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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JUNE 3, 1998
SCM MICROSYSTEMS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-22689 77-0444317
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(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
131 ALBRIGHT WAY
LOS GATOS, CALIFORNIA 95032
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(ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(408) 370-4888
NOT APPLICABLE
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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Item 2. Acquisition or Disposition of Assets.
On June 3, 1998, the registrant acquired all of the issued and
outstanding capital stock of Intellicard Systems Pte. Ltd., a corporation
incorporated under the laws of the Republic of Singapore ("Intellicard"), from
Intellicard's stockholders in exchange for aggregate consideration of
US$18,390,999, of which US$14,890,999 was paid in cash and US$3,500,000 was paid
upon the issuance of 61,185 shares of the registrant's Common Stock (such
transaction being referred to herein as the "Intellicard Acquisition").
Approximately $11.4 million of the cash portion of the consideration was paid to
the selling stockholders in exchange for cash held by Intellicard at the closing
of the transaction. The registrant used its available cash and cash equivalents
to fund the cash portion of the consideration. The Intellicard Acquisition will
be accounted for under the "purchase" method of accounting.
Intellicard is a contract manufacturing company that manufactures
certain of the registrant's products, including smart card readers, DVB modules
and PC Card adapters.
The Intellicard Acquisition was effected pursuant to the terms
and conditions of a Stock Purchase Agreement between the registrant, Intellicard
and Intellicard's stockholders, including IPC Peripherals Pte. Ltd., a
corporation incorporated under the laws of the Republic of Singapore, Alco
Technology Pte. Ltd., a corporation incorporated under the laws of the Republic
of Singapore, Tan Tai Chew, Goh Boon Huat and Lim Kim Lark. Poh Chuan Ng, a
director of the registrant since June 1995, served as the Director of Business
Development at Intellicard from September 1994 through May 1997.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
It is impracticable for the registrant to provide the required
financial statements for the business acquired at the time of filing this
report, but the registrant will file such required financial statements, if
required pursuant to this item and Rule 3-05(b) of Regulation S-X, by amendment
to this report as soon as practicable, but not later than sixty days after this
report was required to be filed initially.
(b) Pro Forma Financial Information.
It is impracticable for the registrant to provide the required
pro forma information for the business acquired at the time of filing this
report, but the registrant will file such required pro forma information, if
required pursuant to this item and Rule 3-05(b) of Regulation S-X, by amendment
to this report as soon as practicable, but not later than sixty days after this
report was required to be filed initially.
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(c) Exhibits.
2.1 Stock Purchase Agreement, dated as of June 3, 1998,
by and among the registrant, IPC Peripherals Pte.
Ltd., a corporation incorporated under the laws of
the Republic of Singapore, Tan Tai Chew, Goh Boon
Huat, Lim Kim Lark, Alco Technology Pte. Ltd., a
corporation incorporated under the laws of the
Republic of Singapore, and Intellicard Systems Pte.
Ltd., a corporation incorporated under the laws of
the Republic of Singapore.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
The registrant's issuance of shares of its Common Stock in
connection with the Intellicard Acquisition (as described in Item 2 hereof) was
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), in reliance upon the exemption from registration
provided by Rule 903 of Regulation S promulgated thereunder. The exemption from
registration under the Securities Act provided by Rule 903 of Regulation S was
available for the issuance by the registrant of shares of its Common Stock in
connection with the Intellicard Acquisition on the basis of the following: (i)
the offer and sale of the registrant's Common Stock was made in an offshore
transaction to persons and entities outside the United States; (ii) no directed
selling efforts were made in the United States by the registrant, a distributor,
any of their respective affiliates, or any person acting on behalf of any of the
foregoing; (iii) the registrant is a reporting person under the Securities
Exchange Act of 1934, as amended; (iv) offering restrictions were implemented
in respect of the shares of Common Stock issued; and (v) the offer and sale of
the registrant's Common Stock were not made to a U.S. person or for the account
or benefit of a U.S. person.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SCM MICROSYSTEMS, INC.
A Delaware Corporation
Dated: June 18, 1998 By: /s/ John Niedermaier
________________________________
Title: Vice President, Finance
Chief Financial Officer
_____________________________
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EXHIBIT INDEX
<TABLE>
<CAPTION>
No. Description
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<S> <C>
2.1 Stock Purchase Agreement, dated as of June 3, 1998, by and among the
registrant, IPC Peripherals Pte. Ltd., a corporation incorporated
under the laws of the Republic of Singapore, Tan Tai Chew, Goh Boon
Huat, Lim Kim Lark, Alco Technology Pte. Ltd., a corporation
incorporated under the laws of the Republic of Singapore, and
Intellicard Systems Pte. Ltd., a corporation incorporated under the
laws of the Republic of Singapore.
</TABLE>
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
SCM MICROSYSTEMS, INC.
A DELAWARE CORPORATION
INTELLICARD SYSTEMS PTE LTD.
A CORPORATION INCORPORATED UNDER THE LAWS OF THE
REPUBLIC OF SINGAPORE
AND
IPC PERIPHERALS PTE. LTD.
TAN TAI CHEW
GOH BOON HUAT
LIM KIM LARK
ALCO TECHNOLOGY PTE. LTD.
JUNE 3, 1998
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TABLE OF CONTENTS
<TABLE>
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PAGE
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ARTICLE I - PURCHASE AND SALE OF THE SECURITIES.......................................... -2-
1.1 Purchase and Sale of the Securities......................................... -2-
1.2 Escrow Deposit.............................................................. -3-
1.3 Tax and Duty Assessments.................................................... -3-
1.4 Offset for Shareholder Liabilities.......................................... -3-
1.5 Closing..................................................................... -3-
1.6 Closing Deliveries.......................................................... -4-
1.7 Further Assurances.......................................................... -5-
ARTICLE II - REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SELLING SHAREHOLDERS.............................................. -6-
2.1 Company Organization and Good Standing...................................... -6-
2.2 Company Capital Structure................................................... -6-
2.3 Company Subsidiaries........................................................ -7-
2.4 Authority of the Company and Selling Shareholders........................... -7-
2.5 No Conflicts................................................................ -8-
2.6 Company Financial Statements................................................ -9-
2.7 No Undisclosed Liabilities.................................................. -10-
2.8 Deferred Compensation....................................................... -10-
2.9 No Changes.................................................................. -11-
2.10 Tax Matters................................................................. -13-
2.11 Restrictions on Business Activities......................................... -15-
2.12 Title of Properties; Absence of Liens and Encumbrances;
Condition of Equipment...................................................... -15-
2.13 Intellectual Property....................................................... -16-
2.14 Agreements, Contracts and Commitments....................................... -18-
2.15 Interested Party Transactions............................................... -20-
2.16 Governmental Authorization.................................................. -20-
2.17 Permits..................................................................... -20-
2.18 Legal Proceedings........................................................... -21-
2.19 Accounts Receivable; Inventory.............................................. -21-
2.20 Customers and Suppliers..................................................... -22-
2.21 Minute Books................................................................ -22-
2.22 Environmental Matters....................................................... -22-
2.23 Employee Benefit Plans and Compensation..................................... -27-
2.24 Insurance................................................................... -30-
2.25 Compliance with Laws........................................................ -30-
2.26 Warranties; Indemnities..................................................... -30-
2.27 Complete Copies of Materials................................................ -31-
2.28 Brokers' and Finders' Fees.................................................. -31-
2.29 Foreign Offering Representations............................................ -31-
2.30 Investment Representations.................................................. -32-
2.31 Representations Complete.................................................... -33-
ARTICLE III - REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER......................................................................... -34-
3.1 Organization, Standing and Power............................................ -34-
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
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<S> <C>
3.2 Authority................................................................... -34-
3.3 No Conflicts................................................................ -34-
3.4 Brokers' and Finder's Fees.................................................. -35-
ARTICLE IV - ADDITIONAL AGREEMENTS....................................................... -35-
4.1 Confidentiality............................................................. -35-
4.2 Non-Solicitation............................................................ -36-
4.3 Transfer Restrictions....................................................... -36-
4.4 Exchange Act Reports........................................................ -38-
4.5 Best Efforts................................................................ -38-
4.6 Board of Directors.......................................................... -38-
ARTICLE V - CONDITIONS TO THE PURCHASE AND SALE
OF THE SHARES............................................................................ -39-
5.1 Conditions to Obligations of the Parties.................................... -39-
5.2 Additional Conditions to the Obligations of the Purchaser................... -39-
5.3 Additional Conditions to Obligations of the Company and the Selling
Shareholders................................................................ -42-
ARTICLE VI - SURVIVAL AND INDEMNIFICATION................................................ -43-
6.1 Survival.................................................................... -43-
6.2 Indemnification by the Selling Shareholders................................. -44-
6.3 Indemnification by the Purchaser............................................ -45-
6.4 Materiality Exceptions...................................................... -45-
6.5 Insurance Proceeds.......................................................... -46-
6.6 Notice...................................................................... -46-
6.7 Third Party Claims.......................................................... -46-
6.8 The Representative.......................................................... -49-
ARTICLE VII - GENERAL PROVISIONS......................................................... -50-
7.1 Further Assurances.......................................................... -50-
7.2 Notices..................................................................... -51-
7.3 Interpretation.............................................................. -52-
7.4 Expenses.................................................................... -52-
7.5 Counterparts................................................................ -52-
7.6 Entire Agreement; Assignment................................................ -52-
7.7 Severability................................................................ -52-
7.8 Other Remedies.............................................................. -53-
7.9 Governing Law............................................................... -53-
7.10 Rules of Construction....................................................... -53-
7.11 Amendment................................................................... -53-
7.12 Extension; Waiver........................................................... -53-
7.13 Interpretation of Knowledge................................................. -53-
</TABLE>
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INDEX OF EXHIBITS
Exhibit A Schedule of Selling Shareholders and Allocation of Acquisition
Consideration
Exhibit B Form of Escrow Agreement
Exhibit C Form of Employment and Non-Competition Agreement
Exhibit D Schedule of Parties to Employment and Non-Competition Agreement
Exhibit E Schedule of Company Directors after Closing
Exhibit F Form of Legal Opinion of K L Lim & Co.
[Counsel to the Company and the Selling Shareholders]
Exhibit G Form of Legal Opinion of Wilson Sonsini Goodrich & Rosati, P.C.
[Counsel to the Purchaser]
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and entered
into as of June 3, 1998 by and among SCM Microsystems, Inc., a Delaware
corporation (the "PURCHASER"), IPC Peripherals Pte. Ltd., a corporation
organized under the laws of the Republic of Singapore, Tan Tai Chew, Goh Boon
Huat, Lim Kim Lark and Alco Technology Pte. Ltd., a corporation incorporated
under the laws of the Republic of Singapore (each, a "SELLING SHAREHOLDER" and
collectively, the "SELLING SHAREHOLDERS"), and Intellicard Systems Pte. Ltd., a
corporation incorporated under the laws of the Republic of Singapore (the
"COMPANY").
WITNESSETH
WHEREAS, the Selling Shareholders own beneficially and of record an
aggregate of 4,000,000 shares of Common Stock of the Company (the "COMPANY
SHARES"), representing all of the issued and outstanding shares of all classes
and series of capital stock of the Company.
WHEREAS, upon the terms and subject to the conditions set forth herein,
the Selling Shareholders wish to sell to the Purchaser, and the Purchaser wishes
to purchase from the Selling Shareholders, the Company Shares for an aggregate
purchase price of US$18,390,999 (the "ACQUISITION CONSIDERATION"), of which
US$14,890,999 shall be payable in cash and US$3,500,000 shall be payable in
shares of Common Stock of the Purchaser.
WHEREAS, the parties hereto have agreed that a portion of the
Acquisition Consideration shall be placed in escrow by the Purchaser for
purposes of satisfying liabilities, damages, losses, expenses and other similar
charges which result from a breach of the representations and warranties, and
covenants of the Company and the Selling Shareholders contained in this
Agreement.
WHEREAS, the Company, the Selling Shareholders and the Purchaser desire
to make certain representations and warranties and other covenants and
agreements in connection with the transactions contemplated hereby.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the
representations and warranties, covenants and other agreements hereinafter set
forth, the mutual benefits to be gained by the performance thereof, and other
good and valuable consideration, the receipt and legal sufficiency of which are
hereby acknowledged and accepted, the parties hereto hereby agree as follows:
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ARTICLE I
PURCHASE AND SALE OF THE SECURITIES
1.1 Purchase and Sale of the Securities. On the Closing Date and
effective as of the Closing (each as defined in Section 1.5 hereof), upon the
terms and subject to the conditions of this Agreement, each of the Selling
Shareholders shall severally, and not jointly, sell, convey, assign, transfer
and deliver to the Purchaser, and the Purchaser shall purchase from each of the
Selling Shareholders, that number of Company Shares set forth opposite the name
of such Selling Shareholder on Exhibit A hereto, free and clear of all options,
pledges, security interests, voting agreements, trusts or similar arrangements,
liens, charges or other encumbrances or restrictions on voting or transfer
thereof ("ENCUMBRANCES"), in exchange for an aggregate purchase price of
US$18,390,999 (as defined in the recitals hereto, the "ACQUISITION
CONSIDERATION"), payable by the Purchaser to the Selling Shareholders in
accordance with the following:
(a) US$14,890,999 of the Acquisition Consideration shall be
payable in cash (the "CASH CONSIDERATION").
(b) US$3,500,000 of the Acquisition Consideration shall be
payable in that number of shares of Common Stock of the Purchaser (the
"SHARE CONSIDERATION") determined by dividing (x) US$3,500,000 by (y)
the Market Price (as defined below). For all purposes of and under this
Agreement, the term "MARKET PRICE" shall mean and refer to one of the
following (as determined by Purchaser in its sole discretion at or prior
to the Closing): (i) the closing price per share of the Common Stock of
the Purchaser on the Nasdaq National Market (the "CLOSING PRICE") on the
first (1st) business day immediately prior to the Closing Date, (ii) the
Closing Price of the Common Stock of the Purchaser on any day, as
selected by the Purchaser, within the ten (10) calendar day period
ending on the first (1st) business day immediately prior to the Closing
Date; or (iii) the average Closing Price of the Common Stock of the
Purchaser for the ten (10) calendar day period ending on the first (1st)
business day immediately prior to the Closing Date.
(c) The Cash Consideration and the Share Consideration shall be
allocated among the Selling Shareholders in accordance with, and in the
manner set forth on, Exhibit A hereto.
The obligations of the Selling Shareholders under this Section 1.1 shall
be several, and not joint; provided, however, that in addition to the other
conditions to the obligations of the Purchaser set forth in Article V hereof,
the Purchaser shall not be obligated to purchase any Company Shares pursuant to
and in accordance with this Section 1.1 unless and until each of the Selling
Shareholders tenders to the Purchaser at the Closing all of the Company Shares
held by such Selling Shareholder, in each case as set forth on Exhibit A hereto.
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1.2 Escrow Deposit. Notwithstanding the foregoing provisions of Section
1.1 hereof and anything to the contrary contained in this Agreement, the
Purchaser shall withhold an aggregate of US$350,000 in cash (the "ESCROWED CASH
CONSIDERATION") and ten percent (10%) of the Share Consideration (i.e., that
number of shares of the Purchaser's Common Stock with a fair market value equal
to US$350,000.00) (the "ESCROWED SHARE CONSIDERATION") from the respective cash
and share amounts payable to the Selling Shareholders pursuant to Section 1.1
hereof, and the Purchaser shall deposit the Escrowed Cash Consideration and the
Escrowed Share Consideration into an escrow account (the "ESCROW FUND"),
representing the aggregate of those portions of the respective cash and share
amounts payable to each of the Selling Shareholders pursuant to Section 1.1
hereof, to be governed by the terms hereof and the terms of the Escrow Agreement
attached hereto as Exhibit B (the "ESCROW AGREEMENT" and the escrow agent
designated therein, the "ESCROW AGENT").
