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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): APRIL 12, 2000
SBS TECHNOLOGIES, INC.
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New Mexico 1-10981 85-0359415
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(State of Incorporation) (Commission File No.) (IRS Employer I.D. No.)
2400 Louisiana Blvd, NE AFC Bldg 5-600 Albuquerque, New Mexico 87110
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (505) 875-0600
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ITEM 2. ACQUISITION OF ASSETS
On April 12, 2000, SBS Technologies, Inc. ("SBS") acquired the outstanding
shares of SDL Communications, Inc. ("SDL") from the stockholders of SDL for
$25 million in cash. $250,000 of the purchase price was placed in escrow and
will be distributed among the stockholders of SDL and SBS based upon
stockholders' equity as disclosed on a closing balance sheet to be prepared.
SDL is a privately held company located in Easton, Massachusetts that
specializes in the design, manufacture and sales of WAN I/O for the
Telecommunications and Data Communications market. SDL designs, manufacturers
and markets T1/E1, T3/E3, HSSI and OC3 products based on the PCI, CompactPCI
and PMC form factors, and supporting protocols such as Frame Relay, HDLC,
PPP, X.25 and ATM. In addition, SDL's products support the operating systems
most commonly used in communications, including Windows NT, Solaris and
VxWorks. SDL customers include major telecommunication OEM companies such as
Nokia, Nortel, Motorola, IBM, Network Associates and Compuware.
The acquisition of SDL was funded with existing cash and a $20 million
drawdown under SBS' Credit Agreement with Bank of America, N.A., and will be
accounted for as a purchase transaction. The purchase price was based on a
multiple of revenues as determined by an analysis of acquisitions of
comparable companies and anticipated future earnings, as well as
complementary technology and customer base.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The Registrant will file the audited financial statements, proforma financial
statements, and exhibits required under Item 7 within the required extension
period. The Stock Purchase Agreement between SBS Technologies, Inc., and SDL
Communications, Inc. and the stockholders of SDL Communications, Inc. is filed
herewith electronically.
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SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION METHOD OF FILING
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<S> <C> <C>
10.as Stock Purchase Agreement dated Filed herewith electronically
dated April 12, 2000 between SBS
Technologies, Inc., and SDL
Communications, Inc. and the stockholders
of SDL Communications, Inc.
99.1c Press Release by SBS Technologies, Inc. Filed herewith electronically
Dated April 17, 2000
</TABLE>
SIGNATURES
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 thereunto duly authorized.
SBS TECHNOLOGIES, INC.
Date: April 26, 2000 By: /s/ James E. Dixon, Jr.
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James E. Dixon, Jr.
Vice President
Finance & Administration
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement"), dated as of April 12,
2000, is among SDL Communications, Inc., a Massachusetts corporation, the
address of which is 46 Eastman Street, Easton, Massachusetts 02375, ("SDL"), the
stockholders of SDL listed on Exhibit I hereto ("Sellers") and SBS Technologies,
Inc., a New Mexico corporation, the address of which is 2400 Louisiana
Boulevard, NE, AFC Building 5, Suite 600, Albuquerque, NM 87110, ("SBS" or
"Buyer").
I. RECITALS.
A. Sellers wish to sell their capital stock of SDL to Buyer under
the terms and conditions of this Agreement.
B. Buyer wishes to acquire SDL by the purchase of all of the
issued and outstanding shares of capital stock of SDL under
the terms and conditions of this Agreement.
C. The parties wish to make certain representations, warranties,
covenants and agreements in connection with that acquisition
of stock.
The parties, intending to be legally bound, agree as follows:
II. DEFINITIONS.
For purposes of this Agreement, the following terms, when used with an
initial capital letter, have the following meanings:
A. "Accredited Investor" has the meaning set forth in Rule 501 of
Regulation D promulgated under the Securities Act.
B. "Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
C. "Blue Sky Laws" means the applicable state securities laws and
regulations promulgated thereunder.
D. "Buyer" has the meaning set forth in the preface above.
E. "Buyer Option" means an option for shares of Buyer's Common
Stock issued under Buyer's 1998 Long Term Equity Incentive
Plan, to replace an SDL Option and having vesting and other
terms that
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are substantially equivalent to the SDL Option except as
otherwise required by the Buyer's Plan. The exercise price in
the Buyer Option will be the Fair Market Value as defined by
the Buyer's Plan, and the number of shares subject to the
Buyer Option will be determined in accordance with the formula
on Exhibit II.E.
F. "Closing Balance Sheet" means the balance sheet of SDL
prepared as of the Closing Date pursuant to Section III.B.3
below.
G. "Closing Date" means the date on which the Transactions are
closed, as provided in Section III.C below.
H. "Code" means the Internal Revenue Code of 1986, as amended.
I. "Confidential Information" means any information concerning
the business and affairs of SDL or SBS, respectively, except
for information concerning SDL or SBS, respectively, that the
Party alleged to have impermissibly disclosed that information
(the "Disclosing Party") can show: (i) to have been in its
possession before its receipt from another Party; (ii) to be
now or at the time of the disclosure by the recipient
generally available to the public through no fault of the
Disclosing Party; (iii) to have been available to the public
at the time of its receipt by the Disclosing Party; (iv) to
have been received separately by the Disclosing Party in an
unrestricted manner from a person entitled to disclose that
information; or (v) to have been developed independently by
the Disclosing Party without regard to any information
received in connection with the Transactions.
J. "Damages" means all damages, dues, penalties, fines, costs,
amounts paid in settlement, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable
attorneys' fees, incurred by any Party as a result of any
action.
K. "Disclosure Schedule" means the schedules of exceptions to the
representations and warranties of Sellers, Buyer and Principal
Sellers set forth in Sections IV.A, IV.B, and IV.C,
respectively, each of which is divided into sections which
correspond to the subsections of Sections IV.A, IV.B, and IV.C
of this Agreement.
L. "Employee Benefit Plan" means an employee benefit plan within
the meaning of Section 3(3) of ERISA.
M. "Employee Pension Benefit Plan" means an employee pension
benefit plan within the meaning of Section 3(2) of ERISA.
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N. "Employee Welfare Benefit Plan" means an employee welfare
benefit plan within the meaning of Section 3(1) of ERISA.
O. "Environmental, Health and Safety Laws" means the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976, and the Occupational Safely and Health Act of
1970, each as amended, together with all other laws (including
rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal,
state, local and foreign governments (and all agencies
thereof) concerning pollution or protection of the
environment, public health and safety, or employee health and
safety, including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants,
or chemical, industrial, hazardous, or toxic materials or
wastes into ambient air, surface water, ground water, or lands
or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes in effect on the
Closing Date.
P. "Equity of SDL as of the Closing Date" means Total
Stockholders' Equity of SDL as reported on the Closing Balance
Sheet.
Q. "Escrow Account" means the trust account of Alison K. Schuler,
Esq., and "Escrow Agent" means Alison K. Schuler, Esq.
R. "Extremely Hazardous Substance" has the meaning set forth in
Section 302 of the Emergency Planning and Community
Right-to-Know Act of 1986, as amended.
S. "Fairness Opinion" means the opinion as provided in Section
VII.A.10 below.
T. "Financial Statements" means the financial statements,
including balance sheets, income statements and all notes to
them, of SDL for the period or periods specified in Section
IV.C.8 below.
U. "GAAP" means United States generally accepted accounting
principles applied consistently with the principles, practices
and procedures used in the preparation of the most recent
audited financial statement of the entity as to which that
term is being used.
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V. "Indemnified Party" means the Party seeking indemnification
pursuant to the provisions of this Agreement.
W. "Indemnifying Party" means the Party from whom indemnification
is being sought pursuant to the provisions of this Agreement.
X. "Intellectual Property" means (i) all patents, patent
applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations, thereof, (ii) all trademarks,
service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations,
derivations, and combination thereof and including all
goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (iii) all
copyrights, and all applications, registrations, and renewals
in connection therewith, (iv) all mask works and all
applications, registrations, and renewals in connection
therewith, (v) all trade secrets and confidential business
information (including research and development, know-how,
formulas, compositions, manufacturing and production processes
and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals),
(vi) all computer software (including data and related
documentation), (vii) all other proprietary rights, and (viii)
all copies and tangible embodiments thereof (in whatever form
or medium).
Y. "Knowledge" means actual knowledge of the Party of the
relevant subject matter to which it relates, and such
knowledge as should have come to the attention of any such
Party in the course of discharging such Party's duties as an
officer or director of the relevant entity in a reasonable and
prudent manner consistent with sound business practices.
Z. "KPMG" means the accounting firm of KPMG LLP.
AA. "Liability" means, as of any date, any liability (whether
asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any
liability for Taxes.
BB. "Material" means as to SDL, for any financial matter, a matter
involving $10,000 per occurrence (or such other amount as is
specifically identified), or two or more matters aggregating
$25,000 (or such other amount as is specifically identified)
or more, provided however, when used in connection with any
financial matter arising under Section IV.C.9.c or IV.C.9.t,
"Material" shall mean any matter
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involving $50,000 per occurrence, or two or more matters
aggregating $100,000 or more; and for any financial matter or
otherwise, a matter which impedes the ability to conduct SDL's
business as then conducted.
CC. "Material Adverse Effect" in the case of SDL or the Principal
Sellers, means any event, change or occurrence which has or
would reasonably be expected (in light of known circumstances)
to have a Material negative impact on the condition (financial
or otherwise), business, results of operations, business
outlook, or going concern value of SDL, or the ability of SDL
to consummate the Transactions. In the case of SBS, Material
Adverse Effect means any event, change or occurrence which has
or could reasonably be expected (in light of known
circumstances) to have a material adverse impact on the
ability of SBS to consummate the Transactions.
DD. "Most Recent Audited Financial Statements" means the audited
balance sheet of SDL as of December 31, 1999 and the audited
statements of income, changes in stockholders' equity, and
cash flow of SDL for the 12 months ended December 31, 1999,
audited by KPMG.
EE. "Most Recent Audited Balance Sheet" means the audited balance
sheet of SDL as of December 31, 1999.
FF. "Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including
with respect to quantity and frequency) of the Party to whom
such term is applied.
GG. "Other Sellers" means the shareholders and holders of vested
options of SDL, other than the Principal Sellers, who are
listed on Exhibit II.GG to this Agreement.
HH. "Party" or "Parties" means, either individually or
collectively, Sellers or any of them, SDL, or SBS.
II. "Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture,
a limited liability company or limited liability partnership,
an unincorporated organization, or a governmental entity (or
any department, agency, or political subdivision thereof).
JJ. "Principal Sellers" means Raghbir S. Dhillon, Dhalbir S.
Dhillon, Ming Chee Lau and Augustus Nunes.
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KK. "Purchase Price" means the amount of consideration to be paid
by the Buyer to the Sellers in exchange for the SDL Shares
purchased pursuant to this Agreement, as provided in Section
III.B below.
LL. "SDL Option Holder" means the person to whom have been issued
SDL Options.
MM. "SDL Options" means options for SDL Common Stock that are, as
of the Closing Date, unvested and still outstanding and listed
on Exhibit II.MM.
NN. "SDL Shares" means any and all outstanding shares of, and the
number of shares covered by vested, exercisable options for,
the Common Stock, $0.001 par value, of SDL.
OO. "Securities Act" means the Securities Act of 1933, as amended.
PP. "Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.
QQ. "Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than
(i) mechanic's, materialmen's, and similar liens, (ii) liens
for Taxes or special assessments not yet due and payable or
for Taxes or special assessments that the taxpayer is
contesting in good faith through appropriate proceedings and
for which an adequate reserve has been set aside, (iii)
purchase money liens and liens securing rental payments under
capital lease arrangements, (iv) other liens arising in the
Ordinary Course of Business and not incurred in connection
with the borrowing of money, (v) security interests reflected
in the Most Recent Audited Financial Statement, and (vi)
statutory security interests arising or incurred in the
Ordinary Course of Business with respect to which the
underlying obligations are not delinquent.
RR. "Sellers' Attorney-in-Fact" means Raghbir S. Dillon and
Dhalbir S. Dillon, and each of them acting singly, as the
attorney-in-fact appointed by the Sellers to act in their
stead and on their behalf in all matters pertaining to this
Agreement and the Transactions.
SS. "Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of
the common stock or has the power to vote or direct the voting
of sufficient securities to elect a majority of the directors.
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TT. "Tax" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental
(including taxes under Code Section 59A), customs duties,
capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or
not.
UU. "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including
any amendment thereof.
VV. "Transactions" means the transactions contemplated to take
place pursuant to this Agreement.
Other capitalized terms used in this Agreement shall have the meanings
ascribed to them as set forth in other provisions of this Agreement.
III. PURCHASE AND SALE OF SDL SHARES.
A. BASIC TRANSACTION. Subject to the terms and conditions of this
Agreement, the Buyer agrees to purchase from each of the
Sellers at the Closing, and each of the Sellers agrees to sell
to the Buyer at the Closing, all of the Sellers' SDL Shares.
B. PURCHASE PRICE AND METHOD OF PAYMENT.
1. TOTAL PURCHASE PRICE. The total consideration to be paid
by the Buyer to the Sellers for the SDL Shares purchased
pursuant to this Agreement (the "Purchase Price") will be
an amount equal to the sum of the following:
a. An amount determined by multiplying $25,000,000
by a fraction, the numerator of which is the
number of SDL Shares purchased pursuant to this
Agreement and the denominator of which is the
total of all SDL Shares (the "Basic Purchase
Price") in cash, less, on a dollar-for-dollar
basis, the amount, if any, by which the Equity of
SDL as of the Closing Date is less than
$3,500,000, plus, on a dollar-for-dollar basis,
the amount, if any, by which the Equity of SDL as
of the Closing Date is greater than $3,500,000
(the amount by which the Basic Purchase Price is
adjusted upward or downward based
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upon the Equity of SDL as of the Closing Date is
the "Adjustment Amount"); plus
b. an amount equal to the out of pocket fees and
expenses incurred by or on behalf of the Sellers
or SDL to KPMG in connection with the audit of
the Financial Statements, and not previously
reimbursed by the Buyer.
2. METHOD OF PAYMENT. At the Closing the Buyer will:
a. Pay by wire transfer of immediately available
funds in an aggregate amount equal to the Basic
Purchase Price less $250,000, (the "Initial
Payment") to a custodial bank account for the
benefit of the Sellers designated by the Sellers'
Attorney-in-Fact by written instruction given to
the Buyer at least 48 hours before the Closing.
The responsibility of Buyer under this Section
III.B.2.a will be limited to the wire transfer of
the Initial Payment to the account designated by
the Sellers' Attorney-in-Fact (the "Designated
Account"), and SDL will have no responsibility
under this Section III.B.2.a. Without limiting
the foregoing, Buyer and SDL will not be
responsible for determining whether the
Designated Account conforms with the requirements
of this Section III.B.2.a, or for holding or
distributing the Initial Payment within or from
the Designated Account. The Sellers'
Attorney-in-Fact will be solely responsible for
determining whether the Designated Account
conforms with the requirements of this Agreement,
and for holding and distributing the Initial
Payment within and from the Designated Account.
The Sellers' Attorney-in-Fact will distribute the
Initial Payment to the Sellers net of certain
expenses in proportion to their stock ownership
interests.
b. Pay into the Escrow Account, by wire transfer,
immediately available funds aggregating $250,000,
to be paid and disbursed upon determination of
the Adjustment Amount in accordance with
paragraph III.B.3, and not otherwise subject to
set off or counterclaim.
3. PURCHASE PRICE ADJUSTMENT. The Purchase Price set forth in
Section III.B.1 hereof will be subject to adjustment as follows:
a. The Buyer will prepare the Closing Balance Sheet
and deliver it to the Sellers' Attorney-in-Fact
within 45 days
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following the Closing Date. The Closing Balance
Sheet shall be used to determine the Adjustment
Amount.
b. The Closing Balance Sheet shall be prepared from
the books and records of SDL in accordance with
GAAP as applied consistently with the principles,
practices and procedures used in preparation of
the Most Recent Audited Balance Sheet. All
inventory and supplies reflected on the Closing
Balance Sheet shall be so reflected on the basis
of a complete physical count taken on March 22,
2000 , adjusted for receipts and shipments
through the Closing Date, and shall be valued in
accordance with SDL's prior practices as
reflected in the Most Recent Audited Balance
Sheet. Representatives of both the Buyer and the
Sellers' Attorney-in-Fact shall have the right to
participate in the taking of the physical
inventory and the valuation thereof. The Buyer
will apply certain procedures agreed upon by the
Buyer and the Sellers' Attorney-in-Fact to
specific accounts and/or items on the Closing
Balance Sheet. SDL, the Buyer and the Sellers
will provide each other with full cooperation in
connection with the preparation of the Closing
Balance Sheet.
c. The Closing Balance Sheet will not reflect
expenses attributable to the costs associated
with the audit of SDL's balance sheet as of
December 31, 1999 and 1998, and Statements of
Income, Changes in Stockholders Equity and Cash
Flow for the fiscal year ended December 31, 1999.
