Document:

Exhibit 10.1

 

PURCHASE AGREEMENT

 

THIS PURCHASE AGREEMENT (this “Agreement”) is
made as of July 1, 2002, by and among VeriFone Holdings, Inc., a Delaware
corporation (the “Company”), GTCR Fund VII, L.P., a Delaware limited
partnership (“GTCR Fund VII”), GTCR Co-Invest, L.P., a Delaware limited
partnership (“GTCR Co-Invest,” and together with GTCR Fund VII, the “GTCR
Purchasers”) and the TCW/Crescent Purchasers (as defined herein).  The GTCR Purchasers and the TCW/Crescent
Purchasers are collectively referred to herein as the “Purchasers” and
individually as a “Purchaser”. 
Except as otherwise indicated herein, capitalized terms used herein are
defined in Section 6 hereof.

 

The
parties hereto agree as follows:

 

Section 1.               Authorization
and Closing.

 

1A.          Authorization
of the Stock.  The Company shall
authorize the issuance and sale to the Purchasers of up to 60,397.74064 shares
of its Class A Preferred Stock, par value $0.01 per share (the “Class A
Preferred”), and up to 24,652,139.04 shares of its Common Stock, par value
$0.01 per share (the “Common Stock”), each having the rights and
preferences set forth in Exhibit A attached hereto.  The Class A Preferred and the Common
Stock are collectively referred to herein as the “Stock.”

 

1B.          Purchase
and Sale of the Stock by the Purchasers.

 

(a)           At the
Closing (as defined below), the Company shall sell to the Purchasers and,
subject to the terms and conditions set forth herein, the Purchasers shall
purchase from the Company, (i) 24,652,139.04 shares of Common Stock at a price
of $0.05 per share and (ii) 60,397.74064 shares of Class A Preferred at a price
of $1,000.00 per share.  Each Purchaser
shall purchase the number of such shares set forth next to such Purchaser’s
name on the Schedule of Purchasers attached hereto.  The closing of the purchase and sale of the
Stock to be purchased hereunder (the “Closing”) shall take place at the
offices of Kirkland & Ellis, 200 East Randolph Drive, Chicago,
Illinois 60601 at 10:00 a.m. on July 1, 2002, or at such other place or on
such other date as may be mutually agreeable to the Company and the Purchasers.

 

(c)           At the
Closing, the Company shall deliver to each Purchaser stock certificates
evidencing the Stock to be purchased by such Purchaser at such Closing,
registered in such Purchaser’s name, upon payment of the purchase price thereof
by a cashier’s or certified check, or by wire transfer of immediately available
funds to such account as designated by the Company.

 

Section 2.               Conditions
of Each Purchaser’s Obligation at the Closing.  The obligation of each Purchaser to purchase
and pay for the Stock to be purchased by it at the Closing is subject to the
satisfaction as of the Closing of the following conditions:

 

2A.          Representations
and Warranties; Covenants.  The
representations and warranties contained in Section 5 hereof shall
be true and correct at and as of the Closing as

 

 

though then made, except to the extent of changes caused by the
transactions expressly contemplated herein, and the Company shall have
performed in all material respects all of the covenants required to be
performed by it hereunder prior to the Closing.

 

2B.          Certificate
of Incorporation.  The Company’s
certificate of incorporation (the “Certificate of Incorporation”) shall
include the provisions set forth in Exhibit A hereto, shall be in
full force and effect under the laws of Delaware as of the Closing and shall
not have been amended or modified.

 

2C.          Senior
Management Agreement and Executive Stock Agreements.  The Company and VeriFone, Inc. shall have entered
into a senior management agreement with Douglas G. Bergeron (the “Senior
Management Agreement”) in form and substance substantially similar to Exhibit
B-1 attached hereto, and Executive Stock Agreements (the “Executive
Stock Agreements”) with each of Jesse Adams, William G. Atkinson, Robert
Cook, Gary Grant, Robert Lopez, James Sheehan, Dave Turnbull and Elmore Waller
(collectively with Mr. Bergeron, the “Executives”), in form and
substance substantially similar to Exhibit B-2, attached hereto, the Senior
Management Agreement and Executive Stock Agreements shall not have been amended
or modified and shall be in full force and effect as of the Closing, and the
Executives shall have purchased the Stock proposed to be purchased by them
thereunder.

 

2D.          Stockholders
Agreement.  The Company and certain
stockholders of the Company set forth therein shall have entered into a
stockholders agreement in form and substance substantially similar to Exhibit C
attached hereto (the “Stockholders Agreement”), and the Stockholders
Agreement shall be in full force and effect as of the Closing.

 

2E.           Registration
Agreement.  The Company and certain
stockholders of the Company set forth therein shall have entered into a
registration rights agreement in form and substance substantially similar to Exhibit D
attached hereto (the “Registration Agreement”), and the Registration
Agreement shall be in full force and effect as of the Closing.

 

2F.           Professional
Services Agreement.  A Subsidiary of
the Company and GTCR Golder Rauner,  L.L.C.,
a Delaware limited liability company (“GTCR”), shall have entered into a
professional services agreement in form and substance substantially similar to Exhibit
E attached hereto (the “Professional Services Agreement”), and the
Professional Services Agreement shall be in full force and effect as of the
Closing.

 

2F.           Agreement
and Plan of Merger.  The transaction
contemplated by the Agreement and Plan of Merger of even date herewith among
the Company, VeriFone Intermediate Holdings, Inc., a Delaware corporation,
VeriFone MergerSub, Inc., a Delaware corporation, VeriFone, Inc., a Delaware
corporation, and VeriFone Holding Corp., a Delaware corporation (the “Merger
Agreement”) (the “Agreement and Plan of Merger”) shall have been
consummated.

 

2F.           Debt Financing.  The Company shall have received senior debt
and subordinated debt financing in the aggregate amount of $95,000,000 on terms
and conditions satisfactory to the Company.

 

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2G.          Closing
Documents.  The Company shall have
delivered to the Purchasers all of the following documents:

 

(a)           an Officer’s
Certificate, dated the date of the Closing, stating that the conditions
specified in Section 1 and Sections 2A through 2F,
inclusive, have been fully satisfied;

 

(b)           certified
copies of the resolutions duly adopted by the Board of Directors of the Company
(the “Board”) authorizing the execution, delivery and performance of
this Agreement, the Certificate of Incorporation, the Senior Management
Agreement, the Executive Stock Agreements, the Stockholders Agreement, the
Registration Agreement and each of the other agreements contemplated hereby
(the “Transaction Documents”), the issuance and sale of the Stock and
the consummation of all other transactions contemplated by this Agreement; and

 

(c)           certified
copies of the Certificate of Incorporation and the Company’s bylaws, each as in
effect at the Closing.

 

2H.          Fees and
Expenses.  The Company shall have
reimbursed each Purchaser for its fees and expenses as provided in Section 7A
hereof.

 

2I.            Compliance
with Applicable Laws.  The purchase
of Stock by the Purchasers hereunder shall not be prohibited by any applicable
law or governmental regulation, shall not subject any Purchaser to any penalty,
liability or, in each Purchaser’s sole judgment, other onerous conditions under
or pursuant to any applicable law or governmental regulation, and shall be
permitted by laws and regulations of the jurisdictions to which such Purchaser
is subject.

 

2J.           Waiver.  Any condition specified in this Section 2
may be waived only if such waiver is set forth in a writing executed by the
GTCR Purchasers.

 

Section 3.               Covenants.

 

3A.          Financial
Statements and Other Information. 
The Company shall deliver to each Purchaser (so long as such Purchaser
holds any Stock) and to each holder of at least 15% of the Investor Preferred
and each holder of at least 15% of the Investor Common:

 

(a)           as soon as
available but in any event within 30 days after the end of each monthly
accounting period in each fiscal year, unaudited consolidating and consolidated
statements of income and cash flows of the Company and its Subsidiaries for
such monthly period and for the period from the beginning of the fiscal year to
the end of such month, and consolidating and consolidated balance sheets of the
Company and its Subsidiaries as of the end of such monthly period, all prepared
in accordance with generally accepted accounting principles, consistently
applied, subject to the absence of footnote disclosures and to normal year-end
adjustments;

 

(b)           accompanying
the financial statements referred to in (a) above, an Officer’s Certificate
stating that neither the Company nor any of its Subsidiaries is in default
under any of its material agreements or, if any such default exists, specifying
the nature and

 

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period of existence thereof and what actions the Company and its
Subsidiaries have taken and propose to take with respect thereto;

 

(c)           within 120
days after the end of each fiscal year, consolidating and consolidated
statements of income and cash flows of the Company and its Subsidiaries for
such fiscal year, and consolidating and consolidated balance sheets of the
Company and its Subsidiaries as of the end of such fiscal year, setting forth
in each case comparisons to the annual budget and to the preceding fiscal year,
all prepared in accordance with generally accepted accounting principles,
consistently applied, and accompanied by (i) with respect to the
consolidated portions of such statements (except with respect to budget data),
an opinion containing no exceptions or qualifications (except for
qualifications regarding specified contingent liabilities) of an independent
accounting firm of recognized national standing acceptable to the Majority
Holders and (ii) a copy of such firm’s annual management letter to the
Board;

 

(d)           promptly
upon receipt thereof, any additional reports, management letters or other
detailed information concerning significant aspects of the Company’s operations
or financial affairs given to the Company by its independent accountants (and
not otherwise contained in other materials provided hereunder);

 

(e)           at least
30 days prior to the beginning of each fiscal year, an annual budget prepared
on a monthly basis for the Company and its Subsidiaries for such fiscal year
(displaying anticipated statements of income and cash flows), and promptly upon
preparation thereof any other significant budgets prepared by the Company and
any revisions of such annual or other budgets, and within 30 days after any
monthly period in which there is a material adverse deviation from the annual
budget, an Officer’s Certificate explaining the deviation and what actions the
Company has taken and proposes to take with respect thereto;

 

(f)            promptly
(but in any event within five business days) after the discovery or receipt of
notice of any default under any material agreement to which it or any of its
Subsidiaries is a party or any other event or circumstance affecting the Company
or any Subsidiary which is reasonably likely to have a material adverse effect
on the financial condition, operating results, assets, operations or business
prospects of the Company or any Subsidiary (including the filing of any
material litigation against the Company or any Subsidiary or the existence of
any material dispute with any Person which involves a reasonable likelihood of
such litigation being commenced) (a “Material Adverse Effect”), an
Officer’s Certificate specifying the nature and period of existence thereof and
what actions the Company and its Subsidiaries have taken and propose to take
with respect thereto;

 

(g)           with
reasonable promptness, such other information and financial data concerning the
Company and its Subsidiaries as any Person entitled to receive information
under this Section 3A may reasonably request; and

 

(h)           copies of
all financial statements, proxy statements, reports and any other general
written communications which the Company sends to its stockholders, and copies
of all registration statements and all regular, special or periodic reports
which it files, or any of its officers or directors file with respect to the
Company, with the Securities and Exchange

 

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Commission or with any securities exchange on which any of its
securities are then listed, and copies of all press releases and other
statements made available generally by the Company to the public concerning
material developments in the Company’s and its Subsidiaries’ businesses.