1.3 Tax and Duty Assessments. The Purchaser shall be solely responsible
for, and shall promptly pay when due, any and all income, excise, sales,
value-added, use, registration, stamp and transfer taxes or duties imposed or
assessed upon, attributable to, or levied by reason of or in connection with,
the transfer of the Company Shares (and the certificates therefor) pursuant to
and in accordance with the terms and conditions of this Agreement.
1.4 Offset for Shareholder Liabilities. In the event that any of the
Selling Shareholders has outstanding loans payable to the Company on the Closing
Date, (i) the cash amounts payable to such Selling Shareholder pursuant to
Section 1.2 hereof shall be reduced by an amount equal to the outstanding
principal plus accrued interest payable under any such loan(s) as of the Closing
Date (collectively, the "SHAREHOLDER LOAN AMOUNT"), and (ii) the Purchaser shall
transfer an amount equal to the Shareholder Loan Amount to the Company on the
Closing Date. Such amounts, if any, are set forth in Section 1.4 of the
Disclosure Schedule.
1.5 Closing. Subject to the satisfaction or waiver of the conditions set
forth in Article V hereof, the consummation of the transactions contemplated
hereby pursuant to the terms and provisions hereof (the "CLOSING") shall take
place simultaneously with the execution and delivery of this Agreement at the
offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, located
at 650 Page Mill Road, Palo Alto, CA 94304-1050, at 10:00 a.m. Pacific Standard
Time, on the earlier to occur of (i) June 30, 1998, and (ii) the first (1st)
business day after satisfaction or waiver of the conditions set forth in Article
V hereof, or at such other place, time and date as shall be mutually agreed upon
in writing by the parties hereto. The date upon which the Closing shall actually
occur shall be referred to herein as the "CLOSING DATE."
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1.6 Closing Deliveries.
(a) At the Closing, on the terms and subject to the conditions
set forth herein and in reliance on the representations and warranties,
covenants and other agreements set forth herein, each of the Selling
Shareholders shall severally, and not jointly, deliver, or cause to be
delivered, to the Purchaser each of the following:
(i) a copy of this Agreement, duly and validly executed by
such Selling Shareholder;
(ii) a certificate or certificates, registered in the name
of such Selling Shareholder, as set forth on Exhibit A hereto,
representing the number of Company Shares to be sold by such
Selling Shareholder to the Purchaser pursuant to and in
accordance with the terms of this Agreement;
(iii) a copy of the Escrow Agreement, duly and validly
executed by such Selling Shareholder; and
(iv) such other agreements, instruments, certificates and
other documents as may be necessary or appropriate to effectuate
completely the transactions contemplated hereby and by each of
the Related Agreements.
(b) At the Closing, on the terms and subject to the conditions
set forth herein and in reliance on the representations and warranties,
covenants and other agreements set forth herein, the Company shall
deliver, or cause to be delivered, to the Purchaser each of the
following:
(i) a copy of this Agreement, validly executed by a duly
authorized officer of the Company;
(ii) a copy of the Escrow Agreement, validly executed by a
duly authorized officer of the Company; and
(iii) such other agreements, instruments, certificates and
other documents as may be necessary or appropriate to effectuate
completely the transactions contemplated hereby and by each of
the Related Agreements.
(c) At the Closing, on the terms and subject to the conditions
set forth herein and in reliance on the representations and warranties,
covenants and other agreements set forth herein, the Purchaser shall
deliver, or cause to be delivered, to the Selling Shareholders, and/or
the Escrow Agent, as appropriate, each of the following:
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(i) a copy of this Agreement, validly executed by a duly
authorized officer of the Purchaser;
(ii) subject to the provisions of Section 1.2 hereof, the
Cash Consideration payable by check, bank draft or wire transfer
of immediately available funds to an account or accounts
designated in writing by each of the Selling Shareholders;
(iii) subject to the provisions of Section 1.2 hereof,
certificates representing the Share Consideration, validly
executed by the appropriate duly authorized officers of the
Purchaser; and
(iv) the Escrowed Cash Consideration, payable by wire
transfer of immediately available funds to the escrow account
designated in the Escrow Agreement;
(v) certificates representing the Escrowed Share
Consideration, validly executed by the appropriate duly
authorized officers of the Purchaser, to the Escrow Agent;
(vi) a copy of the Escrow Agreement, validly executed by a
duly authorized officer of the Purchaser; and
(vii) such other agreements, instruments, certificates and
other documents as may be necessary or appropriate to effectuate
completely the transactions contemplated hereby and by each of
the Related Agreements.
1.7 Further Assurances. On and after the Closing, upon the reasonable
request of any of the other parties hereto, the parties hereto shall prepare,
execute and deliver such other and further agreements, instruments,
certificates, and other documents, and take, do and perform such other and
further actions, as may be necessary or appropriate in order to effectuate
completely the purposes and intent of this Agreement and to fully consummate the
transactions contemplated hereby.
1.8 Related Agreements. For all purposes of and under this Agreement,
the term "RELATED AGREEMENTS" shall mean and refer to (i) the Escrow Agreement,
and (ii) the Employment and Non-Competition Agreements (as defined in Section
5.2(f) hereof).
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SELLING SHAREHOLDERS
The Company and the Selling Shareholders hereby jointly and severally
represent and warrant to the Purchaser, subject to the exceptions and
qualifications specifically set forth in the disclosure schedule delivered by
the Company and the Selling Shareholders to the Purchaser at the Closing (the
"DISCLOSURE SCHEDULE"), as follows:
2.1 Company Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. The Company has the corporate power to own
its properties and to carry on its business as now being conducted. The Company
is duly qualified to transact business and is in good standing as a foreign
corporation in each jurisdiction in which the failure to be so qualified or be
in good standing would have a Material Adverse Effect (as defined below) on the
Company. The Company has delivered, or caused to be delivered, to the Purchaser
and its counsel a true, correct and complete copy of the Company's Memorandum of
Association and Articles of Association, each as amended to date and as in full
force and effect on the date hereof. For purposes of this Agreement, "MATERIAL
ADVERSE EFFECT" shall mean any material adverse change in, or material adverse
effect on, the business, prospects, assets, results of operations, or financial
or other condition of the Company, or any event or circumstance which would
likely prevent, hinder or materially delay the consummation of any of the
transactions contemplated by this Agreement and the Related Agreements.
2.2 Company Capital Structure.
(a) The authorized capital stock of the Company consists of
5,000,000 shares of Common Stock, of which 4,000,000 shares have been
issued and are outstanding as of the date hereof. All shares of the
Company's issued and outstanding capital stock are held by the persons
and in the amounts set forth on Exhibit A hereto. All issued and
outstanding shares of the Company's Common Stock were duly authorized
and validly issued, are fully paid and non-assessable, were issued in
compliance with all securities laws of the Republic of Singapore and any
other foreign governmental authority of applicable jurisdiction and,
except as set forth in Section 2.2(a) of the Disclosure Schedule, are
not subject to any preemptive rights created by statute, the Company's
Memorandum of Association or Articles of Association or any agreement to
which the Company is a party or by which it is bound.
(b) Except as set forth in Section 2.2(b) of the Disclosure
Schedule, there are no options, warrants, calls, rights, commitments or
agreements of any kind or character, whether written or oral, to which
the Company is a party or by which it is bound pursuant to which the
Company is or may become obligated to issue, deliver,
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sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of the capital stock of the Company
or pursuant to which the Company is or may become obligated to grant,
extend, accelerate the vesting of, change the price of, otherwise amend
or enter into any such option, warrant, call, right, commitment or
agreement.
(c) The Company Shares are owned beneficially and of record by
the Selling Shareholders, free and clear of any and all Encumbrances of
any kind or nature whatsoever, other than restrictions imposed by the
securities laws of the Republic of Singapore and any other foreign
governmental authority of applicable jurisdiction. The Company Shares
comprise all of the issued and outstanding shares of capital stock of
the Company. There are no outstanding securities convertible into, or
exercisable or exchangeable for, shares of capital stock of the Company.
Upon the consummation of the transactions contemplated by this Agreement
and the Related Agreements, the Purchaser will own beneficially and of
record, all right, title and interest in and to the Company Shares, free
and clear of all Encumbrances of any kind or nature whatsoever, other
than restrictions imposed by securities laws of the Republic of
Singapore and any other foreign governmental authority of applicable
jurisdiction.
2.3 Company Subsidiaries. The Company does not have and has never had
any subsidiaries or affiliated companies, does not otherwise own and has never
otherwise owned any shares of capital stock or any other equity or ownership
interest in, and does not otherwise control, directly or indirectly, and has
never otherwise controlled any other corporation, partnership, association,
joint venture or other legal entity.
2.4 Authority of the Company and Selling Shareholders.
(a) The Company has all requisite power and authority to enter
into this Agreement and each of the Related Agreements to which the
Company is a party, to perform fully its obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by the Company of this Agreement and
each of the Related Agreements to which the Company is a party, the
performance by the Company of its obligations hereunder and thereunder,
and the consummation by the Company of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate
action on the part of the Company. This Agreement has been duly executed
and delivered by the Company, and constitutes the valid and binding
obligation of the Company enforceable against the Company in accordance
with the terms hereof, except as such enforceability may be limited by
principles of general application relating to bankruptcy, insolvency,
creditor's rights, and the relief of debtors, and rules of law governing
specific performance, injunctive relief or other equitable remedies.
When delivered in accordance with the terms and conditions hereof, each
of the Related Agreements to which the Company is a party will have
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been duly executed and delivered by the Company, and all such Related
Agreements will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with the
respective terms thereof, except as such enforceability may be limited
by principles of general application relating to bankruptcy, insolvency,
creditor's rights, and the relief of debtors, and rules of law governing
specific performance, injunctive relief or other equitable remedies.
(b) Each of the Selling Shareholders have all requisite power
and authority to enter into this Agreement and each of the Related
Agreements to which each such Selling Shareholder is a party, to perform
fully his or its respective obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery by each of the Selling Shareholders that is a
corporation of this Agreement and each of the Related Agreements to
which each such Selling Shareholder is a party, the performance by each
of the Selling Shareholders that is a corporation of its respective
obligations hereunder and thereunder, and the consummation by each of
the Selling Shareholders that is a corporation of the transactions
contemplated hereby and thereby, have been duly authorized by all
necessary corporate action on the part of each such Selling Shareholder.
This Agreement has been duly executed and delivered by each of the
Selling Shareholders, and constitutes the valid and binding obligation
of each of the Selling Shareholders enforceable against each such
Selling Shareholder in accordance with the terms hereof, except as such
enforceability may be limited by principles of general application
relating to bankruptcy, insolvency, creditor's rights, and the relief of
debtors, and rules of law governing specific performance, injunctive
relief or other equitable remedies. When delivered in accordance with
the terms and conditions hereof, each of the Related Agreements will
have been duly executed and delivered by each of the Selling
Shareholders who are party to such Related Agreements, and all such
Related Agreements will constitute the valid and binding obligation of
each of the Selling Shareholders enforceable against each such Selling
Shareholder in accordance with the respective terms thereof, except as
such enforceability may be limited by principles of general application
relating to bankruptcy, insolvency, creditor's rights, and the relief of
debtors, and rules of law governing specific performance, injunctive
relief or other equitable remedies.
2.5 No Conflicts.
(a) The execution and delivery by the Company and each of the
Selling Shareholders of this Agreement and each of the Related
Agreements to which the Company and/or any of Selling Shareholders is a
party does not, and will not, (i) conflict with, or result in any
violation of, or constitute a default under (with or without notice or
lapse of time, or both), or give rise to a right of termination,
cancellation, modification or acceleration of any obligation or loss of
any benefit under (each, a "CONFLICT") (A) any provision of the
Company's Memorandum of
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Association or Articles of Association, each as amended and in full
force and effect as of the date hereof, or (B) any mortgage, indenture,
lease, contract or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company or its properties or
assets, or (ii) violate any order, injunction, judgment, ruling, law or
regulation of any court, administrative agency or commission or other
federal, state, county, local or foreign governmental authority,
instrumentality, agency or commission, including, without limitation,
any governmental authority, instrumentality, agency or commission of the
Republic of Singapore (each, a "GOVERNMENTAL ENTITY"), applicable to the
Company or any of its properties or assets. Except as set forth in
Section 2.5(a) of the Disclosure Schedule, no consent, waiver, approval,
order or authorization of, or registration, declaration or filing with,
any Governmental Entity or any third party, including, without
limitation, a party to any agreement with the Company, is required by or
with respect to the Company in connection with the execution and
delivery by the Company and the Selling Shareholders of this Agreement
or any of the Related Agreements, the performance by the Company and the
Selling Shareholders of their respective obligations hereunder and
thereunder, or the consummation by the Company and the Selling
Shareholders of the transactions contemplated hereby and thereby.
(b) The execution and delivery by each of the Selling
Shareholders of this Agreement and each of the Related Agreements to
which any of them is a party does not, and will not, (i) give rise to
any Conflict in respect of any mortgage, indenture, lease, contract or
other agreement or instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to any of the Selling Shareholders or their respective
properties and assets, or (ii) violate any order, injunction, judgment,
ruling, law or regulation of any Governmental Entity applicable to any
of the Selling Shareholders or any of their respective properties or
assets. No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or any
third party, including, without limitation, a party to any agreement
with any of the Selling Shareholders, is required by or with respect to
any of the Selling Shareholders in connection with the execution and
delivery by the Selling Shareholders of this Agreement or any of the
Related Agreements, the performance by the Selling Shareholders of their
respective obligations hereunder and thereunder, or the consummation by
the Selling Shareholders of the transactions contemplated hereby and
thereby.
2.6 Company Financial Statements. Section 2.6 of the Disclosure Schedule
includes a copy of the Company's audited financial statements, including balance
sheets, income statements and statements of cash flows, as of and for the fiscal
years ending December 31, 1995, 1996 and 1997 and the Company's unaudited
financial statements, including a balance sheet, income statement and statement
of cash flow, as of and for the
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three-month period ended March 31, 1998 (collectively, the "FINANCIAL
STATEMENTS"). Except for customary year end adjustments (which will not be
material in amount when taken as a whole) the Financial Statements are complete
and correct and have been prepared in accordance with Singapore generally
accepted accounting principles ("GAAP") applied on a basis consistent throughout
the periods indicated and consistent with each other, except that the unaudited
financial statements for the three-month period ended March 31, 1998 do not
contain the notes necessary to be in compliance with Singapore GAAP and are
subject to customary year end adjustments which will not be material in amount
when taken as a whole. The Financial Statements present fairly the financial
condition and results of operations of the Company as of the dates and during
the periods indicated therein except for customary year end adjustments which
will not be material in amount when taken as a whole. The audited balance sheet
of the Company as of December 31, 1997 is hereinafter referred to as the
"AUDITED BALANCE SHEET." The unaudited balance sheet of the Company as of March
31, 1998 is hereinafter referred to as the "UNAUDITED BALANCE SHEET."
2.7 No Undisclosed Liabilities. Except for obligations incurred in the
ordinary course of its business and in a manner consistent with its past
practices which are not material to the financial condition or results of
operations of the Company and which are not required under Singapore GAAP to be
set forth or reflected on a balance sheet or the notes thereto, the Company does
not have any liability, indebtedness, obligation, expense, claim, deficiency,
guaranty or endorsement of any type, whether accrued, absolute, contingent,
matured, unmatured or otherwise (whether or not required to be reflected in
financial statements in accordance with Singapore GAAP), which individually or
in the aggregate, (i) has not been reflected in the Unaudited Balance Sheet, or
(ii) has not been specifically described in this Agreement or in Section 2.7 of
the Disclosure Schedule and specifically identified herein or therein as not
being included in the Unaudited Balance Sheet, or (iii) has not arisen in the
ordinary course of the Company's business since the date of the Unaudited
Balance Sheet.
2.8 Deferred Compensation. Section 2.8 of the Disclosure Schedule
includes a complete and accurate list of the names of all directors and
employees (including executive officers) of the Company, and consultants to the
Company, and the amount of money each is entitled to receive from the Company as
a result of deferred compensation, bonuses or Company expenses payable to the
director, employee or consultant, other than stock options. Other than the names
and amounts listed in Section 2.8 of the Disclosure Schedule, no other
compensation is owed by the Company to the directors or employees of the
Company, or consultants to the Company, other than ordinary payroll payable by
the Company at the end of each pay period.