SDL shall pay all of its attorneys' fees relating
to the Transactions at or before the Closing
Date. It is contemplated by the Parties that the
Buyer shall not be responsible for the payment of
the Sellers' or SDL's attorneys' fees incurred in
connection with this Agreement and the
Transactions.
d. Within 30 days after receipt of the Closing
Balance Sheet, the Sellers' Attorney-in-Fact will
notify the Buyer if he disagrees with any of the
amounts included in the Closing Balance Sheet. If
no notice of objection is given, the Closing
Balance Sheet will be final and conclusive for
all purposes. If the parties are unable to
resolve any differences within 60 days of the
receipt of the Closing Balance Sheet, the Buyer
and the Sellers agree to retain the accounting
firm of Ernst & Young LLP, through its Boston
office, to review the final report of Buyer on
the
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Closing Balance Sheet, to determine whether it
has been prepared in accordance with GAAP, to
arbitrate any other dispute concerning the
Closing Balance Sheet and the Adjustment Amount
and to render a decision comprising a correct
statement of the Closing Balance Sheet and the
Adjustment Amount within 30 days of its
retention. That decision shall be final and
binding for all purposes. Any decision or award
pursuant to this Section III.B.3.d may be entered
in and enforced by any court having jurisdiction
over the matter. The parties hereby consent and
commit themselves to the jurisdiction of the
courts of New Mexico for the purposes of the
enforcement of any such award. The Buyer and the
Sellers will each pay one-half of the costs of
services rendered by Ernst & Young LLP.
e. Within five days after the later of (i)
expiration of the 30-day period for giving notice
of disagreement with the Closing Balance Sheet,
if no such notice of objection is given by the
Sellers' Attorney-in-Fact, or (ii) the resolution
of disputes, if any, pursuant to Section
III.B.3.d above, the Basic Purchase Price shall
be adjusted (using the formula set forth in
Section III.B.1.a based on the amounts shown in
the Closing Balance Sheet). If the Adjustment
Amount is owed to Sellers, within five (5)
business days after receipt of written notice
given jointly by the Sellers' Attorney-in-Fact
and the Buyer, the Escrow Agent will disburse, as
directed by that notice and by wire transfer in
immediately available funds, the amount held in
the Escrow Account to the Sellers'
Attorney-in-Fact, or either of them, and the
Buyer will similarly wire the Adjustment Amount
to the Sellers' Attorney-in-Fact, or either of
them. If the Adjustment Amount is owed to the
Buyer, within five (5) business days after
receipt of written notice given jointly by the
Sellers' Attorney-in-Fact and the Buyer, the
Escrow Agent will disburse, as directed by that
notice and by wire transfer in immediately
available funds, to the Buyer an amount of the
escrowed funds equal to the Adjustment Amount,
and the balance of the escrowed funds, if any, to
the Sellers' Attorney-in-Fact, or either of them,
for distribution to Sellers in accordance with
their respective interests. The responsibility of
the Buyer under this Section III.B.3.e will be
limited to the wire transfer of any Adjustment
Amount owed to Sellers to the Sellers'
Attorney-in-Fact. The responsibility of the
Escrow Agent
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under this Section III.B.3.e will be limited
to the wire transfer, in accordance with
written instructions jointly given by the
Sellers' Attorney-in-Fact and the Buyer, of
the proper amount of the escrowed funds to the
Sellers' Attorney-in-Fact and the Buyer, or
either of them. SDL shall have no
responsibility under this Section III.B.3.e.
Without limiting the foregoing, the Buyer, SDL
and the Escrow Agent will not be responsible
for holding or distributing the Adjustment
Amount or any portion of the escrowed funds
which have been wire transferred to the
Sellers' Attorney-in Fact, or either of them.
SBS and the Sellers' Attorney-in-Fact will
jointly notify the Escrow Agent in writing of
the distributions to be made of the escrowed
funds. The Escrow Agent will have no
responsibility or liability of any sort
whatsoever arising from the disbursement of
the escrowed funds in accordance with that
notice or in any case for any action or
nonaction taken or not taken, except for
malfeasance. If the Adjustment Amount owed to
the Buyer exceeds the amount of escrowed
funds, within five (5) business days, the
Sellers will pay the additional amount owed to
the Buyer by wire transfer to the Buyer in
immediately available funds. The Principal
Sellers shall be jointly and severally liable
for any Adjustment Amount owed to the Buyer in
excess of the escrowed funds.
f. In addition, the Purchase Price set forth in
Section III.B.1 hereof shall be subject to
adjustment in accordance with Section VI.K
hereof.
C. CLOSING. Unless this Agreement has been terminated and the
Transactions have been abandoned pursuant to the terms of this
Agreement, the closing of the Transactions (the "Closing")
will take place on such date (the "Closing Date") and at such
location as the Parties may mutually agree, but not later than
April 15, 2000.
D. DELIVERIES AT THE CLOSING. At the Closing, or, in the case of
the delivery of Buyer Options described in Section III.D.4,
below, as soon thereafter as reasonably practicable, the
Parties shall deliver the following:
1. At Closing, the Sellers will deliver to the Buyer:
a. the various certificates, instruments, and documents
referred to in this Agreement, and
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b. stock certificates representing all of the Sellers'
SDL Shares, endorsed in blank or accompanied by duly
executed assignment documents.
2. At Closing, the Buyer shall deliver to the Sellers'
Attorney-in-Fact:
a. the various certificates, instruments, and documents
referred to in this Agreement, and
b. that portion of the Purchase Price specified in
Section III.B.2.a above.
3. At Closing, the Buyer will deliver to the Escrow Agent
that portion of the Purchase Price specified in Section
III.B.2.b above.
4. At Closing, the SDL Options will be canceled and as soon
thereafter as is reasonably practicable, the Buyer shall
deliver to each SDL Option Holder a Buyer Option in place of
the Holder's SDL Option.
IV. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTIONS.
A. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the
Sellers, individually, represents and warrants to the Buyer,
as of the date of this Agreement, except as set forth in the
Sellers' Disclosure Schedule, attached as Exhibit IV.A, as
follows:
1. AUTHORIZATION OF TRANSACTIONS. The Seller has all
requisite power and authority to execute and deliver this
Agreement and to perform the Seller's obligations under
this Agreement. This Agreement constitutes the valid and
legally binding obligation of the Seller, enforceable
against the Seller in accordance with its terms and
conditions (subject as to enforcement of remedies, to the
discretion of courts in awarding equitable relief to
applicable bankruptcy, reorganization, insolvency,
moratorium and similar laws relating to or affecting the
rights of creditors generally and to general principles of
equity).
2. REQUIRED NOTICES, FILINGS AND APPROVALS. To Seller's
Knowledge, except for the notification and clearance of
the Transaction pursuant to the Hart-Scott-Rodino Act, the
Seller need not give any notice to, make any filing with,
or obtain any authorization, consent or approval of any
government or
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governmental agency or any other Person, in order for the
Seller to consummate the Transactions.
3. NONCONTRAVENTION. Except as set forth in the Sellers'
Disclosure Schedule, neither the execution and delivery of
this Agreement, nor the consummation of the Transactions
will (i) to Seller's Knowledge violate any constitution,
statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the
Seller is subject or (ii) conflict with, result in a
breach of, constitute a default under, result in the
acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any
notice under, any agreement, contract, lease, license,
instrument or other arrangement to which the Seller is a
party or by which the Seller is bound or to which the SDL
Shares or any of SDL's assets are subject.
4. BROKERS' FEES. The Seller has no Liability or obligation
to pay any brokerage fees, commissions, finders' fees or
financial advisory fees to any Person with respect to the
Transactions.
5. SDL SHARES. The Seller holds of record and owns
beneficially the number of SDL Shares as set forth in the
Sellers' Disclosure Schedule, free and clear of any
restrictions on transfer (other than any restrictions
under the Securities Act and Blue Sky Laws), Taxes (other
than income or other Taxes as may be owed by the Seller as
a result of the Transactions), Security Interests,
options, warrants, rights, contracts, commitments,
equities, claims, and demands. The Seller is not a party
to any option, warrant, right, or other contract or
commitment that could require the Seller to sell,
transfer, or otherwise dispose of any capital stock of SDL
(other than pursuant to this Agreement). The Seller is not
a party to any voting trust, proxy, or other written
agreement or understanding with respect to the voting of
any capital stock of SDL.
B. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
represents and warrants to the Sellers, as of the date of this
Agreement, except as set forth in the Buyer's Disclosure
Schedule, attached as Exhibit IV.B, as follows:
1. ORGANIZATION OF BUYER. Buyer is a corporation duly
organized, validly existing, and in good standing under
the laws of the State of New Mexico, with requisite
corporate power and authority to carry on its business as
it is now being conducted, and to own, operate and lease
its properties and assets. Buyer has only
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<PAGE>
those subsidiaries disclosed in its Annual Report on Form
10-K for the year ended June 30, 1999 and subsequent Forms
10-Q, filed with the SEC. Buyer, and each of its
subsidiaries, is duly licensed or qualified to transact
business as a foreign corporation and is in good standing
in each jurisdiction in which the nature of the business
transacted by it or the character or location of the
properties owned, leased or operated by it requires that
licensing or qualification, except where the failure to be
so licensed or qualified would not have a Material Adverse
Effect on the business, operations or financial condition
of Buyer and its subsidiaries, taken as a whole.
2. AUTHORIZATION OF TRANSACTIONS. Buyer has full power and
authority (including full corporate power and authority)
to execute and deliver this Agreement and to perform its
obligations under it. The Board of Directors of the Buyer
has taken all action required by law, the Buyer's Articles
of Incorporation and Bylaws to authorize the execution,
delivery and performance of this Agreement and
consummation of the Transactions. This Agreement has been
duly and validly executed and delivered by the Buyer and
no other action is necessary. This Agreement constitutes
the valid and legally binding obligation of Buyer,
enforceable in accordance with its terms and conditions
(subject as to enforcement of remedies, to the discretion
of courts in awarding equitable relief, to applicable
bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting the rights of creditors generally,
and general principles of equity).
3. REQUIRED NOTICES, FILINGS AND APPROVALS. Except for
notification and clearance of the Transaction pursuant to
the Hart-Scott-Rodino Act, Buyer need not give any notice
to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental
agency or any other Person in order for the Buyer to
consummate the Transactions.
4. NONCONTRAVENTION. Except as set forth in Exhibit IV.B,
neither the execution and delivery of this Agreement, nor
the consummation of the Transactions will (i) violate any
constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or
court to which the Buyer is subject or (ii) conflict with,
result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license,
instrument, or
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<PAGE>
other arrangement to which the Buyer is a party or by
which the Buyer is bound or to which any of the Buyer's
assets are subject.
5. BROKERS' FEES. The Buyer has no Liability or obligation to
pay any brokerage fees, commissions, or finders' fees to
any Person with respect to the Transactions, except those
owed in connection with obtaining a fairness opinion and
financial advisory fees with respect to the Transactions.
Payment of these fees will be the sole responsibility of
the Buyer.
6. NO INSOLVENCY OR FRAUDULENT TRANSFER. The payment of the
Purchase Price will not cause the Buyer to become
insolvent or seek protection from creditors and will not
be a fraudulent transfer within the meaning of the New
Mexico Uniform Fraudulent Transfer Act, Section 56-9-1 et
seq. NMSA Comp. 1972.
7. INVESTMENT. The Buyer is an Accredited Investor and
acknowledges that the SDL Shares purchased by the Buyer
pursuant to this Agreement are being acquired for
investment only and not with a view to any public
distribution thereof, within the meaning of the Securities
Act. Buyer will not offer to sell or otherwise dispose of
the SDL Shares so acquired by it in violation of any of
the registration requirements of the Securities Act or of
any applicable Blue Sky Laws.
8. EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Except
as set forth in Exhibit IV.B, since the most recent fiscal
year end audit of the Buyer, there have not been any
changes in the business, financial condition, operations,
or results of operations of the Buyer and its
subsidiaries, taken as a whole, which have had a Material
Adverse Effect on the Buyer and its subsidiaries, taken as
a whole.
C. REPRESENTATIONS CONCERNING SDL. The Principal Sellers, jointly
and severally, represent and warrant to Buyer, as of the date
of this Agreement, except as set forth in the SDL Disclosure
Schedule, attached as Exhibit IV.C, as follows:
1. ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. SDL is a
corporation duly organized, validly existing, and in good
standing under the laws of the Commonwealth of
Massachusetts, with requisite corporate power and
authority to carry on its business as it is now being
conducted, and to own, operate and lease its properties
and assets. SDL has no
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subsidiaries. SDL is duly licensed or qualified to
transact business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of the
business transacted by it or the character or location of
the properties owned, leased or operated by it requires
that licensing or qualification, except where the failure
to be so licensed or qualified would not have a Material
Adverse Effect on the business, operations or financial
condition of SDL. The SDL Disclosure Schedule lists the
directors and officers of SDL. SDL has delivered to Buyer
correct and complete copies of the charter and bylaws of
SDL (as amended to date). Except as set forth on the
Disclosure Schedule, the minute books (containing records
of meetings of the shareholders, the board of directors,
and any committee of the board of directors), the stock
certificate books, and the stock record book of SDL are
correct and complete. SDL is not in default under or in
violation of any provision of its Articles of Organization
and Bylaws.
2. CAPITALIZATION. The entire authorized capital stock of SDL
consists of 4,725,000 shares of $0.001 par value common
stock, of which 3,666,550 SDL Shares are issued and
outstanding, and 225,000 shares of $0.001 par value
Preferred Stock, none of which is issued and outstanding,
and no SDL Shares are held in treasury. All of the issued
and outstanding SDL Shares have been duly authorized, are
validly issued, fully paid, and nonassessable, and are
held of record and beneficially owned by the respective
Sellers as set forth in the SDL Disclosure Schedule.
Except for the SDL Options and as set forth on the SDL
Disclosure Schedule, there are no outstanding or
authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights,
or other contracts or commitments that could require SDL
to issue, sell, or otherwise cause to become outstanding
any of its capital stock. There are no outstanding or
authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to SDL,
other than normal dividends paid to its shareholders from
time-to-time. There are no voting trusts, proxies, or
other agreements or understandings with respect to the
voting of the capital stock of SDL. SDL does not have, and
never has had, more than 200 shareholders of record.
3. AUTHORIZATION OF TRANSACTIONS. SDL has full power and
authority (including full corporate power and authority)
to execute and deliver this Agreement and to perform its
obligations under it. The Board of Directors and
shareholders of SDL have taken all action required by law,
SDL's Articles of Organization and
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<PAGE>
Bylaws to authorize the execution, delivery and
performance of this Agreement and consummation of the
Transactions. This Agreement has been duly and validly
executed and delivered by SDL and no other action is
necessary. This Agreement constitutes the valid and
legally binding obligation of SDL, enforceable in
accordance with its terms and conditions (subject as to
enforcement of remedies, to the discretion of courts in
awarding equitable relief to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws
affecting the rights of creditors generally, and to
general principles of equity).
4. NONCONTRAVENTION. Except as set forth in the SDL
Disclosure Schedule, neither the execution and delivery of
this Agreement, nor the consummation of the Transactions
will (i) to Principal Sellers' Knowledge, violate any
constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or
court to which SDL is subject or (ii) conflict with,
result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license,
instrument, or other arrangement to which SDL is a party
or by which SDL is bound or to which any of SDL's assets
are subject.
5. REQUIRED NOTICES, FILINGS AND APPROVALS. Except for
notification and clearance of the Transaction pursuant to
the Hart-Scott-Rodino Act, SDL does not need to give any
notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or
governmental agency or any other Person in order for SDL
to consummate the Transactions.
6. BROKERS' FEES. SDL has no Liability or obligation to pay
any brokerage fees, commissions, finders' fees or
financial advisory fees to any Person with respect to the
Transactions. Principal Sellers will hold Buyer and SDL
harmless for any such liability after Closing,
notwithstanding and without regard to the provisions of
Section VIII.B.3.
7. TITLE TO ASSETS. SDL has good and marketable title to, or
a valid leasehold interest in, the properties and assets
used by it, located on its premises, or shown on the Most
Recent Audited Balance Sheet or acquired after the date of
the Most Recent Audited Balance Sheet, free and clear of
all Security Interests, except for properties and assets
disposed of in the Ordinary
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Course of Business since the date of the Most Recent
Audited Balance Sheet.
8. FINANCIAL STATEMENTS. The SDL Disclosure Schedule contains
the following financial statements of SDL (collectively
the "Financial Statements"): (i) audited balance sheets as
of December 31, 1999 and 1998 and audited statement of
income, changes in stockholders' equity, and cash flow for
the fiscal year ended December 31, 1999; and (ii)
unaudited balance sheets and statements of income as of
and for each of the three months ended March 31, 2000. The
audited financial statements referred to above (including
the notes thereto), have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods
covered thereby, and present fairly the financial
condition of SDL as of those dates and the results of
operations of SDL for those periods.
9. EVENTS SUBSEQUENT TO MOST RECENT AUDITED FINANCIAL
STATEMENT. Except as set forth in the SDL Disclosure
Schedule, since December 31, 1999, there have not been any
changes in the business, financial condition, operations,
or results of operations of SDL which have had a Material
Adverse Effect on SDL. Without limiting the generality of
the foregoing, since December 31, 1999, other than as
contemplated by this Agreement:
a. SDL has not sold, leased, transferred, or assigned
any of its assets, tangible or intangible, other than
in the Ordinary Course of Business;
b. SDL has not entered into any agreement, contract,
lease, or license (or series of related agreements,
contracts, leases, and licenses) which involved more
than $500,000 or which was not in the ordinary course
of SDL's business;
c. To Principal Sellers' Knowledge no party (including
SDL) has accelerated, terminated, modified, or
canceled any agreement, contract, lease, or license
(or series of related agreements, contracts, leases,
and licenses) involving more than $50,000 to which
SDL is a party or by which it is bound, other than
terminations, modifications or cancellations pursuant
to and consistent with the terms of those agreements,
contracts, leases or licenses which are effected for
reasons other than cause or convenience;
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d. SDL has not imposed any Security Interest upon any of
its assets, tangible or intangible;
e. SDL has not made any capital expenditure (or series
of related capital expenditures) which involved more
than $30,000 or was not for an asset used in SDL's
business;
f. SDL has not made any capital investment in, any loan
to, or any acquisition of the securities or assets
of, any other person (or series of related capital
investments, loans, and acquisitions);
g. SDL has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed
any indebtedness for borrowed money or capitalized
lease obligations other than as disclosed on the SDL
Disclosure Schedule;
h. SDL has not delayed or postponed the payment of
accounts payable and other Liabilities outside the
Ordinary Course of Business;
i. SDL has not accelerated the shipment of products in
advance of the customer's requested delivery
schedule;
j. SDL has not canceled, compromised, waived, or
released any right or claim (or series of related
rights and claims) either involving more than $10,000
or outside the Ordinary Course of Business;
k. SDL has not granted any license or sublicense of any
rights under or with respect to any Intellectual
Property to manufacture or produce any of SDL's
products;
l. There has been no change made or authorized in the
Articles of Organization or Bylaws of SDL;
m. SDL has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its
property;
n. SDL has not made any loan to any of its directors,
officers, and employees outside the Ordinary Course
of Business;
o. SDL has not entered into any employment contract or
collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or
agreement;
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p. SDL has not granted any increase in the base
compensation of any of its directors or officers, or
any increase in base compensation for employees other
than in the Ordinary Course of Business;
q. SDL has not adopted, amended, modified, or terminated
any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit
of any of its directors, officers, and employees (or
taken any such action with respect to any other
Employee Benefit Plan);
r. SDL has not made any other change in employment terms
for any of its directors or officers, or any other
change in the employment terms of any of its
employees other than in the Ordinary Course of
Business;
s. SDL has not made or pledged to make any charitable or
other capital contribution outside the Ordinary
Course of Business;
t. There has not been any other occurrence, event,
incident, action, failure to act, or transaction
outside the Ordinary Course of Business involving SDL
having a Material Adverse Effect; and
u. SDL has not committed to any of the foregoing.