 

3B.          Inspection
of Property.  The Company shall
permit any representatives designated by any Purchaser (so long as such
Purchaser holds any Stock) or any holder of at least 25% of the outstanding
Investor Preferred or at least 25% of the outstanding Investor Common, upon
reasonable notice and during normal business hours and such other times as any
such holder may reasonably request, to (i) visit and inspect any of the
properties of the Company and its Subsidiaries, (ii) examine the corporate
and financial records of the Company and its Subsidiaries and make copies
thereof or extracts therefrom and (iii) discuss the affairs, finances and
accounts of any such corporations with the directors, officers, key employees
and independent accountants of the Company and its Subsidiaries; provided that
the Company shall have the right to have its chief financial officer present at
any meetings with the Company’s independent accountants.

 

3C.          Restrictions.  The Company shall not, without the prior
written consent of the Majority Holders:

 

(a)           directly
or indirectly declare or pay any dividends or make any distributions upon any
of its equity securities, other than payments of dividends on, or redemption
payments in respect of, the Class A Preferred pursuant to the Certificate
of Incorporation;

 

(b)           directly
or indirectly redeem, purchase or otherwise acquire, or permit any Subsidiary
to redeem, purchase or otherwise acquire, any of the Company’s equity
securities (including, without limitation, warrants, options and other rights
to acquire equity securities) other than redemptions of Class A Preferred
pursuant to the Company’s Certificate of Incorporation;

 

(c)           except as
expressly contemplated by this Agreement, the Senior Management Agreement or
the Executive Stock Agreements, authorize, issue, sell or enter into any
agreement providing for the issuance (contingent or otherwise), or permit any
Subsidiary to authorize, issue, sell or enter into any agreement providing for
the issuance (contingent or otherwise) of, (i) any notes or debt
securities containing equity features (including, without limitation, any notes
or debt securities convertible into or exchangeable for equity securities,
issued in connection with the issuance of equity securities or containing profit
participation features) or (ii) any equity securities (or any securities
convertible into or exchangeable for any equity securities) or rights to
acquire any equity securities, other than the issuance of equity securities by
a Subsidiary to the Company or another Subsidiary;

 

(d)           make, or
permit any Subsidiary to make, any loans or advances to, guarantees for the
benefit of, or Investments in, any Person, except for (i) intercompany
transactions between the Company and a Subsidiary, (ii) reasonable advances to
employees in the ordinary course of business as well as travel advances,
(iii) trade credit extended to customers in the ordinary course of
business and (iv) Investments having a stated maturity no greater than one year
from the date the Company makes such Investment in (A) obligations of the
United

 

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States government or any agency thereof or obligations guaranteed by
the United States government, (B) certificates of deposit of commercial
banks having combined capital and surplus of at least $50 million,
(C) commercial paper with a rating of at least “Prime-1” by Moody’s
Investors Service, Inc. or (D) money market accounts investing in any of
the foregoing or in substantially similar investments;

 

(e)           merge or
consolidate with any Person or permit any Subsidiary to merge or consolidate
with any Person (other than a wholly owned Subsidiary);

 

(f)            sell,
lease or otherwise dispose of, or permit any Subsidiary to sell, lease or
otherwise dispose of, more than 5% of the consolidated assets of the Company
and its Subsidiaries (computed on the basis of book value, determined in
accordance with generally accepted accounting principles consistently applied,
or fair market value, determined by the Board in its reasonable good faith
judgment) in any transaction or series of related transactions (other than
sales of inventory in the ordinary course of business);

 

(g)           liquidate,
dissolve or effect a recapitalization or reorganization in any form of
transaction (including, without limitation, any reorganization into a limited
liability company, a partnership or any other non-corporate entity which is
treated as a partnership for federal income tax purposes);

 

(h)           acquire,
or permit any Subsidiary to acquire, any interest in any business (whether by a
purchase of assets, purchase of stock, merger or otherwise), or enter into any
joint venture;

 

(i)            enter
into, or permit any Subsidiary to enter into, the ownership, active management
or operation of any business other than electronic payment solutions;

 

(j)            enter
into, or permit any Subsidiary to enter into, any transaction with any of its
or any Subsidiary’s officers, directors, employees or Affiliates or any
individual related by blood, marriage or adoption to any such Person or any
entity in which any such Person or individual owns a beneficial interest,
except for normal employment arrangements and benefit programs on reasonable
terms, and for leases in the ordinary course of business, and except as
otherwise expressly contemplated by this Agreement, the Senior Management
Agreement and the Executive Stock Agreements;

 

(k)           become
subject to, or permit any of its Subsidiaries to become subject to, any
agreement or instrument which by its terms would (under any circumstances)
restrict (i) the right of any Subsidiary to make loans or advances or pay
dividends to, transfer property to, or repay any Indebtedness owed to, the
Company or any Subsidiary or (ii) the Company’s right to perform the
provisions of this Agreement, the Certificate of Incorporation, the Company’s
bylaws or the other Transaction Documents;

 

(l)            except as
expressly contemplated by this Agreement, make any amendment to the Certificate
of Incorporation or the Company’s bylaws, or file any resolution of the Board
with the Secretary of the State of Delaware; or

 

6

 

(m)          create,
incur, assume or suffer to exist, or permit any Subsidiary to create, incur,
assume or suffer to exist, Indebtedness exceeding the amounts approved therefor
by the Board in the annual budget.

 

3D.          Affirmative
Covenants.  So long as any Purchaser
holds any Stock, the Company shall, and shall cause each Subsidiary to:

 

(a)           comply
with all applicable laws, rules and regulations of all governmental
authorities, the violation of which would reasonably be expected to have a
material adverse effect upon the financial condition, operating results,
assets, operations or business prospects of the Company and its Subsidiaries
taken as a whole, and pay and discharge when payable all taxes, assessments and
governmental charges (except to the extent the same are being contested in good
faith and adequate reserves therefor have been established); and

 

(b)           enter into
and maintain appropriate nondisclosure and noncompete agreements with its key
employees.

 

3E.           Current
Public Information.  At all times
after the Company has filed a registration statement with the Securities and
Exchange Commission pursuant to the requirements of either the Securities Act
or the Securities Exchange Act, the Company shall file all reports required to
be filed by it under the Securities Act and the Securities Exchange Act and the
rules and regulations adopted by the Securities and Exchange Commission
thereunder and shall take such further action as any holder or holders of
Restricted Securities may reasonably request, all to the extent required to
enable such holders to sell Restricted Securities pursuant to
(i) Rule 144 adopted by the Securities and Exchange Commission under
the Securities Act (as such rule may be amended from time to time) or any
similar rule or regulation hereafter adopted by the Securities and Exchange
Commission or (ii) a registration statement on Form S-2 or S-3 or any
similar registration form hereafter adopted by the Securities and Exchange
Commission.  Upon request, the Company
shall deliver to any holder of Restricted Securities a written statement as to
whether it has complied with such requirements.

 

3F.           Amendment
of Other Agreements.  The Company
shall not amend, modify or waive any provision of the Senior Management
Agreement, the Executive Stock Agreements or any other agreement with key
executives of the Company without the prior written consent of the Majority
Holders.  The Company shall enforce the
provisions of the Senior Management Agreement or Executive Stock Agreements and
any other agreement with key executives of the Company and shall exercise all
of its rights and remedies thereunder (including, without limitation, any
repurchase options and first refusal rights) unless it is otherwise directed by
the Majority Holders.

 

3G.          Public
Disclosures.  The Company shall not,
nor shall it permit any Subsidiary to, disclose a Purchaser’s or any of its
Affiliates’ name or identity as an investor in the Company in any press release
or other public announcement or in any document or material filed with any
governmental entity, without the prior written consent of such Purchaser,
unless such disclosure is required by applicable law or governmental
regulations or by order of a court of competent jurisdiction, in which case
prior to making such disclosure the Company shall give written notice to such
Purchaser describing in reasonable detail the proposed content of such

 

7

 

disclosure and shall permit such Purchaser to review and comment upon
the form and substance of such disclosure.

 

3H.          Unrelated
Business Taxable Income.  The Company
shall not engage in any transaction which is reasonably likely to cause GTCR
Fund VII or any of its limited partners or any TCW/Crescent Purchaser which are
exempt from income taxation under Section 501(a) of the IRC and, if
applicable, any pension plan that any such trust may be a part of, to recognize
unrelated business taxable income as defined in Section 512 and
Section 514 of the IRC.

 

3I.            Hart-Scott-Rodino
Compliance.  In connection with any
transaction in which the Company is involved (a “Transaction”) which is
required to be reported under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended from time to time (the “HSR Act”), the Company shall
prepare and file all documents with the Federal Trade Commission and the United
States Department of Justice which may be required to comply with the HSR Act,
and shall promptly furnish all materials thereafter requested by any of the
regulatory agencies having jurisdiction over such filings, in connection with a
Transaction.  The Company shall take all
reasonable actions and shall file and use reasonable best efforts to have declared
effective or approved all documents and notifications with any governmental or
regulatory bodies, as may be necessary or may reasonably be requested under
federal antitrust laws for the consummation of the Transaction.  Notwithstanding the foregoing, if GTCR Fund
VII or any TCW/Crescent Purchaser, rather than the Company, is required to make
a filing under the HSR Act in connection with a Transaction, the Company will
provide to GTCR Fund VII or such TCW/Crescent Purchaser all necessary
information for such filing, will facilitate such filing and will pay all fees
associated with such filing.

 

Section 4.               Transfer
of Restricted Securities.

 

(a)           Restricted
Securities are transferable only pursuant to (i) public offerings
registered under the Securities Act, (ii) Rule 144 of the Securities
and Exchange Commission (or any similar rule or rules then in force) if such
rule or rules are available and (iii) subject to the conditions specified
in clause (b) below, any other legally available means of transfer.

 

(b)           In
connection with the transfer of any Restricted Securities (other than a
transfer described in Sections 4(a)(i) or (ii) above or a
transfer to an Affiliate of a Purchaser), the holder thereof shall deliver
written notice to the Company describing in reasonable detail the transfer or
proposed transfer, together with an opinion of Kirkland & Ellis or
other counsel which (to the Company’s reasonable satisfaction) is knowledgeable
in securities law matters to the effect that such transfer of Restricted Securities
may be effected without registration of such Restricted Securities under the
Securities Act.  In addition, if the
holder of the Restricted Securities delivers to the Company an opinion of
Kirkland & Ellis or such other counsel that no subsequent transfer of
such Restricted Securities shall require registration under the Securities Act,
the Company shall promptly upon such contemplated transfer deliver new
certificates for such Restricted Securities which do not bear the Securities
Act legend set forth in Section 7C. 
If the Company is not required to deliver new certificates for such
Restricted Securities not bearing such legend, the holder thereof shall not
transfer the same until the prospective transferee has confirmed to the Company
in writing its agreement to be bound by the conditions contained in this
Section and Section 7C.

 

8

 

(c)           Upon the
request of any Purchaser, the Company shall promptly supply to such Purchaser
or its prospective transferees all information regarding the Company required
to be delivered in connection with a transfer pursuant to Rule 144A of the
Securities and Exchange Commission.