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<PAGE> 15
2.9 No Changes. Except as set forth in Section 2.9 of the Disclosure
Schedule, since March 31, 1998, there has not been, occurred or arisen:
(a) any transaction by the Company except in the ordinary course
of its business and in a manner consistent with its past practices;
(b) any capital expenditure or commitment by the Company
exceeding US$10,000 in any individual case and US$100,000 in the
aggregate;
(c) any destruction of, damage to or loss of any assets,
business or customer of the Company (whether or not covered by
insurance);
(d) any labor trouble or claim of wrongful discharge of which
the Company has received written notice, or of which the Company is
aware, or other unlawful labor practice or action;
(e) any change in accounting methods or practices (including,
without limitation, any change in depreciation or amortization policies
or rates) by the Company;
(f) any revaluation by the Company of any of its assets other
than depreciation as required by Singapore GAAP and as reflected on the
Unaudited Balance Sheet;
(g) any declaration, setting aside for payment, or payment of
any dividends on or any other distribution (whether in cash, stock or
property) in respect of any of the Company's capital stock, or any
split, combination or reclassification of any of the Company's capital
stock or the issuance or authorization of the issuance of any of the
securities in respect of, in lieu of or in substitution for shares of
the capital stock of the Company, or the repurchase, redemption or other
acquisition, directly or indirectly, of any shares of the Company's
capital stock, or any options, warrants, or other rights exercisable or
exchangeable therefor.
(h) any increase in the salary or other compensation payable, or
to become payable, by the Company to any of its officers, directors,
employees or advisors, or the declaration, payment or commitment or
obligation of any kind for the payment, by the Company, of a bonus or
other additional salary or compensation to any such person, and except
as otherwise contemplated by this Agreement;
(i) any sale, lease, license or other disposition of any of the
assets or properties of the Company, except in the ordinary course of
its business and in a manner consistent with its past practices;
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<PAGE> 16
(j) any amendment, termination or violation of any distribution
agreement or any contract, agreement or license to which the Company is
a party or by which it is or may become bound, other than amendment or
termination by the Company pursuant to the terms thereof in the ordinary
course of its business and in a manner consistent with its past
practices;
(k) any loan by the Company to any person or entity, other than
advances to employees for travel and business expenses in the ordinary
course of its business and in a manner consistent with its past
practices, or any incurring by the Company of any indebtedness other
than trade debt in the ordinary course of its business and in a manner
consistent with its past practices, or any guaranty by the Company of
any indebtedness, issuance or sale of any debt securities of the Company
or guaranteeing of any debt securities of others;
(l) any waiver or release of any material right or claim of the
Company, including, without limitation, any write-off or other
compromise of any account receivable of the Company in excess of
US$5,000 in any individual case and US$50,000 in the aggregate;
(m) any notice or commencement of, or threat of commencement of,
any lawsuit, violation of any operating permit or proceeding against or
investigation of the Company or its affairs;
(n) any receipt of any claim of ownership by a third party,
whether written or oral, of the Company's Intellectual Property Rights
(as defined in Section 2.13 hereof) or infringement by the Company of
any intellectual property rights of any third party;
(o) any issuance, sale or exemption by the Company of any of its
shares of capital stock, or securities exchangeable, convertible or
exercisable therefor, or of any other securities except for issuances or
sales as a result of rights previously granted to purchase shares of the
Company's capital stock;
(p) any transactions by the Company with any of its officers,
directors or employees (other than payment of normal compensation) or
with any persons or entities affiliated with any of its officers,
directors or employees;
(q) any event or condition of any character that has, or could
be reasonably expected to have, a Material Adverse Effect on the
Company; or
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<PAGE> 17
(r) any negotiation or agreement by the Company, or any
director, officer or employees thereof, to take, or cause to be taken,
any of the actions described in the preceding Sections 2.9(a) - (q),
other than by negotiations with the Purchaser and its representatives
regarding the transactions contemplated by this Agreement and each of
the Related Agreements.
2.10 Tax Matters.
(a) Definitions. For the purposes of this Agreement, (i) the
term "TAX" or, collectively, "TAXES," means any and all federal, state,
local and foreign taxes, assessments and other governmental charges,
duties, impositions and liabilities, including, without limitation,
taxes assessed by any governmental authority of the Republic of
Singapore and any other nation in which the Company is subject to
taxation of any kind, and including further, without limitation, taxes
based upon or measured by gross receipts, income, profits, sales, use
and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes,
together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and further including
any liability for taxes of a predecessor entity, (ii) the term "CODE"
means the United States Internal Revenue Code of 1986, as amended, and
(iii) the term "IRS" means the United States Internal Revenue Service,
or any successor agency of the federal government.
(b) Tax Returns and Audits.
(i) The Company has prepared and timely filed, or made a
timely request for extension for filing of, all federal, state,
local and foreign returns, estimates, information statements and
reports required by applicable law (including, without
limitation, the laws of the Republic of Singapore) relating to
any and all Taxes concerning or attributable to the Company or
its operations (each, a "RETURN" and, collectively, the
"RETURNS"), and all such Returns are true and correct and have
been completed in accordance with applicable law.
(ii) The Company (A) has paid or accrued all Taxes it is
required to pay or accrue in accordance with applicable law and
Singapore GAAP, and (B) has withheld and timely remitted with
respect to its employees all federal, state, local and foreign
income Taxes, and other Taxes required to be withheld and
remitted by applicable law.
(iii) The Company has not been delinquent in the payment of
any Tax concerning or attributable to the Company or its
operations, nor is there
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<PAGE> 18
any Tax deficiency outstanding, assessed or, to the knowledge of
the Company and the Selling Shareholders, proposed against the
Company concerning or attributable to the Company or its
operations, nor has the Company executed any waiver of any
statute of limitations on or extending the period for the
assessment or collection of any Tax concerning or attributable
to the Company or its operations.
(iv) No audit or other examination of any Return of the
Company is presently in progress, nor has the Company been
notified by any federal, state local or foreign governmental
authority (including, without limitation, any governmental
authority of the Republic of Singapore) of any request for such
an audit or other examination.
(v) The Company does not have any liabilities for unpaid
federal, state, local and foreign Taxes (including, without
limitation, Taxes assessed by any governmental authority of the
Republic of Singapore) which have not been accrued or reserved
against in accordance with Singapore GAAP on the Unaudited
Balance Sheet, whether asserted or unasserted, contingent or
otherwise.
(vi) The Company has made available to the Purchaser or its
representatives copies of all foreign, federal and state income,
and all state sales and use Returns, filed since January 1,
1995, or with respect to any non-U.S. Returns, for all periods
as to which the applicable statute of limitations has not
expired with respect thereto.
(vii) There are no liens, pledges, charges, claims, security
interests or other encumbrances of any kind or character ("TAX
LIENS") on the assets of the Company relating to or attributable
to Taxes concerning or attributable to the Company or its
operations, other than Tax Liens for taxes not yet due and
payable.
(viii) The Company has no knowledge of any reasonable basis
for the assertion of any claim relating or attributable to Taxes
concerning or attributable to the Company or its operations
which, if adversely determined, would result in any Tax Lien on
the assets of the Company.
(ix) The Company is not a party to a tax sharing or
allocation agreement nor does the Company owe any amount under
any such agreement.
(x) The Company's tax basis in its assets for purposes of
determining its future amortization, depreciation and other
federal income tax deductions is properly reflected on the
Company's tax books and records.
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2.11 Restrictions on Business Activities. There is no agreement
(noncompete or otherwise), commitment, judgment, injunction, order or decree to
which the Company is a party or otherwise binding upon the Company which has or
reasonably could be expected to have the effect of prohibiting or impairing any
business practice of the Company, any acquisition of property (tangible or
intangible) by the Company or the conduct of business by the Company. Section
2.11 of the Disclosure Schedule includes a complete and accurate list of notice
requirements to which the Company is subject pursuant to any such agreement,
commitment, judgment, injunction, order or decree.
2.12 Title of Properties; Absence of Liens and Encumbrances;
Condition of Equipment.
(a) Section 2.12(a) of the Disclosure Schedule includes a
complete and accurate list of all real property currently owned (the
"OWNED REAL PROPERTY") and leased by the Company (the "LEASED REAL
PROPERTY" and, together with the Owned Real Property, the "REAL
PROPERTY"), and, with respect to the Leased Real Property, the name of
the lessor, the date of the lease and each amendment thereto and the
aggregate annual rental and/or other fees payable under any such lease.
All leases for Leased Real Property are in full force and effect, are
valid and effective in accordance with their respective terms, and there
is not any existing material default or event of default (or event which
with notice or lapse of time, or both, would constitute a material
default) under any of such leases.
(b) The Company has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its
tangible properties and assets, free and clear of any liens, pledges,
charges, claims, security interests or other encumbrances of any kind or
character ("REAL ESTATE LIENS"), except as reflected in the Financial
Statements and except for Real Estate Liens for Taxes not yet due and
payable and such imperfections of title and encumbrances, if any, which
are not material in character, amount or extent, and which do not
detract from the value, or interfere with the present use and enjoyment,
of the property subject thereto or affected thereby.
(c) The equipment (the "EQUIPMENT") owned or leased by the
Company is, taken as a whole, (i) adequate for the conduct of the
business of the Company as currently conducted, (ii) in good operating
condition, subject to normal wear and tear, and (iii) reasonably
maintained.
(d) There are no material physical or mechanical defects of the
Real Property, including, without limitation, the structural and
load-bearing components of the Real Property. The improvements on the
Real Property, including, without limitation, the roofs, the parking
lot, the plumbing, heating, air conditioning, water, sewer, gas, and
electrical and life safety systems are in good operating condition and
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<PAGE> 20
repair, are in compliance in all material respects with all applicable
Legal Requirements (as defined below in Section 2.22(a)(viii) hereof)
have been reasonably maintained in a manner consistent in all material
respects with standards generally followed in the industry, ordinary
wear and tear excepted, and are structurally sound and suitable for
their present uses.
(e) The Company and the Selling Shareholders do not have
knowledge of any condemnation, environmental, zoning or other land-use
regulation proceedings, either instituted or planned to be instituted
with respect to the Real Property or any portion thereof, nor have the
Company and the Selling Shareholders received notice of any special
assessment proceedings affecting the Real Property.
(f) All water, sewer, gas, electric, telephone, and drainage
facilities and all other utilities required by law or by the normal use
and operation of the Real Property are installed to the property lines
of the Real Property, are connected pursuant to valid permits, and are
adequate for the conduct of the business on the Real Property as
presently conducted.
(g) The Company has obtained all licenses, permits, variances,
approvals, authorizations, easements and rights of way, including proof
of dedication, required from all governmental authorities having
jurisdiction over the Real Property or from private parties to insure
vehicular and pedestrian ingress to and egress from the Real Property at
current levels of use, except where the failure to so obtain any such
license, permit, variance, approval, authorization, easement or right of
way would not have a Material Adverse Effect.
(h) There are no outstanding written or oral contracts made by
the Company for any alterations or improvements on or to the Real
Property, which have not been fully paid for, and all mechanics' and
materialmens' liens arising from any labor or materials furnished to the
Real Property prior to the time of Closing have been discharged.
2.13 Intellectual Property.
(a) The Company owns, or is licensed or otherwise possesses
legally enforceable rights to use, all patents, trademarks, trade names,
service marks, copyrights, and any applications therefor, maskworks, net
lists, schematics, technology, know-how, computer software programs or
applications (in both source code and object code form), and tangible or
intangible proprietary information or material that are used in the
business of the Company as currently conducted (the "INTELLECTUAL
PROPERTY RIGHTS").
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<PAGE> 21
(b) Section 2.13 of the Disclosure Schedule includes a complete
and accurate list of all patents, trademarks, registered copyrights,
trade names and service marks, and any applications therefor, included
in the Intellectual Property Rights, and specifies, where applicable,
the jurisdictions in which each such Intellectual Property Right has
been issued or registered or in which an application for such issuance
and registration has been filed, including the respective registration
or application numbers and the names of all registered owners.
(c) Section 2.13 of the Disclosure Schedule also includes a
complete and accurate list of all material licenses, sublicenses and
other agreements as to which the Company is a party and pursuant to
which the Company or any other person is authorized by the Company to
use any Intellectual Property Right or other trade secret material to
the Company. The Company is not in material violation of any license,
sublicense or agreement described on such list.
(d) The execution and delivery by the Company of this Agreement
and each of the Related Agreements, the performance by the Company of
its obligations hereunder and thereunder, and the consummation by the
Company of the transactions contemplated hereby and thereby, (i) will
not cause the Company to be in violation or default under any such
license, sublicense or agreement, (ii) entitle any other party to any
such license, sublicense or agreement to terminate or modify such
license, sublicense or agreement, or (iii) require the Company to repay
any funds already received by it from a third party.
(e) No claims with respect to the Intellectual Property Rights
have been asserted against the Company, nor to the knowledge of the
Company, are threatened against the Company or have been asserted or
threatened against a third party, nor is the Company aware of any
reasonable basis for any claims (A) to the effect that the manufacture,
sale, licensing or use of any of the products of the Company as now
manufactured, sold or licensed or used or proposed for manufacture, use,
sale or licensing by the Company infringes on any copyright, patent,
trade mark, service mark, trade secret or other proprietary right of any
third party, (B) against the use by the Company of any trademarks,
service marks, trade names, trade secrets, copyrights, patents,
technology, know-how or computer software programs and applications used
in the Company's business as currently conducted or (C) challenging the
validity, effectiveness, or ownership by the Company of any of the
Intellectual Property Rights.
(f) All registered patents, trademarks, service marks and
copyrights held by the Company are valid and subsisting.
(g) To the knowledge of the Company, there is no unauthorized
use, infringement or misappropriation of any of the Intellectual
Property Rights owned by
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<PAGE> 22
the Company by any third party, including any employee or former
employee of the Company.
(h) No Intellectual Property Right or product of the Company is
subject to any outstanding decree, order, judgment, or stipulation
restricting in any manner the licensing thereof by the Company.
(i) The Company has not entered into any agreement under which
the Company is restricted from selling, licensing or otherwise
distributing any of its products to any class of customers, in any
geographic area, during any period of time or in any segment of the
market.
(j) The Company has a policy requiring each employee and
contractor to execute proprietary information and confidentiality
agreements in the Company's standard forms and all current and former
employees and contractors of the Company have executed such an
agreement.
2.14 Agreements, Contracts and Commitments.
(a) Except as set forth in Section 2.14 of the Disclosure
Schedule, the Company does not have continuing obligations under, is not
a party to, nor is it bound by:
(i) any collective bargaining agreements;
(ii) any agreements or arrangements that contain any
severance pay or post-employment liabilities or obligations,
other than as contemplated herein or in the Employment and
Non-Competition Agreements and the Employment Agreements;
(iii) any bonus, deferred compensation, pension, profit
sharing or retirement plans, or any other employee benefit plans
or arrangements;
(iv) any employment or consulting agreement, contract or
commitment with an employee or individual consultant or
salesperson or consulting or sales agreement, contract or
commitment with a firm or other organization;
(v) any agreement or plan, including, without limitation,
any stock option plan, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be increased,
or the vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated
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<PAGE> 23
on the basis of any of the transactions contemplated by this
Agreement, except as provided herein;
(vi) any fidelity or surety bond or completion bond;
(vii) any lease of personal property having annual lease
payments individually in excess of US$10,000;
(viii) any agreement of indemnification or guaranty other
than in the ordinary course of business;
(ix) any agreement, contract or commitment containing any
covenant limiting the freedom of the Company to engage in any
line of business or to compete with any person;
(x) any agreement, contract or commitment relating to
capital expenditures and involving future payments in excess of
US$10,000 in the aggregate (other than agreements, contracts or
commitments made in the ordinary course of the Company's
business consistent with past practices and not involving future
payments in excess of US$50,000 in the aggregate);
(xi) any agreement, contract or commitment relating to the
disposition or acquisition of material assets or any interest in
any business enterprise outside the ordinary course of the
Company's business;
(xii) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating
to the borrowing of money or extension of credit, including any
guarantees;
(xiii) any purchase order or contract for the purchase of
raw materials involving US$10,000 or more;
(xiv) any construction contracts;
(xv) any distribution, joint marketing or development
agreement;
(xvi) any agreement, contract or commitment with any
customer which, during the last two fiscal years of the Company,
accounted for, or during the Company's current fiscal year is
expected to account for, more than one percent (1%) of the
Company's revenue or trade payables; or
(xvii) any other agreement, contract or commitment that
involves US$10,000 or more or is not cancelable without penalty
within thirty (30) days.