9.5 UNDISCLOSED LIABILITIES. SDL has no Material Liability,
and, to Principal Sellers' Knowledge, there are no
occurrences or circumstances which give Principal
Sellers reasonable grounds to believe that SDL will
have a Material Liability in the reasonably foreseeable
future, except for (i) Liabilities reflected on the
face of the Most Recent Audited Balance Sheet,
including any notes, (ii) Liabilities that are set
forth on the SDL Disclosure Schedule, (iii) Liabilities
which have arisen after December 31, 1999 in the
Ordinary Course of Business (none of which results
from, arises out of, relates to, is in the nature of,
or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law),
(iv) Liabilities for executory obligations to be
performed under the contracts described in Section
IV.C.17 below, and (v) Liabilities in connection with
or as a result of the Transactions.
10. LEGAL COMPLIANCE. To Principal Sellers' Knowledge SDL
is in compliance in all material respects with all
applicable laws
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(including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and
foreign governments (and all agencies thereof), and no
action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any
failure so to comply.
11. TAX MATTERS.
a. All Tax Returns required to be filed with respect to
SDL or its operations by SDL with any taxing
authority as of the Closing Date have been filed, or
if after the Closing Date will be filed promptly
when due, and all Taxes required to be paid with
respect to the periods covered by those Tax Returns
have been paid or accrued or adequate reserves for
the payment thereof have been established, except
where the failure to file those Tax Returns or pay
those Taxes would not have a Material Adverse Effect
on SDL. SDL is not delinquent in the payment of any
Tax, assessment or governmental charge.
b. Sellers shall be responsible for the payment of all
personal Taxes resulting from the Transactions. SDL
shall be responsible for the preparation and timely
filing of all Tax Returns and related reports which
are required for the short period up to the Closing
Date. Any additional Tax has been paid by SDL or
will be reflected on the Closing Balance Sheet.
c. SDL has withheld and paid all Taxes legally required
to have been withheld and paid in connection with
amounts paid to any employee, independent
contractor, creditor, stockholder, or other third
party.
d. To the Principal Sellers' Knowledge, no authority
intends to assess any additional Taxes for any
period up to Closing Date for which Tax returns have
been or are required to be filed. Except as set
forth on the SDL Disclosure Schedule, there is no
dispute or claim concerning any Tax Liability of or
relating to SDL either (i) claimed or raised by any
taxing authority in writing or (ii) as to which any
of the Principal Seller has Knowledge. The SDL
Disclosure Schedule lists all federal, state, local,
and foreign income Tax Returns filed with respect to
SDL for taxable periods ended on or after December
31, 1993 through the present, indicates
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those Tax Returns that have been audited and those
Tax Returns that currently are the subject of audit.
12. REAL PROPERTY LEASED OR SUBLEASED. The SDL Disclosure
Schedule lists all real property leased or subleased to
SDL. SDL has delivered to the Buyer correct and
complete copies of the leases and subleases listed in
the SDL Disclosure Schedule. With respect to each lease
and sublease listed in the Disclosure Schedule:
a. to Principal Sellers' Knowledge, the lease or
sublease is legal, valid, binding and enforceable;
b. to Principal Sellers' Knowledge, SDL is not in
material breach or default, and no event has
occurred which, with notice or lapse of time, would
constitute a breach or default, or permit
termination, modification, or acceleration, of any
lease or sublease and no consent is required under
any lease or sublease for the Transactions;
c. SDL has not assigned, transferred, conveyed or
created any Security Interest in the leasehold or
subleasehold;
d. all facilities leased or subleased thereunder by
SDL are supplied with utilities and other services
necessary for the operation of those facilities as
currently operated by SDL; and
e. Principal Sellers have received written consents
from all lessors or sublessors of leased or
subleased real property, whose consent is required
as a result of the Transactions for the terms and
conditions of leases and subleases to be continued
uninterrupted and without modification from the
current terms and conditions.
13. COMPLIANCE WITH BUILDING AND ZONING CODES. To Principal
Sellers' Knowledge, all of SDL's operations and
activities as conducted as of the date hereof, comply
in all Material respects with all applicable building
and zoning codes.
14. INTELLECTUAL PROPERTY.
a. SDL owns or has the right to use (pursuant to
license, sublicense, agreement, or permission) all
Intellectual Property necessary to design,
manufacture and sell its current products and for
office administration, the failure to
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possess which would have a Material Adverse Effect
on SDL. Each Material item of Intellectual Property
owned or used by SDL immediately before the Closing
will be owned or available for use by SDL on
identical terms and conditions immediately after
the Closing. Except as set forth on the Disclosure
Schedule, SDL has taken commercially reasonable
action to maintain and protect as a trade secret
each Material item of Intellectual Property that
it owns or uses.
b. To Principal Sellers' Knowledge, none of the
products manufactured by SDL infringes upon any
Intellectual Property rights of third parties, and
none of the Principal Sellers has since December
31, 1996, received any written charge, complaint,
claim, demand, or notice alleging any such
infringement (including any claim that SDL must
license or refrain from using any Intellectual
Property rights of any third party).
c. No patents are owned by SDL and SDL has made no
patent applications. Except as set forth on the
Disclosure Schedule, SDL has not granted to any
third party any license with respect to any of its
Intellectual Property to manufacture or produce any
product.
d. The SDL Disclosure Schedule identifies each item of
Intellectual Property that any third party owns and
that SDL embodies or incorporates in SDL's
products, pursuant to license, sublicense,
agreement, or permission. SDL has delivered to the
Buyer correct and complete copies of all such
licenses, sublicenses, agreements, and permissions
(as amended to date). With respect to each item of
Intellectual Property required to be identified in
the SDL Disclosure Schedule, the license,
sublicense, agreement, or permission covering the
item is the legal, valid and binding right of SDL,
enforceable in accordance with its terms, and in
full force and effect, and Principal Sellers have
no reason to believe that they will not stay in
effect following the Closing Date.
15. TANGIBLE ASSETS. SDL owns or leases all buildings,
machinery, equipment, and other tangible assets
necessary for the conduct of its businesses as
currently conducted. To the Principal Sellers'
Knowledge, each of those tangible assets is free from
defects (patent and latent), has been maintained in
accordance with normal industry practice, is in
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good operating condition and repair (subject to normal
wear and tear), and is suitable for the purposes for
which it currently is used.
16. INVENTORY. Inventories reflected on SDL's Most Recent
Audited Balance Sheet are properly stated in accordance
with GAAP.
17. CONTRACTS. The SDL Disclosure Schedule lists the
following written contracts and other agreements to
which SDL is a party:
a. any agreement (or group of related agreements) for
the lease of personal property to or from any
Person providing for lease payments;
b. any agreement for the sale of SDL products or the
purchase of raw materials by SDL which involves
currently open sales or purchase orders;
c. any agreement concerning a partnership or joint
venture;
d. any agreement (or group of related agreements)
under which it has created, incurred, assumed, or
guaranteed any indebtedness for borrowed money, or
any capitalized lease obligation;
e. any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation,
severance, or other material plan or arrangement
for the benefit of its current or former directors,
officers, and employees;
f. any collective bargaining agreement;
g. any written agreement for the employment of any
individual on a full or part-time basis in which
the consideration to be paid is more than $75,000
per year, or for the performance of consulting
services in which SDL's future obligation exceeds
$25,000;
h. any agreement under which it has been advanced or
loaned any amount to any of its directors,
officers, and employees outside the Ordinary Course
of Business; or
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i. any agreement which is currently in default, the
consequences of which could have a Material Adverse
Effect.
SDL has delivered to the Buyer a correct and complete
copy of each written agreement listed in the SDL
Disclosure Schedule. With respect to each such
agreements: (i) the agreement is the legal, valid and
binding obligation of SDL, enforceable in accordance
with its terms, and in full force and effect; (ii) the
agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical
terms following the consummation of the Transactions;
(iii) SDL is not in breach or default, and no event has
occurred which with notice or lapse of time would
constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and
(iv) no party to any such agreement has notified any
Principal Seller or SDL that they do not intend to
perform under the agreement, for any reason.
18. NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts
receivable of SDL as shown on the Most Recent Audited
Balance Sheet are reflected properly on that balance
sheet as of the date of that balance sheet, are valid
receivables subject to no setoffs or counterclaims,
subject only to a reasonable reserve for bad debts set
forth on the face of the Most Recent Audited Balance
Sheet, including the notes thereto.
19. POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of SDL.
20. INSURANCE. The SDL Disclosure Schedule contains an
accurate and complete list of all policies of fire and
other casualty, general liability, theft, life,
workers' compensation, health, directors and officers,
business interruption and other forms of insurance
owned or held by SDL, specifying the insurer, the
policy number, the term of the coverage, and in the
case of any "claims made" coverage, the same
information as to predecessor policies for the previous
three years. All present policies are in full force and
effect, and will not terminate or be violated as a
result of the Transactions. Neither any Principal
Seller nor SDL has done anything which will cause these
policies to be canceled.
21. LITIGATION. The SDL Disclosure Schedule sets forth each
instance in which SDL (i) is subject to any outstanding
injunction, judgment, order, decree or ruling, or (ii)
is a party
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or, to the Knowledge of any Principal Seller, has been
threatened in writing to be made a party to any action,
suit, proceeding, hearing, or investigation, of, in, or
before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign
jurisdiction, or before any arbitrator, which if
resolved adverse to SDL, would cause a Material Adverse
Effect on SDL. There are no occurrences or
circumstances which give any Principal Seller reason to
believe that there is a likelihood that any such
action, suit, proceeding, hearing, or investigation
will be brought or threatened against SDL in the
foreseeable future.
22. CUSTOMERS. As of the date of this Agreement, Netscout,
MCMS/Nokia, Motorola, and Compuware have designed
certain of SDL's products into certain of their
products. The Principal Sellers have no Knowledge that
any of these companies intends to discontinue use of
those SDL products in those customer products in the
immediately foreseeable future, or that the change in
ownership of SDL effected by the Transactions will
itself cause a substantial diminution or termination of
SDL's business relationship with any of these
companies.
23. EMPLOYEES. To the Principal Sellers' Knowledge, no
executive, key employee, or group of employees has any
plans to terminate employment with SDL. SDL is not a
party to or bound by any collective bargaining
agreement, nor has it experienced any strikes,
grievances, claims of unfair labor practices, or other
collective bargaining disputes. SDL has not committed
any unfair labor practice. The Principal Sellers have
no Knowledge of any organizational effort currently
being made or threatened by or on behalf of any labor
union with respect to employees of SDL. SDL has
provided to the Buyer a list of all employees
terminated by SDL during the 12 months before the date
of this Agreement.
24. EMPLOYEE BENEFITS.
a. Except as set forth in the SDL Disclosure Schedule,
SDL has complied in all material respects with all
applicable laws relating to the providing of
employee benefits to its employees, including, but
not limited to, the granting of leave time, the
providing of health, disability and workers
compensation insurance, and the providing of pension
benefits.
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b. The SDL Disclosure Schedule lists each Employee
Benefit Plan that SDL maintains or to which SDL
contributes. Except as set forth in the SDL
Disclosure Schedule:
(1) Each such Employee Benefit Plan (and each
related trust, insurance contract, or fund)
complies and has always complied in form and
in operation in all material respects with the
applicable requirements of ERISA, the Code,
the laws of the Commonwealth of Massachusetts,
and any other applicable laws.
(2) All required Form 5500 Annual Reports,
including all schedules, audits and
attachments have been timely filed with
respect to each such Employee Benefit Plan,
and all excise taxes for late contributions,
or underfunding have been fully paid, along
with any applicable interest and penalties.
all reporting and disclosure obligations have
been fully met. The requirements of ERISA,
including but not limited to Parts 6 and 7 of
Subtitle B of Title I of ERISA and of Code
Sections 4980B, 79, 105, 125, 129, 414, 4980
and 9801, have been met in all material
respects with respect to each such Employee
Benefit Plan subject thereto.
(3) All contributions (including all employer
contributions and employee salary reduction
contributions) which are due on or before the
Closing Date have been paid to each such
Employee Benefit Plan which is an Employee
Pension Benefit Plan and all contributions for
any period ending on or before the Closing
Date which are not yet due have been paid to
each such Employee Pension Benefit Plan or
accrued. All premiums or other payments which
are due on or before the Closing Date for all
periods ending on or before the Closing Date,
have been paid or accrued with respect to each
such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(4) Each such Employee Benefit Plan that is an
Employee Pension Benefit Plan complies in all
material respects with the requirements of
ERISA and a "qualified plan" under Code
Section 401(a).
(5) SDL has delivered to the Buyer correct and
complete copies of the plan documents and
summary plan
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descriptions, the most recent determination
letter received from the Internal Revenue
Service, the most recent Form 5500 Annual
Report, and all related trust agreements,
insurance contracts, and other funding
agreements which implement each such
Employee Benefit Plan.
c. With respect to each Employee Benefit Plan that SDL
maintains or ever has maintained or to which it
contributes, ever has contributed, or ever has been
required to contribute:
(1) No such Employee Benefit Plan is subject to
Title IV of ERISA.
(2) There have been no Prohibited Transactions (as
defined in Section 406 of ERISA and Section
4975 of the IRC) with respect to any such
Employee Benefit Plan that could reasonably be
expected to have a Material Adverse Effect on
SDL. To Principal Sellers' Knowledge, no
fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or
comply in connection with the administration
or investment of the assets of any such
Employee Benefit Plan. No action, suit,
proceeding, hearing, investigation, audit or
correspondence with respect to any such
Employee Benefit Plan (other than routine
claims for benefits) is pending, or, to the
Knowledge of the Principal Sellers, is
threatened. None of the Principal Sellers has
Knowledge of any basis for any such action,
suit, proceeding, hearing, or investigation.
c. No Employee Welfare Benefit Plan with respect to
which SDL could reasonably be expected to have any
liability, provides medical, health, or life
insurance or other welfare-type benefits for current
or future retired or terminated employees, their
spouses, or their dependents (other than in
accordance with Code section 4980B and 9801, and
ERISA Sections 601, 609 and 701, and comparable
provisions of state law).
d. Liabilities and any SDL matching contributions or
profit sharing contributions associated with any
Employee Benefit Plan, Employee Pension Benefit Plan
or Employee Welfare Plan to which SDL is subject,
have been properly reflected and represented on the
Most Recent Audited Financial Statement for SDL, to
the extent required by and in
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accordance with GAAP, and there have been no
occurrences or omissions since the date of the Most
Recent Audited Financial Statement which make those
financing statements materially inaccurate.
25. GUARANTIES. SDL is not a guarantor or is not otherwise
liable for any Liability or obligation (including
indebtedness) of any other Person.
26. ENVIRONMENT, HEALTH, AND SAFETY.
a. SDL has complied in all material respects with all
Environmental, Health, and Safety Laws, and no
action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has
been filed or commenced against any of them
alleging any failure so to comply. Without limiting
the generality of the preceding sentence, SDL has
obtained and been in material compliance with all
of the terms and conditions of all permits,
licenses, and other authorizations which are
required under, and has complied with all other
limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules,
and timetables which are contained in, all
Environmental, Health, and Safety Laws.
b. SDL has no Material Liability (and SDL has not
handled or disposed of any substance, arranged for
the disposal of any substance, exposed any employee
or other individual to any substance or condition,
or owned or operated any property or facility in
any manner that would give the Principal Sellers
reason to believe that SDL will have such Material
Liability) for damage to any site, location, or
body of water (surface or subsurface), for any
illness of or personal injury to any employee or
other individual, or for any reason under any
Environmental, Health, and Safety Law.
c. All properties and equipment used in the business
of SDL have been free of asbestos, PCB's, methylene
chloride, trichloroethylene,
1,2-transdichloroethylene, dioxins, dibenzofurans,
and Extremely Hazardous Substances.
27. CERTAIN BUSINESS RELATIONSHIPS WITH SDL. None of the
Sellers or their Affiliates, nor to their Knowledge any
Other Seller or any Affiliate of an Other Seller, (i)
has had any written agreement with SDL within the past
twelve months or which is
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currently in effect, or (ii) owns any assets, tangible
or intangible, which are used in the business of SDL.
28. DISCLOSURE. To the Principal Sellers' Knowledge, the
representations and warranties contained in this
Subsection C do not contain any untrue statement of a
material fact or omit to state any material fact
necessary in order to make the statements and
information not misleading, as of the date of that
representation or warranty.
29. BUSINESS OUTLOOK. The Principal Sellers have no
Knowledge of any fact or circumstance which Principal
Sellers believe, in good faith, has or will have a
material negative effect on the business outlook for
SDL.
V. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
A. GENERAL. Each of the Parties will use his or its commercially
reasonable efforts to take all action and to do all things
necessary, proper, or advisable in order to consummate and
make effective the Transactions (including satisfaction, but
not waiver, of the closing conditions set forth in Section VII
below). However, the taking of any such action, or the failure
to take that action, by any Party shall not affect the
representations and warranties of the Parties contained in
this Agreement.
B. NOTICES AND CONSENTS. The Principal Sellers will cause SDL to
give any notices to third parties, and will cause SDL to use
commercially reasonable efforts to obtain any third-party
consents, that the Buyer reasonably may request in connection
with the matters referred to in Section IV.C.4 above. Each of
the Parties will (and the Principal Sellers will cause SDL to)
give any notices to, make any filings with, and use its
commercially reasonable efforts to obtain any authorizations,
consents, and approvals of governments and governmental
agencies in connection with the matters referred to in
Sections IV.A.2, IV.B.3 and IV.C.5 above. However, the giving
of any such notices, the making of any such filings, or the
obtaining of any such approvals, or the failure to give such
notices, to make any such filings, or to obtain any such
approvals, by any Party shall not affect the representations
and warranties of the Parties contained in this Agreement.
C. OPERATION OF BUSINESS. The Principal Sellers will not cause or
permit SDL to engage in any practice, take any action, or
enter into any transaction outside the Ordinary Course of
Business.
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D. PRESERVATION OF BUSINESS. The Principal Sellers will cause SDL
to use its commercially reasonable efforts to keep its
business and properties substantially intact, including its
present operations, physical facilities, working conditions,
and relationships with lessors, licensors, suppliers,
customers, and employees.
