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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): July 15, 1997
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Security Dynamics Technologies, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-25120 04-2916506
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(Commission File (IRS Employer
Number) Identification No.)
20 Crosby Drive, Bedford, Massachusetts 01730
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (617) 687-7000
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On July 15, 1997 (the "Effective Date"), Security Dynamics Technologies,
Inc. (the "Company") acquired DynaSoft AB, a corporation organized under the
laws of Sweden ("DynaSoft"), pursuant to Stock Purchase Agreements, dated as of
July 12 and 15, 1997 (the "Stock Purchase Agreements"), by and among the
Company, DynaSoft and the stockholders of DynaSoft.
Pursuant to the Stock Purchase Agreements, the Company issued or reserved
for issuance approximately 2.7 million shares of the Company's Common Stock,
$.01 par value per share ("Common Stock"), in exchange for approximately 95% of
the outstanding shares and all of the outstanding options to acquire shares of
DynaSoft. The Company also paid approximately $6 million to certain stockholders
of DynaSoft in exchange for the remaining outstanding shares. Based on the
closing price of the Company's Common Stock on the Nasdaq National Market on
July 14, 1997, the transaction is valued at approximately $115 million. The
transaction will be accounted for as a pooling of interests. The Company used
authorized, but previously unissued, shares of Common Stock in the acquisition.
The number of shares of the Company's Common Stock issued in exchange for
DynaSoft's shares was determined in an "arm's length" negotiation and the
transaction was unanimously approved by the Boards of Directors of the Company
and DynaSoft. Prior to the Effective Date, neither the Company nor any of its
affiliates, nor any director or officer of the Company or any associate of any
such director or officer, had any material relationship with DynaSoft.
In connection with the Stock Purchase Agreements, the Company and certain
United States stockholders of DynaSoft entered into a Registration Rights
Agreement, dated as of July 15, 1997, pursuant to which the Company has agreed
to file a Registration Statement on Form S-3, on or prior to the 40th day
following the Effective Date, for the purpose of registering under the
Securities Act of 1933 the shares of Common Stock of the Company issued to such
stockholders pursuant to the Stock Purchase Agreements.
In addition, the Company, certain stockholders of DynaSoft, the
representative of such DynaSoft stockholders and State Street Bank and Trust
Company, as escrow agent, have entered into an Escrow Agreement, dated as of
July 15, 1997, providing, among other things, that 10% of the shares of the
Company's Common Stock received by such DynaSoft stockholders pursuant to the
Stock Purchase Agreements will be held in escrow to reimburse the Company in
connection with breaches of representations, warranties or covenants made by
such DynaSoft stockholders in the Stock Purchase Agreements.
DynaSoft is based in Stockholm, Sweden and offers a range of security
solutions, including secure single sign-on (SSSO) solutions, through its BoKS
product family. DynaSoft markets its products worldwide through subsidiaries and
also through OEM licensing agreements with Sun Microsystems, Hewlett-Packard,
and other companies. The Company currently intends to continue DynaSoft's
business substantially in the manner conducted by DynaSoft immediately prior to
the Effective Date.
The foregoing descriptions of the Stock Purchase Agreements and
Registration Rights Agreement do not purport to be complete and are qualified in
their entirety by reference to the full text of each such agreement which are
filed as Exhibits 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7 and 10.1, respectively, to
this Current Report on Form 8-K and incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Financial statements of business acquired are not required as
per Rule 3-05(b) of Regulation S-X.
(b) Pro Forma Financial Information.
Pro forma financial information is not required as per Rule
11-01(c) of Regulation S-X.
(c) Exhibits.
See Exhibit Index attached hereto.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Pursuant to the Stock Purchase Agreements, on July 15, 1997 the
Company issued or reserved for issuance approximately 2.7 million shares of its
Common Stock (the "Shares") to certain stockholders of DynaSoft in exchange for
approximately 95% of the outstanding shares and all of the outstanding options
to acquire shares of DynaSoft. The company also paid approximately $6 million to
certain stockholders of Dynasoft in exchange for the remaining outstanding
shares. Of the Shares, an aggregate of 1,412,728 shares of Common Stock were
issued and sold in reliance on Rule 903 of Regulation S under the Securities Act
of 1933, as amended, to certain stockholders of DynaSoft, each of whom was
deemed not to be a "U.S. person" as defined in Regulation S. No underwriters
were involved with such issuance and sale of Common Stock.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Security Dynamics Technologies, Inc.
(Registrant)
Date: July 29, 1997 By: /s/ Arthur W. Coviello, Jr.
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Arthur W. Coviello, Jr.
Executive Vice President,
Treasurer and Chief Financial Officer
(Principal Financial and Accounting Officer)
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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2.1 Stock Purchase Agreement by and among Security Dynamics
Technologies, Inc., DynaSoft AB and the stockholders of DynaSoft
named on Schedule I thereto, dated July 12, 1997
2.2 Stock Purchase Agreement by and among Security Dynamics
Technologies, Inc., DynaSoft AB and the stockholders of DynaSoft
named on Schedule I thereto, dated July 15, 1997
2.3 Stock Purchase Agreement by and among Security Dynamics
Technologies, Inc., DynaSoft AB and the stockholders of DynaSoft
named on Schedule I thereto, dated July 15, 1997
2.4 Stock Purchase Agreement by and between Security Dynamics
Technologies, Inc. and Ian Anderson, dated July 15, 1997
2.5 Stock Purchase Agreement by and between Security Dynamics
Technologies, Inc. and Joakim Borell, dated July 15, 1997
2.6 Stock Purchase Agreement by and between Security Dynamics
Technologies, Inc. and Jean Paul Link, dated July 15, 1997
2.7 Stock Purchase Agreement by and between Security Dynamics
Technologies, Inc. and Sten Sorenson, dated July 15, 1997
10.1 Registration Rights Agreement by and among Security Dynamics
Technologies, Inc. and the parties named on Schedule I
thereto, dated July 15, 1997
99 Press Release
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC.,
DYNASOFT AB
AND
THE STOCKHOLDERS OF DYNASOFT
NAMED ON SCHEDULE I HERETO
JULY 12, 1997
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<TABLE>
TABLE OF CONTENTS
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Page
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ARTICLE I - PURCHASE AND SALE OF THE SHARES.......................................................................1
1.1 Purchase of the Company Shares from the Company Stockholders....................................1
1.2 Further Assurances..............................................................................1
1.3 The Closing.....................................................................................2
1.4 Actions at the Closing..........................................................................2
1.5 Purchase Price..................................................................................3
1.6 [Intentionally Omitted.]........................................................................3
1.7 Escrow..........................................................................................3
1.8 Options and Warrants............................................................................4
1.9 Fractional Shares...............................................................................5
1.10 Stockholders' Representative....................................................................5
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE COMPANY STOCKHOLDERS...................................................7
2.1 Organization, Qualification, Corporate Power and Authority......................................7
2.2 Capitalization..................................................................................8
2.3 Noncontravention................................................................................9
2.4 Subsidiaries...................................................................................10
2.5 Financial Statements...........................................................................10
2.6 Absence of Certain Changes.....................................................................11
2.7 Undisclosed Liabilities........................................................................11
2.8 Tax Matters....................................................................................11
2.9 Assets.........................................................................................13
2.10 Owned Real Property............................................................................13
2.11 Intellectual Property..........................................................................13
2.12 Real Property Leases...........................................................................16
2.13 Contracts......................................................................................17
2.14 Powers of Attorney.............................................................................19
2.15 Insurance......................................................................................19
2.16 Litigation.....................................................................................19
2.17 Employees and Subcontractors...................................................................20
2.18 Employee Benefits..............................................................................21
2.19 Environmental Matters..........................................................................23
2.20 Legal Compliance...............................................................................25
2.21 Permits........................................................................................25
2.22 Certain Business Relationships With Affiliates.................................................25
2.23 Books and Records..............................................................................25
2.24 Banking Facilities.............................................................................26
2.25 Brokers' Fees..................................................................................26
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2.26 Pooling........................................................................................26
2.27 Disclosure.....................................................................................26
ARTICLE III - FURTHER REPRESENTATIONS AND WARRANTIES
OF THE COMPANY STOCKHOLDERS...........................................................26
3.1 Ownership of Stock; Authority..................................................................26
3.2 Investment Representations.....................................................................27
3.3 Additional Representations by Non-U.S. Persons.................................................28
3.4 Additional Representations by U.S. Persons.....................................................30
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE BUYER.........................................................30
4.1 Organization...................................................................................30
4.2 Capitalization.................................................................................30
4.3 Authorization of Transaction...................................................................30
4.4 Noncontravention...............................................................................31
4.5 Reports and Financial Statements...............................................................31
4.6 Absence of Material Adverse Changes............................................................31
4.7 Pooling........................................................................................32
4.8 Brokers' Fees..................................................................................32
4.9 Disclosure.....................................................................................32
4.10 Opinion of Financial Advisor...................................................................32
4.11 Reporting Issuer...............................................................................32
ARTICLE V - COVENANTS...........................................................................................33
5.1 Conduct of Business............................................................................33
5.2 Notice of Breaches.............................................................................34
5.3 Exclusivity....................................................................................35
5.4 Agreements from Certain Affiliates of the Company..............................................35
5.5 Listing of Buyer Shares........................................................................35
5.6 Delivery of Interim Financial Statements.......................................................35
5.7 Best Efforts to Obtain Satisfaction of Conditions..............................................36
5.8 Notices and Consents...........................................................................36
5.9 Full Access....................................................................................36
5.10 Waiver of Rights of First Refusal..............................................................36
5.11 Indemnification; Discharge of Director Liability...............................................36
5.12 Sharing of Data................................................................................38
5.13 Legend Removal.................................................................................38
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ARTICLE VI - CONDITIONS TO CLOSING...............................................................................38
6.1 Conditions to Obligations of the Buyer.........................................................38
6.2 Conditions to Obligations of the Company and the Company
Stockholders...................................................................................40
ARTICLE VII - INDEMNIFICATION....................................................................................42
7.1 Indemnification................................................................................42
7.2 Method of Asserting Claims.....................................................................43
7.3 Survival.......................................................................................44
7.4 Limitations....................................................................................45
ARTICLE VIII - TERMINATION.......................................................................................45
8.1 Termination of Agreement.......................................................................45
8.2 Effect of Termination..........................................................................46
ARTICLE IX - DEFINITIONS.........................................................................................46
ARTICLE X - GENERAL PROVISIONS...................................................................................48
10.1 Press Releases and Announcements...............................................................48
10.2 No Third Party Beneficiaries...................................................................48
10.3 Entire Agreement...............................................................................48
10.4 Succession and Assignment......................................................................49
10.5 Counterparts...................................................................................49
10.6 Headings.......................................................................................49
10.7 Notices........................................................................................49
10.8 Governing Law..................................................................................50
10.9 Amendments and Waivers.........................................................................50
10.10 Severability...................................................................................50
10.11 Expenses.......................................................................................51
10.12 Specific Performance...........................................................................51
10.13 Construction...................................................................................51
10.14 Incorporation of Exhibits and Schedules........................................................51
10.15 Knowledge......................................................................................52
10.16 Arbitration....................................................................................52
10.17 Currency.......................................................................................52
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SCHEDULES AND EXHIBITS
Schedule I Company Stockholder Information
Exhibit A Escrow Agreement
Exhibit B Registration Rights Agreement
Exhibit C Offer Letters
Exhibit D Consulting Agreements
Exhibit E Form of Affiliate Agreement
Exhibit F Opinions of Counsel for the Company and the Company Stockholders
Exhibit G Opinion of Counsel for the Buyer
Disclosure Schedule
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
July 12, 1997 (the "Agreement Date") by and among Security Dynamics
Technologies, Inc., a Delaware corporation (the "Buyer"), DynaSoft AB, a
corporation organized under the laws of Sweden (the "Company"), and the
stockholders of the Company listed on SCHEDULE I to this Agreement (the "Company
Stockholders"). The Buyer, the Company and the Company Stockholders are referred
to collectively herein as the "Parties."
PRELIMINARY STATEMENT
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1. The Company Stockholders collectively own the outstanding shares of
the capital stock of the Company (the "Company Shares") set forth on SCHEDULE I
hereto.
2. The Buyer desires to purchase, and the Company Stockholders desire
to sell, the Company Shares for the consideration set forth below subject to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
1.1 PURCHASE OF THE COMPANY SHARES FROM THE COMPANY STOCKHOLDERS. Upon
and subject to the terms and conditions of this Agreement, at the closing of the
transactions contemplated by this Agreement (the "Closing"), the Company
Stockholders shall sell, transfer, convey, assign and deliver to the Buyer, and
the Buyer shall purchase, acquire and accept from each Company Stockholder, all
of the Company Shares owned by such Company Stockholder. At the Closing, the
Board of Directors of the Company shall, in accordance with The Companies Act
(Sw:Aktiebolagslagen), cause the transfer of the Company Shares to the Buyer
contemplated by this Agreement to be entered into the share register of the
Company.
1.2 FURTHER ASSURANCES. At any time and from time to time after the
Closing, at the Buyer's request and without further consideration to any of the
Company Stockholders, the Company Stockholders shall promptly execute and
deliver such instruments of sale, transfer, conveyance, assignment and
confirmation, and take all such other action as the Buyer may reasonably
request, more effectively to transfer, convey and assign to the Buyer, and to
confirm the Buyer's title to, all of the Company Shares, to put the Buyer
(through its ownership of the Company) in
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actual possession and operating control of the assets (including without
limitation the original corporate minute books of the Company and all corporate
seals), properties and business of the Company, to assist the Buyer in
exercising all rights with respect thereto and to carry out the purpose and
intent of this Agreement and the Other Stock Purchase Agreements (as defined
below).
1.3 THE CLOSING.
(a) The Closing shall take place at the offices of Hale and
Dorr LLP, 60 State Street, Boston, Massachusetts 02109 commencing at 10:00 a.m.,
local time, on July 15, 1997, or, if all of the conditions to the obligations of
the Parties to consummate the transactions contemplated hereby have not been
satisfied or waived by such date, on such mutually agreeable later date as soon
as practicable after the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(the "Closing Date").
(b) Unless otherwise agreed by the Buyer and the Stockholders'
Representative (as defined below), the Closing of the transactions contemplated
by this Agreement shall take place simultaneously with the closing of the
acquisition by the Buyer of additional shares of the issued and outstanding
capital stock of the Company which, when added to the Company Shares, represent
not less than 90% of the capital stock and votes of the Company issued and
outstanding immediately prior to the Closing (including without limitation at
least 90% of the Company's Series A Stock and at least 90% of the Company's
Series B Stock) (all such issued and outstanding capital stock being hereinafter
referred to as the "Outstanding Company Shares"). Such acquisitions
(collectively, the "Acquisition") shall be effected by this Agreement and
certain other Stock Purchase Agreements (the "Other Stock Purchase Agreements")
entered into on or after the date hereof among the Buyer, the Company and the
holders of such Outstanding Company Shares (such holders of Outstanding Company
Shares, including the Company Stockholders, being hereinafter referred to as the
"Selling Stockholders").
1.4 ACTIONS AT THE CLOSING. At the Closing:
(a) the Company shall deliver to the Buyer the various
certificates, instruments and documents referred to in paragraphs (e) through
(o) of Section 6.1 below;
(b) the Buyer shall deliver to the Company the various
certificates, instruments and documents referred to in paragraphs (c) through
(f) of Section 6.2 below;
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(c) the Buyer shall be entered into the share register of the
Company as the owner of the Company Shares sold by the Company Stockholders
pursuant to this Agreement;
(d) the Buyer shall deliver to the Stockholders'
Representative, for distribution to the Company Stockholders, certificates
representing the Initial Shares (as defined below) in accordance with Section
1.5 below; and
(e) the Buyer, each of the Company Stockholders and the Escrow
Agent (as defined therein) shall execute and deliver an Escrow Agreement in
substantially the form attached hereto as EXHIBIT A (the "Escrow Agreement") and
the Buyer shall deliver to the Escrow Agent a certificate for the Escrow Shares
(as defined below) being placed in escrow on the Closing Date pursuant to
Section 1.7 below.
1.5 PURCHASE PRICE. The purchase price to be paid by the Buyer for
each of the Company Shares issued and outstanding immediately prior to the
Closing shall be such number of shares of common stock, $.01 par value per
share, of the Buyer ("Buyer Common Stock") as is equal to the Conversion Ratio.