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<PAGE> 24
(b) The Company has not breached, violated or defaulted under,
or received notice that it has breached, violated or defaulted under,
any of the material terms or conditions of (i) any agreement, contract
or commitment set forth in Section 2.14 of the Disclosure Schedule, or
(ii) any other agreement, contract or commitment to which it is a party
or by which it is bound (any such agreement, contract or commitment, a
"CONTRACT"). Each Contract is in full force and effect and is not
subject to any default thereunder of which the Company or any of the
Selling Shareholders is aware by any party obligated to the Company
pursuant thereto. The Company has obtained, or will obtain prior to the
Closing, all necessary consents, waivers and approvals of parties to any
Contract as are required in connection with the transactions
contemplated hereby and by each of the Related Agreements, or as are
required or advisable in order to remain in effect without modification
after the consummation of the transactions contemplated hereby and
thereby.
2.15 Interested Party Transactions. Except as set forth in Section 2.15
of the Disclosure Schedule, no officer or director or, to the knowledge of the
Company and the Selling Shareholders, no employee or stockholder (nor, to the
knowledge of the Company and the Selling Shareholders, any ancestor, sibling,
descendant or spouse of any of such persons, or any trust, partnership or
corporation in which any of such persons has or has had an interest), has or has
had, directly or indirectly, (i) an interest in any entity which furnished or
sold, or furnishes or sells, services or products that the Company furnishes or
sells, or proposes to furnish or sell, or (ii) any interest in any entity that
purchases from or sells or furnishes to, the Company, any goods or services, or
(iii) a beneficial interest in any contract or agreement set forth in Section
2.14 of the Disclosure Schedule.
2.16 Governmental Authorization. Section 2.14 of the Disclosure Schedule
includes a complete and accurate list of each material consent, license, permit,
grant or other authorization issued to the Company by any Governmental Entity
(i) pursuant to which the Company currently operates or holds any interest in
any of its properties, or (ii) which is required for the operation of its
business or the holding of any such interest (collectively, the
"AUTHORIZATIONS"), which Authorizations are in full force and effect and
constitute all Authorizations required to permit the Company to operate or
conduct its business or hold any interest in its properties or assets.
2.17 Permits. Section 2.17 of the Disclosure Schedule contains a
complete and accurate list of all material permits (including, without
limitation, those relating to the occupancy or use of the Real Property) issued
to or held by the Company by any Governmental Entity (collectively, the
"PERMITS"). The Permits are the only permits that are required for the Company
to conduct its business as presently conducted and as currently proposed to be
conducted, except for those the absence of which would not have a Material
Adverse Effect. Each such Permit is in full force and effect and, to the best
knowledge of the Company and the Selling Shareholders, no suspension or
cancellation of any such Permit
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is threatened, and the Company is not aware of any basis for believing that such
Permits will not be renewable upon the expiration thereof.
2.18 Legal Proceedings. Except as set forth in Section 2.18 of the
Disclosure Schedule, there is no action, suit, claim or proceeding of any nature
pending, or to the knowledge of the Company and the Selling Shareholders,
threatened against the Company, its properties or any of its officers or
directors, in their capacities as agents of the Company. There is no
investigation pending or, to the knowledge of the Company and the Selling
Shareholders, threatened against the Company, its properties or any of its
officers or directors, in their capacities as agents of the Company by or before
any governmental entity. No Governmental Entity has at any time challenged or
questioned the legal right of the Company to manufacture, offer or sell any of
its products in the present manner or style thereof.
2.19 Accounts Receivable; Inventory.
(a) Section 2.19 of the Disclosure Schedule includes a complete
and accurate list of all of the Company's accounts receivable as
reflected on the Unaudited Balance Sheet (the "ACCOUNTS RECEIVABLE"),
together with a range of days elapsed since invoice (i.e., an aging
report).
(b) All of the Accounts Receivable arose in the ordinary course
of the Company's business, are carried at values determined in
accordance with Singapore GAAP consistently applied and are collectible
except to the extent of reserves therefor set forth in the Unaudited
Balance Sheet. No person has any liens, pledges, charges, claims,
security interests or other encumbrances of any kind or character on any
of the Accounts Receivable, and no request or agreement for deduction or
discount has been made with respect to any of the Accounts Receivable.
(c) All of the inventories of the Company reflected on the
Unaudited Balance Sheet and the Company's books and records on the date
hereof were purchased, acquired or produced in the ordinary and regular
course of the Company's business and in a manner consistent with the
Company's regular inventory practices and are set forth on the Company's
books and records in accordance with the practices and principles of the
Company consistent with the method of treating said items in prior
periods. None of the inventory of the Company reflected on the Unaudited
Balance Sheet or on the Company's books and records as of the date
hereof (in either case net of the reserve therefor) is obsolete,
defective or in excess of the needs of the business of the Company
reasonably anticipated for the normal operation of the business
consistent with its past practices and outstanding customer contracts.
The presentation of inventory on the Unaudited Balance Sheet conforms to
Singapore GAAP and such inventory is stated at the lower of cost
(determined using the first-in, first-out method) or net realizable
value.
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2.20 Customers and Suppliers. No unfilled customer order or commitment
obligating the Company to process or deliver products or perform services will
result in a loss to the Company upon completion of performance. No purchase
order or commitment of the Company is in excess of normal requirements, nor are
prices provided therein in excess of current market prices for the products or
services to be provided thereunder. No material supplier of the Company has
given notice within the past year that it will stop, or decrease the rate of,
supplying materials, products or services to them, and no material customer of
the Company has given notice within the past year that it will stop, or decrease
the rate of, buying materials, products or services from them. Section 2.20 of
the Disclosure Schedule includes a complete and accurate list of (i) each
customer that accounted for more than five percent (5%) of the revenues of the
Company during the calender year ended December 31, 1997, and (ii) each supplier
that is the sole supplier of any significant product or materials to the
Company.
2.21 Minute Books. The minute books of the Company, made available to
counsel for the Purchaser, are the only minute books of the Company and contain
an accurate summary of all proceedings of meetings of the Board of Directors of
the Company and the committees thereof, and all proceedings of meetings of the
shareholders of the Company, or actions by written consent of either the Board
of Directors or the shareholders of the Company, in each case since the date of
incorporation of the Company.
2.22 Environmental Matters.
(a) Definitions. As used herein, the following terms shall be
defined as follows:
(i) "AGENTS" means, with respect to any principal, any past
or present officer, director, employee, representative,
shareholders, or contractor of the Company, any transporter,
hazardous waste hauler, recycler, or Hazardous Material storage,
handling, and disposal facility operator to whom the principal
has directly or indirectly transferred Hazardous Materials or
any other person for whom such principal is legally responsible.
(ii) "CONTAMINATION" means the presence of any Hazardous
Material in the soil, groundwater, surface water, ambient air,
or building materials of a property in a concentration that (i)
exceeds the concentrations allowed by applicable Environmental
Requirements, (ii) requires investigation, remediation, removal,
or monitoring or, (iii) otherwise presents a significant risk to
human health or the environment.
(iii) "ENVIRONMENTAL CLAIM" means any and all property
damage, bodily injury, personal injury, nuisance, tort, breach
of contract, breach of lease, or other causes of action, any and
all governmental enforcement, clean-
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up, removal, remediation, investigation, monitoring, health
evaluation, or closure actions or proceedings, any and all
indemnity, contribution or other cost recovery actions and
proceedings under any Legal Requirement (including, without
limitation, CERCLA, RCRA, any equivalent state statute, or
common law, or the laws of any other Governmental Entity
applicable to the Company and its operations), any and all
judgments, deficiencies, injunctions, actions, suits, fines,
penalties, or demands, any and all attorneys', experts',
accountants', and other professional fees and expenses, and any
and all other liabilities, liens, encumbrances, losses, costs,
expenses, and damages, threatened, instituted, claimed, or
imposed against, or paid or incurred by an indemnified party,
whether foreseeable or unforeseeable, suspected or unsuspected,
conditional or unconditional, known or unknown at the date of
this Agreement.
(iv) "ENVIRONMENTAL REPORTS" means those reports, audits,
tests, assessments, reviews, sampling analysis, and studies
identified in Section 2.22(a) of the Disclosure Schedule.
(v) "ENVIRONMENTAL REQUIREMENTS" means all (i) statutes,
rules, ordinances, regulations, or common laws of any local,
state, federal, provincial, national, or international
jurisdiction that regulate, prohibit, relate to, or impose
liability with respect to Contamination, Hazardous Materials,
Hazardous Material Activities, public health, worker health or
safety, or the environment, as the same may be now or hereafter
amended (collectively "ENVIRONMENTAL LAWS"), (ii) orders,
injunctions, decrees, or rulings issued by a court of competent
jurisdiction or other Governmental Body relating to
Contamination, a Hazardous Material, a Hazardous Material
Activity, public health, worker health or safety, or the
environment, or pursuant to any Environmental Law, and (iii)
obligations arising under consent decrees, settlement
agreements, contracts, leases, covenants running with land, or
equitable servitudes and relating to Contamination, Hazardous
Materials, a Hazardous Material Activities, public health,
worker health or safety or the environment.
(vi) "HAZARDOUS MATERIAL" means any material that has been
designated by any governmental body to be radioactive, toxic,
hazardous or otherwise a danger to health, reproduction or the
environment or that is regulated or prohibited under any Legal
Requirement intended to protect health, reproduction or the
environment, including, without limitation, solvents, petroleum,
crude oil fractions, pesticides, asbestos containing materials,
radon gas, radioactive materials, blood, biological materials
used in or produced as a result of the diagnosis, treatment or
immunization of human beings or animals or as a result of
research or testing pertaining
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<PAGE> 28
thereto, and medical "sharps" waste; excepting only janitorial
or office materials in customary quantities used solely for
office and janitorial purposes, provided no permit or approval
is required by any governmental authority for such use.
(vii) "HAZARDOUS MATERIAL ACTIVITY" means the
transportation, transfer, recycling, storage, use, handling,
treatment, manufacture, investigation, removal, remediation,
release, exposure of others to, sale, or distribution of any
Hazardous Material or any product or waste containing a
Hazardous Material.
(viii) "LEGAL REQUIREMENTS" means any and all local, state,
federal and international laws, statutes, ordinances, rules,
regulations, judgments, injunctions, stipulations, decrees,
orders, treaties, or protocols now or hereafter enacted or
promulgated by any Governmental Entity (foreign or domestic),
any covenant, condition, or restriction contained in any
agreement, and any insurance underwriter's requirement.
(ix) "PRE-EXISTING ENVIRONMENTAL CONDITIONS" means:
(A) the presence as of the Closing Date of
Contamination, underground storage tank, PCB containing
fluids, radon gas, or radioactive materials at any Real
Property, which was used by or for the benefit of the
business on or before the Closing Date;
(B) the presence of Contamination at any property as a
consequence of the migration by any means and at any time of
the Contamination described in Section 2.22(a)(ix)(A)
hereof;
(C) the exposure of any person to any Contamination
described in Sections 2.22(a)(ix)(A) and 2.22(a)(ix)(B)
hereof at any time, the exposure prior to the Closing Date
of any person to any other Hazardous Material located on the
Real Property, the exposure prior to the Closing Date of any
person to a Hazardous Material in the course of a Hazardous
Material Activity conducted on or before the Closing Date by
or for the benefit of Company or its Agents or the Business,
without regard in any of the foregoing cases to whether any
health effect of the exposure has been manifested as of the
Closing Date;
(D) the absence before the Closing Date of any permit
required for the ownership, use or occupancy of the Real
Property, or
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<PAGE> 29
the conduct of any Hazardous Material Activity conducted by
or for the benefit of the business prior to the Closing
Date;
(E) any condition or facts disclosed by the
Environmental Reports;
(F) any Hazardous Materials Activity conducted by the
Company or its Agents on or about the Real Property or
otherwise in connection with the business prior to the
Closing Date; and
(G) any other circumstance existing on or before the
Closing Date, which relates to Hazardous Materials,
Contamination, or Hazardous Material Activities, prevents or
hinders the Purchaser's ownership, use or occupancy of the
Real Property, or the conduct of any Hazardous Material
Activity presently conducted by or for the benefit of the
business.
(x) "REMEDIAL ACTIVITIES" means the reporting,
investigation, characterization, feasibility study, health
assessment, risk assessment, remediation, treatment, removal,
transport, or other activity incident to the investigation,
remediation, disposal, encapsulation removal, or monitoring of
any Contamination or Hazardous Material located on or emanating
from the Real Property, except for Hazardous Material
inventories which are to be purchased by the Buyer in accordance
with this Agreement and which are stored as of the Closing Date
in accordance with all applicable Legal Requirements.
(b) Condition of the Company's Property. Except as provided in
Section 2.22(b) of the Disclosure Schedule, no Contamination (i) is
present at any Real Property, (ii) is present at any other real property
previously owned or operated by the Company or its Agents for the
conduct of, in connection with, or for the benefit of the Company's
business, or (iii) is or was present at any other real property to which
Hazardous Materials produced, generated or transported by the Company
have been delivered. No Hazardous Material nor any storage tank for
Hazardous Materials is present on the Real Property other than Hazardous
Materials stored, kept, and permitted in accordance with all applicable
Environmental Requirements. To best knowledge of the Company and the
Selling Shareholders, no asbestos, or asbestos containing materials, are
present on the Real Property, other than the asbestos containing
material identified in the Environmental Reports.
(c) Compliance With Environmental Requirements. Except as
provided in Section 2.22(c) of the Disclosure Schedule, the Hazardous
Material Activities of the business conducted on or about the Real
Property have and do comply in all
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material respects with applicable Environmental Requirements, except for
noncompliance that has been remedied in all material respects.
(d) Environmental Reports. Except as provided in Section 2.22(d)
of the Disclosure Schedule, the Environmental Reports described in
Section 2.22(a) of the Disclosure Schedule are all of the environmental
investigations, studies, audits, tests, reviews or other analysis
concerning the Real Property or the Hazardous Materials Activities of
the business conducted by or at the direction of Company or to the best
knowledge of the Company and the Selling Shareholders, by any other
person.
(e) Permits & Approvals. Except as provided in Section 2.22(e)
of the Disclosure Schedule, the Permits described in Section 2.22(e) of
the Disclosure Schedule (the "EXISTING ENVIRONMENTAL PERMITS") are all
of the permits required for the conduct of the Hazardous Material
Activities of the business of the Company as presently conducted. All of
the Existing Environmental Permits are in full force and effect, and the
Company has complied with all covenants and conditions of said Existing
Environmental Permits, except for noncompliance that has been fully
remedied or that will not materially and adversely effect the continued
operation of the Hazardous Material Activities. To the knowledge of the
Company and the Selling Shareholders, no fact or circumstance exists
which could cause any Existing Environmental Permit to be revoked or
non-issuable to the Purchaser or the Company for the operation of the
Company after the Closing, without modification and without any need for
the installation of any capital improvements or the modification of any
production process currently conducted at the Real Property.
(f) Superfund Sites. Except as provided in Section 2.20(f) of
the Disclosure Schedule, neither the Real Property nor any other
property to which any Hazardous Materials generated at the Real Property
or by Company or its Agents or any other real property have been
delivered is listed or, to the best knowledge of the Company and the
Selling Shareholders, proposed for listing on the National Priorities
List pursuant to CERCLA, the CERCLIS lists (as defined in CERCLA) or on
any similar federal, state, local or foreign government-maintained list
of sites requiring Remedial Activities or where a release of Hazardous
Materials has occurred in violation of applicable Environmental
Requirements. No notices or restrictions relating to an environmental
condition of the Owned Real Property, any Remedial Activities, or any
Hazardous Materials Activity is required to be placed in a deed for the
Real Property.