 

Section 5.               Representations
and Warranties of the Company.  As a
material inducement to the Purchasers to enter into this Agreement and purchase
the Stock, the Company hereby represents and warrants to the Purchasers that:

 

5A.          Organization
and Corporate Power.  The Company is
a corporation duly organized, validly existing and in good standing under the
laws of Delaware and is qualified to do business in every jurisdiction in which
the failure to so qualify might reasonably be expected to have a material
adverse effect on the financial condition, operating results, assets,
operations or business prospects of the Company and its Subsidiaries taken as a
whole.  The Company has all requisite
corporate power and authority and all material licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and presently proposed to be conducted and to carry
out the transactions contemplated by this Agreement.  The copies of the Company’s Certificate of
Incorporation and bylaws which have been furnished to the Purchasers’ counsels
reflect all amendments made thereto at any time prior to the date of this
Agreement and are correct and complete.

 

5B.          Capital
Stock and Related Matters.

 

(a)           As of the
Closing and immediately thereafter, the authorized capital stock of the Company
shall consist of 40,075,000 shares
of stock, of which 75,000 shares shall be designated as Class A Preferred
(63,700 of which shall be issued
and outstanding and 8,418.53385 of which shall be reserved for issuances upon
exercise of options and warrants granted by the Company) and of which
40,000,000 shares shall be designated as Common Stock (33,994,652.41 of which shall be issued and outstanding;
3,436,136.26 of which shall be reserved for issuances upon exercise of options
and warrants granted by the Company; and 764,705.88 shall be reserved for
future issuances to executives and employees of the Company and its
Subsidiaries).  As of the Closing, the
Company shall not have outstanding any stock or securities convertible or
exchangeable for any shares of its capital stock or containing any profit
participation features, nor shall it have outstanding any rights or options to
subscribe for or to purchase its capital stock or any stock or securities
convertible into or exchangeable for its capital stock or any stock
appreciation rights or phantom stock plans other than pursuant to and as
contemplated by this Agreement, the Senior Management Agreement, the Executive
Stock Agreements and the Company’s Certificate of Incorporation.  As of the Closing, the Company shall not be
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital stock or any warrants, options or
other rights to acquire its capital stock, except pursuant to this Agreement,
the Senior Management Agreement, the Executive Stock Agreements and the Company’s
Certificate of Incorporation.  As of the
Closing, all of the outstanding shares of the Company’s capital stock shall be
validly issued, fully paid and nonassessable.

 

(b)           There are
no statutory or contractual stockholders preemptive rights or rights of refusal
with respect to the issuance of the Stock hereunder except as expressly

 

9

 

contemplated in the Stockholders Agreement or provided herein .  Based in part on the investment
representations of the Purchasers in Section 7C hereof, of the
Executives in Section 1(e) of the Senior Management Agreement or the
Executive Stock Agreements, as applicable, and of the parties to the Agreement
and Plan of Merger in such agreement, the Company has not violated any
applicable federal or state securities laws in connection with the offer, sale
or issuance of any of its capital stock, and the offer, sale and issuance of
the Stock hereunder do not and will not require registration under the
Securities Act or any applicable state securities laws.  To the best of the Company’s knowledge, there
are no agreements between the Company’s stockholders with respect to the voting
or transfer of the Company’s capital stock or with respect to any other aspect
of the Company’s affairs, except for the Stockholders Agreement, the Senior
Management Agreement, the Executive Stock Agreements and the Registration
Agreement.

 

5C.          Subsidiaries;
Investments.  The Company does not
own or hold any shares of stock or any other security or interest in any other
Person or any rights to acquire any such security or interest, and the Company
has never had any Subsidiary.

 

5D.          Authorization;
No Breach.  The execution, delivery
and performance of this Agreement, the Senior Management Agreement, the
Executive Stock Agreements, the Stockholders Agreement, the Registration
Agreement and all other agreements contemplated hereby to which the Company is
a party have been duly authorized by the Company.  This Agreement, the Senior Management
Agreement, the Executive Stock Agreements, the Stockholders Agreement, the
Registration Agreement, the Certificate of Incorporation and all other
agreements contemplated hereby each constitutes a valid and binding obligation
of the Company, enforceable in accordance with its terms.  The execution and delivery by the Company of
this Agreement, the Senior Management Agreement, the Executive Stock
Agreements, the Stockholders Agreement, the Registration Agreement and all
other agreements contemplated hereby to which the Company is a party, the
offering, sale and issuance of the Stock hereunder and the fulfillment of and
compliance with the respective terms hereof and thereof by the Company do not
and will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under,
(iii) result in the creation of any lien, security interest, charge or
encumbrance upon the Company’s capital stock or assets pursuant to,
(iv) give any third party the right to modify, terminate or accelerate any
obligation under, (v) result in a violation of, or (vi) require any
authorization, consent, approval, exemption or other action by or notice to any
court or administrative or governmental body pursuant to, the Certificate of
Incorporation or bylaws of the Company, or any law, statute, rule or regulation
to which the Company is subject, or any agreement, instrument, order, judgment
or decree to which the Company is a party or by which it is bound.

 

5E.           Conduct
of Business; Liabilities.  Other than
the negotiation, execution and delivery of this Agreement, the Senior
Management Agreement, the Executive Stock Agreements, the Stockholders
Agreement, the Registration Agreement and the other agreements contemplated
hereby and thereby, prior to the Closing, the Company has not
(i) conducted any business, (ii) incurred any expenses, obligations
or liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise, whether or not known to the Company and whether due or to become due
and regardless of when asserted), (iii) owned any assets,
(iv) entered into any contracts or agreements or (v) violated any
laws or governmental rules or regulations.

 

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5F.           Litigation,
etc.  There are no actions, suits,
proceedings, orders, investigations or claims pending or, to the best of the
Company’s knowledge, threatened against or affecting the Company (or to the
best of the Company’s knowledge, pending or threatened against or affecting any
of the officers, directors or employees of the Company with respect to their
businesses or proposed business activities) at law or in equity, or before or
by any governmental department, commission, board, bureau, agency or
instrumentality with respect to the transactions contemplated by this
Agreement.

 

5G.          Brokerage.  There are no claims for brokerage
commissions, finders fees or similar compensation in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement binding upon the Company.  The
Company shall pay, and hold each Purchaser harmless against, any liability,
loss or expense (including, without limitation, attorneys’ fees and
out-of-pocket expenses) arising in connection with any such claim.

 

5H.          Governmental
Consent, etc.  No permit, consent,
approval or authorization of, or declaration to or filing with, any
governmental authority is required in connection with the execution, delivery
and performance by the Company of this Agreement or the other agreements
contemplated hereby, or the consummation by the Company of any other
transactions contemplated hereby or thereby.

 

5I.            Disclosure.  Neither this Agreement nor any of the
schedules, attachments, written statements, documents, certificates or other
items prepared or supplied to the Purchasers by or on behalf of the Company
with respect to the transactions contemplated hereby contain any untrue
statement of a material fact or omit a material fact necessary to make each
statement contained herein or therein not misleading.  There is no fact which the Company has not
disclosed to the Purchasers in writing and of which any of its officers,
directors or executive employees is aware and which has had or might reasonably
be anticipated to have a material adverse effect upon the existing or expected
financial condition, operating results, assets, customer or supplier relations,
employee relations or business prospects of the Company.

 

5J.           Closing
Date.  The representations and
warranties of the Company contained in this Section 5 and elsewhere
in this Agreement and all information contained in any exhibit, schedule or
attachment hereto or in any writing delivered by, or on behalf of, the Company
to the Purchasers shall be true and correct in all material respects on the
date of the Closing as though then made, except as affected by the transactions
expressly contemplated by this Agreement.

 

Section 6.               Definitions.  For the purposes of this Agreement, the
following terms have the meanings set forth below:

 

“Affiliate” of any particular person or entity
means any other person or entity controlling, controlled by or under common
control with such particular person or entity. 
For purposes of this Agreement, all holdings of Class A Preferred and
Common Stock by Persons who are Affiliates of each other shall be aggregated
for purposes of meeting any threshold tests under this Agreement.

 

11

 

“Indebtedness” means all indebtedness for
borrowed money (including purchase money obligations) maturing one year or more
from the date of creation or incurrence thereof or renewable or extendible at
the option of the debtor to a date one year or more from the date of creation
or incurrence thereof, all indebtedness under revolving credit arrangements
extending over a year or more, all capitalized lease obligations and all
guarantees of any of the foregoing.

 

“Investor Common” means (i) the Common
Stock issued hereunder and (ii) any Common Stock issued or issuable with
respect to the Common Stock referred to in clause (i) above by way of stock
dividends or stock splits or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.  As to any particular shares of Investor
Common, such shares shall cease to be Investor Common when they have been
(a) effectively registered under the Securities Act and disposed of in
accordance with the Registration statement covering them or
(b) distributed to the public through a broker, dealer or market maker
pursuant to Rule 144 under the Securities Act (or any similar rule then in
force).

 

“Investor Preferred” means (i) the
Class A Preferred issued hereunder and (ii) any Class A
Preferred issued or issuable with respect to the Class A Preferred referred
to in clause (i) above by way of stock dividends or stock splits or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. 
As to any particular shares of Investor Preferred, such shares shall
cease to be Investor Preferred when they have been (a) effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them or (b) distributed to the public
through a broker, dealer or market maker pursuant to Rule 144 under the
Securities Act (or any similar rule then in force).

 

“Investor
Stock” means the Investor Preferred and the Investor Common.

 

“Investment” as applied to any Person means
(i) any direct or indirect purchase or other acquisition by such Person of
any notes, obligations, instruments, stock, securities or ownership interest
(including partnership interests and joint venture interests) of any other
Person and (ii) any capital contribution by such Person to any other
Person.

 

“IRC” means the Internal Revenue Code of 1986,
as amended, and any reference to any particular IRC Section shall be
interpreted to include any revision of or successor to that Section regardless
of how numbered or classified.

 

“Majority Holders” means the holders of a majority
of the Investor Preferred or, if no Investor Preferred is outstanding, the
holders of a majority of the Investor Common.

 

“Officer’s Certificate” means a certificate
signed by the Company’s president or its chief financial officer, stating that
(i) the officer signing such certificate has made or has caused to be made
such investigations as are necessary in order to permit him to verify the
accuracy of the information set forth in such certificate and (ii) to the
best of such officer’s knowledge, such certificate does not misstate any
material fact and does not omit to state any fact necessary to make the
certificate not misleading.

 

“Person” means an individual, a partnership, a
limited liability company, a corporation, an association, a joint stock company,
a trust, a joint venture, an unincorporated

 

12

 

organization and a governmental entity or any department, agency or
political subdivision thereof.

 

“Restricted Securities” means (i) the
Stock issued hereunder and (ii) any securities issued with respect to the
securities referred to in clause (i) above by way of a stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. 
As to any particular Restricted Securities, such securities shall cease
to be Restricted Securities when they have (a) been effectively registered
under the Securities Act and disposed of in accordance with the registration
statement covering them, (b) become eligible for sale pursuant to
Rule 144(k) (or any similar provision then in force) under the Securities
Act or (c) been otherwise transferred and new certificates for them not
bearing the Securities Act legend set forth in Section 7C have been
delivered by the Company in accordance with Section 4(b).  Whenever any particular securities cease to
be Restricted Securities, the holder thereof shall be entitled to receive from
the Company, without expense, new securities of like tenor not bearing a
Securities Act legend of the character set forth in Section 7C.