E. FULL ACCESS. Each of the Principal Sellers will permit, and
the Principal Sellers will cause SDL to permit,
representatives of the Buyer to have full access at all
reasonable times, and in a manner so as not to materially
interfere with the normal business operations of SDL, to all
premises, properties, books, records (including Tax records of
SDL, but not including the personal tax records of Sellers),
contracts, and documents of or pertaining to SDL. The Buyer
will provide to SDL copies of the results of any searches
authorized or conducted by or on behalf of the Buyer with
respect to the Intellectual Property of SDL, or possible
infringement by the products of SDL on the Intellectual
Property of any third party. Upon termination of this
Agreement, the Buyer will return any and all information
provided by the Sellers or SDL pursuant to this Section.
F. EXCLUSIVITY. From the date of this Agreement through either
the Closing Date or the date of termination of this Agreement
as provided in Article IX below, none of the Sellers will (and
the Principal Sellers will not cause or permit SDL to) (i)
solicit, initiate, or encourage the submission of any proposal
or offer from any Person relating to the acquisition of any
capital stock or other voting securities, or any substantial
portion of the assets, of SDL (including any acquisition
structured as a merger, consolidation, or share exchange) or
(ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate
in, or facilitate in any other manner any effort or attempt by
any Person to do or seek any of the foregoing. None of the
Sellers will vote his or her SDL Shares in favor of any such
acquisition. The Sellers will notify the Buyer immediately if
any Person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing.
G. NOTICE OF DEVELOPMENTS; SUPPLEMENTS TO AND AMENDMENT OF THE
DISCLOSURE SCHEDULE. Before the Closing, and from time-to-time
at the request of the Buyer, the Sellers, SDL and the Buyer
will each supplement or amend its respective Disclosure
Schedule, with respect to any event or development (the
"Events") which, if existing or occurring at or before the
date of this Agreement, would have been required to be set
forth on that Disclosure Schedule, or
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which is necessary to correct any information set forth on
that Disclosure Schedule or in any representation or warranty
of the Sellers, SDL or the Buyers which has been rendered
inaccurate by reason of that Event (the Party giving any such
notice is herein referred to as the "Notice Giving Party"). If
any such Event as supplemented or amended shall be of such
nature to cause a Material Adverse Effect on the Party to whom
it applies, or on the ability of the Party receiving notice of
that Event to close the Transactions (the "Notice Receiving
Party"), then the Notice Receiving Party shall have a right to
terminate this Agreement within the shorter of two (2) weeks
of receipt of that notice or a period ending on the Closing
Date. The Notice Giving Party shall provide additional detail
or information as reasonably requested by the Notice Receiving
Party, as to any Events disclosed to the Notice Receiving
Party as a supplement or amendment to the Notice Giving
Party's Disclosure Schedule. If the Notice Receiving Party
does not object to the disclosing of the Events within the
shorter of two (2) weeks of the disclosure of those Events to
the Notice Receiving Party or a period ending on the Closing
Date, then the Notice Receiving Party will be deemed to have
waived any rights (including without limitation any claim for
indemnification, any right to terminate the Agreement or any
rights not to Close the Transactions) arising as a result of
the failure of the Notice Giving Party to fulfill any
condition contained in Article VII of this Agreement or for
materially breaching a representation or warranty of the
Notice Giving Party.
VI. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing.
A. GENERAL. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of
this Agreement, each of the Parties will take such further
action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to
indemnification therefor under Section VIII below). The
Sellers acknowledge and agree that from and after the Closing
the Buyer will be entitled to possession of all documents,
books, records, agreements, and financial data of any sort
relating to SDL.
B. EMPLOYEE BENEFITS. The Buyer will offer to the employees of
SDL (other than Raghbir S. Dhillon and Dhalbir S. Dhillon ),
effective as of the first calendar day of the month
immediately following Closing, employment in capacities and at
base rates of pay identical to
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those in effect as of the Closing Date. The Buyer will provide
to those employees (the "SDL Employees") the same benefit
plans, policies and practices, whether or not subject to
ERISA, provided by the Buyer to similarly situated employees
of the Buyer, at the same cost borne by those employees of the
Buyer, except that the SDL Employees will not become eligible
for the Buyer's medical flexible spending account pursuant to
Code Section 125 until the first pay period in the month
following the month of Closing. The Buyer shall cause each
benefit plan, policy and practice in which SDL Employees are
eligible to participate to be amended to take into account all
service with SDL before the Closing Date for purposes of
eligibility, vesting and calculation of benefits other than
(i) accrual of benefits under any defined benefit pension plan
intended to be qualified under Code Section 401(a), or (ii)
the Buyer's Employee Stock Purchase Plan. During the 2000 plan
year, neither Buyer nor SDL shall terminate any SDL plan
providing for a medical flexible spending account pursuant to
Code Section 125 or amend the provisions of the plan dealing
with those accounts in a manner that materially adversely
affects any participant. No group health plan maintained by
the Buyer or any Affiliate of the Buyer shall impose on any
SDL Employee as of the Closing Date (or any spouse or
dependent of any such employee) any preexisting condition
limitation or restriction other than (x) such a limitation or
restriction which is generally applicable under the plan and
which applies in the case of an employee (or any spouse or
dependent of any such employee) who fails to enroll in the
plan when he or she first becomes eligible, or (y) to the
extent that that preexisting limitation or restriction is not
covered under SDL's group health plan as of the Closing Date.
C. COBRA BENEFITS. Buyer shall continue to provide COBRA
continuation coverage with respect to former employees and
their qualified beneficiaries of SDL in its group health plan,
in order that their rights under COBRA are not prejudiced by
this transaction.
D. LITIGATION SUPPORT. If and for as long as any Party actively
is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim,
or demand in connection with (i) any Transaction contemplated
under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or
transaction on or before the Closing Date involving SDL, each
of the other Parties will cooperate with him or it and his or
its counsel in the contest or defense, make available their
personnel, and provide such testimony and access to their
books and records as shall be necessary in connection with the
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contest or defense, all at the sole cost and expense of the
contesting or defending Party, including, without limitation,
the reasonable costs and expenses related to airfare, lodging
and meals of the cooperating Party (unless the contesting or
defending Party is entitled to indemnification therefor under
Section VIII below); provided, however, that the obligations
of the Sellers pursuant to this Section for any matter will
terminate 10 years after the Closing Date.
E. TRANSITION. None of the Sellers will take, or, to the extent
it is within his or her reasonable control, permit any
employee or agent of SDL to take, any action that is designed
or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of
SDL from maintaining the same business relationships with SDL
after the Closing as it maintained with SDL before the
Closing. Each of the Sellers will refer all customer inquiries
relating to the businesses of SDL to the Buyer from and after
the Closing.
F. CONFIDENTIALITY. Each of the Sellers shall treat and hold and,
to the extent it is within his or her reasonable control,
cause any employee or agent of SDL to treat and hold, as
confidential, and the Buyer shall treat and hold as
confidential before Closing, (and in the event this Agreement
shall be terminated and the Transactions shall not close,
after the scheduled Closing Date), all of the Confidential
Information, and shall refrain from using any of the
Confidential Information except in connection with this
Agreement, and deliver promptly to the Buyer or Sellers, as
the case may be, or destroy, at the request and option of the
Buyer or the Sellers, as the case may be, all tangible
embodiments (and all copies) of the Confidential Information
which are in his, their or its possession. If any of the
Sellers, employees or agents of SDL or the Buyer is requested
or required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process) to disclose
any Confidential Information, any Party having knowledge
thereof will notify the others promptly of the request or
requirement so that the Buyer, SDL or the Sellers, as the case
may be, may seek an appropriate protective order or waive
compliance with the provisions of this section. If, in the
absence of a protective order or the receipt of a waiver
hereunder, any of the Sellers or the Buyer is/are, on the
advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt,
that Seller or the Buyer may disclose the Confidential
Information to the tribunal. However, the disclosing Seller or
the Buyer, as the case may be, shall use his, their or its
reasonable
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best efforts to obtain, at the reasonable request of the Buyer
or the Sellers, as the case may be, an order or other
assurance that confidential treatment will be accorded to that
portion of the Confidential Information required to be
disclosed as the Buyer or the Sellers, as the case may be,
shall designate.
G. EMPLOYMENT AGREEMENT. At Closing, Raghbir S. Dhillon and
Dhalbir S. Dhillon each will enter into an Employment
Agreement, substantially in the form attached as Exhibit VI.G,
by which he will be employed by Buyer under the terms and
conditions set forth in that Employment Agreement.
H. COVENANTS NOT TO COMPETE. At Closing, each Principal Seller,
and Jeffrey C. Marden will enter into a Covenant Not to
Compete substantially in the form attached as Exhibit VI.H.
I. CONFIDENTIALITY AGREEMENTS. At Closing, each Principal Seller,
and Jeffrey C. Marden will enter into a Confidentiality
Agreement substantially in the form attached as Exhibit VI.I.
J. PAYMENT OF AUDIT EXPENSES. The Buyer shall reimburse Sellers
and SDL for any out-of-pocket amounts paid by Sellers or SDL
to KPMG before Closing in connection with the audit by KPMG of
SDL's balance sheets as of and for the years ended December
31, 1999 and 1998 and statements of income, shareholder equity
and cash flow as of December 31, 1999. The Buyer shall
promptly pay these amounts upon submission of invoices
received from KPMG.
K. S-LINK SHARES. If Buyer or SDL sells any of the S-Link Shares
to a Person other than Buyer or any of its Affiliates, the Net
Gain arising from such sale shall be distributed as follows:
1. if, on or before the 91st calendar day after the Closing
Date, the Buyer or SDL completes a sale of any of the
S-Link Shares and receives consideration for such sale,
whether in the form of cash, equity, debt or otherwise,
75% of the Net Gain shall be paid to the Sellers'
Attorney-in-Fact and 25% of the Net Gain shall be retained
by the Buyer or SDL;
2. if, on or after the 92nd calendar day after the Closing
Date but on or before the 183rd calendar day after the
Closing Date, the Buyer or SDL completes a sale of any of
the S-Link Shares and receives consideration for such
sale, whether in the form of cash, equity, debt or
otherwise, 60% of the Net Gain shall be paid to the
Sellers' Attorney-in-Fact and 40% of the Net Gain shall be
retained by the Buyer or SDL;
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3. if, on or after the 184th calendar day after the Closing
Date but on or before the 275th calendar day after the
Closing Date, the Buyer or SDL completes a sale of any of
the S-Link Shares and receives consideration for such
sale, whether in the form of cash, equity, debt or
otherwise, 40% of the Net Gain shall be paid to the
Sellers' Attorney-in-Fact and 60% of the Net Gain shall be
retained by the Buyer or SDL; and
4. if the Buyer or SDL completes a sale of any of the S-Link
Shares and receives consideration for such sale, whether
in the form of cash, equity, debt or otherwise, on or
after the 276th calendar day after the Closing Date, 100%
of the Net Gain shall be retained by the Buyer or SDL.
As used in this Section VI.K, "S-Link Shares" shall mean the
common stock of S-Link, Corp., a Delaware corporation, owned
by SDL at the time of Closing; and "Net Gain" shall mean the
consideration received by the Buyer or SDL in exchange for the
sale of S-Link Shares, less an amount equal to: (i) $140,000
multiplied by a fraction, the numerator of which is the number
of S-Link Shares sold in the subject sale and the denominator
of which is the total number of all of S-Link Shares; (ii) all
Taxes paid and Tax Liability incurred by Buyer or SDL in
connection with or as a consequence of the subject sale; and
(iii) all other costs or expenses paid or incurred by Buyer or
SDL in connection with or as a consequence of the subject sale
and the division of the Net Gain arising in connection
therewith, including without limitation broker's or sales
commissions and legal fees.
Notwithstanding the foregoing, none of the Sellers or any
person subject to the direction or control of any of the
Sellers (whether or not Seller is exercising such direction or
control individually or as an Officer or Employee of SDL or
Buyer) shall take any action related to the sale or decision
not to sell any of the S-Link Shares, and any such action
shall be taken exclusively by the Board of Directors or
President and Chief Executive Officer of Buyer. Raghbir S.
Dhillon, if then a director of S-Link, shall recuse himself
from participation in any consideration by the management or
Board of Directors of S-Link related to any such sale. If any
Seller or any person subject to the direction of any Seller
breaches the provisions of this paragraph in connection with a
sale of any of the S-Link Shares, then 100% of the Net Gain
resulting from such sale shall by retained by the Buyer or
SDL.
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Any sums paid to the Sellers' Attorney-in-Fact pursuant to
this Section VI.K, other than any required to be characterized
as interest, shall be deemed an adjustment to the Purchase
Price and shall be distributed by the Sellers'
Attorney-in-Fact to the Sellers in accordance with their
respective interests as set forth in Exhibit III.B.2.
L. TERMINATION OF PLANS. The Board of Directors of SDL having
adopted amendments terminating the SDL Section 401(k) Plan and
the Profit Sharing Plan (the "SDL Plans"), the fiduciaries of
the SDL Plans shall (i) as soon as practicable after the
Closing, file the Plants with the IRS for its determination
upon termination that the SDL Plans, as terminated, continue
to qualify for tax-qualified status, and (ii) continue to
satisfy all reporting and disclosure requirements with respect
to the SDL Plans until distributions have been made and all
required reports timely filed. No distributions shall be made
from the SDL Plans before receipt of favorable determination
letters from the IRS, except with respect to employees who
discontinue service with SDL prior to issuance of a favorable
determination letter from the IRS.
VII. CONDITIONS TO OBLIGATION TO CLOSE.
A. CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of the
Buyer to consummate the Transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
1. the representations and warranties set forth in Sections
IV.A and IV.C above shall be true and correct in all
material respects at and as of the Closing Date;
2. the Sellers shall have performed and complied with all of
the covenants hereunder in all material respects through
the Closing
3. the Sellers shall have procured all of the third party
consents specified in Section V.B above;
4. the Sellers shall sell not less than 90% of all SDL Shares
to the Buyer pursuant to this Agreement;
5. all outstanding, vested options for SDL common stock have
been exercised or tendered, together with payment, for
exercise before or concurrent with Closing;
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6. no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling,
or charge would (i) prevent consummation of any of the
Transactions, (ii) cause any of the Transactions to be
rescinded following consummation, (iii) affect adversely
the right of the Buyer to own SDL Shares and to control
SDL, or (iv) materially adversely affect the right of SDL
to own its assets and to operate its businesses (and no
such injunction, judgment, order, decree, ruling, or
charge shall be in effect);
7. the Board of Directors of SDL will have adopted an
amendment terminating SDL'S Section 401(k) Plan and Profit
Sharing Plan (the "SDL Plans") on or before the Closing
Date, incorporating changes required by legislation
subsequent to the date on which the SDL Plans received a
favorable determination letter from the IRS, and
providing, inter alia, that no distributions shall be made
from the SDL Plans before receipt of a favorable IRS
determination letter referred to in Section VI.L; and the
Plans will be fully vested and funded;
8. within the meaning of clause (4) of the fourth sentence of
the definition of "Take-over bid" appearing in
Massachusetts General Laws, Chapter 110C, Section 1: (i)
SDL, through its Board of Directors, shall have consented
to the acquisition and offer to acquire all of the SDL
Shares pursuant to this Agreement; (ii) the Board of
Directors of SDL shall have recommended acceptance of such
acquisition and offer to acquire to all of the
shareholders of SDL; and (iii) the terms of this
Agreement, including any inducements to officers or
directors which are not made available to all
shareholders, shall have been furnished to all
shareholders;
9. SDL and the Principal Sellers shall have delivered to the
Buyer, respectively, an officer's certificate and
individual certificates to the effect that each of the
conditions specified above in Sections VII.A.1-8 is
satisfied in all material respects;
10. the Parties shall have received all authorizations,
consents, and approvals of governments and governmental
agencies referred to in Sections IV.A.2, IV.B.3, and
IV.C.5 above;
11. the Buyer shall have received from counsel to SDL and the
Sellers an opinion in form and substance mutually agreed
to by
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the parties, addressed to the Buyer, and dated as of the
Closing Date;
12. the Buyer shall have received from a nationally recognized
investment banking firm, or its other advisors, Fairness
Opinion in form and substance satisfactory to the Buyer in
its sole discretion, to the effect that the Transactions
will be fair and reasonable to the Buyer, and that the
consideration to be granted and received by the Buyer in
the Transactions is fair and reasonable to the Buyer under
the circumstances of the Transactions;
13. SDL shall have terminated its $1,000,000 revolving line of
credit with Peoples Savings Bank and any financing
statement, Security Interest, or personal guaranty with
respect thereto shall have been terminated;
14. all actions to be taken by the Sellers in connection with
consummation of the Transactions and all certificates,
opinions, instruments, and other documents required to
effect the Transactions will be reasonably satisfactory in
form and substance to the Buyer; and
15. if needed, the Buyer has received written notice from the
lessors and sublessors of all real property leased or
subleased by SDL as provided in Section IV.C.12.e above,
in form and substance reasonably satisfactory to Buyer.
B. CONDITIONS TO OBLIGATION OF THE SELLERS. The obligation of the
Sellers to consummate the Transactions to be performed by them
in connection with the Closing is subject to satisfaction of
the following conditions:
1. the representations and warranties set forth in Section
IV.B above shall be true and correct in all material
respects at and as of the Closing Date;
2. the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects through
the Closing;
3. no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling,
or charge would (i) prevent consummation of any of the
Transactions, (ii) cause any of the Transactions to be
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rescinded following consummation, (iii) affect adversely
the right of the Buyer to own SDL Shares and to control
SDL, or (iv) materially adversely affect the right of SDL
to own its assets and to operate its businesses (and no
such injunction, judgment, order, decree, ruling, or
charge shall be in effect);
4. the Buyer shall have delivered to the Sellers'
Attorney-in-Fact a certificate to the effect that each of
the conditions specified above in Sections VII.B.1-3 is
satisfied in all respects;
5. the Parties shall have received all other authorizations,
consents, and approvals of governments and governmental
agencies referred to in Sections IV.A.2, IV.B.3, and
IV.C.5 above;
6. the Sellers shall have received from counsel to the Buyer
an opinion in form and substance mutually agreed to by the
parties, addressed to the Sellers' Attorney-in-Fact, and
dated as of the Closing Date; and
7. all actions to be taken by the Buyer in connection with
consummation of the Transactions and all certificates,
opinions, instruments, and other documents required to
effect the Transactions will be reasonably satisfactory in
form and substance to the Sellers.