The "Conversion Ratio" shall initially be equal to a fraction, (a) the numerator
of which shall be 2,900,000 and (b) the denominator of which shall be the sum of
(i) the number of shares of capital stock of the Company issued and outstanding
immediately prior to the Closing (other than Outstanding Company Shares owned by
any Subsidiary (as such term is defined below)) and (ii) the number of shares of
capital stock of the Company issuable upon exercise of the Options (as defined
below), whether vested, unvested or subject to repurchase by the Company
following such exercise. The Conversion Ratio shall be subject to equitable
adjustment in the event of any stock split, stock dividend, reverse stock split,
share combination or subdivision, reclassification, recapitalization,
reorganization or similar event affecting the Buyer Common Stock between the
date of this Agreement and the Closing. The Company Stockholders shall be
entitled to receive immediately 90% of the shares of Buyer Common Stock issuable
with respect to their Company Shares pursuant to this Section 1.5 (the "Initial
Shares"). The remaining 10% of the shares of Buyer Common Stock issuable with
respect to Company Shares pursuant to this Section 1.5 (the "Escrow Shares")
shall be deposited in escrow pursuant to Section 1.7 and shall be held and
disposed of in accordance with the terms of the Escrow Agreement. The Initial
Shares and the Escrow Shares shall together be referred to herein as the "Buyer
Shares."
1.6 [INTENTIONALLY OMITTED.]
1.7 ESCROW. On the Closing Date, the Buyer shall deliver to the
Escrow Agent a certificate (issued in the name of the Escrow Agent or its
nominee) representing the Escrow Shares, as described in Section 1.5, for the
purpose of securing the indemnification obligations of the Company Stockholders
set forth in
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this Agreement. The Escrow Shares shall be held by the Escrow Agent under the
Escrow Agreement pursuant to the terms thereof. The Escrow Shares shall be held
as a trust fund and shall not be subject to any lien, attachment, trustee
process or any other judicial process of any creditor of any party, and shall be
held and disbursed solely for the purposes and in accordance with the terms of
the Escrow Agreement.
1.8 OPTIONS AND WARRANTS.
(a) As of the Closing, (i) the Buyer shall assume the Securix,
Inc. 1996 Stock Option Plan (the "Stock Plan") and (ii) all options to purchase
shares of capital stock of the Company issued pursuant to the Stock Plan
("Options"), whether vested, unvested or subject to repurchase by the Company
following such exercise, shall be assumed by the Buyer. Immediately after the
Closing, each Option outstanding immediately prior to the Closing shall be
deemed to constitute an option to acquire, on the same terms and conditions as
were applicable under such Option immediately prior to the Closing, such number
of shares of Buyer Common Stock as is equal to the number of shares of capital
stock of the Company subject to the unexercised portion of such Option
multiplied by the Conversion Ratio (with any fraction resulting from such
multiplication to be rounded down to the next lowest whole number). The exercise
price per share of each such assumed Option shall be equal to the exercise price
of such Option immediately prior to the Closing, divided by the Conversion Ratio
(with any fraction of a cent resulting from such division to be rounded up to
the next highest whole cent). The term, exercisability, vesting schedule,
repurchase provisions, status as an "incentive stock option" under Section 422
of the Internal Revenue Code of 1986 (as amended, the "Code"), if applicable,
and all of the other terms of the Options shall otherwise remain unchanged.
(b) As soon as practicable after the Closing, the Buyer shall
deliver to the holders of Options appropriate notices setting forth such
holders' rights pursuant to such Options, as amended by this Section 1.8, and
the agreements evidencing such Options shall continue in effect on the same
terms and conditions (subject to the amendments provided for in this Section 1.8
and such notice).
(c) The Buyer shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Buyer Common Stock for
delivery upon exercise of the Options assumed in accordance with this Section
1.8. As soon as practicable (and in any event no later than five business days
after the Closing Date), the Buyer shall file a Registration Statement on Form
S-8 (or any successor form) under the United States Securities Act of 1933 (as
amended, the "Securities Act") with respect to all shares of Buyer Common Stock
subject to such Options that may be registered on a Form S8, and shall use its
best efforts to maintain the effectiveness of such Registration Statement for so
long as such Options remain outstanding.
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(d) The Company shall cause the termination, as of the
Closing, of any warrants or options to purchase shares of capital stock of the
Company other than the Options (the "Warrants") which remain unexercised, all of
which are set forth in Section 1.8(d) of the Disclosure Schedule (as defined
below).
(e) The Company shall use all reasonable efforts to obtain,
prior to the Closing, the consent from each holder of an Option or a Warrant to
the amendment (in the case of Options) or termination (in the case of Warrants)
of such Option or Warrant pursuant to this Section 1.8.
1.9 FRACTIONAL SHARES. No certificates or scrip representing
fractional Initial Shares shall be issued to Company Stockholders in exchange
for the Company Shares, and such Company Stockholders shall not be entitled to
any voting rights, rights to receive any dividends or distributions or other
rights as a stockholder of the Buyer with respect to any fractional Initial
Shares that would otherwise be issued to such Company Stockholders. In lieu of
any fractional Initial Shares that would otherwise be issued, each Company
Stockholder that would have been entitled to receive a fractional Initial Share
shall be entitled to receive a cash payment equal to the average last sale price
per share of the Buyer Common Stock on the Nasdaq National Market, as reported
by Nasdaq, on the ten consecutive trading days immediately preceding the Closing
Date, multiplied by the fraction of a share that such Company Stockholder would
otherwise be entitled to receive.
1.10 STOCKHOLDERS' REPRESENTATIVE.
(a) In order to efficiently administer the Acquisition and the
transactions contemplated hereby, including (i) the waiver of any condition to
the obligations of the Company Stockholders to consummate the Acquisition and
the transactions contemplated hereby and (ii) the defense and/or settlement of
any claims for which the Company Stockholders and/or the other Selling
Stockholders may be required to indemnify the Buyer and/or the Company pursuant
to the Escrow Agreement and Article VII below, the Company Stockholders hereby
designate Rolf Ljung as their representative (the "Stockholders'
Representative").
(b) The Company Stockholders hereby authorize the
Stockholders' Representative (i) to take all action necessary in connection with
the waiver of any condition to the obligations of the Company Stockholders to
consummate the Acquisition and the transactions contemplated hereby, or the
defense and/or settlement of any claims for which the Company Stockholders
and/or the other Selling Stockholders may be required to indemnify the Buyer
and/or the Company pursuant to Article VII below, (ii) to give and receive all
notices required to be given under this Agreement and the Escrow Agreement, and
(iii) to take any and all additional action as is contemplated to be taken by or
on behalf of the Company
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Stockholders and/or the other Selling Stockholders by the terms of this
Agreement or the Escrow Agreement.
(c) In the event that the Stockholders' Representative
dies, becomes unable to perform his responsibilities hereunder or resigns from
such position, the Selling Stockholders holding, prior to the Closing, a
majority of the Outstanding Company Shares as set forth in Attachment A to the
Escrow Agreement shall select another representative to fill such vacancy and
such substituted representative shall be deemed to be the Stockholders'
Representative for all purposes of this Agreement and the documents delivered
pursuant hereto.
(d) All decisions and actions by the Stockholders'
Representative, including without limitation any agreement between the
Stockholders' Representative and the Buyer relating to the defense or settlement
of any claims for which the Company Stockholders and/or the other Selling
Stockholders may be required to indemnify the Buyer and/or the Company pursuant
to Article VII below, shall be binding upon all of the Company Stockholders and
no Company Stockholder shall have the right to object, dissent, protest or
otherwise contest the same.
(e) By his execution of this Agreement, each Company
Stockholder agrees that:
(i) the Buyer shall be able to rely conclusively
on the instructions and decisions of the Stockholders' Representative as to the
settlement of any claims for indemnification by the Buyer and/or the Company
pursuant to Article VII below or any other actions required or permitted to be
taken by the Stockholders' Representative hereunder, and no party hereunder
shall have any cause of action against the Buyer to the extent the Buyer has
relied upon the instructions or decisions of the Stockholders' Representative;
(ii) all actions, decisions and instructions of
the Stockholders' Representative shall be conclusive and binding upon all of the
Company Stockholders and no Company Stockholder shall have any cause of action
against the Stockholders' Representative for any action taken, decision made or
instruction given by the Stockholders' Representative under this Agreement, any
of the Other Stock Purchase Agreements or the Escrow Agreement, except for fraud
or willful breach of this Agreement or any such agreement by the Stockholders'
Representative;
(iii) the provisions of this Section 1.10 are
independent and severable, are irrevocable and coupled with an interest and
shall be enforceable notwithstanding any rights or remedies that any Company
Stockholder may have in connection with the Acquisition and the transactions
contemplated by this Agreement or any of the Other Stock Purchase Agreements;
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(iv) remedies available at law for any breach of
the provisions of this Section 1.10 are inadequate; therefore, the Buyer and the
Company shall be entitled to temporary and permanent injunctive relief without
the necessity of proving damages if either the Buyer and/or the Company brings
an action to enforce the provisions of this Section 1.10; and
(v) the provisions of this Section 1.10 shall be
binding upon the executors, heirs, legal representatives, personal
representatives, successor trustees, and successors of each Company Stockholder,
and any references in this Agreement to a Company Stockholder or the Company
Stockholders shall mean and include the successors to the Company Stockholder's
rights hereunder, whether pursuant to testamentary disposition, the laws of
descent and distribution or otherwise.
(f) The Buyer shall reimburse the Stockholders'
Representative for his reasonable out-of-pocket expenses incurred in performing
his services in connection with the Acquisition, up to a maximum reimbursement
of $5,000. Any expenses in excess of such amount shall be paid by the Selling
Stockholders in proportion to their ownership of Outstanding Company Shares as
set forth in Attachment A to the Escrow Agreement. Notwithstanding the
foregoing, the Buyer shall also reimburse the Stockholders' Representative for
his reasonable out-of-pocket expenses incurred in successfully defending against
any claims for indemnification pursuant to this Agreement, the Other Stock
Purchase Agreements and/or the Escrow Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE COMPANY STOCKHOLDERS
The Company and each of the Company Stockholders, jointly and
severally, represents and warrants to the Buyer that the statements contained in
this Article II are true and correct, except as set forth in the disclosure
schedule attached hereto (the "Disclosure Schedule"). The Disclosure Schedule
shall be arranged in sections and paragraphs corresponding to the numbered and
lettered sections and paragraphs contained in this Article II, and the
disclosures in any section or paragraph of the Disclosure Schedule shall qualify
other sections or paragraphs in this Article II only to the extent that it is
clear from a reading of the disclosure that such disclosure is applicable to
such other sections or paragraphs.
2.1 ORGANIZATION, QUALIFICATION, CORPORATE POWER AND AUTHORITY.
(a) The Company is a corporation duly organized and
validly existing as a limited liability company under the laws of Sweden. The
Company is duly qualified to conduct business and is in corporate and tax good
standing under
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the laws of each jurisdiction in which the nature of its businesses or the
ownership or leasing of its properties requires such qualification, each of
which jurisdictions is set forth in Section 2.1 of the Disclosure Schedule. The
Company has all requisite corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. The Company has furnished to the Buyer true and complete copies of
its Articles of Association and registration certificate, each as amended and as
in effect on the Agreement Date. The Company has at all times complied with, and
is not in default under or in violation of, any provision of its articles of
association.
(b) The Company has all requisite power and authority to
execute and deliver the Fundamental Agreements (as defined below in this Section
2.1(b)) and to perform its obligations under the Fundamental Agreements. The
Fundamental Agreements have each been (or in the case of the Fundamental
Agreements to be entered into on the Closing Date, shall be when delivered) duly
and validly (i) executed and delivered by the Company and (ii) authorized by all
necessary corporate action on the part of the Company. Each Fundamental
Agreement constitutes (or, in the case of the Fundamental Agreements to be
entered into on the Closing Date, shall constitute) a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to the effect of bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and except
as the availability of equitable remedies may be limited by general principles
of equity. For purposes of this Agreement, the term "Fundamental Agreements"
means this Agreement, the Escrow Agreement, the Registration Rights Agreement in
the form attached hereto as EXHIBIT B (the"Registration Rights Agreement") and,
with respect to the Company and the Company Stockholders party thereto, the
Offer Letters attached hereto as EXHIBIT C and the Consulting Agreements
attached hereto as EXHIBIT D.
2.2 CAPITALIZATION. The authorized capital stock of the Company
consists of 10,000,000 shares of capital stock, SEK one par value per share, of
which (a) 5,538,000 shares have been designated Series A Stock, all of which are
issued and outstanding and none of which are held in the treasury of the
Company, and (b) 4,462,000 shares have been designated Series B Stock, all of
which are issued and outstanding and none of which are held in the treasury of
the Company. Section 2.2 of the Disclosure Schedule sets forth a complete and
accurate list of (a) all stockholders of the Company, indicating the number of
Outstanding Company Shares held by each stockholder, and (b) all holders of
Options and Warrants, indicating the number of Company Shares subject to each
Option and Warrant and the exercise price thereof. Copies of all Options and
Warrants have previously been provided to the Buyer. All of the Outstanding
Company Shares are, and all shares of capital stock of the Company that may be
issued upon exercise of Options and Warrants will be, duly authorized, validly
issued, fully paid, nonassessable and free of all preemptive rights. None of the
outstanding capital stock of the Company is evidenced by share
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<PAGE> 14
certificates. There are no outstanding or authorized options, warrants, rights,
calls, convertible instruments, agreements or commitments to which the Company
is a party or which are binding upon the Company providing for the issuance,
disposition or acquisition of any of its capital stock, other than the Options
and Warrants listed in Section 2.2 of the Disclosure Schedule. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. There are no agreements, voting trusts, proxies or
understandings with respect to the voting, or registration under the Securities
Act or any foreign securities laws, of any Outstanding Company Shares. All of
the Outstanding Company Shares were issued in compliance with all applicable
laws.
2.3 NONCONTRAVENTION. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state and foreign
securities laws, neither the execution and delivery by the Company or the
Company Stockholders of the Fundamental Agreements nor the consummation of the
transactions contemplated thereby will (a) conflict with or violate any
provision of the Articles of Association of the Company, (b) require on the part
of the Company or any corporation, partnership, limited liability company or
other form of business association (a "Business Entity") with respect to which
the Company, directly or indirectly, has the power to vote or direct the voting
of sufficient securities to elect a majority of the directors or managers (a
"Subsidiary") any filing with, or any permit, authorization, consent or approval
of, any court, arbitrational tribunal, administrative agency or commission or
other governmental or regulatory authority or agency (a "Governmental Entity"),
(c) conflict with, result in a breach of, constitute (with or without due notice
or lapse of time or both) a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify or cancel, or require
any notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest (as defined below) or other
arrangement to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary is bound or to which any of their respective assets is
subject, (d) result in the imposition of any Security Interest upon any assets
of the Company or any Subsidiary, or (e) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company, any Subsidiary or
any of their respective properties or assets. For purposes of this Agreement,
"Security Interest" means any mortgage, pledge, security interest, encumbrance,
charge or other lien (whether arising by contract or by operation of law), other
than (i) mechanic's, materialmen's and similar liens, (ii) liens arising under
worker's compensation, unemployment insurance, social security, retirement and
similar legislation, and (iii) liens on goods in transit incurred pursuant to
documentary letters of credit, in each case arising in the ordinary course of
business consistent with past custom and practice (including with respect to
frequency and amount) ("Ordinary Course of Business") of the Company and its
Subsidiaries.
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<PAGE> 15
2.4 SUBSIDIARIES. Section 2.4 of the Disclosure Schedule sets forth for
each Subsidiary (a) its name and jurisdiction of incorporation, (b) the number
of shares of authorized capital stock of each class of its capital stock, (c)
the number of issued and outstanding shares of each class of its capital stock,
the names of the holders thereof and the number of shares held by each such
holder, (d) the number of shares of its capital stock held in treasury, and (e)
its directors, managers and officers. Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each Subsidiary is duly qualified to conduct
business and is in corporate and tax good standing under the laws of each
jurisdiction in which the nature of its businesses or the ownership or leasing
of its properties requires such qualification. Each Subsidiary has all requisite
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it. The Company has
delivered to the Buyer correct and complete copies of the charter and By-laws of
each Subsidiary, as amended to date. No Subsidiary is in default under or in
violation of any provision of its charter or By-laws. All of the issued and
outstanding shares of capital stock of each Subsidiary are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights. All
shares of each Subsidiary that are held of record or owned beneficially by
either the Company or any Subsidiary are held or owned free and clear of any
restrictions on transfer (other than restrictions under the Securities Act and
state or foreign securities laws), claims, Security Interests, options,
warrants, rights, contracts, calls, commitments, equities and demands. There are
no outstanding or authorized options, warrants, rights, agreements or
commitments to which the Company or any Subsidiary is a party or which are
binding on any of them providing for the issuance, disposition or acquisition of
any capital stock of any Subsidiary. There are no outstanding stock
appreciation, phantom stock or similar rights with respect to any Subsidiary.