 

“Securities Act” means the Securities Act of
1933, as amended, or any similar federal law then in force.

 

“Securities Exchange Act” means the Securities
Exchange Act of 1934, as amended, or any similar federal law then in force.

 

“Securities and Exchange Commission” includes
any governmental body or agency succeeding to the functions thereof.

 

“Subsidiary” means any corporation or other
entity of which the securities having a majority of the ordinary voting power
in electing the board of directors (or any body with a similar function) are,
at the time as of which any determination is being made, owned by the Company
either directly or through one or more Subsidiaries.

 

“TCW/Crescent Purchasers” means, collectively,
(i) TCW/Crescent Mezzanine Partners III, L.P., a Delaware limited partnership,
(ii) TCW/Crescent Mezzanine Trust III, a Delaware business trust, (iii)
TCW/Crescent Mezzanine Partners III Netherlands, L.P., a Delaware limited
partnership, and (iv) TCW Leveraged Income Trust IV, L.P., a Delaware limited
partnership.

 

Section 7.               Miscellaneous.

 

7A.          Expenses.  The Company agrees to pay, and hold each
Purchaser and all holders of Investor Stock harmless against liability for the
payment of, (i) the reasonable fees and expenses of their counsel arising
in connection with the negotiation and execution of this Agreement and the
consummation of the transactions contemplated by this Agreement, (ii) the
fees and expenses incurred with respect to any amendments or waivers (whether
or not the same become effective) under or in respect of this Agreement, the
Senior Management Agreement, the Executive Stock Agreements, the Stockholders
Agreement, the Registration Agreement, the Professional Services Agreement, the
other agreements contemplated hereby and the Certificate of Incorporation and
the Company’s bylaws, (iii) stamp and other taxes which may be payable in
respect of the execution and delivery of this Agreement or the issuance,
delivery or acquisition of

 

13

 

any shares of Stock purchased hereunder, (iv) the fees and
expenses incurred with respect to the interpretation or enforcement of the
rights granted under this Agreement, the Senior Management Agreement, the
Executive Stock Agreements, the Stockholders Agreement, the Registration
Agreement, the Professional Services Agreement, the other agreements
contemplated hereby and the Certificate of Incorporation and the Company’s
bylaws and (v) such reasonable travel expenses, legal fees and other
out-of-pocket fees and expenses as have been or may be incurred by the
Purchasers, their Affiliates and their Affiliates’ directors, officers and
employees in connection with any Company-related financing and in connection
with the rendering of any other services by the Purchasers or their Affiliates
(including, but not limited to, fees and expenses incurred in attending board
of directors or other Company-related meetings).

 

7B.          Remedies.  Each holder of Investor Stock shall have all
rights and remedies set forth in this Agreement and the Certificate of
Incorporation and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights which
such holders have under any law.  Any
Person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.

 

7C.          Purchasers’
Investment Representations.  Each
Purchaser, severally and not jointly, hereby represents (i)  that it is acquiring the Restricted
Securities purchased hereunder or acquired pursuant hereto for its own account
with the present intention of holding such securities for purposes of
investment, and that it has no intention of selling such securities in a public
distribution in violation of the federal securities laws or any applicable state
securities laws, (ii) that it is an “accredited investor” and a sophisticated
investor for purposes of applicable U.S. federal and state securities laws and
regulations, (iii) that this Agreement and each of the other agreements
contemplated hereby to which such Purchaser is a party constitutes (or will
constitute) the legal, valid and binding obligation of such Purchaser,
enforceable in accordance with its terms and (iv) that the execution, delivery
and performance of this Agreement and such other agreements by such Purchaser
does not and will not conflict with, violate or cause a breach of any
agreement, contract or instrument to which such Purchaser is subject.  Notwithstanding the foregoing, nothing
contained herein shall prevent such Purchaser and subsequent holders of
Restricted Securities from transferring such securities in compliance with the
provisions of Section 4 hereof. 
Each certificate for Restricted Securities shall be imprinted with a
legend in substantially the following form:

 

“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON [DATE OF ISSUANCE] AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THE TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE PURCHASE
AGREEMENT, DATED AS OF JULY 1, 2002 BY AND AMONG THE ISSUER (THE “COMPANY”)
AND CERTAIN INVESTORS, AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE
TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH
RESPECT TO SUCH TRANSFER.  A COPY OF SUCH
CONDITIONS SHALL BE

 

14

 

FURNISHED
BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.”

 

7D.          Consent
to Amendments.  Except as otherwise
expressly provided herein, the provisions of this Agreement may be amended and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company has obtained the
written consent of the Majority Holders. 
No other course of dealing between the Company and the holder of any
Stock or any delay in exercising any rights hereunder or under the Certificate
of Incorporation shall operate as a waiver of any rights of any such
holders.  For purposes of this Agreement,
shares of Stock held by the Company or any Subsidiaries shall not be deemed to
be outstanding.

 

7E.           Survival
of Representations and Warranties. 
All representations and warranties contained herein or made in writing
by any party in connection herewith shall survive the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
regardless of any investigation made by the Purchasers or on their behalf.

 

7F.           Successors
and Assigns.  Except as otherwise
expressly provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not.  In addition,
and whether or not any express assignment has been made, the provisions of this
Agreement which are for the Purchasers’ benefit as a purchaser or holder of
Stock are also for the benefit of, and enforceable by, any subsequent holder of
such Stock.  The rights and obligations
of each Purchaser under this Agreement and the agreements contemplated hereby
may be assigned by such Purchaser at any time, in whole or in part, to any
investment fund managed by GTCR Golder Rauner, L.L.C., or any successor thereto
or any Affiliate of the TCW/Crescent Purchasers.

 

7G.          Generally
Accepted Accounting Principles. 
Where any accounting determination or calculation is required to be made
under this Agreement or the exhibits hereto, such determination or calculation
(unless otherwise provided) shall be made in accordance with generally accepted
accounting principles, consistently applied.

 

7H.          Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.

 

7I.            Counterparts.  This Agreement may be executed simultaneously
in two or more counterparts (including by means of telecopied signature pages),
any one of which need not contain the signatures of more than one party, but
all such counterparts taken together shall constitute one and the same
Agreement.

 

7J.           Entire
Agreement.  This Agreement, those
documents expressly referred to herein and other documents of even date
herewith embody the complete agreement among the parties and supersede and preempt
any prior understandings, agreements or representations by or

 

15

 

among the parties, written or oral, which may have related to the
subject matter hereof in any way.

 

7K.          Descriptive
Headings; Interpretation.  The
descriptive headings of this Agreement are inserted for convenience only and do
not constitute a Section of this Agreement.  The use of the word “including” in this
Agreement shall be by way of example rather than by limitation.

 

7L.           Governing
Law.  The corporate law of Delaware
shall govern all issues concerning the relative rights of the Company and its
stockholders.  All other questions
concerning the construction, validity and interpretation of this Agreement and
the exhibits and schedules hereto shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.

 

7M.         Notices.  All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, delivered via facsimile, sent to the recipient by
reputable express courier service (charges prepaid) or mailed to the recipient
by certified or registered mail, return receipt requested and postage
prepaid.  Such notices, demands and other
communications shall be sent to the Purchasers at the address set forth on the Purchaser
Notice Schedule attached hereto and to the Company at the address indicated
below:

 

If
to the Company:

 

VeriFone Holdings, Inc.

2455 Augustine Drive

Santa Clara, CA  95054

Attention:  Chief
Executive Officer

Facsimile: (310) 209-3310

 

with copies to:

 

GTCR Fund VII, L.P. and GTCR Co-Invest, L.P.

c/o GTCR Golder Rauner, L.L.C.

6100 Sears Tower

Chicago, IL  60606-6402

	
  Attention:

  	
  Collin E. Roche

  
	
   

  	
  Craig A. Bondy

  

Facsimile: (312) 382-2201

 

Kirkland
& Ellis

200
East Randolph Drive

Chicago,
Illinois 60601

Attention:
Stephen L. Ritchie

Facsimile:
(312) 861-2200

 

16

 

or to
such other address or to the attention of such other person as the recipient
party has specified by prior written notice to the sending party.

 

7N.          Understanding Among the
Purchasers.  The determination
of each Purchaser to purchase the Stock pursuant to this Agreement has been
made by such Purchaser independent of any other Purchaser and independent of
any statements or opinions as to the advisability of such purchase or as to the
properties, business, prospects or condition (financial or otherwise) of the
Company which may have been made or given by any other Purchaser or by any
agent or employee of any other Purchaser. 
In addition, it is acknowledged by each of the Purchasers that no
Purchaser has acted as an agent of any other Purchaser in connection with
making its investment hereunder and that no Purchaser shall be acting as an
agent of any other Purchaser in connection with monitoring its investment
hereunder.  It is further acknowledged by
each of the other Purchasers that the GTCR Purchasers have retained Kirkland
& Ellis to act as their counsel in connection with the transactions
contemplated hereby and that Kirkland& Ellis has not acted as counsel for
any of the other Purchasers in connection herewith and that none of the other
Purchasers have the status of a client of Kirkland & Ellis for conflict of
interest or other purposes as a result thereof.

 

*   *   *  
*   *

 

17

 

IN
WITNESS WHEREOF, the parties hereto have executed this Purchase Agreement on
the date first written above.

 

	
   

  	
   

  	
  VERIFONE
  HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ DOUGLAS G. BERGERON

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Douglas G.
  Bergeron

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Chief Executive
  Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GTCR FUND VII,
  L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  GTCR Partners
  VII, L.P.

  	
   

  
	
   

  	
   

  	
  Its:

  	
  General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  GTCR Golder
  Rauner, L.L.C.

  	
   

  
	
   

  	
   

  	
  Its:

  	
  General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ JOSEPH P. NOLAN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Joseph P. Nolan

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Principal

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GTCR CO-INVEST,
  L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  GTCR Partners
  VI, L.P.

  	
   

  
	
   

  	
   

  	
  Its:

  	
  General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  GTCR Golder Rauner,
  L.L.C.

  	
   

  
	
   

  	
   

  	
  Its:

  	
  General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ JOSEPH P. NOLAN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Joseph P. Nolan

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Principal

  	
   

  

 

 

	
   

  	
   

  	
  TCW/CRESCENT
  MEZZANINE PARTNERS III, L.P.

  
	
   

  	
   

  	
  TCW/CRESCENT
  MEZZANINE TRUST III

  
	
   

  	
   

  	
  TCW/CRESCENT
  MEZZANINE PARTNERS III

  
	
   

  	
   

  	
   

  	
  NETHERLANDS,
  L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  TCW/Crescent
  Mezzanine Management III, L.L.C.,

  its Investment manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  TCW/Asset
  Management Company, its

  Sub-Advisor

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ TIMOTHY P. COSTELLO

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Timothy P.
  Costello

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TCW LEVERAGED
  INCOME TRUST IV, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  TCW/Asset
  Management Company,

  as its Investment Advisor

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ RUFUS H. RIVERS

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Rufus H.
  Rivers

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  TCW Asset
  Management Company,

  as its Managing Member of

  TCW (LINC IV) L.L.C., the General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ TIMOTHY P. COSTELLO

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Timothy P.
  Costello

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  

 

 

SCHEDULE OF PURCHASERS

 

	
  Stockholder

  	
   

  	
  No. of Shares of Common

  Stock

  	
   

  	
  No. of Shares of Class A

  Preferred Stock

  	
   

  
	
  GTCR Fund VII,
  L.P.