(g) Environmental Liabilities. Except as provided in Section
2.20(g) of the Disclosure Schedule, no suit, proceeding, administrative
action, writ, injunction, governmental investigation or governmental or
third party claim is pending or, to the knowledge of the Company and the
Selling Shareholders, is threatened with respect to any Hazardous
Material Activity conducted on or about the Real Property or
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<PAGE> 31
otherwise in connection with the conduct of the business; and to the
knowledge of the Company and the Selling Shareholders, no fact or
circumstance exists with respect to the Real Property or the conduct of
the business, which will involve the Purchaser or its successor or
assigns in any such suit, proceeding, action, writ, injunction,
investigation or claim, or impose upon the Purchaser or its successor or
assigns any environmental liability. There are no liens, pledges,
charges, claims, security interests or other encumbrances of any kind or
character under any Environmental Laws on the Owned Real Property or
Company's right, title and interest in the Leased Real Property and, to
the knowledge of the Company and the Selling Shareholders, no
governmental actions have been taken or are in the process of being
taken, which could subject such properties to such liens, pledges,
charges, claims, security interests or other encumbrances of any kind or
character.
2.23 Employee Benefit Plans and Compensation.
(a) Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
(i) "AFFILIATE" means any other person or entity under
common control with the Company within the meaning of Section
414(b), (c) or (m) of the Code and the regulations promulgated
thereunder.
(ii) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(iii) "EMPLOYEE PLAN" means any plan, program, policy,
practice, contract, agreement or other arrangement providing for
bonuses, severance, termination pay, performance awards, stock
or stock-related awards, fringe benefits or other employee
benefits of any kind, whether formal or informal, funded or
unfunded and whether or not legally binding, including without
limitation, each "employee benefit plan," within the meaning of
Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by the Company
or any Affiliate for the benefit of any Employee, and pursuant
to which the Company or any Affiliate has or may have any
material liability contingent or otherwise.
(iv) "EMPLOYEE" means any current, former, or retired
employee, officer, or director of the Company or any Affiliate.
(v) "EMPLOYEE AGREEMENT" means each employment, severance,
consulting or similar agreement or contract between the Company
or any Affiliate and any Employee.
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<PAGE> 32
(vi) "MULTIEMPLOYER PLAN" means any Pension Plan which is a
"multiemployer plan," as defined in Section 3(37) of ERISA.
(vii) "PENSION PLAN" means each Company Employee Plan which
is an "employee pension benefit plan," within the meaning of
Section 3(2) of ERISA.
(b) Schedule. Section 2.23(b) of the Disclosure Schedule
includes a complete and accurate list of (i) each Employee of the
Company and each Employee's salary as of March 31, 1998, and (ii) each
Employee Plan and each Employee Agreement. The Company does not have any
plan or commitment, whether legally binding or not, to establish any new
Employee Plan or Employee Agreement, to modify any Employee Plan or
Employee Agreement (except to the extent required by law or to conform
any such Employee Plan or Employee Agreement to the requirements of any
applicable law, in each case as previously disclosed to the Purchaser in
writing, or as required by this Agreement), or to enter into any
Employee Plan or Employee Agreement, nor does it have any intention or
commitment to do any of the foregoing.
(c) Documents. The Company has provided to the Purchaser (i)
true, correct and complete copies of all documents embodying each
Employee Plan and each Employee Agreement, including, without
limitation, all amendments thereto and copies of all forms of agreement
and enrollment used therewith, (ii) the most recent annual actuarial
valuations, if any, prepared for each Employee Plan, (iii) the two most
recent annual reports (Series 5500 and all schedules thereto), if any,
required under ERISA in connection with each Employee Plan or related
trust, (iv) if the Employee Plan is funded, the most recent annual and
periodic accounting of Employee Plan assets, (v) the most recent summary
plan description together with the most recent summary of material
modifications, if any, required under ERISA with respect to each
Employee Plan, (vi) all IRS determination letters and rulings relating
to Employee Plans and copies of all applications and correspondence to
or from the IRS or the United States Department of Labor ("DOL") with
respect to any Employee Plan, and (vii) all communications material to
any Employee or Employees relating to any Employee Plan and any proposed
Employee Plans, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of
payments or vesting schedules or other events which would result in any
material liability to the Company.
(d) Employee Plan Compliance. The Company has performed in all
material respects all obligations required to be performed by it under
each Employee Plan and each Employee Plan has been established and
maintained in all material respects in accordance with its terms and in
compliance with all applicable laws, statutes, orders, rules and
regulations, including but not limited to ERISA or the
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<PAGE> 33
Code; (ii) no "prohibited transaction," within the meaning of Section
4975 of the Code or Section 406 of ERISA, has occurred with respect to
any Employee Plan; (iii) there are no actions, suits or claims pending,
or, to the knowledge of the Company, threatened or anticipated (other
than routine claims for benefits) against any Employee Plan or against
the assets of any Employee Plan; and (iv) each Employee Plan can be
amended, terminated or otherwise discontinued after the Closing Date in
accordance with its terms, without liability to the Company, the
Purchaser or any of its Affiliates (other than ordinary administration
expenses typically incurred in a termination event); (v) there are no
inquiries or proceedings pending or, to the knowledge of the Company or
any affiliates, threatened by the IRS or DOL with respect to any
Employee Plan; and (vi) neither the Company nor any Affiliate is subject
to any penalty or tax with respect to any Employee Plan under Section
402(i) of ERISA or Section 4975 through 4980 of the Code.
(e) Pension Plans. The Company does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to,
any Pension Plan which is subject to Part 3 of Subtitle B of Title I of
ERISA, Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has the Company contributed
to or been requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Employee Plan provides,
or has any liability to provide, life insurance, medical or other
employee benefits to any Employee upon his or her retirement or
termination of employment for any reason, except as may be required by
statute, and the Company has never represented, promised or contracted
(whether in oral or written form) to any Employee (either individually
or to Employees as a group) that such Employee(s) would be provided with
life insurance, medical or other employee welfare benefits upon their
retirement or termination of employment, except to the extent required
by statute.
(h) Effect of Transaction. The execution and delivery by the
Company of this Agreement and each of the Related Agreements, the
performance by the Company of its obligations hereunder and thereunder,
and the consummation by the Company of the transactions contemplated
hereby and thereby, will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any Employee
Plan, Employee Agreement, trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits
or obligation to fund benefits with respect to any Employee.
(i) Employment Matters. The Company (i) is in compliance in all
material respects with all applicable foreign, federal and state laws,
rules and regulations of any Government Entity respecting employment,
employment practices,
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<PAGE> 34
terms and conditions of employment and wages and hours, in each case,
with respect to Employees; (ii) has withheld all amounts required by law
or by agreement to be withheld from the wages, salaries and other
payments to Employees; (iii) is not liable for any arrears of wages or
any taxes or any penalty for failure to comply with any of the
foregoing; and (iv) is not liable for any payment to any trust or other
fund or to any governmental or administrative authority, with respect to
unemployment compensation benefits, social security or other benefits
for Employees (other than routine payments to be made in the normal
course of business and consistent with past practice).
(j) Labor. No work stoppage or labor strike against the Company
is pending or, to the knowledge of the Company and the Selling
Shareholders, threatened. The Company is not involved in or, to the
knowledge of the Company and the Selling Shareholders, threatened with,
any labor dispute, grievance, or litigation relating to labor, safety or
discrimination matters involving any Employee, including, without
limitation, charges of unfair labor practices or discrimination
complaints, which, if adversely determined, would, individually or in
the aggregate, result in liability to the Company. Neither the Company
nor any of its subsidiaries, if any, has engaged in any unfair labor
practices within the meaning of the National Labor Relations Act which
would, individually or in the aggregate, directly or indirectly result
in a liability to the Company. The Company is not presently, nor has it
been in the past, a party to, or bound by, any collective bargaining
agreement or union contract with respect to Employees and no collective
bargaining agreement is being negotiated by the Company.
2.24 Insurance. Section 2.24 of the Disclosure Schedule includes a
complete and accurate list of all insurance policies and fidelity bonds covering
the assets, business, equipment, properties, operations, employees, officers and
directors of the Company. There is no claim by the Company pending under any of
such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid and the Company is
otherwise in material compliance with the terms of such policies and bonds. The
Company and the Selling Shareholders have no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
2.25 Compliance with Laws. The Company has complied in all material
respects with, is not in violation in any material respect of, and has not
received any notices of violation with respect to, any foreign, federal, state
or local statute, law or regulation of any Governmental Entity with respect to
the conduct of its business, or the ownership or operation of its business,
assets or properties.
2.26 Warranties; Indemnities. Section 2.26 of the Disclosure Schedule
indicates all warranty and indemnity claims in excess of US$1,000 by any one
customer made against the Company.
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2.27 Complete Copies of Materials. The Company has delivered or made
available to the Purchaser true and complete copies of each agreement, contract,
commitment or other document that is referred to in the Disclosure Schedule or
that has been requested by the Purchaser or its counsel. Without in any way
limiting the generality of the foregoing, to the extent that the Company has
delivered any of the foregoing to the Purchaser, such copies are true and
complete.
2.28 Brokers' and Finders' Fees. Neither the Company nor the Selling
Shareholders has incurred, nor will they incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any of the Relate Agreements, or
the consummation of the transactions contemplated hereby of thereby. The
Purchaser will not incur any liability for any brokerage or finders' fee or
agents' commissions or any similar charges by virtue of any act of the Company
and/or the Selling Shareholders in connection with the consummation of the
transactions contemplated hereby or by any of the Related Agreements.
2.29 Foreign Offering Representations.
(a) No offer or solicitation of an offer was made by the
Purchaser, any of its affiliates or any other person acting for or on
behalf of the Purchaser, to any of the Selling Shareholders to enter
into this Agreement, or to consummate the transactions contemplated
hereby (including, without limitation, the issuance of shares of the
Purchaser's Common Stock as Share Consideration pursuant hereto), while
any such Shareholder was inside the United States, and, at the time of
the execution and delivery by the Selling Shareholders of this
Agreement, each of the Selling Shareholders was outside the United
States.
(b) In making the decision to invest in the shares of the
Purchaser's Common Stock to be issued as Share Consideration pursuant
hereto, none of the Selling Shareholders has relied upon any materials
received in connection with any "directed selling efforts" of the
Purchaser, any of its affiliates or any person acting for or on behalf
of the Purchaser, as such term is defined in Rule 902(b) under
Regulation S ("REGULATION S") promulgated under the Securities Act of
1933, as amended (the "SECURITIES ACT"), including, without limitation,
any printed materials distributed in a publication with a general
circulation within the United States, or advertisements with radio or
television stations broadcasting within the United States, in each case
which discuss the terms of this Agreement or the transactions
contemplated hereby (including, without limitation, the issuance of
shares of the Purchaser's Common Stock as Share Consideration pursuant
hereto).
(c) In making the decision to invest in the shares of the
Purchaser's Common Stock to be issued as Share Consideration pursuant
hereto, none of the
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Selling Shareholders has relied upon any "Distributors", as such term is
defined in Rule 902(c) of Regulation S, including, without limitation,
any underwriter or dealer.
(d) Each of the Selling Shareholders understands and
acknowledges that the shares of the Purchaser's Common Stock to be
issued as Share Consideration pursuant hereto are being issued in
reliance upon the exemption from the registration requirements of the
Securities Act afforded by Regulation S, that such shares will not be
registered under the Securities Act or any state securities or "blue
sky" law, and that such shares may not be offered or sold in the United
States or to any "U.S. Person", as such term is defined in Rule 902(o)
of Regulation S (a "U.S. PERSON"), or otherwise disposed of, except in
accordance with the provisions of Rules 903 and 904 of Regulation S,
pursuant to registration of such shares under the Securities Act, or
pursuant to another available exemption from the registration
requirements of the Securities Act.
(e) None of the Selling Shareholders is a U.S. Person, and none
of the Selling Securities is acquiring the shares of the Purchaser's
Common Stock to be issued as Share Consideration pursuant hereto for the
account or benefit of any U.S. Person.
(f) Each of the Selling Shareholder's understands and
acknowledges that such Selling Shareholder may not resell any of the
shares of the Purchaser's Common Stock to be issued as Share
Consideration pursuant hereto unless any such resale is effected in
accordance with the provisions of Rule 904 of Regulation S, pursuant to
registration of such resale under the Securities Act, or pursuant to
another available exemption from the registration requirements of the
Securities Act. As a result, such shares may not be able to be resold
for at least one year after the Closing Date.
2.30 Investment Representations.
(a) Except to the extent otherwise provided for in connection
with, or otherwise not applicable in light of, the express provisions of
any of the Related Agreements, the shares of the Purchaser's Common
Stock to be issued as Share Consideration pursuant hereto are being
acquired by each of the Selling Shareholders pursuant to the terms and
subject to the conditions of this Agreement for each such Selling
Shareholder's own account and for investment purposes only, and not with
a view to any public resale, public distribution or other public
offering thereof, in each case within the meaning of the Securities Act
or any state securities or "blue sky" law.
(b) Each of the Selling Shareholders understands and
acknowledges that the shares of the Purchaser's Common Stock to be
issued as Share Consideration pursuant hereto will not be registered
under the Securities Act or any state securities
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or "blue sky" law, and that, in the event that the issuance of the
shares of the Purchaser's Common Stock as Share Consideration pursuant
hereto shall be deemed not to qualify for the exemption from the
registration requirements of the Securities Act afforded by Regulation S
for any reason, such shares may not be sold or otherwise disposed of,
notwithstanding the failure to so qualify for the registration exemption
afforded by Regulation S, except pursuant to registration under the
Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act.
(c) Each of the Selling Shareholders has such knowledge and
experience in financial and business matters that such parties are
capable of evaluating the merits and risks of the prospective investment
in the shares of the Purchaser's Common Stock to be issued as Share
Consideration pursuant hereto, that such parties are able to bear the
economic consequences thereof, and that each of such parties qualify as
an "accredited investor" as such term is defined in Rule 501 of
Regulation D promulgated under the Securities Act.
(d) In making the decision to invest in the shares of the
Purchaser's Common Stock to be issued as Share Consideration pursuant
hereto, each of the Selling Shareholders has relied upon independent
investigations made by such Selling Shareholder and, to the extent
believed by such Selling Shareholder to be appropriate, such Selling
Shareholder's representatives, including such Selling Shareholder's own
professional, tax and other advisors, and has not relied upon any
representation or warranty from the Purchaser or any of its directors,
officers, employees, agents, affiliates or representatives with respect
to the value of such shares or the tax consequences of the transactions
contemplated by this Agreement or any of the Related Agreements.
(e) Each Selling Shareholder and such Selling Shareholder's
representatives have been given a full opportunity to examine all
documents relating to the transactions contemplated hereby and by each
of the Related Agreements, and to ask questions of, and to receive
answers from, the Purchaser and its representatives concerning, the
terms of the transactions contemplated by this Agreement and each of the
Related Agreements and such other information as such Selling
Shareholder desires in order to evaluate an investment in the shares of
the Purchaser's Common Stock to be issued as Share Consideration
pursuant hereto, and all such questions have been answered to the full
satisfaction of such Selling Shareholder.
2.31 Representations Complete. None of the representations or warranties
made by the Company or the Selling Shareholders (as modified by the Disclosure
Schedule hereunder), nor any statement made in any schedule or certificate
furnished by the Company or the Selling Shareholders pursuant to this Agreement,
contains or will contain at the Closing, any untrue statement of a material
fact, or omits or will omit at the Closing, to state
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any material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company and the
Selling Shareholders as follows:
3.1 Organization, Standing and Power. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Purchaser has the corporate power to own its properties
and to carry on its business as now being conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the failure to be
so qualified would have a material adverse effect on the business, assets,
financial condition, or results of operations of the Purchaser or the ability of
the Purchaser to consummate the transactions contemplated hereby and by each of
the Related Agreements.