There are no voting trusts, proxies or other agreements or understandings with
respect to the voting of any capital stock of any Subsidiary. Except as set
forth in Section 2.4 of the Disclosure Schedule, the Company does not control
directly or indirectly or have any direct or indirect equity participation in
any corporation, partnership, trust or other business association which is not a
Subsidiary.
2.5 FINANCIAL STATEMENTS. The Company has previously furnished to the
Buyer or its advisors complete and accurate copies of its (a) audited balance
sheets and related statements of profit and loss for the fiscal years ended June
30, 1997, 1996 and 1995, together with reports thereon by Lindebergs,
independent auditors of the Company and the Subsidiaries (the "Audited Financial
Statements"), including the audited balance sheet (the "Most Recent Balance
Sheet") for the 12 months ended June 30, 1997 (the "Balance Sheet Date"). The
foregoing financial statements (the "Financial Statements") have been prepared
in accordance with Swedish generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods covered thereby (except as
may be indicated therein or in the notes thereto), fairly present the financial
condition and results of operations of the
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<PAGE> 16
Company and the Subsidiaries as of the respective dates thereof and for the
periods referred to therein, and are consistent with the books and records of
the Company and the Subsidiaries.
2.6 ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date, (a)
there has not been any material adverse change in the assets, business,
financial condition or results of operations of the Company or any Subsidiary,
nor has there occurred any event or development that could reasonably be
foreseen to result in such a material adverse change in the future, and (b)
neither the Company nor any Subsidiary has taken any of the actions set forth in
subsections (a) through (o) of Section 5.1 below.
2.7 UNDISCLOSED LIABILITIES. None of the Company and its
Subsidiaries has any liability (whether known or unknown, whether absolute or
contingent, whether liquidated or unliquidated and whether due or to become
due), except for (a) liabilities shown or expressly reserved for on the Most
Recent Balance Sheet, a copy of which is included in Section 2.7 of the
Disclosure Schedule, (b) liabilities that have arisen since the Balance Sheet
Date in the Ordinary Course of Business of the Company and its Subsidiaries and
that are similar in nature and amount to the liabilities that arose during the
comparable period of time in the immediately preceding fiscal period, and (c)
contractual liabilities incurred in the Ordinary Course of Business of the
Company and the Subsidiaries that are not required to be reflected on the Most
Recent Balance Sheet and that are not in the aggregate material.
2.8 TAX MATTERS.
(a) Each of the Company and the Subsidiaries has filed all Tax
Returns (as defined below) that it was required to file through the Closing Date
and all such Tax Returns were correct and complete in all respects. Each of the
Company and the Subsidiaries has paid all Taxes (as defined below) that are
shown to be due on any such Tax Returns, except such as are being contested in
good faith by appropriate proceedings (to the extent any such proceedings are
required) and with respect to which the Company is maintaining reserves adequate
for their payment. The accruals and reserves for Taxes set forth on the Most
Recent Balance Sheet are sufficient to pay all unpaid Taxes of the Company and
the Subsidiaries attributable to all periods ended on or before the date of the
Most Recent Balance Sheet, and all Taxes attributable to the period from and
after the Balance Sheet Date and continuing through the Closing Date are
attributable to the operation of the Company and the Subsidiaries in the
Ordinary Course of Business of the Company and the Subsidiaries. None of the
Company or any of the Subsidiaries has any actual or potential liability for any
Tax obligation of any taxpayer (including without limitation any affiliated or
combined group of corporations or other entities that included the Company or
any Subsidiary during a prior period) other than the Company and the
Subsidiaries. All Taxes that the Company or any Subsidiary is or was required by
law to withhold or collect have been duly withheld or collected and, to the
extent
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<PAGE> 17
required, have been paid to the proper Governmental Entity. For purposes of
determining the amount of Taxes attributable to a specified period (e.g., the
period from the date of the Most Recent Balance Sheet through the Closing Date)
other than a Tax Period, each Tax shall be computed as if the specified period
were a Tax Period. For purposes of this Agreement, a Tax Period means a period
for which a Tax is required to be computed under applicable statutes and
regulations. For purposes of this Agreement, "Taxes" means all taxes, charges,
fees, levies, custom duties (social security fees) or other similar assessments
or liabilities, including without limitation income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property, sales, use,
transfer, transfer gains, withholding, employment, payroll and franchise taxes
imposed by any internal, local or foreign government, or any agency thereof, or
other political subdivision of the United States or any such government, and any
interest, fines, penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any tax or any contest or dispute
thereof and any amounts of Taxes of another person that the Company or any
Subsidiary is liable to pay by law or otherwise. For purposes of this Agreement,
"Tax Returns" means all reports, returns, declarations, statements or other
information required to be supplied to a taxing authority in connection with
Taxes.
(b) The Company has delivered to the Buyer or its advisors
correct and complete copies of all income Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by the Company or any
Subsidiary since the fiscal year ended June 30, 1992. The income Tax Returns of
the Company have been audited by the Tax Authority in the County of Stockholm or
are closed by the applicable statute of limitations for all taxable years
through June 30, 1996. No examination or audit of any Tax Returns of the Company
or any Subsidiary by any Governmental Entity is currently in progress or, to the
Sellers' Knowledge (as such term is defined in Section 10.15), threatened or
contemplated.
(c) Neither the Company nor any Subsidiary is a party to any
Tax allocation or sharing agreement or any Tax indemnity agreement. Neither the
Company nor any Subsidiary has waived any statute of limitations with respect to
Taxes or agreed to an extension of time with respect to a Tax assessment or
deficiency. Neither the Company nor any Subsidiary has ever filed Tax Returns on
a combined, consolidated or unitary basis with any other Business Entity in any
jurisdiction or has otherwise been liable for any Taxes of any other Business
Entity. Neither the Company nor any Subsidiary has participated in, nor will
participate in, an international boycott within the meaning of Section 999 of
the Code. Neither the Company nor any Subsidiary is a party to any agreement,
contract, arrangement or plan that has resulted, or would result, separately or
in the aggregate, in the payment of any excess "parachute payments" within the
meaning of Section 280G of the Code.
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(d) Neither the Company nor any Subsidiary is a party to any
tax litigation or is the subject of any tax auditing. Neither the Company nor
any Subsidiary has any reason to suspect any tax litigation attributable to
periods ended before the Closing Date. Neither the Company nor any Subsidiary is
or has been a party to any specific transaction the main purpose of which has
been to avoid, defer or reduce Taxes. Classifications, definitions, valuation
and principles used in the accounts of the Company or any Subsidiary are in
accordance with classifications, definitions, valuations and principles used in
the Tax Returns of the Company or such Subsidiary, so the case may be. Neither
the Company nor any Subsidiary is or has been a party to any transaction or
agreement which is in conflict with the tax rules on transfer pricing in any
relevant jurisdiction.
2.9 ASSETS. Each of the Company and the Subsidiaries owns or
leases all tangible assets necessary for the conduct of its businesses as
presently conducted and as presently proposed by the Company or any Subsidiary
to be conducted. Each such tangible asset is free from material defects, has
been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear) and is suitable
for the purposes for which it presently is used. No asset of the Company or any
Subsidiary (tangible or intangible) is subject to any Security Interest.
2.10 OWNED REAL PROPERTY. None of the Company or any Subsidiary
owns, or has ever owned, any real property.
2.11 INTELLECTUAL PROPERTY.
(a) Each of the Company and the Subsidiaries owns, or is
licensed or otherwise possesses legally enforceable right to use, all
Intellectual Property (as defined below in this Section 2.11) used in the
operation of its business or necessary for the operation of its businesses as
presently proposed to be conducted. Each item of Intellectual Property owned by
or used in the operation of the business of the Company or any Subsidiary at any
time during the fiscal year ended June 30, 1997 will be owned or available for
use by the Company or a Subsidiary on identical terms and conditions immediately
following the Closing. Each of the Company and the Subsidiaries has taken
reasonable measures to protect the proprietary nature of each item of
Intellectual Property and to maintain in confidence all trade secrets and
confidential information, that it owns or uses. To the Sellers' Knowledge, (i)
no other person or Business Entity has any rights to any of the Intellectual
Property owned or used by the Company or any Subsidiary (other than any rights
in any such Intellectual Property (A) not owned by the Company or any Subsidiary
that constitutes commercially available software generally available to the
public or (B) owned by the Company or any Subsidiary granted pursuant to
software licenses entered into in the Ordinary Course of Business), and (ii) no
other person or Business Entity is infringing, violating or misappropriating any
of the Intellectual Property that
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<PAGE> 19
the Company or any Subsidiary owns or uses. The Company or a Subsidiary has
acquired all rights to Intellectual Property developed or held by any employees
(within the scope and term of their employment or otherwise relating to the
current or proposed business of the Company or any of its Subsidiaries) or third
parties who developed Intellectual Property for the Company or any Subsidiary.
For purposes of this Agreement, "Intellectual Property" means all (A) patents,
patent applications, patent disclosures and all related continuation,
continuation in part, divisional, reissue, reexamination, utility model,
certificate of invention and design patents, patent applications, registrations
and applications for registrations, (B) trademarks, service marks, trade dress,
logos, trade names and corporate names and registrations and applications for
registration thereof, (C) copyrights and registrations and applications for
registration thereof, (D) computer software, data and documentation, (E) trade
secrets and confidential business information, whether patentable or
unpatentable and whether or not reduced to practice, know-how, manufacturing and
production processes and techniques, research and development information,
copyrightable works, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and
information, (F) other proprietary rights relating to any of the foregoing, and
(G) copies and tangible embodiments thereof.
(b) None of the activities or business conducted by the
Company or any of the Subsidiaries infringes, violates or constitutes a
misappropriation of (or in the past infringed, violated or constituted a
misappropriation of) any Intellectual Property rights of any other person or
Business Entity. Neither the Company nor any Subsidiary has received any
complaint, claim or notice alleging any such infringement, violation or
misappropriation, and to the Sellers' Knowledge there is no basis for any such
complaint, claim or notice.
(c) Section 2.11(c) of the Disclosure Schedule identifies each
(i) patent or registration that has been issued to the Company or any Subsidiary
with respect to any of its Intellectual Property, (ii) pending patent
application or application for registration that the Company or any Subsidiary
has made with respect to any of its Intellectual Property, and (iii) material
license or other material agreement pursuant to which the Company or any
Subsidiary has granted any rights to any third party with respect to any of its
Intellectual Property. The Company has delivered to the Buyer or its advisors
correct and complete copies of all such patents, registrations, applications,
licenses and agreements (as amended to date) and has specifically identified and
made available to the Buyer or its advisors correct and complete copies of all
other written documentation evidencing ownership of, and any claims or disputes
relating to, each such item. Except as set forth in Section 2.11(c) of the
Disclosure Schedule, with respect to each item of Intellectual Property that the
Company or any Subsidiary owns:
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<PAGE> 20
(A) subject to such rights as have been granted
by the Company or any Subsidiary under license agreements entered into in the
Ordinary Course of Business of the Company and the Subsidiaries, the Company or
a Subsidiary possesses all right, title and interest in and to such item;
(B) such item is not subject to any outstanding
judgment, order, decree, stipulation or injunction; and
(C) except in accordance with the terms of
Company's standard form of software license agreement, a copy of which has
previously been provided to the Buyer or its advisors, neither the Company nor
any Subsidiary has agreed to indemnify any person or Business Entity for or
against any infringement, misappropriation or other conflict with respect to
such item.
(d) Section 2.11(d) of the Disclosure Schedule identifies
each item of Intellectual Property used in the operation of the business of the
Company and the Subsidiaries at any time during the period covered by the
Financial Statements, or that the Company or any Subsidiary plans to use in the
future, that is owned by a party other than the Company or a Subsidiary (other
than commercially available software generally available to the public, which is
not listed in Section 2.11(d) of the Disclosure Schedule but with respect to
which the representations set forth below in this Section 2.11(d) are true). The
Company has supplied the Buyer or its advisors with correct and complete copies
of all licenses, sublicenses or other agreements (as amended to date) pursuant
to which the Company or any Subsidiary uses such Intellectual Property, all of
which are listed on Section 2.11(d) of the Disclosure Schedule. Except as set
forth in Section 2.11(d) of the Disclosure Schedule, with respect to each such
item of Intellectual Property:
(i) the license, sublicense or other agreement
covering such item is legal, valid, binding, enforceable and in full force and
effect with respect to the Company or any Subsidiary party thereto, and to the
Sellers' Knowledge is legal, valid, binding, enforceable and in full force and
effect with respect to each other party thereto, in either case subject to the
effect of bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and except as the availability of
equitable remedies may be limited by general principles of equity;
(ii) such license, sublicense or other agreement
will continue to be legal, valid, binding, enforceable and in full force and
effect immediately following the Closing in accordance with the terms thereof as
in effect prior to the Closing, subject to the effect of bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and except as the availability of equitable remedies may be limited by
general principles of equity;
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<PAGE> 21
(iii) neither the Company or any Subsidiary nor,
to the Sellers' Knowledge, any other party to such license, sublicense or other
agreement is in breach or default, and no event has occurred which with notice
or lapse of time would constitute a breach or default by the Company or any
Subsidiary or, to the Sellers' Knowledge, by any such other party, or permit
termination, modification or acceleration thereunder;
(iv) the underlying item of Intellectual Property
is not subject to any outstanding judgment, order, decree, stipulation or
injunction to which the Company or any Subsidiary is a party or has been
specifically named, nor to the Sellers' Knowledge subject to any other
outstanding judgment, order, decree, stipulation or injunction;
(v) neither the Company nor any Subsidiary has
agreed to indemnify any person or Business Entity for or against any
interference, infringement, misappropriation or other conflict with respect to
such item; and
(vi) no license or other fee is payable upon any
transfer or assignment of such license, sublicense or other agreement by the
terms thereof or the terms of any other agreement or arrangement with the other
party or parties thereto.
2.12 REAL PROPERTY LEASES. Section 2.12 of the Disclosure Schedule
lists all real property leased or subleased to the Company or any Subsidiary.
The Company has delivered to the Buyer or its advisors correct and complete
copies of the leases and subleases (as amended to date) listed in Section 2.12
of the Disclosure Schedule. With respect to each lease and sublease listed in
Section 2.12 of the Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding,
enforceable and in full force and effect, subject to the effect of bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and except as the availability of equitable remedies
may be limited by general principles of equity;
(b) the lease or sublease will continue to be legal,
valid, binding, enforceable and in full force and effect immediately following
the Closing in accordance with the terms thereof as in effect prior to the
Closing, subject to the effect of bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and except
as the availability of equitable remedies may be limited by general principles
of equity;
(c) neither the Company or any Subsidiary nor, to the
Sellers' Knowledge, any other party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of time, would
constitute a breach or
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<PAGE> 22
default by the Company or any Subsidiary or, to the Sellers' Knowledge, by any
such other party, or permit termination, modification or acceleration
thereunder;
(d) there are no disputes, oral agreements or forbearance
programs in effect as to the lease or sublease;
(e) neither the Company nor any Subsidiary has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in
the leasehold or subleasehold;
(f) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation of said
facilities; and
(g) no construction, alteration or other leasehold
improvement work with respect to the lease or sublease remains to be paid for or
performed by the Company or any Subsidiary.