  	
   

  	
  23,635,752.43

  	
   

  	
  57,907.59346

  	
   

  
	
  GTCR Co-Invest,
  L.P.

  	
   

  	
  216,386.61

  	
   

  	
  530.14718

  	
   

  
	
  TCW/Crescent Mezzanine Partners III, L.P.

  	
   

  	
  635,100.00

  	
   

  	
  1,556.01200

  	
   

  
	
  TCW/Crescent Mezzanine Trust III

  	
   

  	
  98,940.00

  	
   

  	
  242.41400

  	
   

  
	
  TCW/Crescent Mezzanine Partners III Netherlands,
  L.P.

  	
   

  	
  25,960.00

  	
   

  	
  63.57400

  	
   

  
	
  TCW Leveraged Income Trust IV, L.P.

  	
   

  	
  40,000.00

  	
   

  	
  98.00000Exhibit
10.2

 

 

STOCKHOLDERS
AGREEMENT

 

THIS STOCKHOLDERS AGREEMENT (this “Agreement”)
is made as of July 1, 2002 by and among (i) VeriFone Holdings, Inc., a
Delaware corporation (the “Company”), (ii) GTCR Fund VII, L.P., a
Delaware limited partnership (“GTCR Fund VII”), GTCR Co-Invest, L.P., a
Delaware limited partnership (“GTCR Co-Invest”), and GTCR Capital
Partners, L.P., a Delaware limited partnership (“GTCR Capital” and,
together with GTCR Fund VII and GTCR Co-Invest, the “GTCR Investors”),
(iii) the TCW/Crescent Lenders (as defined herein), (iv) each executive on the
attached “Schedule of Stockholders” and any other executive
employee of the Company or its Subsidiaries who, at any time, acquires
securities of the Company in accordance with the terms hereof and executes a
counterpart of this Agreement or otherwise agrees to be bound by this Agreement
(each, an “Executive” and collectively, the “Executives”), and
(v) VF Holding Corp., a Delaware corporation (formerly known as VeriFone
Holding Corp.) (“Seller”), and each of the other Persons set forth from
time to time on the attached Schedule of Stockholders under the
heading “Other Stockholders” who, at any time, acquires securities of the
Company in accordance with the terms hereof and executes a counterpart of this
Agreement or otherwise agrees to be bound by this Agreement (Seller and such
other Persons being “Other Stockholders” hereunder).  Each of the GTCR Investors and each of the
TCW/Crescent Lenders are sometimes individually referred to as an “Investor”
and collectively as the “Investors.” 
The Investors, the Executives and the Other Stockholders are
collectively referred to herein as the “Stockholders” and individually
as a “Stockholder.”  Capitalized
terms used but not otherwise defined herein are defined in Section 9
hereof.

 

The Investors will
purchase Class A Preferred Stock of the Company (the “Class A Preferred”)
and Common Stock of the Company (the “Common Stock”), pursuant to a
Purchase Agreement between the Investors and the Company dated as of the date
hereof (as amended from time to time in accordance with its terms, the “Purchase
Agreement”).  The Company, GTCR
Capital and the TCW/Crescent Lenders are parties to a Senior Subordinated Loan
Agreement of even date herewith, as amended, supplemented or modified from time
to time (the “Loan Agreement”), pursuant to which Warrants will be
issued to GTCR Capital and the TCW/Crescent Lenders.  Pursuant to a Senior Management Agreement or
Executive Stock Agreements between the Company and the Executives, the
Executives will purchase Common Stock and Class A
Preferred.  Pursuant to the Agreement and
Plan of Merger of even date herewith among the Company, VeriFone Intermediate
Holdings, Inc., a Delaware corporation, VeriFone MergerSub, Inc., a Delaware
corporation, VeriFone, Inc., a Delaware corporation, and Seller (the “Merger
Agreement”), certain parties thereto shall acquire Common Stock.

 

The Company and the
Stockholders desire to enter into this Agreement for the purposes, among
others, of (i) limiting the manner and terms by which capital stock of the
Company may be transferred, and (ii) assuring
continuity in the ownership of the Company. 
The execution and delivery of this Agreement is a condition to the
Investors’ purchase of the Common Stock and the Class A
Preferred pursuant to the Purchase Agreement.

 

 

NOW, THEREFORE, in consideration of the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement hereby agree as follows:

 

1.                                       Board
of Directors.

 

(a)                                  From
and after the Closing and until the provisions of this Section 1
cease to be effective, each Stockholder shall vote all of his Stockholder
Shares and any other voting securities of the Company over which such
Stockholder has voting control and shall take all other necessary or desirable
actions within his control (whether in his capacity as a stockholder, director,
member of the board or any committee thereof, or officer of the Company or
otherwise, and including, without limitation, attendance at meetings in person
or by proxy for purposes of obtaining a quorum and execution of written
consents in lieu of meetings), and the Company shall take all necessary and
desirable actions within its control (including, without limitation, calling
special board and stockholder meetings), so that:

 

(i)                                     the authorized number of directors on the Company’s board of
directors (the “Board”) shall be established at up to eight directors;

 

(ii)                                  the following persons shall be elected to the Board:

 

(A)                              three representatives designated by GTCR Fund VII (the “GTCR
Investor Directors”);

 

(B)                                the Chief  Executive
Officer of VeriFone, Inc., a Delaware corporation (the “CEO,” and in his
director capacity, the “Executive Director”);

 

(C)                                one representative designated by Seller, who shall initially
be Alec Gores (the “Seller Director”); and

 

(D)                               two,
or at the election of GTCR Fund VII, three representatives chosen jointly by
GTCR Fund VII and the CEO (the “Outside Directors”); provided
that no Outside Director shall be a member of the Company’s management or an
employee or officer of the Company or its subsidiaries; provided further
that if GTCR Fund VII and the CEO are unable to agree on the Outside Directors
within 10 days after the date specified by GTCR Fund VII for electing the
Outside Directors, then GTCR Fund VII shall, in its sole discretion, designate
the Outside Directors;

 

(iii)                               the composition of any committee of the Board shall include
at least one GTCR Investor Director;

 

(iv)                              the
boards of directors of each of the Company’s subsidiaries (each a “Sub Board”)
shall be composed so that a majority of the members of each Sub Board are
members of the Board; provided that in the case of VeriFone, Inc., at least one
of such directors shall be the CEO;

 

2

 

(v)                                 the  removal from the Board, a Sub Board or a
committee (with or without cause) of any GTCR Investor Director or any Outside
Director shall be upon (and only upon) the written request of GTCR Fund VII;

 

(vi)                              if the Executive Director ceases to hold his executive
office, the Executive Director shall be removed promptly after such time from
the Board, each Sub Board and each committee;

 

(vii)                           in the
event that any representative designated hereunder for any reason ceases to
serve as a member of the Board, a Sub Board or a committee during his term of
office, the resulting vacancy on the Board, the Sub Board or such committee
shall be filled by a representative designated by the person or persons
originally entitled to designate such director pursuant to Section 1(a)(ii) above; and

 

(viii)                        The
TCW/Crescent Lenders shall have board observer rights upon the terms and
conditions set forth in the Loan Agreement, for so long as the TCW/Crescent
Lenders are entitled to such rights under the Loan Agreement.

 

(b)                                 The
Company shall pay all out-of-pocket expenses incurred by each director in
connection with attending regular and special meetings of the Board, any Sub Board
and any committee thereof. 
Notwithstanding the foregoing, (i) the Company shall not pay in respect
of service as a director any director fees or other compensation (other than
reimbursement of out-of-pocket expenses as provided in the previous sentence)
to the CEO, the Seller Director or to any director who is an employee of any of
the GTCR Investors or any entity which directly or indirectly controls any of
the GTCR Investors and (ii) any director fees or other compensation paid to any
other director shall be reasonable in amount.

 

(c)                                  If
any party fails to designate a representative to fill a directorship pursuant
to the terms of this Section 1, the election of a person to such
directorship shall be accomplished in accordance with the Company’s bylaws and
applicable law.

 

(d)                                 The
rights of Seller under this Section 1 shall terminate at such time
as Seller ceases to hold in the aggregate (i) at least 50% of the Stockholder
Shares acquired by Seller pursuant to the Merger Agreement or (ii) at least 21⁄2%
of the fully-diluted Common Stock of the Company.

 

(e)                                  The
provisions of this Section 1 shall terminate upon the first to
occur of (i) the consummation of a Public Offering and (ii) the consummation of
a Sale of the Company.

 

2.                                       Legend.  Each certificate evidencing Stockholder
Shares and each certificate issued in exchange for or upon the transfer of any
Stockholder Shares (if such shares remain Stockholder Shares as defined herein
after such transfer) shall be stamped or otherwise imprinted with a legend in
substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS AGREEMENT DATED AS OF JUNE      ,
2002 AMONG THE ISSUER OF SUCH SECURITIES (THE “COMPANY”) AND CERTAIN OF

 

3

 

 

THE COMPANY’S STOCKHOLDERS.  A COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN
REQUEST.”

 

The Company shall imprint such legend on certificates
evidencing Stockholder Shares outstanding prior to the date hereof.  The legend set forth above shall be removed
from the certificates evidencing any shares which cease to be Stockholder
Shares or upon termination of this Agreement.

 

3.                                       Representations
and Warranties.  Each Stockholder
represents and warrants that (i) this Agreement has been duly authorized,
executed and delivered by such Stockholder and constitutes the valid and
binding obligation of such Stockholder, enforceable in accordance with its
terms and (ii) such Stockholder has not granted and is not a party to any
proxy, voting trust or other agreement which is inconsistent with, conflicts
with or violates any provision of this Agreement.  Except for any proxy, voting trust or other
agreement granted by an Investor to a trustee for the benefit of secured
noteholders pursuant to documents related to the financing of such Investor, no
holder of Stockholder Shares shall grant any proxy or become a party to any
voting trust or other agreement which is inconsistent with, conflicts with or
violates any provision of this Agreement.

 

4.                                       Participation
Rights.

 

(a)                                  At
least 30 days prior to any Transfer of Stockholder Shares by any GTCR Investor,
the GTCR Investors shall deliver a written notice (the “Sale Notice”) to
the Company and the other Stockholders who are not GTCR Investors (the “Tag-Along
Stockholders”) specifying in reasonable detail the identity of the
prospective transferee(s) and the terms and conditions of the Transfer.  The Tag-Along Stockholders may elect to
participate in the contemplated Transfer by delivering written notice to the
GTCR Investors  within
30 days after delivery of the Sale Notice. 
If any Tag-Along Stockholders have elected to participate in such
Transfer, the GTCR Investors and such Tag-Along Stockholders will be entitled
to sell in the contemplated Transfer, at the same price and on the same terms,
Stockholder Shares of the same type and class and in the same relative
proportions (which proportions shall be determined on a share for share basis
with respect to the Common Stock and on the basis of aggregate liquidation
value with respect to the Class A Preferred) as the Stockholder Shares which
are being Transferred, a number of shares of each class of Stockholder Shares
equal to the product of (A) the quotient determined by dividing the number of
shares of each such class of Stockholder Shares owned by such person by the
aggregate number of outstanding shares of each such class of Stockholder Shares
owned by the GTCR Investors and the Tag-Along Stockholders participating in
such sale and (B) the number of shares of each such class of Stockholder Shares
to be sold in the contemplated Transfer.