3.2 Authority. The Purchaser has all requisite corporate power and
authority to enter into this Agreement and each of the Related Agreements to
which it is a party, to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by the Purchaser of this Agreement and each of the Related Agreements,
the performance by the Purchaser of its obligations hereunder and thereunder,
and the consummation by the Purchaser of the transactions contemplated hereby
and thereby, have been duly authorized by all necessary corporate action on the
part of the Purchaser. This Agreement has been duly executed and delivered by
the Purchaser, and constitutes the valid and binding obligation of the Purchaser
enforceable against it in accordance with terms hereof, except as such
enforceability may be limited by principles of general application relating to
bankruptcy, insolvency, creditor's rights, and the relief of debtors, and rules
of law governing specific performance, injunctive relief or other equitable
remedies. When delivered in accordance with the terms and conditions hereof,
each of the Related Agreements to which the Purchaser is a party will have been
duly executed and delivered by the Purchaser, and all such agreements will
constitute the valid and binding obligation of the Purchaser enforceable against
it in accordance with the respective terms thereof, except as such
enforceability may be limited by principles of general application relating to
bankruptcy, insolvency, creditor's rights, and the relief of debtors, and rules
of law governing specific performance, injunctive relief or other equitable
remedies.
3.3 No Conflicts. The execution and delivery by the Purchaser of this
Agreement and each of the Related Agreements to which the Purchaser is a party,
the performance by the Purchaser of its obligations hereunder and thereunder,
the consummation by the Purchaser of the transactions contemplated hereby and
thereby, will not (i) give rise to a Conflict under (A) any provision of the
Certificate of Incorporation or Bylaws of the
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Purchaser, or (B) any mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Purchaser or its
properties or assets, other than any such conflicts, violations, defaults,
terminations, cancellations, modifications, accelerations or losses which would
not have a material adverse effect on the ability of the Purchaser to consummate
the transactions contemplated hereby, or (ii) violate any order, injunction,
judgment, ruling, law or regulation of any Governmental Entity applicable to the
Purchaser or any of its properties or assets. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity or any third party, including, without limitation, a party to any
agreement with the Purchaser, is required by or with respect to the Purchaser in
connection with the execution and delivery by the Purchaser of this Agreement
and each of the Related Agreements to which the Purchaser is a party, the
performance by the Purchaser of its obligations hereunder and thereunder, and
the consummation by the Purchaser of the transactions contemplated hereby and
thereby, except for (x) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
United States state and federal securities laws, Singapore securities laws or
other laws, and the laws of any other country, and (y) such other consents,
authorizations, filings, approvals and registrations which if not obtained or
made would not have a material adverse effect on the ability of the Purchaser to
consummate the transactions contemplated hereby.
3.4 Brokers' and Finder's Fees. The Purchaser has not incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement
or any of the Related Agreements, or the consummation of the transactions
contemplated hereby of thereby. The Company and the Selling Shareholders will
not incur any liability for any brokerage or finders' fee or agents' commissions
or any similar charges by virtue of any act of the Purchaser in connection with
the consummation of the transaction contemplated hereby or by any of the Related
Agreements.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Confidentiality. From and after the Closing, the Company and the
Selling Shareholders shall, and shall cause their respective representatives,
agents and affiliates, if any, to (i) hold in strict confidence all
confidential, proprietary or other non-public information or trade secrets
relating to the Company and/or the Purchaser or any products offered by the
Company and/or the Purchaser and any of their respective affiliates (the
"CONFIDENTIAL INFORMATION"), unless and to the extent specifically compelled to
disclose by judicial or administrative process or, in the reasonable opinion of
its counsel, by other requirements of law, and (ii) not, directly or indirectly,
except at the request of the Purchaser, use for their own benefit or purposes,
or release or disclose to any other person or entity, any such Confidential
Information (except, to the extent reasonably required, for disclosure to
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accountants, attorneys and other representatives who agree to be bound by the
provisions of this Section 4.1). Notwithstanding the foregoing, the term
"CONFIDENTIAL INFORMATION" shall not include information (A) which is or becomes
generally available to the public (other than as a result of the disclosure of
such information by the Seller or any of its respective representatives and
affiliates), or (B) becomes available to the recipient of such information on a
non-confidential basis from a source which is not, to the recipient's knowledge,
bound by a confidentiality or other similar agreement, or by any other legal,
contractual or fiduciary obligation which prohibits disclosure of such
information.
4.2 Non-Solicitation. During the period commencing on the Closing Date
and expiring on the date which is three (3) full years following the Closing
Date (the "TERMINATION DATE"), each of the Selling Shareholders shall not
(whether acting alone or through any of his or its affiliates, representatives
or agents, either for himself, itself or on behalf of any other person, general
or limited partnership, firm, association, corporation, joint venture or other
organization) attempt to hire, solicit, or assist others in recruiting or
hiring, any person who is an employee of the Company, the Purchaser or any of
their respective affiliates, or induce or attempt to induce any such employee to
terminate his or her employment with the Company, the Purchaser or any of their
respective affiliates.
4.3 Transfer Restrictions.
(a) Without limiting the representations set forth herein, the
Selling Shareholders hereby further agree not to sell, assign, transfer,
convey, dispose of, pledge or otherwise encumber (each, a "TRANSFER")
all or any portion of the shares to be issued as Share Consideration
pursuant hereto unless and until:
(i) there is a registration statement filed by the Purchaser
with, and declared or ordered effective by, the Commission under
the Securities Act, covering such proposed Transfer of such
shares and such Transfer is made pursuant to such registration
statement and in accordance with the Securities Act;
(ii) such Transfer is effected in accordance with the
provisions of Rule 903 of Regulation S; or
(iii) such Transfer is effected in accordance with another
available exemption from the registration requirements of the
Securities Act;
provided, however, that in the event that a Selling Shareholder
shall propose to Transfer any such shares in reliance upon Section
4.3(a)(ii) or Section 4.3(a)(iii) hereof, such Selling Shareholder shall
have (A) notified the Purchaser in writing of its intention to effect
such proposed Transfer of such shares, (B) furnished the Purchaser with
a statement in reasonable detail of the manner and circumstances of
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such proposed Transfer, (C) caused the proposed transferee of such
shares to agree in advance to take and hold such shares on the terms set
forth in this Section 4.3, and (D) furnished the Purchaser with an
written opinion of legal counsel reasonably satisfactory to the
Purchaser, in form and substance reasonably satisfactory to the
Purchaser, opining that such proposed Transfer may be effected without
registration thereof under the Securities Act.
(b) Each certificate or instrument representing the shares to be
issued as Share Consideration pursuant hereto, and any other securities
issued on or in respect of such shares in connection with (i) any stock
split, stock dividend, subdivision, combination, consolidation,
reclassification or other similar event, or (ii) any merger,
consolidation, reorganization or other similar event, shall be stamped
or otherwise imprinted with a legend, in addition to any other legends
required under applicable state "blue sky" securities laws, in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND ARE "RESTRICTED SECURITIES" AS DEFINED IN
RULE 144 PROMULGATED UNDER THE SECURITIES ACT. SUCH SECURITIES
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
OTHERWISE DISTRIBUTED EXCEPT (I) PURSUANT TO A REGISTRATION
STATEMENT DECLARED OR ORDERED EFFECTIVE BY THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT, OR (II) IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER
THE SECURITIES ACT, OR (III) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, AND IN THE CASE OF ANY SALE, OFFER OF SALE, PLEDGE,
HYPOTHECATION OR OTHER DISTRIBUTION EFFECTED PURSUANT TO CLAUSE
(II) AND (III) ABOVE, PURSUANT TO AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER OF SUCH SECURITIES THAT
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT AS TO SUCH
SALE, OFFER OF SALE, PLEDGE, HYPOTHECATION OR OTHER
DISTRIBUTION. THIS CERTIFICATE MUST BE SURRENDERED TO THE ISSUER
HEREOF OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE
TRANSFER OF ANY INTEREST IN THE SECURITIES REPRESENTED HEREBY.
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(c) The Purchaser shall not register any Transfer of the shares
to be issued as Share Consideration pursuant hereto, and shall instruct
its transfer agent to disregard any attempted or proposed Transfer of
such shares, unless the conditions set forth in this Section 4.3 are
satisfied to the extent applicable to any such Transfer. The Selling
Shareholders hereby consent to (i) the entry of a notation on the
records of the Purchaser, and (ii) the delivery of instructions to the
transfer agent of such shares which the Purchaser may deem necessary or
advisable in order to effectuate and implement the restrictions on
transfer of such shares set forth in this Section 4.3.
4.4 Exchange Act Reports. The Purchaser shall use its reasonable best
efforts to timely file all reports required to be filed under the Exchange Act
during the period commencing on the date hereof and ending on the second
anniversary of the Closing Date, including, without limitation, any report on
Form 8-K or otherwise required to be filed under the Exchange Act in accordance
with the instructions thereto in connection with the issuance of shares of the
Purchaser's Common Stock to the Selling Shareholders as Share Consideration
pursuant to and in accordance with the terms and conditions hereof, in each case
in reliance on the exemption from the registration requirements of the
Securities Act afforded by Regulation S promulgated thereunder.
4.5 Best Efforts. Subject to the terms and conditions hereof, each of
the parties hereto shall use its reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things which are
necessary, proper or advisable under applicable laws and regulations (including,
without limitation, the laws and regulations of the Republic of Singapore and
the United States) or otherwise in order to consummate and effectuate completely
the transactions contemplated by this Agreement and each of the Related
Agreements. In furtherance and not in limitation of the foregoing, each of the
parties hereto shall execute and deliver, or cause to be executed and delivered,
all agreements, certificates, instruments and other documents, and shall use its
reasonable best efforts promptly to obtain all waivers, permits, consents,
approvals and other authorizations from, and to effect all registrations,
filings and notices with or to, any Governmental Entity or other persons which
are necessary or appropriate in connection with the consummation and complete
effectuation of the transactions contemplated by this Agreement and each of the
Related Agreements.
4.6 Board of Directors. As soon as practicable following the Closing,
the Company shall execute all such instruments, certificates and other
documents, take all such actions and do all such things as may be necessary or
appropriate to assist the Purchaser, acting in its capacity as the sole
shareholder of the Company, in fixing the number of directors constituting the
entire Board of Directors of the Company at three (3) directors (including,
without limitation, amending the Company's Memorandum of Association and
Articles of Association), and electing the following individuals to serve as
members of the Company's Board of Directors until the next annual meeting of the
shareholders of the Company and until their respective successors are duly
elected and qualified, or until the earlier of their death, resignation or
removal by the sole shareholder of the Company (including, without limitation,
filing the appropriate Form 45s - Consent to Act as Director
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and Statement of Non-disqualification - with the Singapore Registry of Companies
and Businesses): John Niedermaier, Bernd Meier and Tan Tai Chew.
ARTICLE V
CONDITIONS TO THE PURCHASE AND SALE OF THE SHARES
5.1 Conditions to Obligations of the Parties. The respective obligations
of each party to this Agreement shall be subject to the satisfaction at or prior
to the Closing Date of the following conditions:
(a) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the transactions
contemplated by this Agreement or any of the Related Agreements shall be
in effect, nor shall any proceeding brought by an administrative agency
or commission or other governmental authority or instrumentality,
domestic or foreign, seeking any of the foregoing be pending; nor shall
there be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the sales
contemplated hereby, which makes the consummation of such sales
unlawful, void, voidable or unenforceable under applicable law, rules
and regulations of any governmental authority, domestic or foreign.
(b) Government Approvals. The Purchaser, the Company and the
Selling Shareholders shall have obtained all other authorizations,
consents, orders and approvals required from or of, or declarations or
filings with, or expirations of waiting periods imposed by, any
governmental authorities required for the consummation of the
transactions contemplated by this Agreement.
5.2 Additional Conditions to the Obligations of the Purchaser. The
obligations of the Purchaser to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions, any of which may
be waived, in writing, exclusively by the Purchaser:
(a) Representations and Warranties. The representations and
warranties of the Company and the Selling Shareholders contained in this
Agreement shall be true and correct in all respects, and the Purchaser
shall have received a certificate, signed by a duly authorized officer
of the Company, certifying as to the foregoing effect.
(b) Covenants. The Company and the Selling Shareholders shall
have performed and complied in all respects with all agreements,
covenants and obligations contained in this Agreement required to be
performed and complied with by such parties as of the Closing Date, and
the Purchaser shall have received a
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certificate, signed by a duly authorized officer of the Company,
certifying as to the foregoing effect.
(c) Conditions. The conditions to the obligations of the
Purchaser contained in this Agreement shall have been satisfied in all
respects as of the Closing Date, and the Purchaser shall have received a
certificate, signed by a duly authorized officer of the Company,
certifying as to the foregoing effect.
(d) Secretary's Certificate. The Purchaser shall have received a
certificate, dated as of the Closing Date, duly and validly executed on
behalf of the Company by the Secretary of the Company certifying that:
(i) attached thereto are the true, correct and complete copy
of the Company's Memorandum of Association, as in effect as of
the Closing Date, and that neither the Board of Directors nor
the shareholders of the Company have taken any action to repeal,
alter or amend the same;
(ii) attached thereto are the true, correct and complete
copy of the Company's Articles of Association, as in effect as
of the Closing Date, and that neither the Board of Directors nor
the shareholders of the Company have taken any action to repeal,
alter or amend the same;
(iii) attached thereto are the true, correct and complete
copy of the resolutions of the Board of Directors of the Company
authorizing the execution and delivery by the Company of this
Agreement and each of the Related Agreements to which the
Company is a party, the performance by the Company of its
obligations hereunder and thereunder, and the consummation by
the Company of the transactions contemplated hereby and thereby,
and that neither the Board of Directors nor the shareholders of
the Company have taken any action to repeal, alter or amend the
same; and
(iv) the signatures of the officers executing this Agreement
and each of the Related Agreements to which the Company is a
party for and on behalf of the Company are the true and correct
signatures of each such officer, and that each such person is
such duly elected, qualified and acting officer of the Company.
(e) Escrow Agreement. The Purchaser shall have received a copy
of the Escrow Agreement, duly and validly executed by the Company and
the Selling Shareholders who are parties thereto, or a duly authorized
officer of the same, as the case may be.
(f) Employment and Non-Competition Agreements. The Purchaser
shall have received a separate copy of the Employment and
Non-Competition Agreement,
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in the form attached hereto as Exhibit C (the "EMPLOYMENT AGREEMENTS"),
duly and validly executed by each of key employees of the Company listed
on Exhibit D hereto.
(g) Contractual Consents. The Company shall have given all
notices to, and obtained all consents, approvals or authorizations of or
from, any individual, corporation or other party which is necessary to
permit the consummation of the transactions contemplated hereby and by
each of the Related Agreements including, without limitation, any
consents required under contracts and agreements listed on Section 2.5
of the Disclosure Schedules to which the Company is a party or by which
it is bound, or which may be required to permit the change of ownership
of the Company.
(h) Board of Directors of the Company. The Purchaser shall have
received (i) resolutions duly adopted by the Board of Directors of the
Company, effective as of the Closing Date, reconstituting the Board of
Directors of the Company to be comprised of Steven Humphreys, Bernd
Meier and Tan Tai Chew, and (ii) a resignation from the Board of
Directors, effective as of the Closing Date, duly executed by each of
the members of the Board of Directors of the Company other than those
members of the Company's Board of Directors listed on Exhibit E hereto.
(i) Lien Releases. The Purchaser shall have received a duly and
validly executed copy of all agreements, instruments, certificates and
other documents necessary or appropriate to evidence the release of any
and all liens and other encumbrances on the assets of the Company
arising or resulting from, or in connection with, any loans, guarantees
or other similar arrangements between the Company and any of the Selling
Shareholders.
(j) Legal Opinion. The Purchaser shall have received an opinion
from K L Lim & Co., legal counsel to the Company and the Selling
Shareholders in the Republic of Singapore, substantially in the form
attached hereto as Exhibit F.