VIII. REMEDIES FOR BREACHES OF THIS AGREEMENT.
A. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Sellers, Buyer and the
Principal Sellers contained in Sections IV.A, IV.B and IV.C,
and as may be otherwise contained in this Agreement, shall
survive the Closing (even if the damaged party knew or had
reason to know of any misrepresentation or breach of warranty
at the time of Closing) and continue in full force and effect
for a period of 12 months after the Closing Date; except that
the representations and warranties set forth in Section
IV.C.11 (Tax Matters) shall continue in full force and effect
for the period of applicable statutes of limitation, and the
representations and warranties set forth in Section IV.A.5
(SDL Shares) and Section IV.C.2 (Capitalization) shall
continue in full force and effect perpetually after the
Closing. As used herein, the term "Survival Period" shall mean
the applicable period, described above, during which
representations and warranties continue in full force and
effect after the Closing.
B. INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
Page 40 of 62
<PAGE>
1. If any of the Sellers breaches any of the Sellers'
representations, warranties, and covenants contained in
this Agreement, and if the Buyer makes a written claim for
indemnification against the Principal Sellers as provided
in this Agreement within the relevant Survival Period,
then the Principal Sellers agree, jointly and severally,
to indemnify the Buyer from and against any Damages the
Buyer may suffer, whether those Damages occurred during or
after the Survival Period, resulting from, arising out of,
relating to, in the nature of, or caused by the breach.
2. The Principal Sellers, jointly and severally, hereby
indemnify and hold harmless the Buyers and SDL from any
and all Liability for Taxes imposed or assessed on the
Buyer or on SDL after the Closing Date, resulting from the
operation of SDL before the Closing Date that have not
been paid or accrued as of the Closing Date, or from Taxes
imposed or assessed on SDL as a result of the
Transactions, without regard to the limits set forth in
the following paragraph and for the period of the
applicable statute of limitation.
3. Notwithstanding anything in Section VIII.B.1 to the
contrary, and subject to the provisions of Section
VIII.B.2 and the following sentence, the Buyer will not be
entitled to any indemnification under Section VIII.B.1 if
the aggregate amount of all claims thereunder is less than
$100,000; provided, however, that if the aggregate amount
of all claims equals or exceeds $100,000, then the Buyer
will be entitled to full indemnification of all claims
under Section VIII.B.1 to the extent they are, in the
aggregate, $100,000 or more. Notwithstanding the
foregoing, if any claim arises with respect to the
representations and warranties set forth in Section IV.C.2
(Capitalization), the Buyer will be entitled to full
indemnification under Section VIII.B.1 with respect to
that claim, regardless of the amount of that or any other
claim, singly or in the aggregate. The Parties do not
intend that this exception amount shall be deemed to be a
definition or limitation of what is "material" for any
purpose under this Agreement.
C. INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLERS.
1. If the Buyer breaches any of the Buyer's representations,
warranties, and covenants contained in this Agreement, and
if the Sellers make a written claim for indemnification
against the Buyer as provided in this Agreement within the
Survival Period,
Page 41 of 62
<PAGE>
then the Buyer agrees to indemnify the Sellers from and
against any Damages the Sellers may suffer, whether those
Damages occurred during or after the Survival Period,
resulting from, arising out of, relating to, in the
nature of, or caused by the breach.
2. Notwithstanding anything in Section VIII.C.1 to the
contrary, the Sellers will not be entitled to any
indemnification under Section VIII.C.1 if the aggregate
amount of all claims thereunder is less than one hundred
thousand dollars ($100,000); provided, however, that if
the aggregate amount of all claims equals or exceeds
$100,000, then the Sellers will be entitled to full
indemnification of all claims under Section VIII.C.1 to
the extent they are, in the aggregate, $100,000 or more.
The Parties do not intend that the exception amount shall
be deemed to be a definition or limitation of what is
"material" for any purpose under this Agreement.
D. MATTERS INVOLVING THIRD PARTIES.
1. If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third
Party Claim") which may give rise to a claim for
indemnification against any other Party (the "Indemnifying
Party") under this Section, then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in
writing; provided, however, that no delay on the part of
the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
2. Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with
counsel of its choice reasonably satisfactory to the
Indemnified Party as long as (i) the Indemnifying Party
notifies the Indemnified Party in writing within 30 days
after the Indemnified Party has given notice of the Third
Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any
Damages the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused
by the Third Party Claim, (ii) the Indemnifying Party
provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against
the Third Party Claim and fulfill its indemnification
obligations hereunder, (iii) the Third Party Claim
involves only money damages and does not seek an
injunction
Page 42 of 62
<PAGE>
or other equitable relief, (iv) settlement of, or an
adverse judgment with respect to, the Third Party Claim
is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or
practice materially adverse to the continuing business
interests of the Indemnified Party, and (v) the
Indemnifying Party conducts the defense of the Third
Party Claim actively and diligently.
3. As long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with
Section VIII.D.2 above, (i) the Indemnified Party may
retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim,
(ii) the Indemnified Party will not consent to the entry
of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent
of the Indemnifying Party (not to be withheld
unreasonably), and (iii) the Indemnifying Party will not
consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without
the prior written consent of the Indemnified Party (not to
be withheld unreasonably).
4. If any of the conditions in Section VIII.D.2 above is or
becomes unsatisfied, however, (i) the Indemnified Party
may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim, with the prior written consent of the
Indemnifying Party, which consent shall not be
unreasonably withheld, in any manner it reasonably may
deem appropriate, (ii) the Indemnifying Party will
reimburse the Indemnified Party promptly and periodically
for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and
(iii) provided that consent of the Indemnifying Party is
received, the Indemnifying Party will remain responsible
for any Damages the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest extent
provided in this Section VIII.
E. TREATMENT OF INDEMNIFICATION PAYMENTS. All indemnification
payments under this Section VIII shall be deemed adjustments
to the Purchase Price.
F. OTHER INDEMNIFICATION PROVISION. The foregoing indemnification
provisions are in addition to, and not in derogation of, any
statutory, equitable, or common law remedy any Party may have
for breach of representation, warranty or covenant. Each of
the Principal Sellers hereby agrees that he will not make,
with respect to himself
Page 43 of 62
<PAGE>
or on behalf of an Other Seller, any claim for
indemnification against SDL by reason of the fact that he
or the Other Seller was a director, officer, employee, or
agent of that entity or was serving at the request of
that entity as a partner, trustee, director, officer,
employee, or agent of another entity (whether that claim
is for judgments, damages, penalties, fines, costs,
amounts paid in settlement, losses, expenses, or
otherwise and whether that claim is pursuant to any
statute, charter document, bylaw, agreement, or
otherwise) with respect to any action, suit, proceeding,
complaint, claim, or demand brought by the Buyer against
that Seller for indemnification under this Agreement
based on a breach of a representation or warranty
contained in this Agreement.
IX. TERMINATION.
A. TERMINATION OF AGREEMENT. Certain Parties may terminate this
Agreement as provided below:
1. the Buyer and the Sellers' Attorney-in-Fact may terminate
this Agreement by mutual written consent at any time
before the Closing;
2. the Buyer or the Sellers' Attorney-in-Fact may terminate
this Agreement if clearance of the Transaction is not
received pursuant to the Hart-Scott-Rodino Act.
3. the Buyer may terminate this Agreement by giving written
notice to the Sellers' Attorney-in-Fact at any time before
the Closing if (i) any of the Sellers, or SDL has breached
any material representation, warranty, or covenant
contained in this Agreement in any material respect, the
Buyer has notified the Sellers' Attorney-in-Fact of the
Breach, and the breach has continued without cure for a
period of the shorter of 30 days after the notice of
breach or the period ending on the Closing Date, (ii) the
Closing shall not have occurred on or before April 15,
2000, unless extended pursuant to Section IX.C below, by
reason of the failure of any condition precedent under
Section VII.A hereof (unless the failure results primarily
from the Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement), or
(iii) any of the supplements or amendments to the
Disclosure Schedule submitted by the Sellers or SDL before
the Closing are not accepted by the Buyer, as provided in
Section V.G above.
4. the Sellers' Attorney-in-Fact may terminate this Agreement
by giving written notice to the Buyer at any time before
the Closing
Page 44 of 62
<PAGE>
if (i) the Buyer has breached any material
representation, warranty, or covenant contained in this
Agreement in any material respect, the Sellers'
Attorney-in-Fact has notified the Buyer of the breach,
and the breach has continued without cure for a period
the shorter of 30 days after the notice of breach or the
period ending on the Closing Date, (ii) the Closing shall
not have occurred on or before April 15, 2000, unless
extended pursuant to Section IX.C below, or (iii) any of
the supplements or amendments to the Disclosure Schedule
submitted by the Buyer before the Closing are not
accepted by the Sellers' Attorney-in-Fact, as provided in
Section V.G above.
B. EFFECT OF TERMINATION.
1. If this Agreement is terminated pursuant to Section IX.A
above, written notice will be given by the Buyer or the
Sellers' Attorney-in-Fact to the other and the provisions
of this Agreement (except to the extent provided in
Section VI.E and IX.B.2) will terminate and the
Transactions will be abandoned, without further action by
any Party.
2. If this Agreement is terminated for any reason, each Party
will, upon request of the others, redeliver all documents,
work papers and other material of any other Party
(including all copies thereof) relating to the
Transactions, whether obtained before or after the
execution of this Agreement, to the Party who furnished
them. The confidentiality obligations of Section VI.E will
continue to be applicable to and enforceable against the
Parties.
C. EXTENSIONS. This Agreement, and the various deadlines for
performance of obligations and for consummation of the
Transactions as provided in this Agreement, may be extended with
the mutual consent of the Sellers' Attorney-in-Fact, in which
event the obligations of the Parties shall be modified
accordingly, and all deadlines for performance shall be modified
in accordance with any such extension.
X. MISCELLANEOUS.
A. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Sellers, as such or
on behalf of SDL, shall not issue any press release or make
any public announcement relating to the subject matter of this
Agreement before the Closing without first notifying the Buyer
of Sellers' intent to issue such a press release or make such
a public announcement, and receiving prior approval of the
Buyer, which approval shall not be unreasonably withheld.
However, Sellers
Page 45 of 62
<PAGE>
may make any public disclosure on behalf of SDL that is
required by applicable law, as long as Sellers, promptly
upon learning of that requirement, notify the Buyer of
the requirement and discuss with the Buyer, in good
faith, the exact proposed wording of any such
announcement. Buyer will make every effort to provide to
SDL a copy of any press release or public announcement
relating to this Agreement before the Closing before the
press release or public announcement is released.
B. NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties
and their respective successors and permitted assigns.
C. ENTIRE AGREEMENT. This Agreement (including the documents
referred to in this Agreement) constitutes the entire
agreement among the Parties and supersedes any prior
understandings, agreements, or representations by or among the
Parties, written or oral, to the extent they related in any
way to the subject matter of this Agreement.
D. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named in this
Agreement and their respective successors and permitted
assigns. No Party may assign either this Agreement or any of
his or its rights, interests, or obligations under this
Agreement without the prior written approval of the Buyer and
the Principal Sellers. However, the Buyer may (i) assign any
or all of its rights and interests under this Agreement to one
or more of its Affiliates and (ii) designate one or more of
its Affiliates to perform its obligations under this Agreement
(in any or all of which cases the Buyer nonetheless shall
remain responsible for the performance of all of its
obligations hereunder).
E. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
F. HEADINGS. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
G. NOTICES. All notices, requests, demands, claims, and other
communications under this Agreement will be in writing. Any
notice, request, demand, claim, or other communication under
this Agreement shall be deemed duly given if (and then two
business days after) it is sent by registered or certified
mail, return receipt
Page 46 of 62
<PAGE>
requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Sellers
or SDL before Closing: Copy to:
SDL Communications, Inc. Brown Rudnick Freed & Gesmer
4C Eastman Street One Financial Center
Easton, MA 02375 Boston, MA 02111
Attn: David Murphree, Esq.
If to the Buyer
or SDL after Closing: Copy to:
SBS Technologies, Inc. Alison K. Schuler, Esq.
Attn: Christopher J. Amenson, President Schuler, Messersmith, Daly &
2400 Louisiana Blvd., NE Lansdowne
AFC Building 5, Suite 600 4300 San Mateo Blvd. NE
Albuquerque, New Mexico 87110 Suite B-380
Albuquerque, NM 87110
Any Party may send any notice, request, demand, claim, or
other communication under this Agreement to the intended
recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger
service, facsimile, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim,
or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices,
requests, demands, claims, and other communications under this
Agreement are to be delivered by giving the other Parties
notice in the manner in set forth in this Section.
H. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New
Mexico without giving effect to any choice or conflict of law
provision or rule (whether of the State of New Mexico or any
other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New Mexico.
I. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless it is in writing and signed by
the Buyer and the Sellers' Attorney-in-Fact. No waiver by any
Party
Page 47 of 62
<PAGE>
of any default, misrepresentation, or breach of warranty
or covenant under this Agreement, whether intentional or
not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or
covenant under this Agreement or affect in any way any
rights arising by virtue of any prior or subsequent such
occurrence.
J. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
K. EXPENSES. Each of the Parties and SDL will bear his, her or
its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the
Transactions. The Sellers agree that SDL will fully discharge
and not have any undischarged Liabilities as of the Closing
Date for any costs and expenses in connection with this
Agreement and the Transactions (including for any legal fees
and expenses in connection with this Agreement or any of the
Transactions).
L. INCORPORATION OF EXHIBITS. The Exhibits identified in this
Agreement are incorporated in the Agreement by reference and
made a part hereof.
M. SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably if
any of the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are
breached. Accordingly, each of the Parties agrees that the
other Parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the
term and conditions of this Agreement in any action instituted
in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the
provisions set forth in Section X.N below), in addition to any
other remedy to which they may be entitled, at law or in
equity.
N. DISPUTES.
1. Except for matters which are subject to mediation and
arbitration as provided below, each of the Parties submits
to the jurisdiction of any state or federal court sitting
in Albuquerque, New Mexico, in any action or proceeding
arising out of or relating to this Agreement and agrees
that all claims in respect
Page 48 of 62
<PAGE>
of the action or proceeding may be heard and determined
in any such court. Each Party also agrees not to bring
any action or proceeding arising out of or relating to
this Agreement in any other court. Each of the Parties
waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and
waives any bond, surety, or other security that might be
required of any other Party with respect thereto. Any
Party may make service on any other Party by sending or
delivering a copy of the process to the Party to be
served at the address and in the manner provided for the
giving of notices in Section X.G above. Nothing in this
Section X.N, however, shall affect the right of any Party
to serve legal process in any other manner permitted by
law or at equity. Each Party agrees that a final judgment
in any action or proceeding so brought shall be
conclusive and may be enforced by suit on the judgment or
in any other manner provided by law or at equity.
2. The Parties agree that any claim or dispute arising out of
or relating to this Agreement or the formation, breach,
termination or validity thereof, which involves in the
aggregate an amount not exceeding $100,000, and except for
injunctive relief as contemplated by Section X.M above
("Dispute"), will be resolved in the manner provided
below. If the Dispute cannot be settled by direct
discussions, the Parties will first try to settle the
Dispute in an amicable manner by mediation under the
Commercial Mediation Rules of the American Arbitration
Association, before resorting to arbitration. Any Dispute
which has not been resolved within 60 days of the
initiation of the mediation procedure (the "Mediation
Deadline") will be settled by binding arbitration by a
panel of three (3) arbitrators, selected in the manner
provided below, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association
(the "Rules"). If a Party seeks mediation or arbitration
of a Dispute, the proceeding will be held in Albuquerque,
New Mexico. Judgment upon any arbitration award may be
entered in any court having jurisdiction thereof, and the
Parties consent to the jurisdiction of the courts in the
state in which the arbitration occurred for this purpose.
The Parties agree that service of process and of any
notices required in connection with any arbitration
hereunder or any related court proceedings may be given in
the manner provided for the giving of notices under this
Agreement as set forth in Section X.G. Within 20 days of
the Mediation Deadline, the Sellers will collectively
nominate one arbitrator and the Buyer will nominate one
arbitrator. Within thirty (30) days of the
Page 49 of 62
<PAGE>
nomination and appointment of the two arbitrators, the
two arbitrators shall select a third arbitrator, and if
they fail to do so, a neutral arbitrator shall be chosen
in accordance with the Rules.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURES ON THE FOLLOWING PAGE
Page 50 of 62
<PAGE>
The Parties have executed this Agreement as of the date set forth above.
SBS TECHNOLOGIES, INC.
By: /s/ C. J. Amenson
------------------------------------
Christopher J. Amenson
Title: President and
Chief Executive Officer
SELLERS:
/s/ Raghbir S. Dhillon
----------------------------------------
Raghbir S. Dhillon
/s/ Dhalbir S. Dhillon
----------------------------------------
Dhalbir S. Dhillon
/s/ Ming Chee Lau
----------------------------------------
Ming Chee Lau
/s/ Augustus Nunes
----------------------------------------
Augustus Nunes
/s/ Raghbir S. Dhillon
----------------------------------------
Raghbir S. Dhillon, as Attorney-in-Fact
for each of the persons whose names
appear on Exhibit II.GG hereto
SDL COMMUNICATIONS, INC.
By: /s/ Raghbir S. Dhillon
------------------------------------
Raghbir S. Dhillon
Title: President and Chief
Executive Officer
Page 51 of 62
<PAGE>
EXHIBIT I
SELLERS
Page 52 of 62
<PAGE>
EXHIBIT I
SDL Shares
----------
<TABLE>
<CAPTION>
Name of Seller Number of SDL Shares Owned*
-------------- ---------------------------
<S> <C>
Raghbir S. Dhillon 1,217,000
Dhalbir S. Dhillon 817,000
Ming Chee Lau 742,000
Augustus Nunes 447,000
Charanjit Singh 100,000
Brij Bhushan and Champa Bhushan 40,000
Urminder Aulakh 40,000
Sukhjinder Singh Bajwa 30,000
Jeffrey C. Marden 30,000
Rubinder Dhillon 25,000
Todd W. Corkum 24,500
David J. Burke 21,500
William R. Koss 20,000
Mathew J. Sheahan 12,500
Jill Kopka 12,500
Peter J. and Nellie Quinn 12,000
Richard Machado 11,500
Satnam Dhami 10,000
Gabriel E. Tempestoso 7,000
Vincent P. Wasnewsky 5,500
Yee-Ling Chin 5,500
Kenneth E. Jones, Jr. 5,000
Darcy Morse 5,000
Paul E. Letourneau 4,000
Brian T. Joss 4,000
William DiSalvio 4,000
William E. Galvin 2,500
Roger A. Provost 2,400
Steve F. McIntire 2,000
James Ribero 2,000
Susan P. Johnson 1,575
Sally West 1,575
Gianluca Marchi 1,000
Jacqueline Christoferson 1,000
Total 3,666,550
</TABLE>
*As of 4/10/00
<PAGE>
EXHIBIT II.E
FORMULA FOR BUYER OPTIONS
Page 53 of 62
<PAGE>
EXHIBIT II.E
FORMULA FOR BUYER OPTIONS
All valid outstanding and unvested options of SDL Communications,
Inc., ("SDL") common stock will be converted into options of SBS
Technologies, Inc. ("SBS") common stock based on the following conversion
formula:
"Market value per share of SDL common stock and vested
options on the day of Closing divided by the average closing price of SBS
common stock as reported on NASDAQ (SBSE) for the five business days prior to
the Closing Date of this Stock Purchase Agreement."