 

(b)                                 The
GTCR Investors will use commercially reasonable efforts to obtain the agreement
of the prospective transferee(s) to the participation of the Tag-Along
Stockholders in any contemplated Transfer, and the GTCR Investors will not
transfer any of their Stockholder Shares to the prospective transferee(s)
unless (A) the prospective transferee(s) agrees to allow the participation of
the Tag-Along Stockholders or (B) the GTCR Investors agree to purchase the

 

4

 

number of such
class of Stockholder Shares from the Tag-Along Stockholders which the Tag-Along
Stockholders would have been entitled to sell pursuant to Section 4(a)
for the consideration per share to be paid to the GTCR Investors by the
prospective transferee(s).

 

(c)                                  Notwithstanding
anything to the contrary in any other provision of this Agreement, the restrictions
set forth in this Section 4 shall not apply to (i) any Transfer or
Transfers of less than 10%, in the aggregate, of any class of Stockholder
Shares held by any GTCR Investor to or among its Affiliates or (ii) a Public
Sale; provided that the restrictions contained in this Agreement will
continue to be applicable to the Stockholder Shares after any Transfer pursuant
to clause (i) and the transferee of such Stockholder Shares shall agree in
writing to be bound by the provisions of this Agreement.  Upon the Transfer of Stockholder Shares
pursuant to clause (i) of the previous sentence, the transferees will deliver a
written notice to the Company, which notice will disclose in reasonable detail
the identity of such transferee.

 

(d)                                 The
provisions of this Section 4 (i) will not apply (a) to sales made
in connection with an Approved Sale and (b) to any Stockholder who is
participating in a Sale of the Company and (ii) shall terminate upon the first
to occur of, (x) the consummation of a Sale of the Company and (y) the
consummation of a Public Offering.

 

5.             First Refusal Rights.

 

(a)                                  Prior
to making any Transfer of Stockholder Shares (other than a Transfer pursuant to
a Public Sale of the type referred to in clause (i) of the definition thereof
or a Sale of the Company), any Stockholder (other than the GTCR Investors)
desiring to make such Transfer (the “Transferring Stockholder”) will
give written notice (the “Sale Notice”) to the Company and the holders
of First Refusal Shares (collectively, the “Sale Notice Recipients”).  The Sale Notice will disclose in reasonable
detail the identity of the prospective transferee(s), the number of shares to
be transferred and the terms and conditions of the proposed transfer.  Such Transferring Stockholder will not
consummate any Transfer until the date that the parties to the Transfer have
been finally determined pursuant to Section 5(b) below (such date,
the “Authorization Date”).

 

(b)                                 The
Company may elect to purchase all (but not less than all) of such Stockholder
Shares to be transferred upon the same terms and conditions as those set forth
in the Sale Notice by delivering a written notice of such election to the
Transferring Stockholder and the Sale Notice Recipients (other than the
Company) within 20 days after the Sale Notice has been given to the
Company.  If the Company has not elected
to purchase all of the Stockholder Shares to be transferred, the holders of
First Refusal Shares may elect to purchase all (but not less than all) of the
Stockholder Shares to be transferred upon the same terms and conditions as
those set forth in the Sale Notice by giving written notice of such election to
such Transferring Stockholder within 25 days after the Sale Notice has been
given to the holders of First Refusal  Shares.  If more than one holder of First Refusal
Shares elects to purchase the Stockholder Shares to be transferred, the shares
of Stockholder Shares to be sold shall be allocated among the holders of First
Refusal Shares pro rata according to the number of First Refusal Shares of the
relevant class owned by such holder of First Refusal Shares on a fully diluted
basis.  If neither the Company nor the
holders of First Refusal Shares elects to purchase all of the Stockholder
Shares specified in the Sale Notice, the Transferring Stockholder may transfer
the Stockholder Shares specified in the Sale Notice at a price and on terms no
more favorable to the transferee(s)

 

5

 

thereof than
specified in the Sale Notice during the 60-day period immediately following the
Authorization Date.  Any Stockholder
Shares not transferred within such 60-day period will be subject to the
provisions of this Section 5 upon subsequent transfer.  The Company may pay the purchase price for
such shares by offsetting amounts outstanding under any bona fide debts owed by
the Transferring Stockholder to the Company.

 

(c)                                  The
restrictions of this Section 5 will not apply with respect to (i)
any Transfer of Stockholder Shares by any Stockholder to or among its Affiliates,
(ii) in the case of an Executive or a Seller Stockholder (as defined in Section 12
hereof), pursuant to applicable laws of descent and distribution or among such
Executive’s or such stockholder’s Family Group, (iii) in the case of Seller,
any Seller Transfer (as defined in Section 12 hereof), (iv) a
repurchase of Stockholder Shares by the Company pursuant to the terms of the
Senior Management Agreement and Executive Stock Agreements (as defined in the
Purchase Agreement), (v) a Public Sale, (vi) an Approved Sale (as defined in Section 7(a)
hereof) or (vii) any pledge by an Investor to a trustee for the benefit of
secured noteholders pursuant to documents relating to the financing of such
Investor; provided that the restrictions contained in this Agreement
will continue to be applicable to the Stockholder Shares after any Transfer
pursuant to clause (i), (ii) or (iii) above and the transferee of such
Stockholder Shares shall agree in writing to be bound by the provisions of this
Agreement.  Upon the Transfer of
Stockholder Shares pursuant to clause (i), (ii) or (iii) of the previous
sentence, the transferees will deliver a written notice to the Company, which
notice will disclose in reasonable detail the identity of such transferee.

 

(d)                                 Notwithstanding
anything herein to the contrary, except pursuant to clause (b) above, in no
event shall any Transfer of Stockholder Shares pursuant to this Section 5
be made for any consideration other than cash payable upon consummation of such
Transfer.

 

(e)                                  The
restrictions set forth in this Section 5 shall continue with
respect to each Stockholder Share until the earlier of (i) the consummation of
a Public Offering, (ii) the consummation of an Approved Sale and (iii) the date
on which such Stockholder Share has been transferred pursuant to this Section 5
(other than Section 5(c)).

 

6.                                       Pre-emptive
Rights.

 

(a)                                  If
after the date hereof the Company authorizes the issuance or sale of any shares
of Common Stock or Preferred Stock or any securities convertible, exchangeable
or exercisable for Common Stock to (i) the GTCR Investors or (ii) any employees
of the GTCR Investors or any entity directly or indirectly controlling or under
common control with any of the GTCR Investors (each, a “GTCR Issuance”),
the Company shall offer to sell to each holder of Common Stock (other than the
GTCR Investors) (the “Other Common Stockholders”), at the same price and
on the same terms, an amount of Common Stock, Preferred Stock or such other
securities equal to the product of (i) the quotient determined by
dividing (A) the number of shares of Common Stock held by such Other Common
Stockholder by (B) the total number of shares of Common Stock outstanding, in
each case on a fully diluted basis and (ii) the sum of the number of
shares of Common Stock, Preferred Stock or such other securities to be issued
in the GTCR Issuance plus the number of shares of Common Stock, Preferred Stock
or such other securities which Other Common Stockholders have elected to
purchase pursuant to Section 6(b) below.  Each Other Common Stockholder shall be
entitled to purchase such shares or securities

 

6

 

at the most favorable price and on the most favorable terms as such
shares or securities are to be offered to the GTCR Investors; provided
that if the GTCR Investors are required or permitted to also purchase other
securities of the Company, the Other Common Stockholder exercising their rights
pursuant to this Section 6 shall also be required or permitted, as
the case may be, to purchase the same strip of securities (on the same terms
and conditions) that the GTCR Investors are required or permitted to purchase,
as the case may be.  The purchase price
for all shares and securities to be offered to the Other Common Stockholder
shall be payable in cash or, to the extent otherwise required hereunder, notes
issued by such holders.  It is understood
by the parties hereto that the Company may proceed with the consummation of the
GTCR Issuance prior to offering such shares or other securities to the Other
Common Stockholders; provided that an Issuance Notice (as defined below) is
delivered to each of the Other Common Stockholders in accordance with Section 6(b)
below.

 

(b)                                 The
Company shall deliver to each holder a written notice (each, an “Issuance
Notice”) describing in reasonable detail the shares or securities being
offered, the purchase price thereof, the payment terms and such Other Common
Stockholder’s percentage allotment prior to the closing of the GTCR Issuance or
no later than 30 days thereafter.  In
order to exercise its purchase rights hereunder, each Other Common Stockholder
must within fifteen (15) days after receipt of an Issuance Notice, deliver a
written notice to the Company describing its election hereunder.  If one or more Other Common Stockholders
elects to purchase shares or other securities under this Section 6,
the closing of such purchase shall occur no later than 30 days after receipt by
the Company of such election.

 

(c)                                  Notwithstanding
the foregoing, the rights set forth in this Section 6 shall not
apply to (i) issuances of equity securities (or securities convertible into or
exchangeable for, or options to purchase, such equity securities), pro rata to
all holders of Common Stock, as a dividend on, subdivision of or other
distribution in respect of, the Common Stock or (ii) any issuances of Common
Stock upon the exercise of warrants originally issued to GTCR Capital and the
TCW/Crescent Lenders pursuant to the Loan Agreement.

 

(d)                                 The
rights set forth in this Section 6 shall continue with respect to
each Stockholder Share until the earlier of (i) the transfer of such
Stockholder Share in a Public Sale, or (ii) the consummation of a Sale of the
Company or a Public Offering.

 

7.             Sale of the Company.

 

(a)                                  If
the holders of a majority of the Investor Shares approve a Sale of the Company
to a Person that is not an Affiliate of the GTCR Investors in a bona fide
arms-length transaction (an “Approved Sale”), each holder of Stockholder
Shares shall vote for, consent to and raise no objections against such Approved
Sale.  If the Approved Sale is structured
as a (i) merger or consolidation, each holder of Stockholder Shares shall waive
any dissenters’ rights, appraisal rights or similar rights in connection with
such merger or consolidation or (ii) sale of stock, each holder of Stockholder
Shares shall agree to sell all of his Stockholder Shares and rights to acquire
Stockholder Shares on the terms and conditions approved by the Board and the
holders of a majority of the Investor Shares (voting as a single class) then
outstanding.  Each holder of Stockholder
Shares shall take all such actions in connection with the consummation of the
Approved Sale as may be reasonably requested by the Company.

