotoWorks Subsidiary, and
(3) any action or agreement (other than an adjournment of the
PhotoWorks Shareholders Meeting that is recommended by the Board of
Directors of PhotoWorks in accordance with the terms of the Merger
Agreement) that would impair the ability of Parent and the Subcorp
to complete the Offer or the Merger, the ability of PhotoWorks to
consummate the Merger, or that would otherwise be inconsistent
with, prevent, impede or delay the consummation of the transactions
contemplated by the Merger Agreement.
1.3
Irrevocable Proxy . The Shareholder hereby irrevocably
grants to, and appoints, Parent and any designee of Parent and each
of Parent’s officers, as Shareholder’s attorney, agent
and proxy with full power of substitution and resubstitution, to
the full extent of the Shareholder’s voting rights with
respect to the Owned Shares, to vote all the Owned Shares
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or grant
a consent or approval, at any meeting of the shareholders of
PhotoWorks and in any action by written consent of the shareholders
of PhotoWorks, until the earlier of the acceptance of Shares
pursuant to the Offer or the date of termination of the Merger
Agreement, on the matters described in Section 1.2, and in
accordance therewith. THIS PROXY AND POWER OF ATTORNEY ARE
IRREVOCABLE AND COUPLED WITH AN INTEREST SUFFICIENT IN LAW TO
SUPPORT AND IRREVOCABLE PROXY AND, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, SHALL BE VALID AND BINDING ON ANY PERSON TO WHOM
THE SHAREHOLDER MAY TRANSFER ANY SHARES. The Shareholder revokes
all other proxies and power of attorneys, with respect to all of
the Owned Shares that may have heretofore been appointed or granted
with respect to any matters covered by Section 1.2, and no
subsequent proxy (whether revocable or irrevocable) or power of
attorney shall be given by the Shareholder, except as required by
any letter of transmittal in connection with the Offer. The
Shareholder agrees to execute any further agreement or form
reasonably necessary or appropriate to confirm and effectuate the
grant of the proxy contained herein. Such proxy shall automatically
terminate upon the valid termination of this Agreement in
accordance with Section 5.1.
2. Representations and
Warranties . The Shareholder hereby represents and warrants to
Parent and Subcorp as follows:
2.1
Power; Due Authorization; Binding Agreement . The
Shareholder has full legal capacity, power and authority to execute
and deliver this Agreement, to perform the Shareholder’s
obligations under this Agreement, and to consummate the
transactions contemplated by this Agreement. The execution,
delivery and performance by the Shareholder of this Agreement, the
performance by the Shareholder of the Shareholder’s
obligations hereunder and the consummation by the Shareholder of
the transactions contemplated hereby have been duly and validly
authorized by the Shareholder and no other actions or proceedings
on the part of the Shareholder are necessary to authorize the
execution and delivery by the Shareholder of this Agreement, the
performance by the Shareholder of the Shareholder’s
obligations hereunder or the consummation by the Shareholder of the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by the Shareholder and constitutes a
valid and binding agreement of the Shareholder, enforceable against
the Shareholder in accordance with its terms.
2.2
Ownership of Shares . On the date of this Agreement, the
Owned Shares set forth opposite the Shareholder’s name on
Schedule 1 are owned beneficially by the Shareholder
and include all of the Owned Shares owned beneficially by the
Shareholder, free and clear of any Liens that would prevent the
Shareholder from tendering the Owned Shares in accordance with this
Agreement or complying with the Shareholder’s other
obligations under this Agreement. As of the date of this Agreement,
the Shareholder does not own, beneficially or otherwise, any
securities of PhotoWorks other than the Common Shares set forth on
Schedule 1 , and does not have any right to acquire any
securities of PhotoWorks other than pursuant to the options,
warrants and/or convertible securities as set forth on
Schedule 1 . As of the date of this Agreement, the
Shareholder has, and as of immediately prior to the expiration of
the Offer the Shareholder will have, sole voting power, sole
dispositive power, sole power to issue instructions with respect to
the matters set forth herein, and sole power to agree to all of the
matters set forth
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in this
Agreement, in each case with respect to all of the Owned Shares and
is and will be entitled to dispose of the Owned Shares.
2.3
No Conflicts . The execution and delivery of this Agreement
by the Shareholder does not, and the performance of the terms of
this Agreement by the Shareholder will not, (a) require the
Shareholder to obtain the consent or approval of, or make any
filing with or notification to, any Governmental Authority (other
than, if applicable, a filing on Schedule 13D), (b) if
the Shareholder is an entity, conflict with or result in a breach
of any organizational documents applicable to the Shareholder,
(c) require the consent or approval of any other Person
pursuant to any agreement, obligation or instrument binding on
Shareholder or its properties and assets, (d) except for withdrawal
rights that may be required by the U.S. federal securities laws,
conflict with or violate any law, rule, regulation, order,
judgment, decree, writ or injunction applicable to the Shareholder
or pursuant to which any of its properties or assets are bound or
(e) violate any other agreement to which the Shareholder is a
party, including any voting agreement, shareholders agreement,
irrevocable proxy or voting trust. The Owned Shares are not, with
respect to the voting or transfer of such Owned Shares, subject to
any other agreement, including any voting agreement, shareholders
agreement, irrevocable proxy or voting trust.
2.4
Acknowledgment . The Shareholder understands and
acknowledges that each of Parent and Subcorp is entering into the
Merger
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