2.13 CONTRACTS.
(a) Section 2.13 of the Disclosure Schedule lists the
following written arrangements (including without limitation written agreements)
to which the Company or any Subsidiary is a party:
(i) any written arrangement (or group of related
written arrangements) for the lease of personal property from or to third
parties providing for lease payments in excess of $50,000 per annum;
(ii) any written arrangement (or group of related
written arrangements), currently in force or effect or which by its terms may in
the future be in force or effect, for the licensing or distribution of software,
products or other personal property or for the furnishing or receipt of services
(i) which calls for performance by the Company or any Subsidiary (other than the
performance solely of indemnification obligations) over a period of more than
one year following the date hereof, (ii) which involves the payment or receipt
of more than the sum of $100,000 following the date hereof, or (iii) in which
the Company or any Subsidiary has granted rights to license, sublicense or copy,
"most favored nation" pricing provisions or marketing or distribution rights
relating to any products or territory or has agreed to purchase a minimum
quantity of goods or services or has agreed to purchase goods or services
exclusively from a certain party;
(iii) any written arrangement establishing a
partnership or joint venture;
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<PAGE> 23
(iv) any written arrangement (or group of related
written arrangements) under which it has created, incurred, assumed or
guaranteed (or may create, incur, assume or guarantee) indebtedness (including
capitalized lease obligations) involving more than $50,000 or under which it has
imposed (or may impose) a Security Interest on any of its assets, tangible or
intangible;
(v) any written arrangement concerning
confidentiality, non- solicitation or non-competition (other than the Company's
standard form of confidentiality, nonsolicitation and non-competition agreement
with its employees, a copy of which has been provided to the Buyer or its
advisors, and the nondisclosure agreements entered into among any of the Parties
in connection with the transactions contemplated by this Agreement);
(vi) any written arrangement involving any of the
Company Stockholders or their Affiliates (for the purposes of this Agreement,
"Affiliate" shall mean (A) in the case of an individual, the members of the
immediate family (including parents, siblings and children) of (i) the
individual and (ii) the individual's spouse, and (iii) any Business Entity that
directly or indirectly, through one or more intermediaries controls, or is
controlled by, or is under common control with any of the foregoing individuals,
or (B) in the case of a Business Entity, another Business Entity or a person
that directly or indirectly, through one or more intermediaries controls, or is
controlled by, or is under common control with the Business Entity);
(vii) any written arrangement under which the
consequences of a default or termination could have a material adverse effect on
the assets, business, financial condition, results of operations or future
prospects of the Company or any Subsidiary; and
(viii) any other written arrangement (or group of
related written arrangements) either involving more than $100,000 or not entered
into in the Ordinary Course of Business of the Company or any Subsidiary.
(b) The Company has delivered to the Buyer or its
advisors a correct and complete copy of each written arrangement (as amended to
date) listed in Section 2.13 of the Disclosure Schedule. With respect to each
written arrangement so listed: (i) the written arrangement is legal, valid,
binding and enforceable and in full force and effect with respect to the Company
or any Subsidiary party thereto, and to the Sellers' Knowledge is legal, valid,
binding, enforceable and in full force and effect with respect to each other
party thereto, in either case subject to the effect of bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and except as the availability of equitable remedies may be limited by
general principles of equity; (ii) the written arrangement will continue to be
legal, valid, binding and enforceable and in full force and effect immediately
following the Closing in accordance with the terms thereof as in effect prior to
the
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Closing, subject to the effect of bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and except
as the availability of equitable remedies may be limited by general principles
of equity; and (iii) neither the Company or any Subsidiary nor, to the Sellers'
Knowledge, any other party, is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default by the
Company or any Subsidiary or, to the Sellers' Knowledge, by any such other
party, or permit termination, modification or acceleration, under the written
arrangement. Neither the Company nor any Subsidiary is a party to any oral
contract, agreement or other arrangement which, if reduced to written form,
would be required to be listed in Section 2.13 of the Disclosure Schedule under
the terms of this Section 2.13. Neither the Company nor any Subsidiary is
restricted by any arrangement from carrying on its business anywhere in the
world.
2.14 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of the Company or any Subsidiary.
2.15 INSURANCE. Section 2.15 of the Disclosure Schedule lists each
insurance policy (including fire, theft, casualty, general liability, workers
compensation, business interruption, environmental, product liability and
automobile insurance policies and bond and surety arrangements) to which the
Company or any Subsidiary has been a party, a named insured, or otherwise the
beneficiary of coverage at anytime within the past year. Each such insurance
policy is enforceable and in full force and effect and will continue to be
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect prior to the Closing. Neither the
Company nor any Subsidiary is in breach or default (including with respect to
the payment of premiums or the giving of notices) under any such policy, and no
event has occurred which, with notice or the lapse of time, would constitute
such a breach or default or permit termination, modification or acceleration,
under such policy; and neither the Company nor any Subsidiary has received any
notice from the insurer disclaiming coverage or reserving rights with respect to
a particular claim or such policy in general. Section 2.15 of the Disclosure
Schedule identifies all claims asserted by the Company or any Subsidiary
pursuant to any insurance policy since January 1, 1996 and describes the nature
and status of each such claim. Neither the Company nor any Subsidiary has
incurred any loss, damage, expense or liability covered by any such insurance
policy for which it has not properly asserted a claim under such policy. Each of
the Company and the Subsidiaries is covered by insurance in scope and amount
customary and reasonable for the businesses in which it is engaged and the
jurisdictions in which such businesses are conducted.
2.16 LITIGATION. Except as identified and described in Section 2.16 of
the Disclosure Schedule, (a) there is no action, suit, proceeding or
investigation to which the Company or any Subsidiary is a party (either as a
plaintiff or defendant) pending
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or, to the Sellers' Knowledge, threatened before any court, Governmental Entity
or arbitrator, and to the Sellers' Knowledge, there is no basis for any such
action, suit, proceeding or investigation; (b) neither the Company or any
Subsidiary nor, to the Sellers' Knowledge, any officer, director or employee of
the Company or any Subsidiary has been permanently or temporarily enjoined by
any order, judgment or decree of any court or Governmental Entity from engaging
in or continuing to conduct the business of the Company or any Subsidiary; and
(c) no order, judgment or decree of any court or Governmental Entity has been
issued in any proceeding to which the Company or any Subsidiary is or was a
party or, to the Sellers' Knowledge, in any other proceeding that enjoins or
requires the Company or any Subsidiary to take any action of any kind with
respect to its business, assets or properties. None of the actions, suits,
proceedings or investigations set forth in Section 2.16 of the Disclosure
Schedule, individually or collectively, if determined adversely to the interests
of the Company or any of its Subsidiaries, could have a material adverse effect
on the assets, business, financial condition, results of operations or future
prospects of the Company and the Subsidiaries taken as a whole.
2.17 EMPLOYEES AND SUBCONTRACTORS.
(a) Section 2.17(a) of the Disclosure Schedule contains a list
of (i) all current employees of the Company and the Subsidiaries (the
"Employees"), along with the position, date of hire and annual rate of monetary
compensation, including salary (or, with respect to Employees compensated on an
hourly or per diem basis, the hourly or per diem rate of monetary compensation),
(ii) all employment contracts or agreements relating to employment which are not
terminable by the Company or a Subsidiary without penalty upon less than 30 days
notice (other than any inability to terminate or penalties imposed by Swedish
law), and (iii) all Employees who have executed confidentiality, non-
competition or nonsolicitation agreements.
(b) There are no collective bargaining agreements to which the
Company or any Subsidiary is a party other than as set forth in Section 2.17 (b)
of the Disclosure Schedule. Neither the Company nor any Subsidiary has
experienced any strikes, grievances, claims of unfair labor practices or other
collective bargaining disputes and, to the Sellers' Knowledge, no organizational
effort is presently being made or threatened by or on behalf of any labor union
with respect to the Employees. There is no cause to assume that any labor strike
or other work force disturbance will occur in the Company or any of the
Subsidiaries.
(c) Section 2.17(c) of the Disclosure Schedule sets forth (i)
a list of all subcontractors currently performing services or under contract to
perform future services for the Company or a Subsidiary and (ii) the start date,
type of services to be provided, estimated completion date and hourly or per
diem pay rate of such subcontractors.
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(d) To the Sellers' Knowledge, no employee or group of
employees employed by the Company or a Subsidiary that includes any of the
Selling Stockholders and/or any of Company's ten most highly compensated
engineers has any plans to terminate employment with the Company or a
Subsidiary.
(e) Neither the Company, any of the Company Stockholders or
any Subsidiary nor any director or officer, or, to the Sellers' Knowledge, any
other key employee of the Company or any of the Subsidiaries, or, to the
Sellers' Knowledge, any relatives of any of the foregoing, owns, directly or
indirectly, individually or collectively, any interest in any corporation,
company, partnership, entity or organization which is in a business competitive
with the businesses of the Company and the Subsidiaries or which has any
existing undisclosed contractual relationship with the Company or any of the
Subsidiaries (other than a passive investment interest in any publicly traded
company representing in the aggregate not more than 3% of the outstanding voting
power of such company).
(f) Neither the Company nor any of the Subsidiaries has
violated any labor legislation, regulation or agreement in any relevant
jurisdiction, including without limitation the Swedish lagen (1976:580) om
medbestammande i arbetslivet (MBL).
2.18 EMPLOYEE BENEFITS.
(a) Section 2.18(a) of the Disclosure Schedule contains a
complete and accurate list of all Employee Benefit Plans (as defined below in
this Section 2.18(a)) maintained, or contributed to, by the Company, any
Subsidiary or any ERISA Affiliate (as defined below in this Section 2.18(a)).
For purposes of this Agreement, "Employee Benefit Plan" means any "employee
pension benefit plan" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), any "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA), and any other written or
oral plan, agreement or arrangement involving direct or indirect compensation,
including without limitation insurance coverage, severance benefits, disability
benefits, pension, retirement plans, profit sharing, deferred compensation,
bonuses, stock options, stock purchase, phantom stock, stock appreciation or
other forms of incentive compensation or post-retirement compensation. Full
reservations have been made in the Financial Statements for all present and
reasonably estimated future liabilities in respect of pensions and other
payments related to compensation to be paid to employees. For purposes of this
Agreement, "ERISA Affiliate" means any member of (i) a controlled group of
corporations (as defined in Section 414(b) of the Code), (ii) a group of trades
or businesses under common control (as defined in Section 414(c) of the Code),
or (iii) an affiliated service group (as defined under Section 414(m) of the
Code or the regulations under Section 414(o) of the Code), any of which includes
the Company or a Subsidiary. Complete and accurate copies of (i) all Employee
Benefit Plans that
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have been reduced to writing, (ii) written summaries of all unwritten Employee
Benefit Plans, (iii) all related trust agreements, insurance contracts and
summary plan descriptions, and (iv) all annual reports filed on IRS Form 5500,
5500C or 5500R for the last five plan years for each Employee Benefit Plan, and
(v) all qualification letters issued by the Internal Revenue Service with
respect to every Employee Benefit Plan that is intended to qualify under Section
401(k) of the Code, have been delivered to the Buyer or its advisors. Each
Employee Benefit Plan has been administered in accordance with its terms, and
each of the Company, the Subsidiaries and the ERISA Affiliates has met its
obligations (if any) with respect to such Employee Benefit Plan and has made all
required contributions (if any) thereto. The Company and all Employee Benefit
Plans are in compliance with the currently applicable provisions (if any) of
ERISA, the Code and other applicable federal, state and foreign laws and the
regulations thereunder. Each Employee Benefit Plan that is intended to qualify
under Section 401(k) of the Code is so qualified. Nothing has occurred that
might cause a loss of such qualification and no loss of qualification has been
threatened.
(b) To the Sellers' Knowledge, there are no inquiries or
investigations by any Governmental Entity, termination proceedings or other
claims (except claims for benefits payable in the normal operation of the
Employee Benefit Plans and proceedings with respect to qualified domestic
relations orders), suits or proceedings against or involving any Employee
Benefit Plan or asserting any rights or claims to benefits under any Employee
Benefit Plan.
(c) Neither the Company nor any Subsidiary or ERISA Affiliate
has ever maintained an Employee Benefit Plan subject to Section 412 of the Code,
Part 3 of Subtitle B of Title I or ERISA, or Title IV of ERISA. Except as set
forth in Section 2.18(c) of the Disclosure Schedule, at no time has the Company,
any Subsidiary or any ERISA Affiliate been obligated to contribute to any
"multi-employer plan" (as defined in Section 4001(a)(3) of ERISA) that is
subject to Title IV of ERISA. No act or omission has occurred and no condition
exists with respect to any Employee Benefit Plan maintained by the Company, any
Subsidiary, any of their respective Affiliates or any ERISA Affiliate that would
subject the Company, any Subsidiary or any ERISA Affiliate to any fine, penalty,
Tax or liability of any kind imposed under ERISA or the Code. No prohibited
transaction (as defined in Section 406 of ERISA or Section 4975 of the Code) has
occurred with respect to any Employee Benefit Plan that is subject to ERISA or
the Code. No Employee Benefit Plan, plan documentation or agreement, summary
plan description or other written communication distributed generally to
employees by its terms prohibits the Company or a Subsidiary from amending or
terminating any such Employee Benefit Plan and any Employee Benefit Plan may be
terminated without liability to the Company, any Subsidiary or the Buyer, except
for benefits accrued through the date of termination. No former employees
participate in any welfare benefit plans listed in Section 2.18(a) of the
Disclosure Schedule. No Employee Benefit Plan includes in
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its assets any securities issued by the Company or any Subsidiary. No Employee
Benefit Plan has been subject to tax under Section 511 of the Code.
(d) Section 2.18(d) of the Disclosure Schedule discloses each:
(i) agreement with any director, executive officer or other key employee of the
Company or any Subsidiary (A) the benefits of which are contingent, or the terms
of which are altered, upon the occurrence of a transaction involving the Company
or any Subsidiary of the nature of any of the transactions contemplated by this
Agreement, (B) providing any term of employment or compensation guarantee or (C)
providing severance benefits or other benefits after the termination of
employment of such director, executive officer or key employee; (ii) agreement,
plan or arrangement under which any person may receive payments from the Company
or any Subsidiary that may be subject to the tax imposed by Section 4999 of the
Code or included in the determination of such person's "parachute payment" under
Section 280G of the Code; and (iii) agreement or plan binding the Company or any
Subsidiary, including without limitation any stock option plan, stock
appreciation right plan, restricted stock plan, stock purchase plan, severance
benefit plan, or any Employee Benefit Plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
2.19 ENVIRONMENTAL MATTERS.
(a) Each of the Company and the Subsidiaries has complied with
all applicable Environmental Laws (as defined below in this Section 2.19(a)).
There is no pending or, to the Sellers' Knowledge, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Entity,
relating to any Environmental Law involving the Company or any Subsidiary. For
purposes of this Agreement, "Environmental Law" means any foreign, federal,
state, local or European Union ("EU") law, statute, rule or regulation or the
common or decisional law relating to the environment or occupational health and
safety, including without limitation any statute, regulation or order pertaining
to (i) treatment, storage, disposal, generation and transportation of
industrial, toxic or hazardous substances or solid or hazardous waste; (ii) air,
water and noise pollution; (iii) groundwater and soil contamination; (iv) the
release or threatened release into the environment of industrial, toxic or
hazardous substances, or solid or hazardous waste, including without limitation
emissions, discharges, injections, spills, escapes or dumping of pollutants,
contaminants or chemicals; (v) the protection of wild life, marine sanctuaries
and wetlands, including without limitation all endangered and threatened
species; (vi) storage tanks, vessels and containers; (vii) underground and other
storage tanks or vessels, abandoned, disposed or discarded barrels, containers
and other closed
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receptacles; (viii) health and safety of employees and other persons; and (ix)
manufacture, processing, use, distribution, treatment, storage, disposal,
transportation or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or oil or petroleum products or solid or hazardous
waste. As used in this Section 2.19, the terms "release" and "environment" shall
have the meaning set forth in the United States Comprehensive Environmental
Compensation, Liability and Response Act of 1980 ("CERCLA").
(b) There have been no releases of any Materials of
Environmental Concern (as defined below in this Section 2.19(b)) into the
environment at any parcel of real property or any facility formerly or currently
owned, operated or controlled by the Company or a Subsidiary for which the
Company or any Subsidiary may be liable under any Environmental Law of the
jurisdiction in which such property or facility is located. With respect to any
such releases of Materials of Environmental Concern, the Company or a Subsidiary
has given all required notices (if any) to Governmental Entities (copies of
which have been provided to the Buyer). Neither the Company nor any Subsidiary
is aware of any releases of Materials of Environmental Concern at parcels of
real property or facilities other than those owned, operated or controlled by
the Company or a Subsidiary that could reasonably be expected to have an impact
on the real property or facilities owned, operated or controlled by the Company
or a Subsidiary. For purposes of this Agreement, "Materials of Environmental
Concern" means any chemicals, pollutants or contaminants, hazardous substances
(as such term is defined under CERCLA or any Environmental Law), solid wastes
and hazardous wastes (as such terms are defined under the United States
Resources Conservation and Recovery Act or any Environmental Law), toxic
materials, oil or petroleum and petroleum products, or any other material
subject to regulation under any Environmental Law, except for normal office and
cleaning products.