The market value of SDL common stock and vested options will be
determined by dividing the Purchase Price, as defined in certain sections of
the Stock Purchase Agreement, by the total outstanding shares of SDL common
stock and vested options on the day of Closing. The following is an example
of the determination of the market value of SDL common stock and vested
options:
"Market value per share of SDL common stock and vested options =
$25,000,000/3,661,550 (current total outstanding shares of SDL common stock
and vested options) = $6.8277/share."
The following is an example of the unvested option conversion ratio:
"$6.8277/$48.00 (average closing price of SBS common stock) = .14
options to purchase SBS common stock."
Using this example, each valid and outstanding unvested option of
SDL common stock would be exchanged for .14 options of SBS common stock with
equivalent vesting and other terms, as permitted under the SBS Plan. The SBS
options will expire ten (10) years from the date of grant. SBS does not issue
fractional shares, so SBS will round all fractional options up or down to the
nearest whole number.
<PAGE>
EXHIBIT II.GG
OTHER SELLERS
Page 54 of 62
<PAGE>
EXHIBIT II.GG
SDL SHARES
----------
<TABLE>
<CAPTION>
Name of Other Seller Number of SDL Shares owned*
- -------------------- ---------------------------
<S> <C>
Charanjit Singh 100,000
Brij Bhushan and Champa Bhushan 40,000
Urminder Aulakh 40,000
Sukhjinder Singh Bajwa 30,000
Jeffrey C. Marden 30,000
Rubinder Dhillon 25,000
Todd W. Corkum 24,500
David J. Burke 21,500
William R. Koss 20,000
Mathew J. Sheahan 12,500
Jill Kopka 12,500
Peter J. and Nellie Quinn 12,000
Richard Machado 11,500
Satnam Dhami 10,000
Gabriel E. Tempestoso 7,000
Vincent P. Wasnewsky 5,500
Yee-Ling Chin 5,500
Kenneth E. Jones, Jr. 5,000
Darcy Morse 5,000
Paul E. Letourneau 4,000
Brian T. Joss 4,000
William DiSalvio 4,000
William E. Galvin 2,500
Roger A. Provost 2,400
Steve F. McIntire 2,000
James Ribero 2,000
Susan P. Johnson 1,575
Sally West 1,575
Gianluca Marchi 1,000
Jacqueline Christoferson 1,000
Total 443,550
*As of 4/10/00
</TABLE>
<PAGE>
EXHIBIT II.MM
SDL OPTIONS
Page 55 of 62
<PAGE>
EXHIBIT II.MM
SDL OPTIONS
SDL COMMUNICATIONS, INC.
UNVESTED OPTIONS AT 4/11/00
<TABLE>
<CAPTION>
EXERCISE EXERCISE
HOLDER DATE NUMBER PRICE
- ------ ---------- ------ --------
<S> <C> <C> <C>
WILLIAM GALVIN 5/1/2000 1,250 0.10
5/1/2001 1,250 0.15
ROGER PROVOST 12/31/2000 1,000 0.75
3/31/2001 600 0.75
12/31/2001 1,000 1.00
RICHARD MACHADO 12/31/2000 1,000 0.15
12/31/2000 2,000 0.15
12/31/2001 1,000 0.25
MATTHEW SHEAHAN 5/1/2000 10,000 0.10
5/1/2001 7,500 0.20
TODD CORKUM 6/30/2000 5,500 0.20
9/30/2000 5,500 0.25
12/31/2000 7,000 0.30
3/31/2001 7,500 0.35
SUSAN JOHNSON 3/31/2001 425 0.15
SALLY WEST 3/31/2001 425 0.15
KEN JONES 5/1/2000 2,500 0.10
5/1/2001 2,500 0.15
GABE TEMPESTOSO 12/31/2000 3,000 0.15
YEE-LING CHIN 6/30/2000 2,000 0.30
9/30/2000 2,000 0.40
8/15/2000 2,000 0.35
12/31/2000 2,500 0.45
3/31/2001 2,500 0.50
8/15/2001 1,000 0.45
JACKIE CHRISTOFERSON 6/30/2000 1,000 0.10
6/30/2001 1,000 0.15
BRIAN JOSS 12/13/2000 3,000 0.50
12/31/2001 3,000 0.75
PAUL LETOURNEAU 12/31/2001 3,000 0.50
12/31/2001 3,000 0.75
STEVEN MCINTIRE 12/31/2000 1,000 0.01
JEFF MARDEN 6/30/2000 5,000 0.15
12/31/2000 20,000 0.15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXERCISE EXERCISE
HOLDER DATE NUMBER PRICE
- ------ ---------- ------ --------
<S> <C> <C> <C>
6/30/2001 5,000 0.45
12/31/2001 10,000 0.65
6/30/2002 10,000 0.85
DARCY MORSE 4/1/2001 5,000 0.65
4/1/2002 5,000 0.85
DAVID BURKE 6/30/2000 6,500 0.20
9/30/2000 4,000 0.25
12/31/2000 4,000 0.30
3/31/2001 4,000 0.35
WILLIAM DISALVIO 6/60/2000 2,000 0.30
8/15/2000 2,000 0.35
3/31/2001 3,500 0.45
8/15/2001 1,000 0.45
JAMES RIBERO 11/3/2000 2,000 0.35
11/3/2001 1,000 0.45
GIANLUCA MARCHI 12/31/2000 2,000 0.35
12/31/2001 2,000 0.45
JILLKOPKA 6/30/2000 2,500 0.35
2/5/2001 5,000 0.40
189,450
</TABLE>
<PAGE>
EXHIBIT III.B.2
SELLERS' RESPECTIVE INTERESTS
Page 56 of 62
<PAGE>
EXHIBIT III.B.2
SELLERS' RESPECTIVE INTERESTS
SDL COMMUNICATIONS, INC.
ALLOCATION OF PURCHASE PRICE TO SHAREHOLDERS AS OF 4/12/2000
<TABLE>
<CAPTION>
NAME AMOUNT BY % ALLOCATION
---- --------- ------ ----------
<S> <C> <C> <C>
RAGHBIR S. DHILLON 1,217,000 33.19% 8,297,991
DHALBIR S. DHILLON 817,000 22.28% 5,570,632
MING CHEE LAU 742,000 20.24% 5,059,252
AUGUSTUS NUNES 447,000 12.19% 3,047,824
** CHARANJIT SINGH 100,000 2.73% 681,840
** BRIJ & CHAMPA BHUSHAN 40,000 1.09% 272,736
** URMINDER AULAKH 40,000 1.09% 272,736
** SUKHJINDER BAJWA 30,000 0.82% 204,552
JEFFREY MARDEN 30,000 0.82% 204,552
RUBINDER DHILLON 25,000 0.68% 170,460
TODD CORKUM 24,500 0.67% 167,051
DAVID BURKE 21,500 0.59% 146,596
** WILLIAM R. KOSS 20,000 0.55% 136,368
MATHEW SHEAHAN 12,500 0.34% 85,230
JILL KOPKA 12,500 0.34% 85,230
** PETER J. & NELLIE QUINN 12,000 0.33% 81,821
RICHARD MACHADO 11,500 0.31% 78,412
** SATNAM DHAMI 10,000 0.27% 68,184
GABRIEL TEMPESTOSO 7,000 0.19% 47,729
VICENT WASNEWSKY 5,500 0.15% 37,501
YEE-LING CHIN 5,500 0.15% 37,501
KENNETH JONES 5,000 0.14% 34,092
DARCY MORSE 5,000 0.14% 34,092
PAUL LETOURNEAU 4,000 0.11% 27,274
BRIAN JOSS 4,000 0.11% 27,274
WILLIAM DISALVIO 4,000 0.11% 27,274
WILLIAM GALVIN 2,500 0.07% 17,046
ROGER PROVOST 2,400 0.07% 16,364
STEVE MCINTIRE 2,000 0.05% 13,637
JAMES RIBERO 2,000 0.05% 13,637
SUSAN JOHNSON 1,575 0.04% 10,739
SALLY WEST 1,575 0.04% 10,739
GIANLUCA MARCHI 1,000 0.03% 6,818
JACKIE CHRISTOFERSON 1,000 0.03% 6,818
100.00% 25,000,000
TOTAL SHARES OUTS. AND VESTED OPTS. BY 4/12/2000 3,666,550
PURCHASE PRICE 25,000,000
PER SHARE 6.82
Percentages are based on 4/12/2000 as an anticipated closing date.
** NON-EMPLOYEE SHAREHOLDERS
</TABLE>
<PAGE>
EXHIBIT IV.A
SELLERS' DISCLOSURE SCHEDULE
Page 57 of 62
<PAGE>
EXHIBIT IV A
SELLER'S DISCLOSURE SCHEDULE
SCHEDULE IV A 3
NONCONTRAVENTION
None
<PAGE>
SCHEDULE IV A 5
SDL Shares
----------
<TABLE>
<CAPTION>
Name of Seller Number of SDL Shares Owned*
-------------- ---------------------------
<S> <C>
Raghbir S. Dhillon 1,217,000
Dhalbir S. Dhillon 817,000
Ming Chee Lau 742,000
Augustus Nunes 447,000
Charanjit Singh 100,000
Brij Bhushan and Champa Bhushan 40,000
Urminder Aulakh 40,000
Sukhjinder Singh Bajwa 30,000
Jeffrey C. Marden 30,000
Rubinder Dhillon 25,000
Todd W. Corkum 24,500
David J. Burke 21,500
William R. Koss 20,000
Mathew J. Sheahan 12,500
Jill Kopka 12,500
Peter J. and Nellie Quinn 12,000
Richard Machado 11,500
Satnam Dhami 10,000
Gabriel E. Tempestoso 7,000
Vincent P. Wasnewsky 5,500
Yee-Ling Chin 5,500
Kenneth E. Jones, Jr. 5,000
Darcy Morse 5,000
Paul E. Letourneau 4,000
Brian T. Joss 4,000
William DiSalvio 4,000
William E. Galvin 2,500
Roger A. Provost 2,400
Steve F. McIntire 2,000
James Ribero 2,000
Susan P. Johnson 1,575
Sally West 1,575
Gianluca Marchi 1,000
Jacqueline Christoferson 1,000
Total 3,666,550
</TABLE>
*As of 4/10/00
<PAGE>
EXHIBIT IV.B
BUYER'S DISCLOSURE SCHEDULE
NONE
Page 58 of 62
<PAGE>
EXHIBIT IV B
BUYER'S DISCLOSURE SCHEDULE
SCHEDULE IV B
None.
<PAGE>
EXHIBIT IV.C
SDL DISCLOSURE SCHEDULE
Page 59 of 62
<PAGE>
EXHIBIT IV C
SDL DISCLOSURE SCHEDULE
SCHEDULE IV C 1
1. LIST OF DIRECTORS AND OFFICERS
Directors: Raghbir S. Dhillon, Ming Chee Lau and Dhalbir S. Dhillon
Officers: Raghbir S. Dhillon, President
Dhalbir S. Dhillon, Treasurer
Ming Chee Lau, Clerk
2. The Corporation's minute book and stock transfer books are not complete. Many
actions by the Board of Directors and shareholders required in connection with
amendments to the Articles of Organization, election of officers and directors
and authorizations for issuance of shares do not exist, particularly for the
period from formation through September 1988. The disclosure in this Item 2 is
not intended to and will not limit the liability of the Sellers under the Stock
Purchase Agreement. Such liability will be determined pursuant to Section VIII
and Section X M of the Stock Purchase Agreement.
<PAGE>
SCHEDULE IV C 2
CAPITALIZATION
1. See Schedule IV C 1 with respect to the minute books. The disclosure in
this Item 1 is not intended to and will not limit the liability of the
Sellers under the Stock Purchase Agreement. Such liability will be determined
pursuant to Section VIII and Section X M of the Stock Purchase Agreement.
2. On September 8, 1988, SDL issued stock certificate number 4 to Charanjit
Singh for 100,000 share of Common Stock. Pursuant to an Agreement dated
September 1, 1988 by and among SDL, Mr. Singh, Raghbir Dhillon, Dhalbir
Dhillon and Ming Chee Lau, all other shares previously issued to Mr. Singh,
Mr. Singh's wife Bhupinder Randhawa (who was an initial Director of SDL) and
Raghbir Dhillon, Dhalbir Dhillon and Ming Chee Lau were cancelled. Ms.
Randhawa, however, was not a signatory to the Agreement. On March 25, 1997,
after SDL had increased its number of authorized shares, new stock
certificates were issued to SDL stockholders to replace the old stock
certificates. At that time SDL mistakenly issued stock certificate number 6
for 100,000 shares of Common Stock to Ms. Randhawa. Similarly, on December
19, 1997, after again increasing its number of authorized shares, SDL issued
new stock certificates to replace the old stock certificates. At that time,
SDL mistakenly reissued a new stock certificate, number C 6 for 100,000
shares of Common Stock, to Ms. Randhawa. Based on the above information,
SDL's position is that Mr. Singh owns 100,000 shares of Common Stock as
evidenced by stock certificate number 4, and that stock certificates issued
to Bhupinder Randhawa in 1997 were issued erroneously and are void, and that
any stock certificates issues to Bhupinder Randhawa prior to the September 1,
1998 Agreement were cancelled. Mr. Singh and Ms. Randhawa have entered into a
Limited Release and Agreement under which they have released all claims
against SBS, SDL and the stockholders of SDL other than (i) rights with
respect to stock certificate number 4 described above, which Mr. Singh has
delivered to SBS for sale and (ii) rights to sue Raghbir Dhillon, Dhalbir
Dhillon and Ming Chee Lau related to Mr. Singh's ownership interest in SDL.
3. SDL Options
<TABLE>
<CAPTION>
EXERCISE NUMBER EXERCISE
HOLDER DATE OF SHARES PRICE
- ------ ----------- --------- --------
<S> <C> <C> <C>
WILLIAM GALVIN 05/01/2000 1,250 $0.10
05/01/2001 1,250 0.15
ROGER PROVOST 12/31/2000 1,000 0.75
03/31/2001 600 0.75
12/31/2001 1,000 1.00
<PAGE>
RICHARD MACHADO 12/31/2000 1,000 0.15
12/31/2000 2,000 0.15
12/31/2001 1,000 0.25
MATTHEW SHEAHAN 05/01/2000 10,000 0.10
05/01/2001 7,500 0.20
TODD CORKUM 06/30/2000 5,500 0.20
09/30/2000 5,500 0.25
12/31/2000 7,000 0.30
03/31/2001 7,500 0.35
SUSAN JOHNSON 03/31/2001 425 0.15
SALLY WEST 03/31/2001 425 0.15
KEN JONES 05/01/2000 2,500 0.10
05/01/2001 2,500 0.15
GABE TEMPESTOSO 12/31/2000 3,000 0.15
YEE-LING CHIN 06/30/2000 2,000 0.30
09/30/2000 2,000 0.40
08/15/2000 2,000 0.35
12/31/2000 2,500 0.45
03/31/2001 2,500 0.50
08/15/2001 1,000 0.45
JACKIE CHRISTOFERSON 06/30/2000 1,000 0.10
06/30/2001 1,000 0.15
BRIAN JOSS 12/31/2000 3,000 0.50
12/31/2001 3,000 0.75
PAUL LETOURNEAU 12/31/2000 3,000 0.50
12/31/2001 3,000 0.75
STEVEN MCINTIRE 12/31/2000 1,000 0.01
JEFF MARDEN 06/30/2000 5,000 0.15
12/31/2000 20,000 0.15
06/30/2001 5,000 0.45
12/31/2001 10,000 0.65
06/30/2002 10,000 0.85
<PAGE>
DARCY MORSE 04/01/2001 5,000 0.65
04/01/2002 5,000 0.85
DAVID BURKE 06/30/2000 6,500 0.20
09/30/2000 4,000 0.25
12/31/2000 4,000 0.30
03/31/2001 4,000 0.35
WILLIAM DISALVIO 06/30/2000 2,000 0.30
08/15/2000 2,000 0.35
03/31/2001 3,500 0.45
08/15/2001 1,000 0.45
JAMES RIBERO 11/03/2000 2,000 0.35
11/03/2001 1,000 0.45
GIANLUCA MARCHI 12/31/2000 2,000 0.35
12/31/2001 2,000 0.45
JILL KOPKA 06/30/2000 2,500 0.35
02/05/2001 5,000 0.40
189,450
</TABLE>
<PAGE>
SCHEDULE IV C 4
NONCONTRAVENTION
1. OEM Development Agreement with Motorola, Inc. dated April 4, 1999
requires thirty days advance notice for change in control of SDL. The
obligations under this Agreement have been performed by SDL, and SDL has been
paid for its deliverables. Notification of the change in control was mailed
on March 27, 2000.
2. Employment Liability Coverage, Fiduciary Liability Coverage,
Directors' and Officers' Liability Coverage under policy 8160-45-29 issued by
Federal Insurance Company requires written notice of SBS's acquisition of SDL
stock as soon as practicable. After the closing, this policy continues but
only with respect to certain acts prior to the Closing.
3. OEM Agreement with NetScout Systems, Inc. dated February 3, 1998
requires SDL to inform NetScout Systems within 24 hours of the consummation
of a purchase of all or substantially all of SDL's business by a third party.
Also, this OEM Agreement obligates SDL to place certain technical information
in an escrow account. SDL is in the process of gathering such technical
information for placement in escrow within a few weeks after the Closing.
<PAGE>
SCHEDULE IV C 8
FINANCIAL STATEMENTS
Notwithstanding Section IV C 8, there are delivered herewith:
(i) Preliminary draft of the audited balance sheets as of December 31,
1999.
(ii) Preliminary draft of the audited statement of income, changes in
stockholders' equity and cash flow for fiscal year ended December 31,
1999.
(iii) Preliminary draft of the audited balance sheets as of December 31,
1998.