 

7

 

 

(b)                                 The
obligations of the holders of Stockholder Shares with respect to the Approved
Sale of the Company are subject to the satisfaction of the following
conditions: (i) upon the consummation of the Approved Sale, each holder of a
particular class of Stockholder Shares shall receive the same form of
consideration and the same amount of consideration per share, (ii) if any
holders of a class of Stockholder Shares are given an option as to the form and
amount of consideration to be received, each holder of such class of
Stockholder Shares shall be given the same option, (iii) each holder of then
currently exercisable rights to acquire shares of a class of Stockholder Shares
shall be given an opportunity to either (A) exercise such rights prior to the
consummation of the Approved Sale and participate in such sale as holders of
such class of Stockholder Shares or (B) upon the consummation of the Approved
Sale, receive in exchange for such rights consideration equal to the amount
determined by multiplying (1) the same amount of consideration per share of a
class of Stockholder Shares received by holders of such class of Stockholder
Shares in connection with the Approved Sale less the exercise price per share
of such class of Stockholder Shares of such rights to acquire such class of
Stockholder Shares by (2) the number of shares of such class of Stockholder
Shares represented by such rights and (iv) each holder of Stockholder Shares
shall be obligated to join on a pro rata basis (but not on a joint and several
basis), based on, but not limited to, the share of the aggregate proceeds paid
in such Sale of the Company, in any indemnification or other obligations that
the Company’s stockholders agree to provide in connection with such Sale of the
Company (other than any such obligations that relate specifically to a
particular holder of Stockholder Shares such as indemnification with respect to
representations and warranties given by a holder regarding such holder’s title
to and ownership of Stockholder Shares).

 

(c)                                  If
either the Company or the holders of the Stockholder Shares enter into a
negotiation or transaction for which Rule 506 (or any similar rule then in
effect) promulgated by the Securities and Exchange Commission may be available
with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), the holders of Stockholder Shares
(other than those qualifying as “accredited investors” under such Rule) will,
at the request of the Company, appoint a purchaser representative (as such term
is defined in Rule 501) reasonably acceptable to the Company.  If any holder of Stockholder Shares appoints
a purchaser representative designated by the Company, the Company will pay the
fees of such purchaser representative, but if any holder of Stockholder Shares
declines to appoint the purchaser representative designated by the Company such
holder will, if required, appoint another purchaser representative, and such
holder will be responsible for the fees of the purchaser representative so
appointed.

 

(d)                                 Holders
of Stockholder Shares will bear their pro rata share (based upon the number of
shares sold) of the costs of any sale of such Stockholder Shares pursuant to an
Approved Sale to the extent such costs are incurred for the benefit of all
holders of Stockholder Shares and are not otherwise paid by the Company or the
acquiring party.  For purposes of this Section 7(d),
costs incurred in exercising reasonable efforts to take all actions in
connection with the consummation of an Approved Sale in accordance with Section 7(a)
shall be deemed to be for the benefit of all holders of the Stockholder
Shares.  Costs incurred by holders of
Stockholder Shares on their own behalf will not be considered costs of the
transaction hereunder.

 

(e)                                  In
the event of a sale or exchange by the Stockholders of all or substantially all
of the Stockholder Shares held by the Stockholders (whether by sale, merger,

 

8

 

recapitalization, reorganization, consolidation, combination or
otherwise), each Stockholder shall receive in exchange for the Stockholder
Shares held by such Stockholder the same portion of the aggregate consideration
from such sale or exchange that such Stockholder would have received if such
aggregate consideration had been distributed by the Company in complete
liquidation pursuant to the rights and preferences set forth in the Company’s
Certificate of Incorporation as in effect immediately prior to such sale or
exchange.  Each holder of Stockholder
Shares shall take all such actions in connection with the distribution of the
aggregate consideration from such sale or exchange as may be reasonably
requested by the Company.

 

8.             Financial Statements and Other
Information.

 

(a)                                  The Company shall
deliver to each holder of Stockholder Shares (so long as such Person holds at
least 21⁄2% of the fully-diluted Common Stock of the Company or rights to acquire
at least 21⁄2% of the fully-diluted Common Stock of the Company):

 

(i)                                     as
soon as available but in any event within 45 days after the end of each
quarterly accounting period in each fiscal year, an unaudited consolidated
statement of income and cash flows of the Company and its Subsidiaries for such
quarterly period and for the period from the beginning of the fiscal year to
the end of such quarter, and a consolidated balance sheet of the Company and
its Subsidiaries as of the end of such quarterly period, prepared in accordance
with generally accepted accounting principles, consistently applied, subject to
the absence of footnote disclosures and to normal year-end adjustments; and

 

(ii)                                  within
120 days after the end of each fiscal year, a consolidated statement of income
and cash flows of the Company and its Subsidiaries for such fiscal year, and a
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such fiscal year, prepared in accordance with generally accepted accounting
principles, consistently applied, and accompanied by an opinion of an
independent accounting firm of recognized national standing.

 

(b)                                 The
Company shall twice annually permit any representatives designated by any
holder of  Stockholder Shares (so long as
such person holds at least 21⁄2% of the fully-diluted Common Stock of the Company
or rights to acquire at least 21⁄2% of the fully-diluted Common Stock of the
Company), upon reasonable notice and during normal business hours, to discuss
the affairs, finances and accounts of the Company and its Subsidiaries with the
senior management of the Company and its Subsidiaries, and the Company shall
cause such senior management to use their commercially reasonable efforts to
cooperate therewith.

 

9.                                       Definitions.

 

“Affiliate” means, (i) with respect to any
Person, any Person controlling, controlled by, or under common control with
such Person (or an Affiliate of such Person), where “control” means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person whether through the ownership of voting securities, by
contract, or otherwise, (ii) if such Person is a partnership, any partner
thereof and (iii) if such Person is a limited liability company, any member
thereof.

 

“Closing” shall have the meaning set
forth in the Purchase Agreement.

 

9

 

“Family Group” means an individual’s
spouse, parents, brothers, sisters and descendants (whether natural or adopted)
(collectively, “Immediate Family Members”) and any trust solely for the
benefit of the individual and/or the individual’s Immediate Family members.

 

“First Refusal Shares” means the Investor
Shares and the Seller Shares.

 

“Investor Shares” means (i) any Common
Stock or Class A Preferred purchased or otherwise acquired by the Investors
pursuant to the Purchase Agreement and (ii) any equity securities issued
or issuable directly or indirectly with respect to the Common Stock and Class A
Preferred referred to in clause (i) above by way of stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. 
As to any particular shares constituting Investor Shares, such shares
will cease to be Investor Shares when they have been (x) effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them or (y) sold to the public through a
broker, dealer or market maker pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act.

 

“Person” means an individual, a partnership, a
limited liability company, a corporation, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision thereof.

 

“Public Offering” means the sale in an
underwritten public offering registered under the Securities Act of shares of
the Company’s Common Stock having an aggregate offering value of at least $30
million.

 

“Public Sale” means any sale of Stockholder
Shares (i) to the public pursuant to an offering registered under the
Securities Act or (ii) to the public through a broker, dealer or market maker
pursuant to the provisions of Rule 144 (other than Rule 144(k) prior to a
Public Offering) adopted under the Securities Act.

 

“Sale of the Company” means any transaction or
series of transactions pursuant to, or as a consequence of which any person or
group of related persons (other than GTCR Fund VII) in the aggregate acquire(s)
(i) capital stock of the Company possessing the voting power (other than voting
rights accruing only in the event of a default, breach or event of
noncompliance) to elect a majority of the Company’s board of directors (whether
by merger, consolidation, reorganization, combination, sale or transfer of the
Company’s capital stock) or (ii) all or substantially all of the Company’s
assets determined on a consolidated basis; provided that the term “Sale
of the Company” shall not include a Public Offering.

 

“Securities Act” means the Securities Act of
1933, as amended from time to time.

 

“Seller Shares” means (i) any Common Stock
purchased or otherwise acquired by the Seller pursuant to the Merger Agreement,
(ii) any Common Stock (a) transferred to any Seller Stockholder pursuant to a
Seller Transfer (as such terms are defined in Section 12 below) or
(b) acquired by Seller or any Seller Stockholder pursuant to Sections 5
and 6 hereof and (iii) any equity securities issued or issuable
directly or indirectly with respect to the Common Stock referred to in
clause (i) or clause (ii) above by way of stock dividend or stock split or
in

 

10

 

connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization.  As to any particular
shares constituting Seller Shares, such shares will cease to be Seller Shares
when they have been (x) effectively registered under the Securities Act
and disposed of in accordance with the registration statement covering them or
(y) sold to the public through a broker, dealer or market maker pursuant
to Rule 144 (or any similar provision then in force) under the Securities
Act.

 

“Stockholder Shares” means (i) any Common
Stock or Class A Preferred purchased or otherwise acquired by any Stockholder,
(ii) any Common Stock issued or issuable upon exercise of the Warrants,
(iii) any equity securities issued or issuable directly or indirectly with
respect to the Common Stock and Class A Preferred referred to in
clauses (i) and (ii) above by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization and (iv) any other shares of any class or
series of capital stock of the Company held by a Stockholder; provided  that
Stockholder Shares shall not include nonvoting stock described in (i), (ii),
(iii) or (iv) above for purposes of Section 1 hereof.  As to any particular shares constituting
Stockholder Shares, such shares will cease to be Stockholder Shares when they
have been (x) effectively registered under the Securities Act and disposed
of in accordance with the registration statement covering them or (y) sold
to the public through a broker, dealer or market maker pursuant to
Rule 144 (or any similar provision then in force) under the Securities
Act.

 

“TCW/Crescent Lenders”
means, collectively, (i) TCW/Crescent Mezzanine Partners III, L.P., a Delaware limited partnership, (ii) TCW/Crescent Mezzanine
Trust III, a Delaware business trust, (iii) TCW/Crescent Mezzanine Partners III
Netherlands, L.P., a Delaware limited partnership, and (iv) TCW Leveraged
Income Trust IV, L.P., a Delaware limited partnership.

 

“TCW/Crescent Shares” means (i) any Common
Stock or Class A Preferred purchased or otherwise acquired by any TCW/Crescent
Lender, (ii) any Common Stock issued or issuable upon exercise of the Warrants,
(iii) any equity securities issued or issuable directly or indirectly with
respect to the Common Stock and Class A Preferred referred to in
clauses (i) and (ii) above by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization and (iv) any other shares of any class or
series of capital stock of the Company held by a Stockholder.

 

“Transfer” means
to sell, transfer, assign, pledge or otherwise dispose of (whether with or
without consideration and whether voluntarily or involuntarily or by operation
of law).

 

“Warrants” means
the warrants to purchase shares of Common Stock issued by the Company to GTCR
Capital and the TCW/Crescent Lenders prior to the date hereof, on the date
hereof or at any time in the future.

 

10.                                 Transfers;
Transfers in Violation of Agreement. 
Prior to transferring any Stockholder Shares to any person or entity,
the Transferring Stockholder shall cause the prospective transferee to execute
and deliver to the Company and the Other Stockholders a counterpart of this
Agreement.  Any transfer or attempted
transfer of any Stockholder Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record

 

11

 

such transfer on
its books or treat any purported transferee of such Stockholder Shares as the
owner of such shares for any purpose. 
Upon the transfer of all Stockholder Shares held by a Person, such
Person shall for all purposes cease to be a “Stockholder” party to this
Agreement.