(c) Set forth in Section 2.19(c) of the Disclosure Schedule is
a list of all environmental reports, investigations and audits known to the
Company, any Subsidiary or any of the Company Stockholders (whether conducted by
or on behalf of the Company, a Subsidiary or a third party, and whether done at
the initiative of the Company, a Subsidiary or directed by a Governmental Entity
or other third party) issued or conducted during the past five years relating to
premises currently or previously owned or operated by the Company or a
Subsidiary. Complete and accurate copies of any such report, or the results of
any such investigation or audit, have been provided to the Buyer or its
advisors.
(d) Neither the Company nor any Subsidiary is aware of any
material environmental liability of the solid and hazardous waste transporters
and treatment, storage and disposal facilities that have been utilized by the
Company or a Subsidiary.
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2.20 LEGAL COMPLIANCE. Each of the Company and the Subsidiaries, and
the conduct and operations of their respective businesses, are and have been in
compliance with each law (including rules and regulations thereunder) of any
federal, state, local or foreign government, or any Governmental Entity, that
(a) affects or relates to this Agreement or the transactions contemplated hereby
or (b) is applicable to the Company or a Subsidiary or their respective
businesses.
2.21 PERMITS. The Company and the Subsidiaries have all permits,
licenses, registrations, certificates, orders or approvals from any Governmental
Entity (including without limitation those issued or required under applicable
export laws or regulations and those relating to the occupancy or use of owned
or leased real property) ("Permits") required for the Company and the
Subsidiaries to conduct their respective businesses as presently conducted or as
proposed to be conducted. Each such Permit is in full force and effect and, to
the Sellers' Knowledge, no suspension or cancellation of such Permit is
threatened and to the Sellers' Knowledge there is no basis for believing that
such Permit will not be renewable upon expiration. Each such Permit will
continue in full force and effect following the Closing.
2.22 CERTAIN BUSINESS RELATIONSHIPS WITH AFFILIATES. No Company
Stockholder or any Affiliate of any Company Stockholder (a) owns any property or
right, tangible or intangible, which is used in the business of the Company or
any Subsidiary, (b) has any claim or cause of action against the Company or any
Subsidiary, (c) is a party to any contract or other arrangement, written or
verbal, with the Company or any Subsidiary, or (d) owes any money to the Company
or any Subsidiary or is owed any money by the Company or any Subsidiary (the
agreements, arrangements and relationships described in this sentence are
hereinafter referred to as "Related Party Transactions"). Section 2.22 of the
Disclosure Schedule summarizes any Related Party Transactions.
2.23 BOOKS AND RECORDS. The minute books and other similar records of
the Company and each Subsidiary contain true and complete records of all actions
taken at any meetings of the Company's or such Subsidiary's stockholders, Board
of Directors or any committee thereof and of all written consents executed in
lieu of the holding of any such meeting. The books and records of the Company
and each Subsidiary accurately reflect the assets, liabilities, business,
financial condition and results of operations of the Company or such Subsidiary
and have been maintained in accordance with good business and bookkeeping
practices consistent with the practices of similar companies in the applicable
jurisdiction.
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2.24 BANKING FACILITIES. Section 2.24 of the Disclosure Schedule
identifies:
(a) Each bank, savings and loan or similar financial
institution in which the Company or any Subsidiary has an account or safety
deposit box and the numbers of the accounts or safety deposit boxes maintained
by the Company or such Subsidiary thereat; and
(b) The names of all persons authorized to draw on each such
account or to have access to any such safety deposit box facility.
2.25 BROKERS' FEES. Except as disclosed in Section 2.25 of the
Disclosure Schedule, neither the Company nor any of the Subsidiaries or Company
Stockholders has any liability or obligation to pay any fees or commissions to
any broker, finder or agent with respect to the transactions contemplated by
this Agreement.
2.26 POOLING. To the best of the Sellers' Knowledge, neither the
Company nor any of its Affiliates has through the date of this Agreement taken
or agreed to take any action that could reasonably be expected to prevent the
Company and the Buyer from accounting for the Acquisition as a "pooling of
interests" in conformity with United States generally accepted accounting
principles ("U.S. GAAP").
2.27 DISCLOSURE. No representation or warranty by the Company or
any of the Company Stockholders contained in this Agreement, and no statement
contained in the Disclosure Schedule or any other document, certificate or other
instrument delivered to or to be delivered by or on behalf of the Company or the
Company Stockholders pursuant to this Agreement, contains or will as of the
Closing Date contain any untrue statement of a material fact or omits or will as
of the Closing Date omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
ARTICLE III
FURTHER REPRESENTATIONS AND WARRANTIES
OF THE COMPANY STOCKHOLDERS
Each Company Stockholder severally represents and warrants to the Buyer
as follows:
3.1 OWNERSHIP OF STOCK; AUTHORITY.
(a) The Company Stockholder has good and marketable title,
free and clear of any and all Security Interests, to all of the Company Shares
listed on SCHEDULE I as being owned by such Company Stockholder. The Company
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Stockholder has the full right, power and authority to transfer, convey and sell
to the Buyer at the Closing the Company Shares to be sold by such Company
Stockholder and, upon consummation of the purchase contemplated hereby, the
Buyer will acquire from such Company Stockholder good and marketable title to
such Company Shares, free and clear of all covenants, conditions, restrictions,
voting trust arrangements, liens, charges, encumbrances, options and adverse
claims or rights whatsoever.
(b) The Company Stockholder has all requisite power and
authority to execute and deliver the Fundamental Agreements to which such
Company Stockholder is a party and to perform such Company Stockholder's
obligations under such Fundamental Agreements. Such Fundamental Agreements have
each been (or in the case of the Fundamental Agreements to be entered into on
the Closing Date, shall be when delivered) duly and validly executed and
delivered by such Company Stockholder, and each constitutes (or, in the case of
the Fundamental Agreements to be entered into on the Closing Date, shall
constitute) a valid and binding obligation of such Company Stockholder,
enforceable against such Company Stockholder in accordance with its terms,
subject to the effect of bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and except as the
availability of equitable remedies may be limited by general principles of
equity.
(c) Neither the execution and delivery of any or all of the
Fundamental Agreements to which such Company Stockholder is a party by such
Company Stockholder, nor the consummation by such Company Stockholder of the
transactions contemplated hereby or thereby, will (i) conflict with, result in a
breach of, constitute (with or without due notice or lapse of time or both) a
default under, or require any notice, consent or waiver under, any instrument,
contract, agreement or arrangement to which such Company Stockholder is a party
or by which such Company Stockholder is bound, (ii) result in the imposition of
any Security Interest upon the Company Shares owned by such Company Stockholder,
or (iii) violate any order, writ, injunction or decree applicable to such
Company Stockholder or to the Company Shares.
3.2 INVESTMENT REPRESENTATIONS. With respect to the Buyer Shares
issued to and acquired by the Company Stockholder hereunder:
(a) The Company Stockholder will be acquiring the Buyer Shares
to be issued to such Company Stockholder for his or her own account for
investment only, and not with a view to, or for sale in connection with, any
distribution of such Buyer Shares in violation of the Securities Act or any rule
or regulation under the Securities Act or any state or foreign securities law.
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(b) The Company Stockholder has had adequate opportunity to
obtain from representatives of the Buyer such information, in addition to the
representations set forth in the Agreement, as is necessary to evaluate the
merits and risks of the investment by such Company Stockholder in the Buyer;
provided, however, that the foregoing shall not limit or modify the
representations and warranties of the Buyer set forth in Article IV of this
Agreement or the right of any Company Stockholder to rely thereon.
(c) The Company Stockholder has sufficient experience in
business, financial and investment matters to be able to evaluate the risks
involved in the acquisition of the Buyer Shares to be issued to such Company
Stockholder and to make an informed investment decision with respect to such
investment.
(d) The Company Stockholder understands that the Buyer Shares,
if and when issued, will not have been registered under the Securities Act and
will be "restricted securities" within the meaning of Rule 144 under the
Securities Act; and the Buyer Shares will not be eligible to be sold,
transferred or otherwise disposed of unless they are subsequently registered
under the Securities Act or an exemption from registration is then available.
(e) A legend substantially in the following form will be
placed on the certificate representing any Buyer Shares which may be issued to
such Company Stockholder:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold, transferred or otherwise disposed of in the
absence of an effective registration statement under such Act
or an opinion of counsel satisfactory to the corporation to
the effect that such registration is not required."
3.3 ADDITIONAL REPRESENTATIONS BY NON-U.S. PERSONS. Each Company
Stockholder who is not a "U.S. person" (as defined in Regulation S promulgated
under the Securities Act ("Regulation S")) makes the following additional
representations with respect to the Buyer Shares issued to and acquired by such
Company Stockholder hereunder:
(a) The Company Stockholder understands and acknowledges that
(i) the Buyer Shares have not been registered under the Securities Act and may
not be offered or sold in the United States or to, or for the account or benefit
of, any U.S. person unless such securities are registered under the Securities
Act or such offer or sale is made pursuant to an exemption from the registration
requirements of the Securities Act and (ii) the Buyer Shares are being
distributed by the Buyer pursuant to the terms of Regulation S, which permits
securities to be sold to non-U.S. persons
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in "offshore transactions" (as defined in Regulation S), subject to certain
terms and conditions.
(b) The Company Stockholder is not a U.S. person and has
signed this Agreement outside the United States.
(c) The Company Stockholder acknowledges that for a period of
40 days following the Closing Date (the "Restricted Period"), the Company
Stockholder shall not (i) engage in any activity for the purpose of, or which
may reasonably be expected to have the effect of, conditioning the market in the
United States for the Buyer Shares or (ii) unless such Buyer Shares are
registered under the Securities Act or an exemption from the registration
requirements of the Securities Act is available, offer, sell or transfer the
Buyer Shares in the United States or to, or for the account or benefit of, a
U.S. person. The Company Stockholder understands that the Buyer Shares or any
interest therein are only transferable on the books and records of the transfer
agent and registrar of the Buyer. The Company Stockholder further understands
that such transfer agent and registrar will not register any transfer of the
Buyer Shares which the Buyer in good faith believes violates the restrictions
set forth in this paragraph (c), and that the Buyer may place stop transfer
orders with its transfer agent with respect to certificates representing Buyer
Shares.
(d) Unless the Buyer Shares shall first have been registered
under the Securities Act, any proposed offer, sale or transfer during the
Restricted Period of any of the Buyer Shares shall be subject to the condition
that the Company Stockholder must deliver to the Buyer (i) a written
certification that neither record nor beneficial ownership of the Buyer Shares
has been offered or sold in the United States or to, or for the account or
benefit of, any U.S. person, (ii) a written certification of the proposed
transferee that such transferee (or any account for which such transferee is
acquiring such Buyer Shares) is not a U.S. person, that such transferee is
acquiring such Buyer Shares for such transferee's own account (or an account
over which he or she has investment discretion), and that such transferee is
knowledgeable of and agrees to be bound by the restrictions on re-sale set forth
in this section and Regulation S during the Restricted Period, and (iii) a
written opinion of United States counsel, in form and substance reasonably
satisfactory to the Buyer, to the effect that the offer, sale and transfer of
such Buyer Shares are exempt from registration under the Securities Act.
(e) The Company Stockholder agrees that for the duration of
the Restricted Period the stock certificates representing the Buyer Shares shall
bear the legend set forth below:
"The shares of Common Stock represented by this
certificate may not be offered, sold or transferred except in
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accordance with the provisions of Regulation S under the
Securities Act of 1933, as amended."
3.4 ADDITIONAL REPRESENTATIONS BY U.S. PERSONS. Each Company
Stockholder who is a U.S. person represents and warrants that he is an
Accredited Investor within the definition of Rule 501(a) under the Securities
Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to each Company Stockholder as
follows:
4.1 ORGANIZATION. The Buyer is a corporation duly organized,
validly existing and in corporate and tax good standing under the laws of the
State of Delaware.
4.2 CAPITALIZATION. The authorized capital stock of the Buyer
consists of 80,000,000 shares of Buyer Common Stock, of which 35,055,430 shares
were issued and outstanding and 509 shares were held in the treasury of the
Buyer as of June 30, 1997. All of the issued and outstanding shares of Buyer
Common Stock are duly authorized, validly issued, fully paid, nonassessable and
free of all preemptive rights. All of the Buyer Shares will be, when issued in
accordance with this Agreement, duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights.
4.3 AUTHORIZATION OF TRANSACTION. The Buyer has all requisite
power and authority to execute and deliver the Fundamental Agreements to which
it is a party and the Other Stock Purchase Agreements and to perform its
obligations under each such agreement. The execution and delivery of such
agreements by the Buyer and the performance of such agreements and the
consummation of the transactions contemplated thereby by the Buyer have been
(or, in the case of the Fundamental Agreements to be entered into on the Closing
Date and the Other Stock Purchase Agreements, shall be when delivered) duly and
validly authorized by all necessary corporate action on the part of the Buyer.
Each Fundamental Agreement to which the Buyer is a party and the Other Stock
Purchase Agreements has been (or, in the case of the Fundamental Agreements to
be entered into on the Closing Date and the Other Stock Purchase Agreements,
shall be when delivered) duly and validly executed and delivered by the Buyer
and constitutes (or, in the case of the Fundamental Agreements to be entered
into on the Closing Date and the Other Stock Purchase Agreements, shall
constitute when delivered) a valid and binding obligation of the Buyer,
enforceable against the Buyer in accordance with its terms, subject to the
effect of bankruptcy, insolvency, moratorium or other similar laws affecting the
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enforcement of creditors' rights generally and except as the availability of
equitable remedies may be limited by general principles of equity.
4.4 NONCONTRAVENTION. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state and foreign
securities laws, neither the execution and delivery by the Buyer of the
Fundamental Agreements to which the Buyer is a party nor the consummation of the
transactions contemplated thereby will (a) conflict with or violate any
provision of the charter or By-laws of the Buyer, (b) require on the part of the
Buyer any filing with, or permit, authorization, consent or approval of, any
Governmental Entity, (c) conflict with, result in breach of, constitute (with or
without due notice or lapse of time or both) a default under, result in the
acceleration of, create in any party any right to accelerate, terminate, modify
or cancel, or require any notice, consent or waiver under, any contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest or
other arrangement to which the Buyer is a party or by which the Buyer is bound
or to which any of its assets are subject, or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Buyer or any
of its properties or assets.
4.5 REPORTS AND FINANCIAL STATEMENTS. The Buyer has previously
furnished to the Company complete and accurate copies, as amended or
supplemented, of the Buyer's (a) Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, as filed by the Buyer with the United States Securities
and Exchange Commission (the "SEC"), and (b) all reports filed by the Buyer with
the SEC under Section 13 or 15 of the Securities Exchange Act of 1934 (as
amended, the "Exchange Act") since December 31, 1996 (such materials, together
with any amendments or supplements thereto, are collectively referred to herein
as the "Buyer Reports"). As of their respective dates, the Buyer Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited financial statements and unaudited interim financial statements of the
Buyer included in the Buyer Reports (i) comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, (ii) have been prepared in
accordance with U.S. GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated therein or in the notes thereto, and
in the case of quarterly financial statements, as permitted by Form 10-Q under
the Exchange Act), (iii) fairly present the consolidated financial condition,
results of operations and cash flows of the Buyer as of the respective dates
thereof and for the periods referred to therein, and (iv) are consistent with
the books and records of the Buyer.
4.6 ABSENCE OF MATERIAL ADVERSE CHANGES. Since December 31, 1996, there
has not been any material adverse change in the assets, business, financial
condition
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or results of operations of the Buyer, nor has there occurred any event or
development which could reasonably be foreseen to result in such a material
adverse change in the future.
4.7 POOLING. To the best knowledge of the Buyer, neither the Buyer nor
any of its Affiliates has through the date of this Agreement taken or agreed to
take any action that could reasonably be expected to prevent the Company and the
Buyer from accounting for the Acquisition as a "pooling of interests" in
conformity with U.S.
GAAP.
4.8 BROKERS' FEES. The Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement except to Robertson, Stephens &
Company LLC.