(k) Litigation. There shall be no action, suit, claim or
proceeding of any nature pending, or overtly threatened, against the
Company, its properties or any of its officers or directors, arising out
of, or in any way connected with, the transactions contemplated by this
Agreement or any of the Related Agreements.
(l) Claims. There shall not have occurred any claims (whether or
not asserted in litigation) which may materially and adversely affect
the consummation of the transactions contemplated hereby or by any of
the Related Agreements, or which may materially and adversely affect the
assets (including intangible assets), financial condition or results of
operations of the Company.
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(m) Complete Tender of Company Shares. Each of the Selling
Shareholders shall have tendered for sale to the Purchaser all of the
Company Shares held by such Selling Shareholder, in each case as set
forth on Exhibit A hereto.
(n) Tax Opinion. The Purchaser shall have received an opinion of
independent accountants for the Company, in a form reasonably
satisfactory to the Purchaser, certifying that the Company's disposition
of shares of the Purchaser's capital stock since the date of the
Unaudited Balance Sheet will not give rise to any liabilities of the
Company for Taxes arising under the laws of the Republic of Singapore.
5.3 Additional Conditions to Obligations of the Company and the Selling
Shareholders. The obligations of the Company and the Selling Shareholders to
consummate and effect this Agreement and the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, by all, but
not less than all, of the Selling Shareholders:
(a) Representations, and Warranties. The representations and
warranties of the Purchaser contained in this Agreement shall be true
and correct in all respects, and the Company and the Selling
Shareholders shall have received a certificate, signed by a duly
authorized officer of the Purchaser, certifying as to the foregoing
effect.
(b) Covenants. The Purchaser shall have performed and complied
with all agreements, covenants and obligations of the Purchaser
contained in this Agreement required to be performed and complied with
by it as of the Closing Date, and the Company and the Selling
Shareholders shall have received a certificate, signed by a duly
authorized officer of the Purchaser, certifying as to the foregoing
effect.
(c) Conditions. The conditions to the obligations of the Company
and the Selling Shareholders shall have been satisfied in all respects
as of the Closing Date, and the Company and the Selling Shareholders
shall have received a certificate, signed by a duly authorized officer
of the Purchaser, certifying as to the foregoing effect.
(d) Certificate of Good Standing. The Company and the Selling
Shareholders shall have a received a long form certificate of good
standing in respect of the Purchaser, certified as of a date reasonably
close to the Closing Date by the Secretary of State of the State of
Delaware.
(e) Escrow Agreement. The Company and the Selling Shareholders
shall have received a copy of each of the Escrow Agreement, validly
executed by a duly authorized officer of the Purchaser.
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(f) Employment and Non-Competition Agreements. The employees of
the Company listed on Exhibit D hereto shall have received a separate
copy of the Employment Agreement, validly executed by a duly authorized
officer of each of the Purchaser and the Company.
(g) Legal Opinion. The Selling Shareholders shall have received
an opinion from Wilson Sonsini Goodrich & Rosati, Professional
Corporation, legal counsel to the Purchaser, substantially in the form
attached hereto as Exhibit G.
(h) Litigation. There shall be no action, suit, claim or
proceeding of any nature pending, or overtly threatened, against the
Purchaser, or any of its officers or directors, arising out of, or in
any way connected with, the transactions contemplated by this Agreement
or any of the Related Agreements.
ARTICLE VI
SURVIVAL AND INDEMNIFICATION
6.1 Survival. Notwithstanding anything to the contrary contained herein,
and regardless of any investigations made by the parties hereto, (i) the
representations and warranties of the Company and the Selling Shareholders
contained in Article II of this Agreement, and the representations of the
Purchaser contained in Article III of this Agreement, shall survive the
execution and delivery of this Agreement for the period commencing on the date
hereof and continuing until the fourth (4th) anniversary of the date hereof;
provided, however, that the representations and warranties of the Selling
Shareholders contained in Section 2.1, 2.2, 2.4 and 2.28 hereof shall survive
the execution and delivery of this Agreement for the period commencing on the
date hereof and continuing until the later of (A) the fourth (4th) anniversary
of the date hereof, and (B) the expiration of the relevant statutes of
limitations, and (ii) each covenant and other agreement contained in this
Agreement which by its terms is to be performed after the Closing shall survive
the execution and delivery of this Agreement for a period commencing on the date
hereof and continuing until the later of (A) the fourth (4th) anniversary of the
date hereof, and (B) the expiration of the relevant statute of limitations. The
representations and warranties of the Selling Shareholders contained herein
shall not be limited, restricted or otherwise impaired by any examination or
investigation made for or on behalf of the Purchaser or by the knowledge of any
of the Purchaser's officers, directors, stockholders, employees or agents.
Notwithstanding anything to the contrary in this Agreement, if a claim for
indemnification is duly made under this Article VI before the expiration of the
periods of survival set forth in this Section 6.1, then notwithstanding the
expiration of such time period of survival the representation or warranty
applicable to such claim shall survive until the final resolution of such claim
and the satisfactory performance of all obligations with respect thereto.
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6.2 Indemnification by the Selling Shareholders.
(a) Subject to the terms and conditions of this Article VI,
notwithstanding anything to the contrary contained herein, the Selling
Shareholders (for purposes of this Article VI other than Section 6.3
hereof, collectively, the "INDEMNITORS") shall jointly and severally
indemnify the Purchaser, and its respective officers, directors, agents
and representatives (for purposes of this Article VI other than Section
6.3 hereof, each an "INDEMNITEE" and collectively, the "INDEMNITEES"),
for and in respect of, and hold the Indemnitees harmless from and
against, any and all damages, fines, penalties, losses, liabilities,
judgments, deficiencies and expenses (including, without limitation,
amounts paid in settlement, interest, court costs, costs of
investigators, reasonable fees and expense of attorneys and accountants
and other expenses of litigation) ("DAMAGES") incurred or suffered by
any of the Indemnitees resulting from, relating to or in connection with
(i) any inaccuracy of any representation, breach of any warranty or
failure to perform any covenant or agreement of the Company or the
Selling Shareholders contained in any provision of this Agreement other
than Sections 2.1, 2.2, 2.4, 2.28 and 7.4 hereof, and (ii) any
inaccuracy of any representation, breach of any warranty or failure to
perform any covenant or agreement of the Company or the Selling
Shareholders contained in Sections 2.1, 2.2, 2.4, 2.28 and 7.4 hereof;
provided, however, that in no event shall the Indemnitors, considered as
a group, be liable to the Indemnitees under the foregoing clause (i) of
this Section 6.2(a) for any Damages in excess of the amounts held in the
Escrow Fund; provided, however, that notwithstanding the foregoing
proviso of this Section 6.2(a) or anything to the contrary contained in
this Agreement, nothing contained in this Section 6.2(a) shall be deemed
to limit or restrict in any manner (whether by time, amount, procedure
or otherwise) any remedy at law or in equity to which the Indemnitees
may be entitled as a result of actual fraud by the Indemnitors;
provided, however, that notwithstanding the foregoing and anything to
the contrary contained in this Agreement, each of the Selling
Shareholders shall be liable under this Section 6.2(a) only for such
Selling Shareholder's own actual fraudulent conduct and not for the
fraudulent conduct of any other Selling Shareholder.
(b) Subject to the terms and conditions of this Article VI,
notwithstanding anything to the contrary contained herein, the
Indemnitors shall jointly and severally indemnify the Indemnitees for
and in respect of any and all liabilities for Taxes imposed or assessed
upon, attributable to, or levied by reason of or in connection with, the
disposition by the Company of shares of the Purchaser's capital stock
after the date of the Unaudited Balance Sheet; provided, however, that
notwithstanding the foregoing or anything to the contrary contained in
this Agreement, each of the Indemnitors shall only be liable under this
Section 6.2(b) for that pro rata
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<PAGE> 49
portion of the liabilities for any such Taxes as is equal to such
Indemnitor's respective pro rata portion of the Acquisition
Consideration payable to such Indemnitor pursuant to the terms and
conditions of this Agreement.
(c) To secure the indemnification obligations of the Indemnitors
to the Indemnitees set forth in Section 6.2(a) and 6.2(b) hereof, the
Escrowed Cash Consideration and the Escrowed Share Consideration shall
be deposited into the Escrow Fund with the Escrow Agent in accordance
with Section 1.2 hereof and the terms of the Escrow Agreement. In the
event that any amounts are due and owing to the Purchaser under the
indemnification provisions of this Article VI as a result of the
inaccuracy of any representation or the breach of any warranty of the
Company and/or the Selling Shareholders contained in this Agreement, the
Purchaser shall (i) be entitled to offset such amounts against the
amounts held in the Escrow Fund pursuant to the terms and provisions of
the Escrow Agreement, and (ii) not be entitled to seek any
indemnification amounts in excess of the amount held in the Escrow
Funds, except as otherwise expressly permitted under the terms and
provisions of this Agreement with respect to claims of actual fraud by
the Selling Shareholders and indemnification claims for Damages incurred
or suffered by the Indemnitees for any inaccuracy in any representation
or any breach of any warranty contained in Sections 2.1, 2.2, 2.4, 2.28
and 7.4 hereof.
(d) The Selling Shareholders acknowledge that their
indemnification obligations hereunder relate solely to their capacity as
former shareholders of the Company, and accordingly, such
indemnification obligations set forth in this Article VI shall not
entitle the Selling Shareholders, or any current or former officer,
director or employee of the Company, to any indemnification from the
Company under the Company's Memorandum of Association or Articles of
Association, this Agreement or any of the Related Agreements.
6.3 Indemnification by the Purchaser. Subject to the terms and
conditions of this Article VI, notwithstanding anything to the contrary
contained herein, the Purchaser (for purposes of this Article VI other than
Section 6.2 hereof, the "INDEMNITOR") shall indemnify the Selling Shareholders,
and their respective officers, directors, agents and representatives, if any,
(for purposes of this Article VI other than Section 6.2 hereof, each an
"INDEMNITEE" and collectively, the "INDEMNITEES"), for and in respect of, and
hold the Indemnitees harmless from and against, any and all Damages incurred or
suffered by any of the Indemnitees resulting from, relating to or in connection
with any inaccuracy of any representation, breach of any warranty or failure to
perform any covenant or agreement of the Purchaser contained in this Agreement.
6.4 Materiality Exceptions. For purposes of the indemnification
obligations of any Indemnitor under this Article VI in respect of any Damages
incurred or suffered by any Indemnitee, any inaccuracy in any representation or
any breach of any warranty contained in this Agreement shall be deemed to
constitute an inaccuracy in such representation or a
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<PAGE> 50
breach of such warranty notwithstanding any limitation or qualification on the
scope, accuracy or completeness contained in such representation or warranty
with respect to materiality or a Material Adverse Effect, it being the intention
of the parties hereto that all parties hereto shall be indemnified for and in
respect of, and held harmless from and against, any and all Damages arising out
of, based upon or with respect to the failure of any such representation or
warranty to be true, correct and complete in any respect.
6.5 Insurance Proceeds. Notwithstanding anything to the contrary
contained herein, the amount of any Damages incurred or suffered by any
Indemnitee for which indemnification is otherwise available against any
Indemnitor(s) under this Article VI shall be reduced by the amount of any
insurance proceeds (minus all reasonably allocable costs, charges and expenses
incurred by such Indemnitee in obtaining such recovery) actually recovered in
respect thereof. Any such insurance recovery by the Indemnitee shall be promptly
repaid by the Indemnitee to the Indemnitor(s) following the time at which such
amounts are actually recovered, realized or received by this Indemnitee;
provided, however, that in the event that any such insurance recovery is set
aside or disallowed and the Indemnitee has paid any amounts to any Indemnitor(s)
in respect thereof (or the amount by which the Indemnitee was indemnified by any
Indemnitor(s) was reduced in respect thereof), then the obligation of the
Indemnitor(s) to indemnify such Indemnitee with respect to such amounts shall be
reinstated immediately and such amounts shall be paid promptly to the Indemnitee
in accordance with the terms and provisions of this Article VI.
6.6 Notice. Each Indemnitee shall give prompt written notice (the "CLAIM
NOTICE") to the Indemnitor(s), and, in the case of claims under Section 6.2
hereof, to the Escrow Agent, of any claim or event known to such Indemnitee
which gives rise, or may give rise, to a claim for indemnification under this
Article VI by such Indemnitee against the Indemnitor(s) (an "INDEMNIFIABLE
CLAIM"), specifying the nature and estimated amount of such Damages (the
"CLAIMED AMOUNT"). The failure of any Indemnitee to give such notice as provided
in this Section 6.6 shall not relieve the Indemnitor(s) of their obligations
under this Article VI, except to the extent that such failure materially and
adversely affects the rights of such Indemnitor(s). In the case of any claim for
indemnification under Section 6.2 or 6.3 hereof arising out of a claim, action,
suit or proceeding brought by any third party that is not a party to this
Agreement (a "THIRD-PARTY CLAIM"), the Indemnitee also shall give the
Indemnitor(s) copies of any written claims, process or legal pleadings with
respect to such Third-Party Claim promptly after such documents are received by
such Indemnitee.
6.7 Third Party Claims.
(a) Except as otherwise provided in Section 6.7(c) hereof, in
the event of any Third-Party Claim, the Indemnitor(s) may elect, but
shall not be obligated, to compromise or defend any such Third-Party
Claim at such Indemnitor(s)' sole cost and expense and with such
Indemnitor(s)' own counsel reasonably satisfactory to the Indemnitee,
provided that (i) such Indemnitor(s) provide the Indemnitee with
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<PAGE> 51
reasonable evidence that such Indemnitor(s) will have the financial
resources to defend against such claim and fulfill their indemnification
obligations under this Article VI in respect of such Third-Party Claim,
and (ii) the delivery of a Defense Notice (as defined below) by such
Indemnitor(s) shall constitute an acknowledgment by such Indemnitor(s)
of their obligation to indemnify the Indemnitee with respect to such
Third-Party Claim in accordance with the terms of this Article VI, and
(iii) any costs and expenses incurred by the Indemnitor(s) in connection
with the foregoing shall constitute Damages incurred or suffered by the
Indemnitee(s) within the meaning of this Article VI. If the
Indemnitor(s) shall elect to compromise or defend a Third-Party Claim,
such Indemnitor(s) shall, within thirty (30) days of receipt of a Claim
Notice (or sooner, if the nature of such Third-Party Claim so requires),
provide written notice to the Indemnitee of its intent to do so (a
"DEFENSE NOTICE"), and such Indemnitee shall reasonably cooperate in the
compromise of, or defense against, such Third-Party Claim. The
Indemnitor(s) shall be responsible for the payment of such Indemnitee's
actual out-of-pocket expenses incurred in connection with such
cooperation, and such expenses shall constitute Damages incurred or
suffered by the Indemnitee within the meaning of this Article VI.
Following the delivery of notice by the Indemnitor(s) to an Indemnitee
indicating the Indemnitor(s)' election to assume the defense of a
Third-Party Claim, the Indemnitor(s) shall not be liable to such
Indemnitee under this Article VI for any legal expenses subsequently
incurred by such Indemnitee in connection with the defense of such
Third-Party Claim; provided, however, that such Indemnitee shall have
the right to retain a single counsel of its own selection to represent
such Indemnitee if, in such Indemnitee's reasonable judgment, a conflict
of interest between such Indemnitee and the Indemnitor(s) exists in
respect of such Third-Party Claim, in which event the reasonable fees
and expenses of such separate counsel shall be paid by the Indemnitor(s)
and shall constitute Damages incurred or suffered by the Indemnitee
within the meaning of this Article VI. If the Indemnitor shall elect not
to compromise or defend against a Third-Party Claim, or fails to notify
the Indemnitee of its election to compromise or defend against a
Third-Party Claim in accordance with this Section 6.7, such Indemnitee
may pay, compromise or defend such Third-Party Claim on behalf of and
for the account and risk of the Indemnitor(s) and any amount paid or
expenses incurred in connection therewith shall constitute Damages
incurred or suffered by the Indemnitee within the meaning of this
Article VI. The Indemnitor(s) may not consent to entry of any judgment
or enter into any settlement without the written consent of each related
Indemnitee (which consent shall not be unreasonably withheld), unless
such judgment or settlement provides solely for money damages or other
money payments for which such Indemnitee is entitled to indemnification
hereunder and includes as an unconditional term thereof the delivery by
the claimant or plaintiff to such Indemnitee of a release from all
liability in respect of such Third-Party Claim.