 

11.                                 Additional
Stockholders.  In connection with the
issuance of any additional equity securities of the Company, the Company, with
the consent of GTCR Fund VII, may permit such person to become a party to this
Agreement and succeed to all of the rights and obligations of a “Stockholder”
under this Agreement by obtaining an executed counterpart signature page to
this Agreement, and, upon such execution, such person shall for all purposes be
a “Stockholder” party to this Agreement.

 

12.                                 Seller
Transaction.  The parties to this
Agreement acknowledge that Seller may Transfer certain of the shares of Common
Stock it receives pursuant to the Merger Agreement to those Persons who are
stockholders of Seller as of the Closing Date (as such term is defined in the
Merger Agreement) (collectively, the “Seller Stockholders”) either as a
distribution, as partial consideration for the redemption of the shares of
Seller’s capital stock owned by such Seller Stockholders, or pursuant to a
similar transaction or series of transactions (the “Seller Transfers”);
provided that as a condition to any such transaction the transferees thereof
shall first execute and deliver to the Company a counterpart signature page to
this Agreement and thereby become an “Other Stockholder” for all purposes
hereunder.  The parties to this Agreement
further acknowledge and agree that, in the event any Seller Transfer is
consummated, (i) the transfer of Common Stock to the Seller Stockholders
pursuant to such Seller Transfer shall not be subject to the provisions of Section 5
of this Agreement and (ii) each Seller Stockholder (together with the members
of such Seller Stockholder’s Family Group to whom Common Stock may be
transferred pursuant to the terms of this Agreement) shall be aggregated with
Seller for purposes of determining whether the percentage thresholds set forth
in Sections 1(d), 8(a) and 8(b) of this Agreement have
been satisfied.

 

13.                                 Amendment
and Waiver.  Except as otherwise
provided herein, no modification, amendment or waiver of any provision of this
Agreement shall be effective against the Company or the Stockholders unless
such modification, amendment or waiver is approved in writing by the Company
and the holders of a majority of the Investor Shares; provided that no
such amendment or modification that would adversely affect one class or group
of holders of Stockholder Shares in a manner different than any other class or
group of holders of Stockholder Shares shall be effective against such class or
group of holders of Stockholder Shares without the prior written consent of at
least a majority of such Stockholder class or group adversely affected thereby;
provided that any amendment of the time periods set forth in Section 5
hereof and any amendment of the conditions set forth in Section 7(b)
hereof, in each case which would adversely affect Stockholders who are not
Investors shall also require the written consent of the holders of a majority
of the Stockholder Shares which are not Investor Shares; provided  further
that any material amendment of Sections 5, 6 or 7 hereof
which would adversely affect the holders of TCW/Crescent Shares in a manner
different from the GTCR Investors (or which would materially benefit the GTCR
Investors and not materially benefit the holders of TCW/Crescent Shares) shall
also require the written consent of the holders of a majority of the
TCW/Crescent Shares.  The failure of any
party to enforce any of the provisions of this Agreement shall in no way be
construed as a waiver of such provisions and shall not affect the

 

12

 

right of such
party thereafter to enforce each and every provision of this Agreement in accordance
with its terms.

 

14.                                 Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

 

15.                                 Entire
Agreement. Except as otherwise expressly set forth herein, this document
embodies the complete agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.

 

16.                                 Successors
and Assigns.  Except
as otherwise provided herein, this Agreement shall bind and inure to the
benefit of and be enforceable by the Company and its successors and assigns and
the Stockholders and any subsequent holders of Stockholder Shares and the respective
successors and assigns of each of them, so long as they hold Stockholder
Shares.

 

17.                                 Counterparts.  This Agreement may be executed in separate
counterparts (including by means of telecopied signature pages), each of which
shall be an original and all of which taken together shall constitute one and
the same agreement.

 

18.                                 Remedies.  The Company, each Investor, each Executive
and each Other Stockholder shall be entitled to enforce their rights under this
Agreement specifically to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights existing in their
favor.  The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that the Company, each Investor, each
Executive and each Other Stockholder may in its sole discretion apply to any
court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief (without posting a bond or other security) in order to
enforce or prevent any violation of the provisions of this Agreement.

 

19.                                 Notices.  Any notice provided for in this Agreement
shall be in writing and shall be either personally delivered, delivered via
facsimile or mailed via certified mail, return receipt requested (postage
prepaid) or sent by reputable overnight courier service (charges prepaid) to
the Company at the address set forth below and to any other recipient at the
address indicated on the schedules hereto and to any subsequent holder of
Stockholder Shares subject to this Agreement at such address as indicated by
the Company’s records, or at such address or to the attention of such other
person as the recipient party has specified by prior written notice to the
sending party.  Notices will be deemed to
have been given hereunder when delivered personally, three days after deposit
in the U.S. mail and one day after deposit with a reputable overnight courier
service.  All notices to the Company shall
be sent as follows:

 

13

 

If to the Company:

 

VeriFone Holdings, Inc.

2455 Augustine Drive

Santa Clara, CA  95054

Attention:  Chief Executive Officer

Facsimile: (310) 209-3310

 

with
copies to:

 

GTCR Fund VII, L.P. and GTCR Co-Invest, L.P.

c/o GTCR
Golder Rauner, L.L.C.

6100 Sears Tower

Chicago, IL  60606-6402

Attention:                        Collin E. Roche

Craig A. Bondy

Facsimile: (312) 382-2201

 

Kirkland & Ellis

200 East Randolph Drive

Chicago, Illinois 60601

Attention: Stephen L. Ritchie

Facsimile: (312) 861-2200

 

20.                                 Certain
Fees; Affiliate Transactions.  The
Company shall not, and shall cause its Subsidiaries to not, pay any fees,
including without limitation any management advisory fees, consulting fees,
investment banking fees or similar fees to any GTCR Investor or any Affiliate
of any of the GTCR Investors except as provided in the Professional Services
Agreement, dated as of July 1, 2002, as amended from time to time, between
VeriFone, Inc. and GTCR Golder Rauner, L.L.C. (the “Professional Services
Agreement”).  In addition to the
foregoing, the Company covenants that it shall not enter into any agreement or
undertake any transaction after the date hereof with any GTCR Investor or any
Affiliate of any GTCR Investor that is not a bona fide arms-length agreement or
transaction, as applicable, negotiated and entered into in the ordinary course
of business (including without limitation any amendment to the Professional
Services Agreement).

 

21.                                 Governing
Law.  The corporate law of Delaware
shall govern all issues concerning the relative rights of the Company and its
stockholders.  All other questions
concerning the construction, validity and interpretation of this Agreement
shall be governed by and construed in accordance with the internal laws of the
State of Delaware, without giving effect to any choice of law or other conflict
of law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware.

 

22.                                 Descriptive
Headings.  The descriptive headings
of this Agreement are inserted for convenience only and do not constitute a
part of this Agreement.

 

*  
*   *   *   *

 

14

 

IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement on the day and year first above written.

 

	
   

  	
  VERIFONE
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS G. BERGERON

  
	
   

  	
  Name:

  	
  Douglas G.
  Bergeron

  
	
   

  	
  Its:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GTCR FUND
  VII, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GTCR Partners
  VII, L.P.

  
	
   

  	
  Its:

  	
  General
  Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GTCR Golder
  Rauner, L.L.C.

  
	
   

  	
  Its:

  	
  General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOSEPH P. NOLAN

  
	
   

  	
  Name:

  	
  Joseph P.
  Nolan

  
	
   

  	
  Its:

  	
  Principal

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GTCR
  CO-INVEST, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GTCR Golder
  Rauner, L.L.C.

  
	
   

  	
  Its:

  	
  General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOSEPH P. NOLAN

  
	
   

  	
  Name:

  	
  Joseph P.
  Nolan

  
	
   

  	
  Its:

  	
  Principal

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GTCR CAPITAL
  PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GTCR
  Mezzanine Partners, L.P.

  
	
   

  	
  Its:

  	
  General
  Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GTCR
  Partners VI, L.P.

  
	
   

  	
  Its:

  	
  General
  Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GTCR Golder
  Rauner, L.L.C.

  
	
   

  	
  Its:

  	
  General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOSEPH P. NOLAN

  
	
   

  	
  Name:

  	
  Joseph P.
  Nolan

  
	
   

  	
  Its:

  	
  Principal

  

 

 

	
   

  	
  TCW/CRESCENT
  MEZZANINE PARTNERS III, L.P.

  
	
   

  	
  TCW/CRESCENT
  MEZZANINE TRUST III

  
	
   

  	
  TCW/CRESCENT
  MEZZANINE PARTNERS III

  
	
   

  	
   

  	
  NETHERLANDS,
  L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  TCW/Crescent
  Mezzanine Management III, L.L.C.,

  
	
   

  	
   

  	
  its
  Investment manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
  TCW/Asset
  Management Company,

  
	
   

  	
   

  	
  its
  Sub-Advisor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TIMOTHY P. COSTELLO

  
	
   

  	
  Name:

  	
  Timothy P.
  Costello

  
	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TCW
  LEVERAGED INCOME TRUST IV, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  TCW/Asset
  Management Company,

  
	
   

  	
   

  	
  as its
  Investment Advisor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ RUFUS H. RIVERS

  
	
   

  	
  Name:

  	
  Rufus H.
  Rivers

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  TCW Asset
  Management Company,

  
	
   

  	
   

  	
  as its
  Managing Member of

  
	
   

  	
   

  	
  TCW (LINC
  IV) L.L.C., the General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TIMOTHY P. COSTELLO

  
	
   

  	
  Name:

  	
  Timothy P.
  Costello

  
	
   

  	
  Title:

  	
  Managing
  Director

  

 

 

	
   

  	
   

  
	
   

  	
  /s/ JESSE ADAMS

  
	
   

  	
  Jesse Adams

  
	
   

  	
   

  
	
   

  	
  /s/ WILLIAM G. ATKINSON

  
	
   

  	
  William G.
  Atkinson

  
	
   

  	
   

  
	
   

  	
  /s/ DOUGLAS G. BERGERON

  
	
   

  	
  Douglas G.
  Bergeron

  
	
   

  	
   

  
	
   

  	
  /s/ ROBERT COOK

  
	
   

  	
  Robert Cook

  
	
   

  	
   

  
	
   

  	
  /s/ GARY GRANT

  
	
   

  	
  Gary Grant

  
	
   

  	
   

  
	
   

  	
  /s/ ROBERT LOPEZ

  
	
   

  	
  Robert Lopez

  
	
   

  	
   

  
	
   

  	
  /s/ JAMES SHEEHAN

  
	
   

  	
  James
  Sheehan

  
	
   

  	
   

  
	
   

  	
  /s/ DAVE TURNBULL

  
	
   

  	
  Dave
  Turnbull

  
	
   

  	
   

  
	
   

  	
  /s/ ELMORE WALLER

  
	
   

  	
  Elmore
  Waller

  

 

 

	
   

  	
  VF HOLDING
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ALEC E. GORES

  
	
   

  	
  Name:

  	
  Alec E.
  Gores

  
	
   

  	
  Its:

  	
  Chairman

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