4.9 DISCLOSURE. No representation or warranty by the Buyer contained
in this Agreement, and no statement contained in the any document, certificate
or other instrument delivered to or to be delivered by or on behalf of the Buyer
pursuant to this Agreement, contains or will as of the Closing Date contain any
untrue statement of a material fact or omits or will as of the Closing Date omit
to state any material fact necessary, in light of the circumstances under which
it was or will be made, in order to make the statements herein or therein not
misleading.
4.10 OPINION OF FINANCIAL ADVISOR. The Buyer has received an opinion of
Robertson, Stephens & Company LLC, the financial advisor to the Buyer, to the
effect that the consideration payable for the Outstanding Company Shares and
shares of capital stock of the Company issuable upon exercise of the Options in
connection with the Acquisition is fair, from a financial point of view, to the
Buyer.
4.11 REPORTING ISSUER. The Buyer represents and warrants to each
Company Stockholder that is not a U.S. person that the Buyer is a "reporting
issuer" (as defined in Regulation S). The Buyer, its Affiliates and any person
acting on behalf of, or as agent of, any of the foregoing, whether as principal
or agent, (a) has distributed or will distribute the Buyer Shares to such
Company Stockholders only in "offshore transactions" (as defined in Regulation
S), (b) has not engaged and will not engage with respect to the Buyer Shares
issued or to be issued to such Company Stockholders in any "directed selling
efforts" (as defined in Regulation S) in or directed toward the United States,
and (c) has complied and will comply with all "offering restrictions" (as
defined in Regulation S) in respect of such Buyer Shares.
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ARTICLE V
COVENANTS
5.1 CONDUCT OF BUSINESS. Except as contemplated by this Agreement,
during the period from the date of this Agreement to the Closing, the Company
shall (and shall cause each Subsidiary to) conduct its operations in the
Ordinary Course of Business and in compliance with all applicable laws and
regulations and, to the extent consistent therewith, use all reasonable efforts
to preserve intact its current business organization, keep its physical assets
in good working condition, keep available the services of its current officers
and employees and preserve its relationships with customers, suppliers and
others having business dealings with it to the end that its goodwill and ongoing
business shall not be impaired in any material respect. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the Closing, neither the Company nor any Subsidiary shall, without the prior
written consent of the Buyer:
(a) issue, sell, deliver or agree or commit to issue, sell or
deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) or authorize the
issuance, sale or delivery of, or redeem or repurchase, any stock of any class
or any other securities or any rights, warrants or options to acquire any such
stock or other securities (except pursuant to the conversion or exercise of
convertible securities, Options or Warrants outstanding on the date hereof), or
amend any of the terms of any such convertible securities, Options or Warrants;
(b) split, combine or reclassify any shares of its capital
stock or declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of its capital
stock;
(c) create, incur or assume any debt not currently outstanding
(including obligations in respect of capital leases) except in the Ordinary
Course of Business; assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person or entity; or make any loans, advances or capital contributions
to, or investments in, any other person or entity;
(d) enter into, adopt or amend any Employee Benefit Plan or
any employment or severance agreement or arrangement of the type described in
Section 2.18(d) or (except for normal increases in the Ordinary Course of
Business) increase in any manner the compensation or fringe benefits of, or
materially modify the employment terms of, its directors, officers or employees,
generally or individually, or pay any benefit not required by the terms in
effect on the date hereof of any existing Employee Benefit Plan;
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(e) acquire, sell, lease, encumber or dispose of any assets or
property (including without limitation any shares or other equity interests in
or securities of any Subsidiary or any corporation, partnership, association or
other business organization or division thereof), other than purchases and sales
of assets in the Ordinary Course of Business;
(f) amend its articles of association, charter and/or by-laws,
as applicable;
(g) change in any material respect its accounting methods,
principles or practices, except insofar as may be required by a generally
applicable change in GAAP;
(h) discharge or satisfy any Security Interest or pay any
obligation or liability other than in the Ordinary Course of Business;
(i) mortgage or pledge any of its property or assets or
subject any such assets to any Security Interest;
(j) sell, assign, transfer or license any Intellectual
Property, other than in the Ordinary Course of Business;
(k) enter into, amend, terminate, take or omit to take any
action that would constitute a violation of or default under, or waive any
rights under, any material contract or agreement;
(l) make or commit to make any capital expenditure in excess
of $50,000 per item or $250,000 in the aggregate;
(m) take any action or fail to take any action permitted by
this Agreement with the knowledge that such action or failure to take action
would result in (i) any of the representations and warranties of the Company or
the Company Stockholders set forth in this Agreement or any of the Other Stock
Purchase Agreements becoming untrue or (ii) any of the conditions to any Party's
obligations set forth in Article VI not being satisfied;
(n) take any action that would jeopardize the treatment of the
Acquisition as a "pooling of interests" for accounting purposes; or
(o) agree in writing or otherwise to take any of the foregoing
actions.
5.2 NOTICE OF BREACHES. The Company shall promptly deliver to the
Buyer written notice of any event or development that would (a) render any
statement, representation or warranty of the Company or the Company Stockholders
in this
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Agreement (including the Disclosure Schedule) inaccurate or incomplete in any
respect, or (b) constitute or result in a breach by the Company of, or a failure
by the Company to comply with, any agreement or covenant in this Agreement
applicable to such party. No such disclosure shall be deemed to avoid or cure
any such misrepresentation or breach.
5.3 EXCLUSIVITY. Neither the Company nor any of the Company
Stockholders shall, and the Company shall use its best efforts to cause its
Affiliates and each of its officers, directors, employees, representatives and
agents not to, directly or indirectly, (a) solicit, initiate, engage or
participate in or encourage discussions or negotiations with any person or
entity (other than the Buyer) concerning any merger, consolidation, sale of
material assets, tender offer, recapitalization, accumulation of Outstanding
Company Shares, proxy solicitation or other business combination involving the
Company, any Subsidiary or any division of the Company or any Subsidiary or (b)
provide any nonpublic information concerning the business, properties or assets
of the Company or any Subsidiary to any person or entity (other than the Buyer).
The Company shall immediately notify the Buyer of, and shall disclose to the
Buyer all details of, any inquiries, discussions or negotiations of the nature
described in the first sentence of this Section 5.3.
5.4 AGREEMENTS FROM CERTAIN AFFILIATES OF THE COMPANY. Concurrently
with the execution of this Agreement, the Company shall deliver to the Buyer a
list of all persons or entities who are at such time Affiliates of the Company
(the "Company Affiliates"). In order to help ensure that the Acquisition will be
accounted for as a "pooling of interests" and that the issuance of Buyer Shares
will comply with the Securities Act, the Company shall cause each Company
Affiliate to execute and deliver to the Buyer, on the Agreement Date, a written
agreement substantially in the form attached hereto as EXHIBIT E.
5.5 LISTING OF BUYER SHARES. The Buyer shall use its best efforts to
list the Buyer Shares and the shares of Buyer Common Stock to be issued under
the Other Stock Purchase Agreements on the Nasdaq National Market and shall use
its best efforts to cause such listing to be approved prior to the Closing.
5.6 DELIVERY OF INTERIM FINANCIAL STATEMENTS. As promptly as possible
following the last day of each month after the Agreement Date until the Closing
Date, and in any event within 20 days after the end of each such month, the
Company shall deliver to the Buyer the unaudited balance sheet of the Company
and the related statements profit and loss for the one-month period then ended,
all certified by the chief financial officer of the Company to the effect that
such interim financial statements are prepared in accordance with GAAP and
fairly present the financial condition of the Company as of the date thereof and
for the period covered thereby.
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5.7 BEST EFFORTS TO OBTAIN SATISFACTION OF CONDITIONS. Each of the
Parties shall use its best efforts, to the extent commercially reasonable, to
take all actions and to do all things necessary, proper or advisable to
consummate Acquisition and the transactions contemplated by this Agreement and
the Other Stock Purchase Agreements; provided, however, that notwithstanding
anything in this Agreement to the contrary, the Buyer shall not be required to
sell or dispose of or hold separately (through a trust or otherwise) any assets
or businesses of the Buyer or its Affiliates.
5.8 NOTICES AND CONSENTS. Each of the Buyer, the Company and the
Company Stockholders shall use its respective best efforts to obtain, at its
expense, all such waivers, permits, consents, approvals or other authorizations
from third parties and Governmental Entities, and to effect all such
registrations, filings and notices with or to third parties and Governmental
Entities, as may be required by or with respect to the Buyer, the Company or the
Selling Stockholders, respectively, in connection with the transactions
contemplated by this Agreement and the Other Stock Purchase Agreements
(including without limitation, with respect to the Company, those listed in
Section 2.3 of the Disclosure Schedule).
5.9 FULL ACCESS. The Company shall (and shall cause each
Subsidiary to) permit representatives of the Buyer to have full access (at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Company and the Subsidiaries) to all premises,
properties, financial and accounting records, contracts, other records and
documents, and personnel, of or pertaining to the Company and each of the
Subsidiaries. The officers and management of the Company and the Subsidiaries
shall cooperate fully with the Buyer's representatives and agents and shall make
themselves available to the extent necessary to complete the due diligence
process and the Closing. The Company shall, at the request of the Buyer,
introduce the Buyer to the principal suppliers, customers and employees and the
Company and the Subsidiaries to facilitate discussions between such persons and
the Buyer in regard to the conduct of the business of the Company and the
Subsidiaries following the Closing.
5.10 WAIVER OF RIGHTS OF FIRST REFUSAL. Each Company Stockholder,
by his or her execution of this Agreement, expressly waives any and all rights
of first refusal and rights of first offer, including without limitation the
rights of first refusal set forth in the Company's Articles of Association and
in the Consortium Agreement dated September 15, 1995, as amended, among the
holders of the Company's Series A Stock, with respect to any offer to sell or
sale of Outstanding Company Shares by any person or entity in connection with
the Acquisition.
5.11 INDEMNIFICATION; DISCHARGE OF DIRECTOR LIABILITY.
(a) From and after the Closing Date, the Buyer will fulfill,
assume and honor in all respects the obligations of the Company and its
Subsidiaries with
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respect to any written indemnification agreement or arrangement between the
Company and/or its Subsidiaries and any of their respective directors and
officers existing and in force as of the date hereof, copies of which are
attached to Section 5.11 of the Disclosure Schedule.
(b) The Buyer shall discharge or procure the discharge of all
directors of the Company and its Subsidiaries in office immediately prior to
Closing from their personal liability for the period from July 1, 1996 to June
30, 1997 on the next annual general meetings of the Company and the
Subsidiaries, which discharges shall not in any way limit or restrict or be
construed to limit or restrict the Buyer's rights against any of the Selling
Stockholders under this Agreement or any of the Other Stock Purchase Agreements.
In addition, the Buyer shall, provided that the auditors so recommend, discharge
or procure the discharge of all directors of the Company and its Subsidiaries in
office immediately prior to Closing from their personal liability for the period
from July 1, 1997 to the Closing at the annual general meetings of the Company
and the Subsidiaries for the fiscal year ending June 30, 1998, which discharges
shall not in any way limit or restrict or be construed to limit or restrict the
Buyer's rights against any of the Selling Stockholders under this Agreement or
any of the Other Stock Purchase Agreements.
(c) From and after the Closing Date, the Buyer shall
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date of this Agreement, a director or officer of the Company
or any of its Subsidiaries (the "Indemnified Parties") against all losses,
claims, damages, costs, expenses, liabilities or judgments or amounts that are
paid in settlement with the approval of the Buyer (which approval shall not be
unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation under any United States corporate law and asserted
or claimed after the Closing Date based in whole or in part on or arising in
whole or in part out of the fact that such person is or was a director or
officer of the Company or any of its Subsidiaries, whether pertaining to any
matter exiting or occurring at or prior to the Closing Date ("Indemnified
Liabilities"), including without limitation all losses, claims, damages, costs,
expenses, liabilities or judgments based in whole or in part on, or arising in
whole or in part out of, or pertaining to this Agreement or the transactions
contemplated hereby, in each case to the full extent a corporation is permitted
under the Delaware General Corporation Law of the United States (the "DGCL"), or
the General Corporation Law of the State of California (the "CGCL"), as
applicable, to indemnify its own directors and officers. In addition, the Buyer
will pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party upon receipt of the undertaking
contemplated by Section 145(e) of the DGCL or Section 317(f) of the CGCL, as may
be applicable. Without limiting the foregoing, in the event any such claim,
action, suit, proceeding or investigation is brought against any Indemnified
Party after the Closing Date, (i) the Indemnified Parties may retain counsel
reasonably satisfactory to the Buyer, (ii) the Buyer shall pay all reasonable
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fees and expenses of such counsel for the Indemnified Parties promptly as
statements therefor are received, and (iii) the Buyer will use all reasonable
efforts to assist in the vigorous defense of any such matter, provided that the
Buyer shall not be liable for any settlement of any claim effected without its
written consent, which consent, however, shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this Section 5.11(c),
upon learning of any such claim, action, suit, proceeding or investigation,
shall promptly notify the Buyer (but the failure so to notify the Buyer shall
not relieve it from any liability which it may have under this Section 5.11(c)
except to the extent such failure prejudices such party) and shall deliver to
the Buyer the undertaking contemplated by Section 145(e) of the DGCL or Section
317(f) of the CGCL, as may be applicable. The Indemnified Parties as a group may
retain only one law firm to represent them with respect to each such matter
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Parties.
(d) The Buyer shall honor, and shall cause the U.K. Subsidiary
of the Company to honor, all indemnification obligations of the Company's U.K.
Subsidiary to each present and former director and officer of the Company's U.K.
Subsidiary to the fullest extent that may be required by the U.K. Subsidiary's
Article's of Association and Paragraph 118 of Table A of the Companies Act 1995
and the laws of the United Kingdom or any political subdivision thereof.
5.12 SHARING OF DATA. The Company Stockholders shall have the right
for a period of seven years following the Closing Date to have reasonable access
to the financial and Tax information acquired by the Buyer in connection with
the Acquisition for the limited purpose of complying with their respective
obligations under applicable Tax laws and regulations.
5.13 LEGEND REMOVAL. The Buyer agrees to use all reasonable efforts
to promptly respond to any appropriate requests for the removal of the legends
affixed to the certificates representing the Buyer Shares.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligation of the
Buyer to consummate the transactions to be performed by the Buyer in connection
with the Closing is subject to the satisfaction, or waiver by the Buyer, of the
following conditions:
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(a) the Company and the Company Stockholders shall have
obtained all of the waivers, permits, consents, approvals or other
authorizations, and effected all of the registrations, filings and notices,
necessary for the consummation by the Company and the Seller Shareholders of the
Acquisition and the transactions contemplated by this Agreement and the Other
Stock Purchase Agreements;
(b) the representations and warranties of the Company and the
Company Stockholders set forth in Articles II and III above shall have been true
and correct when made on the Agreement Date and shall be true and correct in all
material respects as of the Closing Date as if made as of the Closing Date,
except for representations and warranties made as of a specific date, which
shall be true and correct as of such date;
(c) each of the Company and the Company Stockholders shall
have performed or complied with their agreements and covenants required to be
performed or complied with under this Agreement as of or prior to the Closing;
(d) no action, suit or proceeding shall be pending or
threatened by or before any Governmental Entity wherein an unfavorable judgment,
order, decree, stipulation or injunction would (i) prevent consummation of the
Acquisition or any of the transactions contemplated by this Agreement or any of
the Other Stock Purchase Agreements, (ii) cause the Acquisition or any of the
transactions contemplated by this Agreement or any of the Other Stock Purchase
Agreements to be rescinded following consummation, or (iii) affect adversely the
right of the Company or any of the Subsidiaries to own, operate or control any
of its assets or operations, and no such judgment, order, decree, stipulation or
injunction shall be in effect;
(e) the Company and the Stockholders' Representative shall
have delivered to the Buyer a certificate (without qualification as to knowledge
or materiality or otherwise) to the effect that each of the conditions specified
in clauses (a) through (d) of this Section 6.1 is satisfied in all respects;
(f) the Buyer shall have received from Lagerlof & Leman,
Swedish counsel to the Company and the Selling Stockholders, and Gray Cary Ware
& Freidenrich, United States special counsel to the Company, opinions in the
forms attached hereto as EXHIBITS F-1 and F-2, addressed to the Buyer and dated
as of the Closing Date;
(g) the Buyer and each of the Company Stockholders named
therein shall have entered into the Registration Rights Agreement and such
Agreement shall be in full force and effect on the Closing Date in accordance
with its terms;
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(h) the Buyer, the Selling Stockholders and the Escrow Agent
shall have entered into the Escrow Agreement and such Agreement shall be in full
force and effect on the Closing Date in accordance with its terms;
(i) the Buyer shall have received the resignations, effective
as of the Closing Date, of each director of the Company and the Subsidiaries;
(j) the Company shall have delivered to the Buyer a
registration certificate issued by the Patent and Registration Office as of the
Closing Date as to the continued legal existence of the Company and its Swedish
Subsidiary as of the Closing Date;
(k) the Company shall have delivered to the Buyer copies of
the resolutions authorizing the Acquisition and the transactions contemplated by
this Agreement;
(l) the Buyer shall have received a letter from each of
Lindebergs and Deloitte & Touche, L.L.P., auditors for the Company and the
Buyer, respectively, in a form reasonably satisfactory to the Buyer, to the
effect that the Company and, in the case of the letter from Deloitte & Touche,
L.L.P., the Buyer may treat the Acquisition as a "pooling of interests" for
accounting purposes;
(m) each of Hans Tholander, Johan Borendal, Bjorn Oste, Khris
Loux and Peter Rostin shall have received an employment offer letter from the
Company or the Buyer in substantially the form attached hereto as EXHIBIT C;
(n) each of Rolf Ljung and Peter Loux shall have entered into
a Consulting Agreement with the Company and the Buyer in substantially the form
attached hereto as EXHIBIT D and each such Agreement shall be in full force and
effect on the Closing Date in accordance with its terms;
(o) the Buyer shall have consummated the transactions
contemplated by the Other Stock Purchase Agreements; and
(p) all actions to be taken by the Company and the Company
Stockholders in connection with the Acquisition and the consummation of the
transactions contemplated hereby and all certificates, opinions, instruments and
other documents required to effect the transactions contemplated hereby shall be
reasonably satisfactory in form and substance to the Buyer.