These draft statements are not yet final and are subject to completion
of audit review by KPMG, which may result in certain adjustments. The
Sellers will cause KPMG to deliver the final audited financial
statements for the indicated periods not later than April 19, 2000.
<PAGE>
SCHEDULE IV C 9
EVENTS SUBSEQUENT TO MOST RECENT AUDITED FINANCIAL STATEMENT
1. By oral agreement between Raghbir Dhillon and Seamus Gilchrist, SDL
has terminated its Development Agreement dated November 9, 1999 with S-Link,
Corp. due to S-Link's failure to perform its obligations to SDL in a
satisfactory, timely manner. Under the Development Agreement, SDL is required to
give a written notice to S-Link, Corp. to terminate for a breach of a material
obligation. That notice has not been given, however, Raghbir Dhillon has sent an
e-mail to Mr. Gilchrist regarding the discontinuance of the project.
2. MCMS reduced its Purchase Order No. 112900 from $193,180 to $123,650
because it had over-ordered approximately 2,000 cables. There is no contract
with MCMS.
3. SDL has entered into certain employment agreements, as described on
Schedule IV C 17 g.
4. SDL has amended its by-laws to authorize the signing of stock
certificates by its Secretary.
<PAGE>
SCHEDULE IV C 9.5
UNDISCLOSED LIABILITIES
None
<PAGE>
SCHEDULE IV C 11
TAX MATTERS
List of all federal, state, local and foreign income Tax Returns for
taxable periods ended on or after December 31, 1993 through the present,
indicating those Tax Returns that have been audited and those Tax Returns that
currently are the subject of audit provided below:
<TABLE>
<CAPTION>
Year Jurisdictions Filed Audited Subject of Audit
----- ---------------------- -------- ----------------
<S> <C> <C> <C>
1999*
1998 U.S. and Massachusetts No No
1997 U.S. and Massachusetts No No
1996 U.S. and Massachusetts No No
1995 U.S. and Massachusetts No No
1994 U.S. and Massachusetts No No
1993 U.S. and Massachusetts No No
</TABLE>
*SDL has been granted an extension until September 15, 2000 to file its 1999 tax
returns.
<PAGE>
SCHEDULE IV C 12
REAL PROPERTY LEASED OR SUBLEASED
SDL leases property located at 46 Eastman Street, Easton, Massachusetts
02375 from 46 Eastman Realty Trust pursuant to a Standard Form Lease Agreement
dated November 6, 1997, as amended May 10, 1999. Lessor's name indicated on
amendment is Elizabeth Vercoe, who is the new owner of the building.
<PAGE>
SCHEDULE IV C 14
INTELLECTUAL PROPERTY
(a) SDL historically has not sought to seek patent trademark or
registered copyright protection of its intellectual property.
A trademark application was filed for the name "RISCOM" used
on its circuit boards, but was subsequently abandoned, so that
it only has common law rights in that mark.
(c) Grants of rights to third parties:
(1) License Agreement with Image Stream Internet Solutions
Inc. dated April 16, 1998 for SDL Frame Relay Code for Linux.
(2) Source Code License Agreement dated December 23, 1996 for
SDL Frame Relay Source Code.
(3) License Agreement with Network Alchemy, Inc. dated June
15, 1999.
(4) OEM Agreement with Compuware Corporation dated April 14,
1997.
(5) Development and License Agreement with Intel Corporation
dated January 15, 1999.
(d) (1) Run-Time License Agreement with Phar Lap Software, Inc.
dated June 13, 1997 for TNT DOS-Extender. (This License
Agreement is in the process of being amended.)
(2) License Agreement with Hi/fn Inc. dated May 18, 1999 for
LZS221-C Version (compression software).
<PAGE>
SCHEDULE IV C 17
CONTRACTS
a) Leases of personal property.
1. SDL leases a Lexus automobile used by Raghbir Dhillon pursuant
to a lease dated August 18, 1998 from Lexus of Norwood
(Co-Lessee is Raghbir Dhillon).
2. SDL leases a Mercedes automobile used by Dhalbir Dhillon
pursuant to a lease dated July 30, 1998 from Claire
International Inc. (guaranteed by Dhalbir Dhillon).
b) Printout of open sales or purchase orders is attached.
e) Compensation arrangements.
1. SDL Communications, Inc., 401(k) Plan (qualified retirement
plan under Internal Revenue Code Section 401(a))
2. SDL Communications, Inc., Profit Sharing Plan (qualified
retirement plan under Internal Revenue Code Section 401(a))
3. 1996 Non-Qualified Key Employees' Incentive Stock Option Plan
g) Employment or consulting agreements.
1. Master Consultant Agreement with Digital Technology, Inc.
dated March 20, 2000.
2. SDL has entered into forty-six "employment agreements" with
its employees hired after 1996. These agreements are
substantially identical in form and provide for at will
employment and SDL ownership of products which an employee may
make, and that SDL is not required to pay the employee any
royalties for any such products. Sixteen employees who have
signed employment agreements are paid more than $75,000 per
year. Five of these employment agreements were entered after
December 31, 1999.
<PAGE>
SCHEDULE IV C 20
Insurance
<TABLE>
<CAPTION>
- --------------------------------------------- ----------------------------------- -------------------- ----------------
TYPE OF COVERAGE INSURER TERM POLICY NUMBER
- --------------------------------------------- ----------------------------------- -------------------- ----------------
- --------------------------------------------- ----------------------------------- -------------------- ----------------
<S> <C> <C> <C>
1. Employment Liability, Fiduciary
Liability, Directors' and Officers'
Liability and Outside Directorship
Liability Federal Insurance Company 9/3/99 - 9/2/00 8160-45-29
- --------------------------------------------- ----------------------------------- -------------------- ----------------
- --------------------------------------------- ----------------------------------- -------------------- ----------------
2. Umbrella Policy Federal Insurance Company 9/3/99 - 9/3/00 7979-07-14
Underlying Policies are:
a) Employers Liability Great American Insurance Company 9/3/99 - 9/3/00 WC 9961054-00
b) Commercial General Liability Federal Insurance Company 9/3/99 - 9/3/00 3575-49-63
c) Automobile Arabella Protection Ins. Co. 7/30/99 - 7/30/00 11031400000
d) Automobile Arabella Protection Ins. Co. 8/19/99 - 8/19/00 12982400000
e) Electronics Errors and Omissions Federal Insurance Company 9/3/99 - 9/3/00 3575-49-63BOS
f) Employee Benefits Liability Federal Insurance Company 9/7/99 - 9/3/00 3575-49-63
- --------------------------------------------- ----------------------------------- -------------------- ----------------
- --------------------------------------------- ----------------------------------- -------------------- ----------------
3. Electronics Insurance Program Federal Insurance Company 3575-49-63 BOS 9/3/99 - 9/3/00
- --------------------------------------------- ----------------------------------- -------------------- ----------------
- --------------------------------------------- ----------------------------------- -------------------- ----------------
4. Workers Compensation and Employers
Liability Great American Insurance Company WC 9961054 00 8/8/99 - 8/8/00
- --------------------------------------------- ----------------------------------- -------------------- ----------------
- --------------------------------------------- ----------------------------------- -------------------- ----------------
5. Automobile Arabella Protection Ins. Co. 7/30/99 - 7/30/00 11031400000
- --------------------------------------------- ----------------------------------- -------------------- ----------------
- --------------------------------------------- ----------------------------------- -------------------- ----------------
6. Automobile Arabella Protection Ins. Co. 8/19/99 - 8/19/00 12982400000
- --------------------------------------------- ----------------------------------- -------------------- ----------------
- --------------------------------------------- ----------------------------------- -------------------- ----------------
7. Term Insurance for:
a) Robbie Dhillon (owner is R. Northwestern Mutual Life 3/27/97 - 14-075-531*
Dhillon)
b) Robbie Dhillon (owner is SDL) Northwestern Mutual Life 3/27/97 - 3/27/07 14-075-485
c) Ming C. Lau (owner is Ming Lau) Northwestern Mutual Life 01/27/97 -1/27/07 14-072-398
d) Dale Dhillon (owner is SDL) Northwestern Mutual Life 10/27/97 - 10/27/07 14-402-717
e) Dale Dhillon (owner is D. Dhillon) Northwestern Mutual Life 01/27/97 -1/27/07 14-075-675
f) Augustus Nunes (owner is A. Nunes) Northwestern Mutual Life 01/27/97 - 14-072-481*
- --------------------------------------------- ----------------------------------- -------------------- ----------------
- --------------------------------------------- ----------------------------------- -------------------- ----------------
8. Key Person - Rhobbie Dhillon (owner is
SDL) Northwestern Mutual Life 3/27/97 - 9/27/99 D1-219-505
- --------------------------------------------- ----------------------------------- -------------------- ----------------
- --------------------------------------------- ----------------------------------- -------------------- ----------------
9. Disability Insurance
- --------------------------------------------- ----------------------------------- -------------------- ----------------
<PAGE>
- --------------------------------------------- ----------------------------------- -------------------- ----------------
a) Robbie Dhillon (owner is R. 12/27/99 - 12/27/04 D1-354-585*
Dhillon)
b) Robbie Dhillon (owner is R. Northwestern Mutual Life 3/27/97 - 3/27/04 D1-219-495*
Dhillon)
c) Dale Dhillon (owner is D. Dhillon) Northwestern Mutual Life 10/27/99 - Age 65 D1-354-583
d) Dale Dhillon (owner is D. Dhillon) Northwestern Mutual Life 1/27/97 - Age 65 D1-219-179
- --------------------------------------------- ----------------------------------- -------------------- ----------------
- --------------------------------------------- ----------------------------------- -------------------- ----------------
10. Graded Premium Life Insurance.
a) Robbie Dhillon (owner is R.
Dhillon) Transamerica Occidental Life 6/17/94- 41043414
b) Dhalbir Dhillon (owner is D.
Dhillon) Transamerica Occidental Life 8/2/94- 41058675
- --------------------------------------------- ----------------------------------- -------------------- ----------------
- --------------------------------------------- ----------------------------------- -------------------- ----------------
11. Predecessor Policies.
a) Workers Compensation and Employers
Liability Norfolk & Dedham Mutual Fire
Insurance Company 8/8/98-8/8/99 26 WEND0470
b) Commercial Property Coverage Park
and Commercial Inland Marine Coverage Norfolk & Dedham Mutual Fire
Part Insurance Company 6/15/98-6/15/99 P008198
- --------------------------------------------- ----------------------------------- -------------------- ----------------
</TABLE>
*SDL has not provided these policies for review by SBS.
<PAGE>
SCHEDULE IV C 24
Employee Benefits
(a) Compliance with laws:
1. The SDL Communications Group Health, Group Dental, Short Term Disability
and Long Term Disability and Group Life Plans do not contain all required
disclosures under DOL Reg. 2520.102.3
2. The SDL Communications, Inc. Group Health Plan SPD may not contain all
required disclosures under WHCRA and NMHPA
3. SDL has paid the premiums on life insurance policies as identified on
Schedule IV C 20 that are owned by certain employees and did not include
the premium cost in the gross income of the employees as required by
Internal Revenue Code Section 61(a) and the regulations thereunder.
(b) Employee Benefit Plans:
1. SDL Communications, Inc., 401(k) Plan
2. SDL Communications, Inc., Profit Sharing Plan
3. SDL Communications, Inc., Premium Only Plan
4. SDL Communications, Inc., Group Health Plan
5. SDL Communications, Inc., Group Dental Plan
6. SDL Communications, Inc., Short Term Disability Plan
7. SDL Communications, Inc., Group Life Insurance Plan
8. Long term disability insurance is provided on a pre-tax basis with employee
payment of premiums
<PAGE>
SCHEDULE IV C 21
Litigation
No litigation pending or overtly threatened in writing. However, the
Sellers are aware of potential claims against three of the Principal Sellers by
Mr. Charanjit Singh. Mr. Singh has executed a release in favor of SDL.
<PAGE>
SCHEDULE IV C 27
1. Raghbir Dhillon is a director of S-Link, Corp.
2. See Schedule IV C 17 regarding automobile leases.
3. See Schedule IV C 20 regarding term life insurance owned by the Principal
Sellers.
<PAGE>
EXHIBIT VI.G
DHILLON EMPLOYMENT AGREEMENTS
Page 60 of 62
<PAGE>
EMPLOYMENT AGREEMENT
SBS Technologies, Inc. ("Company") and XXXXXXXXXXXXXXXXXXX
("Employee") agree:
1. EMPLOYMENT. Company employs Employee for the period beginning
on the date of this Employment Agreement as set forth below,
solely in accordance with the terms of this Agreement (the
"Employment Period"). During the Employment Period, Employee
will serve in the management positions designated by the
Company. Employee will be a full-time employee of Company (as
defined in the Company's Policy Manual), will devote
sufficient time and energies to the business of Company to
accomplish the duties assigned, will perform to the best of
Employee's ability all duties assigned to Employee by Company
and will devote Employee's best efforts to advance the
interests of Company. Employee will have the power and
authority determined by Company.
2. TERM AND RENEWAL. The initial Employment Period will begin on
the date of this Agreement and will end two years after its
date ("Initial Employment Period"), or upon discharge or
resignation of Employee. This Agreement will be automatically
renewed at the end of the Initial Employment Period, and
successively thereafter for one year terms (each one year
period is a "Successive Employment Period"), unless notice is
given by Company or Employee to the other party not later than
six months before the end of the Successive Employment Period.
(The Initial Employment Period and the Successive Employment
Period are generally referred to as the "Employment Period"
unless the context otherwise requires.)
3. COMPENSATION. For all services performed by Employee for
Company during the Employment Period, Company will pay
Employee the salary and benefits set forth on Appendix "A".
Employee will be entitled to participate in employee benefit
programs established by Company and applicable to all
full-time employees. Employee will be entitled to vacation,
national holidays and paid sick leave in accordance with
Company policy and Appendix A. During vacation, national
holidays, and paid sick leave, Employee will receive
Employee's usual compensation.
4. REIMBURSEMENT OF EXPENSES. Company recognizes that Employee,
in performing Employee's duties hereunder, may be
Employment Agreement
Page 1
<PAGE>
required to spend sums of money in connection with those
duties for the benefit of Company. Employee agrees to
follow Company's written policies with regard to
reimbursable expenses.
5. SICK LEAVE AND DISABILITY. Employee will be entitled to sick
leave and disability as described in the Company's written
policies.
6. RESIGNATION AND DISCHARGE.
A. Employee may resign or be discharged pursuant to the terms
of this paragraph. If Employee (i) resigns, Employee must
give 30 days' notice to Company; (ii) is discharged for
cause (as later defined), Company may discharge Employee
immediately, without notice; or (iii) is discharged not
for cause, Company must give notice to Employee as
provided by Company's written policy or employment manual
or practice then in effect. If Employee is discharged not
for cause during the Initial Employment Period, Company
will pay severance pay in the amount of Employee's base
salary Employee would have been paid from termination
until the expiration of the Initial Employment Period. If
Employee is discharged not for cause during any Subsequent
Employment Period, Company will pay severance pay in an
amount determined in accordance with Company's written
policy or employment manual or practice then in effect.
B. For purposes of this paragraph, "for cause" means that
during the Employment Period, (a) Employee materially
breaches any provision or restriction or materially fails
to perform any obligation contained in this Employment
Agreement, or (b) Employee materially fails to comply with
any written Company policy otherwise, (c) the Company
reasonably determines, in accordance with the Company's
written policy or Company employment manual that Employee
(i) has failed to comply with any employment or
non-discrimination or similar law, regulation or policy,
or (ii) is abusing alcohol or using drugs, (other than as
prescribed by Employee's physician), or (d) Employee
refuses to submit to testing for alcohol or drugs, or (e)
Employee is reasonably believed by Company to have
committed or is charged with any felony or a misdemeanor
which reflects upon Employee's integrity, Employee's
ability to perform Employee's duties, or the integrity or
reputation of the Company.
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<PAGE>
7. CONFIDENTIAL INFORMATION AND NON-COMPETE RESTRICTIONS.
A. Employee acknowledges and recognizes that Employee is, or
will be, employed by Company in a confidential
relationship. As such, he may receive and have access to
the business information, customer names, contracts and
other customer data, business methods, techniques and
trade secrets of Company which are neither known nor
readily accessible to others and are used by Company in
its business to obtain a competitive advantage over
Company's competitors who do not know or use
("Confidential Information"). Employee also may develop
ideas, conceptions, inventions, processes, methods,
products and improvements; and Employee may receive
disclosures of ideas, conceptions, inventions, processes,
methods, products and improvements made by other employees
of Company which relate to the business of the Company
("Company Inventions"). Employee may participate with
Company in improving and developing Confidential
Information and Company Inventions. Protection of the
Confidential Information and Company Inventions against
unauthorized disclosure and use is of critical importance
to Company in maintaining its competitive position.
Employee agrees that Employee will not, at any time,
during the Employment Period, and for a period of two
years following termination for any reason, make any
independent use of, or disclose to any other person or
organization, except as authorized by Company in writing,
any Confidential Information or Company Inventions. Upon
termination of the Employment Period for any reason,
Employee shall promptly deliver to Company all drawings,
manuals, letters, notes, notebooks, reports, customer
lists, customer data, mailing lists, and all other
materials and records of any kinds, and all copies
thereof, that may be in the possession of, or under the
control of, Employee pertaining to Company's business
including any that contain any Confidential Information or
Company Inventions.
B. Employee acknowledges Company's efforts to establish
valuable business relationships with its clients,
customers and suppliers. Employee recognizes that Company
has invested resources in the training and the
professional development of Employee, and Employee further
recognizes Employee's responsibility to the Company when
Company entrusts Employee with Confidential Information.
In view of Company's efforts, Employee agrees that unless
Company authorizes
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<PAGE>
Employee to do so in writing, Employee will not, for a
period of two years after termination of employment
with Company own, control, manage or otherwise
participate in the ownership, control or management of
a business involved within the Territory (the world) in
the development, manufacture, marketing or sale of wide
area network interfaces and communications software
protocols for use in networking platforms and devices
or systems or solicit the purchase of products or
services within that area from any person, corporation,
business organization or enterprise which:
(i) has made any purchase of products or
services from Company within the two years
immediately preceding termination of former
Employee's employment ("Customer"); or
(ii) has been contacted by Employee during the
last 12 months of Employee's employment for
the purpose of securing the purchase of
products or services from Company
("Prospective Customer").
Employee may, without violation of this Employment
Agreement, own directly or indirectly, not more than 2% of
any class of outstanding securities of a person (even if
in competition with the Company) if that class is
regularly traded on a national securities exchange or in
the over-the-counter market, as long as Employee does not
otherwise manage or control that person.