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<PAGE> 52
(b) In the case of any claim for indemnification under Section
6.2 or 6.3 hereof arising out of a claim, action, suit or proceeding
brought by a taxing authority in respect of any Tax liability or
obligation of the Company (a "COMPANY TAX CLAIM"), the Selling
Shareholders shall have the sole right to control any such Company Tax
Claim; provided, however, that the Selling Shareholders shall provide
the Purchaser with copies of all correspondence with any Taxing
authority in connection with any such Tax Claim and shall keep the
Purchaser reasonably informed of all progress with such Taxing
authority; and provided further, however, that the Selling Shareholders
shall consult with the Purchaser in good faith in contesting any
proposed adjustment and shall consider any reasonable advice from the
Purchaser concerning such Tax Claim so long as the Selling Shareholders
shall be entitled to control any such Tax Claim concerning any indemnity
obligation of the Selling Shareholders. The Selling Shareholders shall
not be entitled to compromise or settle any Tax liability of the Company
for any periods prior to the Closing Date that would have the effect of
materially decreasing the deductions available to the Company for
credits, or materially increasing the taxable income of the Company, for
any taxable year or period ending after the Closing Date, in each case
without the prior written consent of the Purchaser, which consent shall
not be unreasonably withheld.
(c) Notwithstanding anything to the contrary in this Article VI
or elsewhere in this Agreement, (i) if there is a reasonable likelihood
that a Third-Party Claim may have a material adverse effect on an
Indemnitee other than as a result of money damages or other money
payments for which such Indemnitee is entitled to indemnification under
this Article VI, such Indemnitee shall have the right, but not the
obligation, to defend such Third-Party Claim at the sole cost and
expense of the Indemnitor(s), which costs and expenses shall constitute
Damages within the meaning of this Article VI, and (ii) if any
Third-Party Claim involves a third party with whom the Indemnitor(s) has
a significant on-going or prospective relationship, the Indemnitee shall
have the right, but not the obligation, to defend such Third-Party Claim
at the sole cost and expense of the Indemnitor(s), which costs and
expenses shall constitute Damages within the meaning of this Article VI;
provided, however, that the Indemnitor(s) shall not be obligated to pay
Damages in respect of any such Third-Party Claim to the extent it is
determined (by agreement between the Indemnitor(s) and the Indemnitee or
by arbitration or court judgment) that such Third-Party Claim was
settled on terms that were not fair and reasonable to the Indemnitee.
(d) Any release or other distribution of amounts held in the
Escrow Fund in satisfaction of any Third Party Claim shall be made only
upon joint instruction of the Selling Shareholders (acting through the
Representative, as defined in Section 6.8 hereof) and the Purchaser to
the Escrow Agent.
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<PAGE> 53
6.8 The Representative.
(a) The Selling Shareholders hereby authorize, direct and
appoint K L Lim & Co. to act as the sole and exclusive agent,
attorney-in-fact and representative of the Selling Shareholders (the
"REPRESENTATIVE"), and hereby further authorize and direct the
Representative (i) to take any and all actions (including, without
limitation, executing and delivering any and all agreements,
instruments, certificates and other documents, defending any and all
Third Party Claims on behalf of the Selling Shareholders as provided in
Section 6.7 hereof, incurring any and all costs and expenses for the
account of the Selling Shareholders in connection with the foregoing or
otherwise (which costs and expenses shall constitute Damages incurred or
suffered by Purchaser within the meaning of this Article VI) and making
any and all determinations) which may be required or permitted by this
Agreement or any of the Related Agreements to be taken by the Selling
Shareholders or the Representative, (ii) to exercise such other rights,
power and authority as are authorized, delegated and granted to the
Representative hereunder and under the terms of the Escrow Agreement in
connection with the transactions contemplated hereby and thereby, and
(iii) to exercise such rights, power and authority as are incidental to
the foregoing. Any such actions taken, exercises of rights, power or
authority, and any decision or determination made by the Representative
consistent therewith, shall be absolutely and irrevocably binding on
each Selling Shareholder as if such Selling Shareholder personally had
taken such action, exercised such rights, power or authority or made
such decision or determination in such Selling Shareholder's individual
capacity. Notwithstanding anything to the contrary contained in this
Agreement, with respect to the specific matters set forth in this
Article VI, (i) each of the Selling Shareholders hereby irrevocably
relinquishes such Selling Shareholder's right to act independently and
other than through the Representative, except with respect to the
removal of the Representative or appointment of a successor
Representative as provided in Section 6.8(b) hereof, and (ii) no Selling
Shareholders shall have any right under this Agreement or otherwise to
institute any suit, action or proceeding against the Company, the
Purchaser or the Escrow Agent with respect to any such matter, any such
right being irrevocably and exclusively delegated to the Representative.
The Representative hereby acknowledges and accepts the foregoing
authorization and appointment and agrees to serve as the Representative
in accordance with the terms of this Agreement and the Escrow Agreement.
(b) The Representative shall serve as Representative until his
resignation, removal from such position of responsibility, incapacity or
death; provided, however, that the Representative shall not have the
right to resign without (i) prior written notice to the Selling
Shareholders, and (ii) selecting a successor representative, acceptable
to a majority in interest of the Selling Shareholders and reasonably
satisfactory to the Purchaser, who shall serve until a successor thereto
is elected by the Selling Shareholders. The Representative may be
removed at any time, and a
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<PAGE> 54
successor representative reasonably satisfactory to Purchaser may be
appointed pursuant to written action by the Selling Shareholders who,
immediately prior to the Closing Date, held shares of Common Stock of
the Company constituting at least a majority of all such shares then
outstanding. Any successor to the Representative shall, for purposes of
this Agreement and the Escrow Agreement, be deemed to be, from the time
of the appointment thereof in accordance with the terms hereof, the
Representative, and from and after such time, the term "REPRESENTATIVE"
as used herein and therein shall be deemed to refer to such successor.
No appointment of a successor shall be effective unless and until such
successor agrees in writing to be bound by the terms of this Agreement
and the Escrow Agreement.
(c) The Representative shall be permitted to independently
retain counsel, consultants and other advisors and shall promptly notify
the Purchaser after retaining any such person.
(d) The provisions of this Section 6.8 shall in no way impose
any obligations on the Purchaser, and notwithstanding any notice
received by the Purchaser to the contrary (except any notice of the
appointment of a successor Representative approved by the Purchaser in
accordance with Section 6.7(b) hereof), the Purchaser (i) shall be
entitled to rely upon and shall be fully protected in relying upon and,
shall have no liability to the Selling Shareholders with respect to, and
shall be indemnified by the Selling Shareholders for, from and against
any and all liability arising out of actions, decisions and
determinations of the Representative, which liabilities shall constitute
Damages within the meaning of this Article VI, and (ii) shall be
entitled to assume that all actions, decisions and determinations of the
Representative are fully authorized by the Selling Shareholders for all
purposes under this Agreement.
(e) The Representative shall not be liable to the Selling
Shareholders for the performance of any act, or the failure to act,
provided the Representative acted or failed to act in good faith and in
a manner such Representative reasonably believed to be in the scope of
such Representative's authority under this Agreement and under the
Escrow Agreement and for a purpose which such Representative reasonably
believed to be in the best interests of the Selling Shareholders,
considered together as a group.
ARTICLE VII
GENERAL PROVISIONS
7.1 Further Assurances. Subject to the terms and conditions contained in
this Agreement, each of the parties hereto shall use its reasonable best efforts
to take promptly, or cause to be taken, all reasonable actions, and to do
promptly, or cause to be done, all things necessary, proper or advisable under
applicable laws, rules and regulations in order
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<PAGE> 55
to consummate and make effective the transactions contemplated by this Agreement
and each of the Related Agreements, to obtain all necessary waivers, consents
and approvals, to effect all necessary registrations and filings and to remove
any and all injunctions or other impediments or delays, legal or otherwise, in
order to consummate and make effective the transactions contemplated by this
Agreement and each of the Related Agreements, in all cases for the purpose of
securing to the parties hereto the benefits contemplated by this Agreement and
each of the Related Agreements.
7.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of complete transmission)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(i) if to the Purchaser, to: SCM Microsystems, Inc.
131 Albright Way
Los Gatos, California 95032
Attention: John Niedermaier
Telephone: (408) 370-4888
Facsimile: (408) 370-4880
with a copy to: Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304-1050
Attn: Kenneth M. Siegel, Esq.
Telephone: (650) 493-9300
Facsimile: (650) 493-6911
(ii) if to the Company, to: Intellicard Systems Pte. Ltd.
Blk. 171 Kallang Way
#04-01/04
Singapore 349250
Attention: Tan Tai Chew
Telephone: 011-65-841-5233
Facsimile: 011-65-841-5288
with a copy to: K L Lim & Co.
Advocates & Solicitors
49 Craig Road
Singapore 089687
Attention: Lim Kim Lark
Telephone: 011-65-223-5221
Facsimile: 011-65-223-5229
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<PAGE> 56
(c) if to the Representative, to: K L Lim & Co.
Advocates & Solicitors
49 Craig Road
Singapore 089687
Attention: Lim Kim Lark
Telephone: 011-65-223-5221
Facsimile: 011-65-223-5229
7.3 Interpretation; Headings. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The table of contents and headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement, or any of the terms and
provisions hereof.
7.4 Expenses. All fees and expenses incurred by the parties hereto in
connection with the negotiation, preparation and delivery of this Agreement and
each of the Related Agreements, the performance of the obligations hereunder and
thereunder, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, all legal, accounting, financial
advisory, consulting and other transaction fees and expenses ("TRANSACTION
EXPENSES"), shall be paid by the party incurring such costs and expenses;
provided, however, that notwithstanding the foregoing, the Transaction Expenses
incurred by the Company shall be paid by the Selling Shareholders and not by the
Company.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
7.6 Entire Agreement; Assignment. This Agreement, the Related
Agreements, the Disclosure Schedule, the Purchaser Disclosure Schedule, the
exhibits hereto and thereto, the Confidentiality Agreement, dated as of November
1, 1997, by and between the Company and the Purchaser, and the other documents
and instruments and other agreements among the parties hereto referenced herein:
(i) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof; (ii) are not intended to confer upon any other person any rights or
remedies hereunder except that the Representative and the Escrow Agent shall
have the express rights articulated in Articles VI hereof and in the Escrow
Agreement hereto; and (iii) shall not be assigned by operation of law or
otherwise except as otherwise specifically provided, except that the Purchaser
may assign its rights and delegate its obligations hereunder to any of its
affiliates.
7.7 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal,
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<PAGE> 57
void or unenforceable, the remainder of this Agreement will continue in full
force and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.
7.8 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
7.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction
and venue of the federal court encompassing the Santa Clara County, California,
in connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon them in any
manner authorized by the laws of the State of California for such persons and
waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction, venue and such process.
7.10 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
7.11 Amendment. Except as is otherwise required by applicable law, this
Agreement may be amended by the parties hereto at any time by execution of an
instrument in writing signed on behalf of each of the parties hereto.
7.12 Extension; Waiver. At any time, the Purchaser, the Selling
Shareholders and the Company may, to the extent legally allowed, (i) extend the
time for the performance of any of the obligations of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto, and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
7.13 Interpretation of Knowledge. For all purposes of and under this
Agreement and each of the Related Agreements, the phrase "to the knowledge of
the Company and the Selling Shareholders" or references to the presence or
absence of "knowledge of the
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<PAGE> 58
Company and the Selling Shareholders" shall mean and refer to the knowledge of
the Company or the Selling Shareholders, as the case may be, after reasonable
investigation and due inquiry.
[Remainder of Page Intentionally Left Blank]
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<PAGE> 59
IN WITNESS WHEREOF, the Purchaser, the Company and each of the Selling
Shareholders have executed this Agreement, or caused this Agreement to be
executed by their respective duly authorized officers, to be effective as of the
date first written above.
THE PURCHASER:
SCM MICROSYSTEMS, INC.
By:_____________________________________________
Name:
Title:
THE COMPANY:
INTELLICARD SYSTEMS PTE. LTD.
By:_____________________________________________
Name:
Title:
THE SELLING SECURITYHOLDERS:
IPC PERIPHERALS PTE. LTD.
By:_____________________________________________
Name:
Title:
________________________________________________
Tan Tai Chew
________________________________________________
Goh Boon Huat
________________________________________________
Lim Kim Lark
<PAGE> 60
ALCO TECHNOLOGY PTE. LTD.
By:_____________________________________________
Name:
Title:
<PAGE> 61
EXHIBIT A
SCHEDULE OF
SELLING SHAREHOLDERS AND
ALLOCATION OF COMPANY SHARES AND ACQUISITION CONSIDERATION
<TABLE>
<CAPTION>
ALLOCATION OF CASH ALLOCATION OF SHARE
CONSIDERATION CONSIDERATION
COMPANY ---------------------------------- ----------------------------
NAME OF SHARES CLOSING ESCROWED CLOSING ESCROWED
SHAREHOLDER OWNED PAYMENT PORTION DELIVERY PORTION
--------- --------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
IPC Peripherals 1,960,000 US$7,125,089.51 (1) US$171,500 US$1,543,500 US$171,500
Pte. Ltd.
Tan Tai Chew 1,040,000 US$3,780,659.74 US$91,000 US$819,000 US$91,000
Goh Boon Huat 500,000 US$1,817,624.87 US$43,750 US$393,750 US$43,750
Lim Kim Lark 300,000 US$1,090,574.93 US$26,250 US$236,250 US$26,250
Alco Technology 200,000 US$727,049.95 US$17,500 US$157,500 US$17,500
Pte. Ltd.
SUBTOTAL: -- US$14,540,999 US$350,000 US$3,150,000 US$350,000
TOTAL: 4,000,000 US$14,890,999.00 US$3,500,000.00
</TABLE>
(1) As set forth in Section 1.4 of the Disclosure Schedule, IPC Peripherals
Pte. Ltd. has an outstanding loan payable to the Company in the
aggregate principal amount of US$2,000,000.00, plus accrued interest at
the rate of 5.5% per annum computed on a daily compounded basis.
Pursuant to Section 1.3 of the Agreement, (i) the cash amount payable by
the Purchaser to IPC Peripherals Pte. Ltd. at the Closing pursuant to
Section 1.1 of the Agreement, as set forth in this Exhibit A, will be
reduced by an amount equal to the aggregate principal amount plus
accrued interest payable under such loan as of the Closing Date, and
(ii) the Purchaser shall transfer an equivalent amount to the Company as
full and complete satisfaction of such loan. Accordingly, at the Closing
the Purchaser shall transfer an aggregate of US$5,116,936.57 to IPC
Peripherals Pte. Ltd. and US$2,008,152.94 to the Company in full and
complete satisfaction of all amounts owing under such loan.
<PAGE> 62
EXHIBIT B
FORM OF
ESCROW AGREEMENT
<PAGE> 63
EXHIBIT C
FORM OF
EMPLOYMENT AND NON-COMPETITION AGREEMENT
<PAGE> 64
EXHIBIT D
SCHEDULE OF PARTIES TO
EMPLOYMENT AND NON-COMPETITION AGREEMENT
Tan Tai Chew
Allan Phua
Ng Yan Yap
Koh Eng Moh
Choo Bee Eng
<PAGE> 65
EXHIBIT E
SCHEDULE OF
COMPANY DIRECTORS AFTER CLOSING
John Niedermaier
Bernd Meier
Tan Tai Chew
<PAGE> 66
EXHIBIT F
FORM OF
LEGAL OPINION OF K L LIM & CO.
[COUNSEL TO THE COMPANY AND THE SELLING SHAREHOLDERS]
<PAGE> 67
EXHIBIT G
FORM OF
LEGAL OPINION OF WILSON SONSINI GOODRICH & ROSATI, P.C.
[COUNSEL TO THE PURCHASER]