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE COMPANY
STOCKHOLDERS. The obligation of the Company and the Company Stockholders to
consummate the transactions to be performed by them in connection with the
Closing
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are subject to the satisfaction, or waiver by the Company and the Stockholders'
Representative, of the following conditions:
(a) the Buyer shall have obtained all of the waivers, permits,
consents, approvals or other authorizations, and effected all of the
registrations, filings and notices, necessary for the consummation by the Buyer
of the Acquisition and the transactions contemplated by this Agreement and the
Other Stock Purchase Agreements;
(b) the representations and warranties of the Buyer as set
forth in Article IV above shall have been true and correct when made on the
Agreement Date and shall be true and correct in all material respects as of the
Closing Date as if made as of the Closing Date, except for representations and
warranties made as of a specific date, which shall be true and correct as of
such date;
(c) the Buyer shall have performed or complied with its
agreements and covenants required to be performed or complied with under this
Agreement as of or prior to the Closing;
(d) the Buyer shall have delivered to the Company and the
Stockholders' Representative a certificate (without qualification as to
knowledge or materiality or otherwise) to the effect that each of the conditions
specified in clauses (a) through (c) of this Section 6.2 is satisfied in all
respects;
(e) the Stockholders' Representative shall have received from
Hale and Dorr LLP, counsel to the Buyer, an opinion in the form attached hereto
as EXHIBIT G, addressed to the Selling Stockholders and dated as of the Closing
Date;
(f) the Buyer and each of the Company Stockholders named
therein shall have entered into the Registration Rights Agreement and such
Agreement shall be in full force and effect on the Closing Date in accordance
with its terms;
(g) the Buyer, the Selling Stockholders and the Escrow Agent
shall have entered into the Escrow Agreement and such Agreement shall be in full
force and effect on the Closing Date in accordance with its terms;
(h) the Buyer shall have delivered to the Stockholders'
Representative a certificate issued by the Secretary of State of the State of
Delaware as of the Closing Date as to the continued legal existence and good
standing of the Buyer in Delaware as of the Closing Date;
(i) the Buyer shall have delivered to the Stockholders'
Representative copies of the resolutions authorizing the Acquisition and the
transactions contemplated by this Agreement;
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(j) the Stockholders' Representative shall have received a
copy of a letter from each of Lindebergs and Deloitte & Touche, L.L.P., auditors
for the Company and the Buyer, respectively, in a form reasonably satisfactory
to the Buyer, to the effect that the Company and, in the case of the letter from
Deloitte & Touche, L.L.P., the Buyer may treat the Acquisition as a "pooling of
interests" for accounting purposes;
(k) each of Hans Tholander, Johan Borendal, Bjorn Oste, Khris
Loux and Peter Rostin shall have received an employment offer letter from the
Company or the Buyer in substantially the form attached hereto as EXHIBIT C;
(l) each of Rolf Ljung and Peter Loux shall have entered into
a Consulting Agreement with the Company and the Buyer in substantially the form
attached hereto as EXHIBIT D and each such Agreement shall be in full force and
effect on the Closing Date in accordance with its terms;
(m) the Buyer Shares and the shares of Buyer Common Stock to
be issued under the Other Stock Purchase Agreements shall have been approved for
listing on the Nasdaq National Market, subject to official notice of issuance;
and
(n) all actions to be taken by the Buyer in connection with
the Acquisition and the consummation of the transactions contemplated hereby and
all certificates, opinions, instruments and other documents required to effect
the transactions contemplated hereby shall be reasonably satisfactory in form
and substance to the Stockholders' Representative.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION. Subject to the terms of Section 7.2 below,
the Company Stockholders shall indemnify the Buyer and, if the Closing occurs,
the Company (together, the "Indemnified Persons") in respect of, and hold the
Indemnified Persons harmless against, any and all claims, debts, obligations and
other liabilities (whether absolute, accrued, contingent, fixed or otherwise,
known or unknown, due or to become due or otherwise), monetary damages, fines,
fees, penalties, interest obligations, deficiencies, losses and expenses
(including without limitation amounts paid in settlement, interest, court costs,
costs of investigators, reasonable fees and expenses of attorneys, accountants,
financial advisors and other experts, and other expenses of litigation) incurred
or suffered by the Indemnified Persons or any Affiliate thereof ("Damages"):
(a) resulting from, relating to or constituting any
misrepresentation, breach of warranty or failure to perform any covenant or
agreement of the Company,
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<PAGE> 48
the Company Stockholders or any of the other Selling Stockholders contained in
this Agreement or any of the Other Stock Purchase Agreements; or
(b) resulting from or relating to any claim by a stockholder
or former stockholder of the Company, or any other person or Business Entity,
seeking to assert, or based upon: (A) ownership or rights to ownership of any
shares of stock of the Company; (B) any rights of a stockholder (other than the
right to receive the Buyer Shares pursuant to this Agreement or any of the Other
Stock Purchase Agreements), including any option, preemptive rights or rights to
notice or to vote; or (C) any rights under the Articles of Association of the
Company; or
(c) resulting from or relating to any untrue statement of a
material fact or omission of a material fact necessary in order to make any of
the statements included in the Information Package (as defined below) not
misleading (provided that the Company Stockholders shall have no responsibility
for, and shall have no indemnification obligation with respect to, the accuracy
or completeness of any of the Buyer Reports or any of the other written
materials provided by the Buyer to the Company and included in the Information
Package). For purposes of this Agreement, the term "Information Package" shall
mean the transaction summary regarding (i) the Acquisition, (ii) the terms of
the Fundamental Agreements and the Other Stock Purchase Agreements, (iii) the
Company and (iv) the Buyer, together with the materials provided to stockholders
of the Company in connection therewith, prepared and distributed by the Company
to Selling Stockholders.
Each Company Stockholder acknowledges that he or she has received copies of the
Other Stock Purchase Agreements and has reviewed such Agreements.
7.2 METHOD OF ASSERTING CLAIMS.
(a) All claims for indemnification by an Indemnified Person
pursuant to this Article VII shall be made in accordance with the provisions of
this Section 7.2 and the Escrow Agreement.
(b) The Indemnified Person shall give prompt written
notification to the Stockholders' Representative of the commencement of any
action, suit or proceeding relating to a third party claim for which
indemnification pursuant to this Article VII and/or the corresponding
indemnification provisions of any of the Other Stock Purchase Agreements may be
sought; provided, however, that no delay on the part of the Indemnified Person
in notifying the Stockholders' Representative shall relieve the Selling
Stockholders from any liability or obligation under this Article VII and/or the
corresponding indemnification provisions of any of the Other Stock Purchase
Agreements except to the extent of any damage or liability caused by or arising
out of such delay. Within 20 days after delivery of such notification, the
Stockholders' Representative may, upon written notice thereof to the Indemnified
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<PAGE> 49
Person, assume control of the defense of such action, suit or proceeding with
counsel reasonably satisfactory to the Indemnified Person, provided the
Stockholders' Representative acknowledges in writing to the Indemnified Person,
on behalf of the Selling Stockholders, that the Selling Stockholders shall
indemnify the Indemnified Person with respect to all elements of such action,
suit or proceeding and any Damages, fines, costs or other liabilities that may
be assessed against the Indemnified Person in connection with such action, suit
or proceeding. If the Stockholders' Representative does not so assume control of
such defense, the Indemnified Person shall control such defense. The party not
controlling such defense may participate therein at its own expense; provided,
that if the Stockholders' Representative assumes control of such defense and the
Indemnified Person reasonably concludes that the indemnifying parties and the
Indemnified Person have conflicting interests or different defenses available
with respect to such action, suit or proceeding, the reasonable fees and
expenses of counsel to the Indemnified Person shall be considered "Damages" for
purposes of this Agreement. The party controlling such defense shall keep the
other party advised of the status of such action, suit or proceeding and the
defense thereof and shall consider in good faith recommendations made by the
other party with respect thereto. The Indemnified Person shall not agree to any
settlement or the entry of a judgment in any such action, suit or proceeding
without the prior written consent of the Stockholders' Representative, which
shall not be unreasonably withheld or delayed. The Stockholders' Representative
shall not agree to any settlement or the entry of a judgment in any action, suit
or proceeding without the prior written consent of the Indemnified Person, which
shall not be unreasonably withheld (it being understood that it is reasonable to
withhold such consent if, among other things, the settlement or the entry of a
judgment (A) lacks a complete release of the Indemnified Person for all
liability with respect thereto or (B) imposes any liability or obligation on the
Indemnified Person).
7.3 SURVIVAL.
(a) Unless otherwise specified in this Section 7.3 or
elsewhere in this Agreement, all provisions of this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby and shall
continue forever in full force and effect in accordance with their terms.
(b) The representations and warranties of the Company
Stockholders set forth in Articles II and III above and the indemnification
obligations set forth in this Article VII:
(i) shall survive the Closing and the
consummation of the transactions contemplated hereby and continue until the
first anniversary of the Closing Date (except in the case of the representations
and warranties set forth in clause (a) of Section 2.6 of this Agreement and the
indemnification obligations with
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<PAGE> 50
respect to the representations and warranties set forth in the corresponding
provision of the Other Stock Purchase Agreement entered into with the Company
Stockholders who are parties hereto, which shall continue until the issuance of
the Buyer's audited financial statements for the year ending December 31, 1997);
and
(ii) shall not be affected by any examination
made for or on behalf of the Buyer or the knowledge of any of the Buyer's
officers, directors, stockholders, employees or agents.
(c) The date on which any particular representation,
warranty or indemnification obligation of each of the Company Stockholders
terminates shall be referred to herein and in the Escrow Agreement as the
"Termination Date." If a notice of a claim is given in accordance with the
notice provisions of this Agreement or the Escrow Agreement before the
Termination Date, then (notwithstanding the occurrence of the Termination Date)
the representation, warranty or indemnification obligation applicable to such
claim shall survive until, but only for purposes of, the resolution of such
claim.
7.4 LIMITATIONS. Notwithstanding anything to the contrary herein,
except as otherwise provided in Section 5(c) of the Escrow Agreement, (a) the
aggregate liability of the Company Stockholders for Damages under this Article
VII shall not exceed the fair market value of the Escrow Shares, as determined
in accordance with the Escrow Agreement, and shall be satisfied only from the
Escrow Shares, and (b) the Company Stockholders and the other Selling
Stockholders shall be liable under the indemnification provisions contained in
Section 7.1(a) of this Agreement and the indemnification provisions contained in
the Other Stock Purchase Agreements for only that portion of the aggregate
Damages which exceeds $500,000. No Company Stockholder shall have any right of
contribution against the Company with respect to any breach by the Company of
any of its representations, warranties, covenants or agreements. Except with
respect to claims based on fraud and except as otherwise provided in Section
5(c) of the Escrow Agreement, the shares of Buyer Common Stock held pursuant to
the Escrow Agreement shall be the Buyer's sole and exclusive remedy for Damages
resulting from or relating to any breach of any representation, warranty,
covenant or indemnification obligation under this Agreement or the Other Stock
Purchase Agreements. The indemnification obligations of the Company Stockholders
pursuant to this Article VII shall be joint and several except as otherwise
provided in Section 5(c) of the Escrow Agreement.
ARTICLE VIII
TERMINATION
8.1 TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement prior to the Closing Date only as provided below:
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<PAGE> 51
(a) the Parties may terminate this Agreement by mutual written
consent;
(b) the Buyer may terminate this Agreement by giving written
notice to the Company and the Stockholders' Representative in the event the
Company or any of the Selling Stockholders are in breach, and the Company or the
Stockholders' Representative may terminate this Agreement by giving written
notice to the Buyer in the event the Buyer is in breach, of any material
representation, warranty or covenant contained in this Agreement or any of the
Other Stock Purchase Agreements, and such breach is not remedied within 10 days
of delivery of written notice thereof;
(c) the Buyer may terminate this Agreement by giving written
notice to the Company and the Stockholders' Representative if the Closing shall
not have occurred on or before August 31, 1997 by reason of the failure of any
condition precedent under Section 6.1 above (unless the failure results
primarily from a breach by the Buyer of any representation, warranty or covenant
contained in this Agreement or any of the Other Stock Purchase Agreements); and
(d) the Company and the Stockholders' Representative may
terminate this Agreement by giving written notice to the Buyer if the Closing
shall not have occurred on or before August 31, 1997 by reason of the failure of
any condition precedent under Section 6.2 above (unless the failure results
primarily from a breach by the Company or the Selling Stockholders of any
representation, warranty or covenant contained in this Agreement or any of the
Other Stock Purchase Agreements).
8.2 EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 8.1 above, all obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party (except for any
liability of any Party for breaches of this Agreement).
ARTICLE IX
DEFINITIONS
For purposes of this Agreement, each of the following defined terms is
defined in the Section of this Agreement indicated below.
Defined Term Section
------------ -------
Acquisition 1.3(b)
Affiliate 2.13(a)(vi)
Agreement Introduction
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<PAGE> 52
Agreement Date Introduction
Audited Financial Statements 2.5
Balance Sheet Date 2.5
Business Entity 2.3
Buyer Introduction
Buyer Common Stock 1.5
Buyer Reports 4.5
Buyer Shares 1.5
CERCLA 2.19(a)
CGCL 5.11(c)
Closing 1.1
Closing Date 1.3(a)
Code 1.8(a)
Company Introduction
Company Affiliates 5.4
Company Shares Preliminary Statement
Company Stockholders Introduction
Damages 7.1
DGCL 5.11(c)
Disclosure Schedule Article II
Employees 2.17(a)
Employee Benefit Plan 2.18(a)
Environmental Law 2.19(a)
ERISA 2.18(a)
ERISA Affiliate 2.18(a)
Escrow Agreement 1.4(e)
Escrow Shares 1.5
Exchange Act 4.5
Financial Statements 2.5
Fundamental Agreements 2.1(b)
GAAP 2.5
Governmental Entity 2.3
Indemnified Liabilities 5.11(c)
Indemnified Parties 5.11(c)
Indemnified Persons 7.1
Information Package 7.1(c)
Initial Shares 1.5
Intellectual Property 2.11(a)
Materials of Environmental Concern 2.19(b)
Most Recent Balance Sheet 2.5
Options 1.8(a)
Ordinary Course of Business 2.3
Other Stock Purchase Agreements 1.3(b)
Outstanding Company Shares 1.3(b)
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<PAGE> 53
Parties Introduction
Permits 2.21
Registration Rights Agreement 2.1(b)
Related Party Transactions 2.22
Regulation S 3.3
Restricted Period 3.3
SEC 4.5
Securities Act 1.8(c)
Security Interest 2.3
Selling Stockholders 1.3(b)
Stockholders' Representative 1.10(a)
Stock Plan 1.8(a)
Subsidiary 2.3
Tax Returns 2.8(a)
Taxes 2.8(a)
Termination Date 7.3(c)
U.S. GAAP 2.27
U.S. person 3.3
Warrants 1.8(d)
ARTICLE X
GENERAL PROVISIONS
10.1 PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement without
the prior written approval of the other Parties; provided, however, that any
Party may make any public disclosure it believes in good faith is required by
law or regulation (in which case the disclosing Party shall advise the other
Parties and provide them with a copy of the proposed disclosure prior to making
the disclosure).