C. The noncompetition covenant of paragraph B above is in
addition to the covenant contained in the Covenant Not To
Compete dated April 12, 2000 between Employee and Company.
D. The confidentiality covenant of paragraph A above is in
addition to the covenant contained in the Confidentiality
Agreement dated April 12, 2000 between Employee and
Company.
E. Employee and Company recognize that irreparable injury
may result to Company in the event of breach or threatened
breach of this section of this Agreement by Employee. If
Employee commits a breach or threatens to commit a breach
of any of the provisions of this section, Company shall
have the right and remedy, in addition to any others that
may be available, at law or in equity, to have the
provisions of this paragraph 7 specifically enforced by
any court having equity jurisdiction,
Page 4
<PAGE>
together with an accounting therefor, Employee having
specifically acknowledged that any such breach or
threatened breach will cause irreparable injury to
Company and that money damages will not provide an
adequate remedy to Company.
8. INVALIDITY. If any provision of this Employment Agreement is
later construed to be unenforceable or invalid, the remaining
provisions shall not be affected but shall continue in full
effect. If any term of this Employment Agreement is found to
be unenforceable or invalid by any court having jurisdiction,
that court shall have the power to reduce or revise the term
and the paragraph(s) shall then be fully enforceable.
9. ASSIGNMENT. Employee acknowledges that Employee's services are
unique and personal. Accordingly, Employee may not assign his
rights or delegate his duties or obligations under this
Agreement. The Employer's rights and obligations shall inure
to the benefit of and shall be binding upon Employer's
successor and assigns.
10. PERSONNEL POLICIES. Company's written personnel policies apply
to all of Company's employees, including Employee, and
describe additional terms and conditions of employment of
Employee. Those terms and conditions, as they may be revised
from time to time by Company, are incorporated by reference
into this Employment Agreement. Company reserves the right to
revise the personnel policies from time to time, as Company
deems necessary. If any personnel policy provision conflicts
with a provision of this Employment Agreement, the terms of
this Employment Agreement shall govern.
11. ALCOHOL AND DRUG TESTING. Employee agrees to comply with and
submit to any Company program or policy for testing for
alcohol abuse or use of drugs and, in the absence of such a
program or policy, to submit to such testing as may be
required by Company and administered in accordance with
applicable law and regulations.
12. BINDING EFFECT. This Employment Agreement constitutes the
entire understanding of the parties, may be modified only in
writing,
Page 5
<PAGE>
is governed by laws of Massachusetts, and will bind and inure
to the benefit of Employee and Employee's personal
representative and Company and Company's successors and
assigns.
DATED: April 12, 2000.
Remainder of Page Intentionally Left Blank
Page 6
<PAGE>
COMPANY:
SBS TECHNOLOGIES, INC.
BY:
------------------------------------
ITS:
-----------------------------------
EMPLOYEE:
---------------------------------
Page 7
<PAGE>
EXHIBIT VI.H
COVENANT NOT TO COMPETE
Page 61 of 62
<PAGE>
COVENANT NOT TO COMPETE
The undersigned ("Seller") and SBS Technologies, Inc., a New Mexico
corporation ("SBS") agree as follows:
I. RECITALS
A. SBS and Seller are, simultaneously with the execution of this
Covenant, entering into a purchase agreement ("Purchase Agreement") under
which SBS will acquire all of the outstanding stock of SDL Communications, a
Massachusetts corporation, ("SDL") for cash.
B. SBS wishes to assure that Seller will refrain from competing with SBS
in the areas of SDL's business, and Seller is willing to so refrain as
provided in this Covenant.
C. For purposes of this Agreement, "Products" means wide area network
interfaces and communications software protocols for use in networking
platforms and devices.
II. COVENANT
A. Seller agrees that, during the term of the Covenant, Seller will not,
without prior written consent of SBS, for Seller's own account or jointly with
another, directly or indirectly, for or on behalf of any individual,
partnership, corporation or other legal entity, as principal, agent or
otherwise:
1. Own, control, manage or otherwise participate in the ownership,
control or management of a business involved within the Territory in the
development, manufacture, marketing or sale of Products.
2. Solicit, call upon, or attempt to solicit any individual,
partnership, corporation or entity within the Territory for the purpose of
providing to that individual, partnership, corporation or other entity
products or services that are competitive with the Products.
B. Seller may, without violation of the Covenant, own, directly or
indirectly not more than two percent (2%) of any class of outstanding
securities of a person (even if in competition with the Products) if that
class is regularly traded on a national securities exchange or in the
over-the-counter market, as long as Seller does not otherwise manage or
control that person.
1
<PAGE>
III. TERM
The term of the Covenant will be four years from its date ("Term").
IV. TERRITORY
The territory covered by this Covenant is the world ("Territory").
V. CONSIDERATION
The consideration for the Covenant is the Purchase Agreement and an undivided
amount of the Purchase Price paid to Seller under the Purchase Agreement.
VI. ACKNOWLEDGEMENT
Seller recognizes the importance of the Covenant and acknowledges that, based on
Seller's past experiences and expertise, and Seller's past development,
exploitation and management of the Products, the close relationships Seller has
with SDL customers and SBS's intent to utilize and exploit the Products and
expand SDL's customer base, the restrictions in this Covenant are reasonable as
to terms, time and area, necessary for the protection of SBS's business and not
unduly restrictive of Seller's rights as an individual.
VII. BREACH
If Seller commits a breach or threatens to commit a breach of any of the
provisions of this Covenant, SBS shall have the right and remedy, in addition to
any others that may be available, at law or in equity, to have the provisions of
this Covenant specifically enforced by any court having equity jurisdiction,
together with an accounting therefor, Seller having specifically acknowledged
that any such breach or threatened breach will cause irreparable injury to SBS
and that money damages will not provide an adequate remedy to SBS.
VIII. INVALIDITY
If any provision of the Covenant is later construed to be unenforceable or
invalid, the remaining provisions shall not be affected but shall continue in
full effect. If the Term or Territory are found to be unenforceable or invalid
by any court having jurisdiction, that court shall have the power to reduce the
Term or Territory of the Covenant and the Covenant as revised shall then be
fully enforceable. The payment provided for in Section V shall be payable in
full notwithstanding any such construction, finding or revision.
2
<PAGE>
IX. MISCELLANEOUS
This Covenant binds and benefits the parties, their successors, assigns and
transferees, is specifically enforceable, constitutes (together with the
Purchase Agreement) the entire agreement of the parties and supersedes all prior
oral or written agreements and understandings, is governed by New Mexico law and
may be modified only in writing. This Covenant may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which taken
together will constitute one and the same instrument. Captions and titles have
been inserted in this Covenant for the benefit of the parties in referring to
this Covenant, but will not be construed or interpreted as part of this
Covenant. Any suits brought by the parties arising under this Covenant shall be
brought in the United States District Court for the Southern District of
California, and the parties expressly acknowledge that such court shall have
jurisdiction over the matter and parties, and that venue shall be proper in that
court.
X. NOTICES
Any notice or other communication required under this Covenant or desired to be
given by any of the parties to this Covenant to any other party shall be deemed
to be duly given when personally delivered, when mailed by certified or
registered mail, return receipt requested, postage prepaid, or when delivered
pre-paid to a next-day expedited delivery service to the other party, addressed
as follows:
SBS:
SBS Technologies, Inc.
Attn: James E. Dixon, Jr., Vice President
Finance and Administration
2400 Louisiana Blvd. NE
AFC Building 5, Suite 600
Albuquerque, New Mexico 87110
Copy to:
Alison K. Schuler, Esquire
4300 San Mateo Boulevard, NE, Suite B-380
Albuquerque, New Mexico 87110
3
<PAGE>
Seller:
As provided on Appendix X hereto.
Any party may change its address for notice by giving written notice of the
change pursuant to this Section.
XI. ANNOUNCEMENTS
Seller, without the prior written consent of SBS, will not make any
announcement, public or non-public, or issue any press release in respect of
this Covenant.
DATED: April 12, 2000
Remainder of Page Intentionally Left Blank
4
<PAGE>
SELLER SBS TECHNOLOGIES, INC.
_______________________________ By:_______________________________
** Its:______________________________
5
<PAGE>
EXHIBIT VI.I
CONFIDENTIALITY AGREEMENT
Page 62 of 62
<PAGE>
CONFIDENTIALITY AGREEMENT
The undersigned XXXXXXXXXXXXXXXXX, ("Seller"), and SBS Technologies,
Inc., a New Mexico corporation, ("Buyer") agree as follows:
I. RECITALS
A. Seller, Dhalbir S. Dhillon, Ming Chee Lau, Augustus J. Nunes, SDL
Communications, Inc., a Massachusetts corporation, ("SDL"), and Buyer are
parties to a Stock Purchase Agreement dated April 11 , 2000 ("Purchase
Agreement"). Defined terms in this Agreement have the same meaning as the same
defined terms in the Purchase Agreement. Pursuant to the Purchase Agreement,
Buyer is acquiring all of the outstanding capital stock of SDL in exchange for
the Purchase Price and the other terms and conditions of the Purchase Agreement.
"Company" means Buyer and its subsidiaries.
B. Section VI. H., Confidentiality Agreement, of the Purchase Agreement
requires that the undersigned enter into this Agreement, and the undersigned are
willing to do so.
II. AGREEMENT
The undersigned agrees, represents and warrants Seller is and has been,
employed by SDL in a confidential relationship. As such, Seller may have
received, receive and have access to the confidential business information,
customer names, contracts and other customer data, business methods, techniques
and trade secrets of SDL and Company which are neither known or readily
accessible to others and are used by Company in its business to obtain a
competitive advantage over Company's competitors who do not know or use it
("Confidential Information"). Seller may develop ideas, conceptions, inventions,
processes, methods, products and improvements; and Seller may have received and
may receive disclosures of ideas, conceptions, inventions, processes, methods,
products and improvements made by other employees of Company and SDL which
relate to the business of the Company ("Company Inventions"). Seller may have
participated and may participate with SDL and Company in improving and
developing Confidential Information and Company Inventions. Protection of the
Confidential Information and Company Inventions against unauthorized disclosure
and use is of critical importance to Company in maintaining its competitive
position. Seller agrees that Seller will not, at any time, for a period of four
years from the date of closing of the Transactions pursuant to the Purchase
Agreement, make any independent use of, or disclose to any other person or
organization, except as authorized by Buyer in writing, any Confidential
Information or Company Inventions. If Seller is not employed by the Company, or
if Seller is employed by the Company, upon termination of the employment for any
reason, Seller shall promptly deliver to Company all drawings, manuals, letters,
notes, notebooks, reports, customer lists, customer data, mailing lists, and all
other materials and records of any kinds, and all copies thereof, that may be in
the possession of, or under the control of, Seller pertaining to SDL's and
Company's business including
Page 1 of 4
<PAGE>
any that contain any Confidential Information or Company Inventions. The
undersigned agrees that release of Confidential Information will cause
irreparable harm to Company and that, upon any breach or threatened breach of
this Section, Buyer may seek, without limitation of other actions and
remedies which might be available, equitable injunctive relief.
III. LEGAL PROCEEDINGS.
If Seller ("Disclosing Party") is requested or required by oral
question, or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process, to
disclose any Confidential Information, then Disclosing Party promptly will
notify the Buyer so that the Buyer may seek an appropriate protective order or
waive compliance with the provisions of the Purchase Agreement. In the absence
of a protective order or receipt of waiver, Disclosing Party will turn over all
of the requested documents to Buyer, who will submit to the requesting party the
Confidential Information.
IV. CONSIDERATION
The undersigned, as a shareholder of SDL, benefits from the sale of
SDL's outstanding capital stock and acknowledge and agree that that benefit, and
the fact that Buyer would not enter into the Purchase Agreement without this
Agreement, is sufficient and complete consideration for this Agreement.
V. BREACH
If the undersigned commits a breach or threatens to commit a breach of
any of the provisions of this Agreement, Buyer shall have the right and remedy,
in addition to any others that may be available, at law or in equity, to have
the provisions of this Agreement specifically enforced by any court having
equity jurisdiction, together with an accounting therefor, the undersigned
having specifically acknowledged that any such breach or threatened breach will
cause irreparable injury to Buyer and that money damages will not provide an
adequate remedy to Buyer.
VI. MISCELLANEOUS
This Agreement binds and benefits the parties, their successors,
assigns and transferees, is specifically enforceable, constitutes (together with
the Purchase Agreement and related agreements attached to it as Appendices) the
entire agreement of the parties, and supersedes all prior oral or written
agreements and understandings, is governed by New Mexico law and may be modified
only in writing. This Agreement may be executed in multiple counterparts, each
of which shall be deemed to be an original, but all of which taken together will
constitute one and the same instrument. Captions and titles have been
Page 2 of 4
<PAGE>
inserted in this Agreement for the benefit of the parties in referring to
this Agreement, but will not be construed or interpreted as part of this
Agreement.
VII. NOTICES
The undersigned:
At the address under the Notice for the undersigned.
Buyer:
SBS Technologies, Inc. (a New Mexico corporation)
2400 Louisiana Blvd. NE
AFC Building 5-600
Albuquerque, New Mexico 87110
and copy to:
Alison K. Schuler, Esq.
P.O. Box 90640
Albuquerque, NM 87199
Seller:
Augustus J. Nunes
11-6 Robin Circle
Norton, MA 02766
or to such other address which may be furnished in writing by one party to the
other.
DATED: April 12, 2000
Remainder of Page Intentionally Left Blank
Page 3 of 4
<PAGE>
Seller: SBS Technologies, Inc.
______________________________ By: _______________________________
Page 4 of 4
<PAGE>
EXHIBIT 99.1c
FOR IMMEDIATE RELEASE
SBS TECHNOLOGIES, INC. COMPLETES THE ACQUISITION
OF SDL COMMUNICATIONS, INC.
ACQUISITION SIGNIFICANTLY EXPANDS TELECOMMUNICATIONS BUSINESS
ALBUQUERQUE, NM. -- (PRNEWSWIRE) -- APRIL 17, 2000 -- SBS Technologies, Inc.
("SBS") ("the Company") (Nasdaq: SBSE) today announced that it has completed
its acquisition of SDL Communications, Inc. ("SDL"). SBS is acquiring the
outstanding shars of SDL for $25 million. SDL, located in Easton,
Massachusetts, specializes in the design, manufacture and sales of WAN I/O
for the Telecommunications and Data Communications market. SDL designs,
manufacturers and markets T1/E1, T3/E3, HSSI and OC3 products based on the
PCI, CompactPCI and PMC from factors, and supporting protocols such as Frame
Relay, HDLC, PPP, X.25 and ATM. In addition, SDL's products support the
operating systems most commonly used in communications, including Windows
NT, Solaris and VxWorks. SDL customers include major telecommunication OEM
companies such as Nokia, Nortel, Motorola, IBM, Network Associates and
Compuware. SBS provides computer processors, complete computing systems and
mezzanine network I/O to telecommunication OEM companies such as Ericsson,
Ciena, Avici and Motorola.
"Our strategy emphasizes the rapid development of our telecommunications
business, including expanding the products we offer, the customers we serve
and our telecommunication related competencies," said Christopher J. Amenson,
Chairman and Chief Executive Officer of SBS. "The addition of the SDL
business into SBS takes us another significant step forward in the execution
of our strategy. SDL is a leader in advanced wide area network adapters for
use in networking platforms and systems. The customer base served by SDL is
very complementary to the existing SBS customer base. We should have
excellent opportunities in the future to expand our customer participation by
bringing the combined strengths of SBS and SDL to bear with each of our
customers," Amenson continued.
"For the fiscal year ending June 30, 2001, we expect that SDL will add
approximately $20 million to our communications revenue and approximately
$0.06 to $0.10 per share on a fully diluted basis, which is slightly less
than originally projected due to a shorter amortization period of acquired
intangibles. We expect that the acquisition of SDL will result in SBS
recording an approximate $4 million in-process research and development
charge during the quarter ending June 30, 2000, and an additional reuction of
approximately $0.04 to $0.06 in fourth quarter fiscal 2000 fully diluted
earnings per share. The acquisition of SDL was funded from banking
facilities," Amenson continued.
"We are delighted with the experienced leadership, technology development and
sales capabilities SDL brings to SBS, and are confident that our
telecommunications strategy is rapidly changing the complexion of this
company as we move into this rapidly growing market. SDL will join our newly
formed Communications Group, which is a separate management structure within
SBS. This group will be reported, beginning with the quarter ended March 31,
2000, as a separate financial reporting segment. We will report on a bssis of
three operating groups: Communications, Aerospace and Computer," Amenson said.
The Company also indicated that third quarter earnings will be reported on
Tuesday, April 18, 2000.
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<PAGE>
SBS TECHNOLOGIES, INC. COMPLETES THE ACQUISITION OF SDL COMMUNICATIONS, INC.
PAGE 2
SBS Technologies, Inc. is a leading designer and manufacturer of
open-architecture, standard bus embedded computer components that system
designers can easily utilize to create a custom solution specific to the
user's unique application.
SBS embedded computer components are used in OEM applications such as
telecommunications base stations and routrs, medical imaging machines,
automation and control equipment, and aerospace devices. SBS product lines
include CPU boards, input/output (I/O) modules, avionics modules and
analyzers, computer interconnection and expansion units, and complete
computer systems. For news releases, product and other information, visit the
SBS Web site at http://www.sbs.com.
------------------
CERTAIN OF THE FOREGOING INFORMATION ARE FORWARD-LOOKING STATEMENTS REGARDING
THE FUTURE EVENTS OR THE FUTURE FINANCIAL PERFORMANCE OF SBS, AND ARE SUBJECT
TO A MEMBER OF RISKS AND OTHER FACTORS WHICH COULD CAUSE THE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS.
AMONG SUCH FACTORS ARE: GENERAL BUSINESS AND ECONOMIC CONDITIONS; CUSTOMER
ACCEPTANCE OF AND DEMAND FOR SBS' NEW PRODUCTS; SBS' OVERALL ABILITY TO
DESIGN, TEST AND INTRODUCE NEW PRODUCTS ON A TIMELY BASIS; THE CYCLICAL
NATURE OF THE MARKETS ADDRESSED BY SBS' PRODUCTS; AND THE RISK FACTORS LISTED
FROM TIME TO TIME IN DOCUMENTS FILED BY SBS WITH THE SECURITIES AND EXCHANGE
COMMISSION.
### Contact: Jennifer D. Wade
Manager, Investor Relations
Tel. 505.875.0600
Fax. 505.875.0404
email: [email protected]