10.2 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.
10.3 ENTIRE AGREEMENT. This Agreement, the Fundamental Agreements and
the Other Stock Purchase Agreements and the exhibits and schedules attached
thereto, together with the Confidential Disclosure Agreement dated February 27,
1997, by and between the Buyer and the Company, constitute the entire agreement
among the Parties and supersede any prior understandings, agreements or
representations by or among the Parties, written or oral, that may have related
in any way to the Acquisition.
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<PAGE> 54
10.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests or obligations hereunder without the prior written
approval of the other Parties, provided that the Buyer may assign its rights,
interests and/or obligations under this Agreement to an Affiliate of the Buyer
by notice to the Company and the Stockholders' Representative.
10.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
10.6 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.
10.7 NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered three
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or two business days after it is sent via a
reputable international overnight courier service, in each case to the intended
recipient as set forth below:
If to the Company: Copies to:
- ----------------- ---------
DynaSoft AB Lagerlof & Leman
Box 10704 Strandvagen 7A
Arenavagen 29 Box 5402
S-121 29 Stockholm S-114 84 Stockholm
SWEDEN SWEDEN
Attn: Chairman of the Board Attn: Per-Erik Hasselberg
Gray Cary Ware & Freidenrich
A Professional Corporation
400 Hamilton Avenue
Palo Alto, CA 94301
Attn: Rod J. Howard, Esq.
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<PAGE> 55
If to the Company Stockholders: Copies to:
- ------------------------------- ---------
Rolf Ljung, Lagerlof & Leman
as Stockholders' Representative Strandvagen 7A
c/o DynaSoft AB Box 5402
Box 10704 S-114 84 Stockholm
Arenavagen 29 SWEDEN
S-121 29 Stockholm Attn: Per-Erik Hasselberg
SWEDEN
If to the Buyer: Copy to:
- --------------- -------
Security Dynamics Technologies, Inc. Hale and Dorr LLP
20 Crosby Drive 60 State Street
Bedford, MA 01730 Boston, MA 02109
Attn: President Attn: Hal J. Leibowitz, Esq.
Any Party may give any notice, request, demand, claim or other communication
hereunder by personal delivery or telecopy, 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 Party for whom it is intended. Any Party
may change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
10.8 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the
Commonwealth of Massachusetts of the United States.
10.9 AMENDMENTS AND WAIVERS. The Parties may mutually amend any
provision of this Agreement at any time by a written instrument signed by all of
the Parties. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
10.10 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. If the final judgment of a court of
competent jurisdiction declares
-50-
<PAGE> 56
that any term or provision hereof is invalid or unenforceable, the Parties agree
that the court making the determination of invalidity or unenforceability shall
have the power to reduce the scope, duration, or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed.
10.11 EXPENSES. Except as set forth in the Escrow Agreement, each of
the Parties shall bear its or their own costs and expenses (including fees and
expenses of their respective legal, accounting and financial advisors) incurred
in connection with this Agreement and the transactions contemplated hereby;
provided, however, that if the Acquisition is consummated, the Company and the
Subsidiaries shall not incur fees and expenses of legal, accounting and
financial advisors in connection with the Acquisition in excess of the amounts
set forth in Section 10.11 of the Disclosure Schedule, and any such fees and
expenses incurred prior to or at the Closing by the Company and the Subsidiaries
in excess of such amounts shall be recovered by the Buyer pursuant to the Escrow
Agreement without regard to the provisions of the first sentence of Section 7.4.
10.12 SPECIFIC PERFORMANCE. Each of the Parties acknowledges and agrees
that one or more of the other Parties would be damaged irreparably in the event
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 terms and provisions hereof in any action
instituted in any court having jurisdiction over the Parties and the matter, in
addition to any other remedy to which it may be entitled, at law or in equity.
10.13 CONSTRUCTION. The language used in this Agreement shall be deemed
to be the language chosen by the Parties hereto to express their mutual intent,
and no rule of strict construction shall be applied against any Party. Any
reference to any federal, state, local or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise.
10.14 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
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<PAGE> 57
10.15 KNOWLEDGE. For purposes of this Agreement, the term "Sellers'
Knowledge" shall mean the actual knowledge, after due inquiry within the Company
and its Subsidiaries, of any of the Company's directors and executive officers
(which shall include, without limitation, Tomas Brostrom, the Company's
Financial Manager).
10.16 ARBITRATION. Any dispute, controversy or claim arising out of or
related to this Agreement, or the breach, termination or invalidity thereof,
shall be finally settled by arbitration in accordance with the UNCITRAL
Arbitration Rules. The arbitration shall be conducted in London, England, and
all proceedings shall be conducted in the English language. There shall be three
arbitrators, one of whom shall be appointed by the Buyer, one of whom shall be
appointed by the Stockholders' Representative and one of whom shall be appointed
by agreement of the first two arbitrators or, failing agreement, by the London
Court of International Arbitration. Disputes about arbitration procedure shall
be resolved by the arbitrators or, failing agreement, by the London Court of
International Arbitration. The arbitrators may proceed to an award
notwithstanding the failure of any party to participate in the proceedings.
Discovery shall be limited to mutual exchange of documents relevant to the
dispute, controversy or claim; depositions shall not be permitted unless agreed
to by the parties. The arbitrators shall be authorized to grant interim relief,
including to prevent the destruction of goods or documents involved in the
dispute, protect trade secrets and provide for security for a prospective
monetary award. The prevailing party shall be entitled to an award of reasonable
attorneys' fees incurred in connection with the arbitration in such amount as
may be determined by the arbitrators. The award of the arbitrators shall be the
sole and exclusive remedy of the parties and shall be enforceable in any court
of competent jurisdiction. Notwithstanding the foregoing, the Parties shall be
entitled to seek injunctive relief, security or other equitable remedies from
any court of competent jurisdiction in furtherance of the arbitration
proceedings.
10.17 CURRENCY. Unless otherwise expressly provided in this Agreement,
all references to monetary amounts included herein are expressed in U.S.
dollars.
[Signatures begin on the following page.]
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<PAGE> 58
IN WITNESS WHEREOF, the Parties have executed this Stock Purchase
Agreement as of the date first above written.
SECURITY DYNAMICS TECHNOLOGIES,
INC.
By: /s/ Arthur W. Coviello, Jr.
-------------------------------
Title: Chief Operating Officer
----------------------------
DYNASOFT AB
By: /s/ Rolf Ljung
-------------------------------
Title: Chairman of the Board
----------------------------
COMPANY STOCKHOLDERS:
[Counterpart signature pages for
each of the Company Stockholders
are attached.]
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<PAGE> 59
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Rolf Ljung
-----------------------------------
Rolf Ljung
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<PAGE> 60
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Hans Tholander
---------------------------------
Hans Tholander
<PAGE> 61
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Bjorn Oste
---------------------------------
Bjorn Oste
<PAGE> 62
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Peter Rostin
---------------------------------
Peter Rostin
<PAGE> 63
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Anders Wikstrom
---------------------------------
Anders Wikstrom
<PAGE> 64
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Johan Borendal
---------------------------------
Johan Borendal
<PAGE> 65
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Tomas Brostrom
---------------------------------
Tomas Brostrom
<PAGE> 66
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Lotta Ljung
---------------------------------
Lotta Ljung
<PAGE> 67
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Fanny Ljung-Lindberg
---------------------------------
Fanny Ljung-Lindberg
<PAGE> 68
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Agnes Ljung-Lindberg
---------------------------------
Agnes Ljung-Lindberg
<PAGE> 69
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Eva Ljung
---------------------------------
Eva Ljung
<PAGE> 70
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Elin Kempegard
---------------------------------
Elin Kempegard
<PAGE> 71
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Sara Kempegard
---------------------------------
Sara Kempegard
<PAGE> 72
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Jacob Tholander
---------------------------------
Jacob Tholander
<PAGE> 73
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Fredrik Tholander
---------------------------------
Fredrik Tholander
<PAGE> 74
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 12, 1997
COMPANY STOCKHOLDERS:
/s/ Mervi Brostrom
---------------------------------
Mervi Brostrom
<PAGE> 75
<TABLE>
SCHEDULE I
<CAPTION>
- ----------------------------------------------------------------------
Company Company
Stockholder Shares
- ----------------------------------------------------------------------
Series A Series B
- ----------------------------------------------------------------------
<S> <C> <C>
Rolf Ljung 0 71,150
- ----------------------------------------------------------------------
Hans Tholander 0 74,050
- ----------------------------------------------------------------------
Bjorn Oste 0 88,200
- ----------------------------------------------------------------------
Peter Rostin 0 88,200
- ----------------------------------------------------------------------
Anders Wikstrom 0 88,200
- ----------------------------------------------------------------------
Johan Borendal 0 88,200
- ----------------------------------------------------------------------
Tomas Brostrom 0 71,500
- ----------------------------------------------------------------------
Lotta Ljung 0 3,100
- ----------------------------------------------------------------------
Fanny Ljung-Lindberg 0 3,100
- ----------------------------------------------------------------------
Agnes Ljung-Lindberg 0 3,100
- ----------------------------------------------------------------------
Eva Ljung 0 3,100
- ----------------------------------------------------------------------
Elin Kempegard 0 3,100
- ----------------------------------------------------------------------
Sara Kempegard 0 3,100
- ----------------------------------------------------------------------
Jacob Tholander 0 7,350
- ----------------------------------------------------------------------
Fredrik Tholander 0 7,350
- ----------------------------------------------------------------------
Mervi Brostrom 0 20,050
- ----------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC.,
DYNASOFT AB
AND
THE STOCKHOLDERS OF DYNASOFT
NAMED ON SCHEDULE I HERETO
JULY 15, 1997
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TABLE OF CONTENTS
Page
ARTICLE I - PURCHASE AND SALE OF THE SHARES..................................1
1.1 Purchase of the Company Shares from the Company Stockholders.....1
1.2 Further Assurances...............................................1
1.3 The Closing......................................................2
1.4 Actions at the Closing...........................................2
1.5 Purchase Price...................................................3
1.6 [Intentionally Omitted.].........................................3
1.7 Escrow...........................................................3
1.8 Options and Warrants.............................................4
1.9 Fractional Shares................................................5
1.10 Stockholders' Representative.....................................5
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE COMPANY STOCKHOLDERS.......................7
2.1 Organization, Qualification, Corporate Power and Authority.......7
2.2 Capitalization...................................................8
2.3 Noncontravention.................................................9
2.4 Subsidiaries....................................................10
2.5 Financial Statements............................................10
2.6 Absence of Certain Changes......................................11
2.7 Undisclosed Liabilities.........................................11
2.8 Tax Matters.....................................................11
2.9 Assets..........................................................13
2.10 Owned Real Property.............................................13
2.11 Intellectual Property...........................................13
2.12 Real Property Leases............................................16
2.13 Contracts.......................................................17
2.14 Powers of Attorney..............................................19
2.15 Insurance.......................................................19
2.16 Litigation......................................................19
2.17 Employees and Subcontractors....................................20
2.18 Employee Benefits...............................................21
2.19 Environmental Matters...........................................23
2.20 Legal Compliance................................................25
2.21 Permits.........................................................25
2.22 Certain Business Relationships With Affiliates..................25
2.23 Books and Records...............................................25
2.24 Banking Facilities..............................................26
2.25 Brokers' Fees...................................................26
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2.26 Pooling.........................................................26
2.27 Disclosure......................................................26
ARTICLE III - FURTHER REPRESENTATIONS AND WARRANTIES
OF THE COMPANY STOCKHOLDERS...............................26
3.1 Ownership of Stock; Authority...................................26
3.2 Investment Representations......................................27
3.3 Additional Representations by Non-U.S. Persons..................28
3.4 Additional Representations by U.S. Persons......................30
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE BUYER....................30
4.1 Organization....................................................30
4.2 Capitalization..................................................30
4.3 Authorization of Transaction....................................30
4.4 Noncontravention................................................31
4.5 Reports and Financial Statements................................31
4.6 Absence of Material Adverse Changes.............................31
4.7 Pooling.........................................................32
4.8 Brokers' Fees...................................................32
4.9 Disclosure......................................................32
4.10 Opinion of Financial Advisor....................................32
4.11 Reporting Issuer................................................32
ARTICLE V - COVENANTS......................................................33
5.1 Conduct of Business.............................................33
5.2 Notice of Breaches..............................................34
5.3 Exclusivity.....................................................35
5.4 Agreements from Certain Affiliates of the Company...............35
5.5 Listing of Buyer Shares.........................................35
5.6 Delivery of Interim Financial Statements........................35
5.7 Best Efforts to Obtain Satisfaction of Conditions...............36
5.8 Notices and Consents............................................36
5.9 Full Access.....................................................36
5.10 Waiver of Rights of First Refusal...............................36
5.11 Indemnification; Discharge of Director Liability................36
5.12 Sharing of Data.................................................38
5.13 Legend Removal..................................................38
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ARTICLE VI - CONDITIONS TO CLOSING..........................................38
6.1 Conditions to Obligations of the Buyer..........................38
6.2 Conditions to Obligations of the Company and the Company
Stockholders....................................................40
ARTICLE VII - INDEMNIFICATION...............................................42
7.1 Indemnification.................................................42
7.2 Method of Asserting Claims......................................43
7.3 Survival........................................................44
7.4 Limitations.....................................................45
ARTICLE VIII - TERMINATION..................................................45
8.1 Termination of Agreement........................................45
8.2 Effect of Termination...........................................46
ARTICLE IX - DEFINITIONS....................................................46
ARTICLE X - GENERAL PROVISIONS..............................................48
10.1 Press Releases and Announcements................................48
10.2 No Third Party Beneficiaries....................................48
10.3 Entire Agreement................................................48
10.4 Succession and Assignment.......................................49
10.5 Counterparts....................................................49
10.6 Headings........................................................49
10.7 Notices.........................................................49
10.8 Governing Law...................................................50
10.9 Amendments and Waivers..........................................50
10.10 Severability....................................................50
10.11 Expenses........................................................51
10.12 Specific Performance............................................51
10.13 Construction....................................................51
10.14 Incorporation of Exhibits and Schedules.........................51
10.15 Knowledge.......................................................52
10.16 Arbitration.....................................................52
10.17 Currency........................................................52
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SCHEDULES AND EXHIBITS
Schedule I Company Stockholder Information
Exhibit A Escrow Agreement
Exhibit B Registration Rights Agreement
Exhibit C Offer Letters
Exhibit D Consulting Agreements
Exhibit E Form of Affiliate Agreement
Exhibit F Opinions of Counsel for the Company and the Company Stockholders
Exhibit G Opinion of Counsel for the Buyer
Disclosure Schedule
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
July 15, 1997 (the "Agreement Date") by and among Security Dynamics
Technologies, Inc., a Delaware corporation (the "Buyer"), DynaSoft AB, a
corporation organized under the laws of Sweden (the "Company"), and the
stockholders of the Company listed on SCHEDULE I to this Agreement (the "Company
Stockholders"). The Buyer, the Company and the Company Stockholders are referred
to collectively herein as the "Parties."
PRELIMINARY STATEMENT
1. The Company Stockholders collectively own the outstanding shares
of the capital stock of the Company (the "Company Shares") set forth on SCHEDULE
I hereto.
2. The Buyer desires to purchase, and the Company Stockholders
desire to sell, the Company Shares for the consideration set forth below subject
to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
1.1 PURCHASE OF THE COMPANY SHARES FROM THE COMPANY STOCKHOLDERS.
Upon and subject to the terms and conditions of this Agreement, at the closing
of the transactions contemplated by this Agreement (the "Closing"), the Company
Stockholders shall sell, transfer, convey, assign and deliver to the Buyer, and
the Buyer shall purchase, acquire and accept from each Company Stockholder, all
of the Company Shares owned by such Company Stockholder. At the Closing, the
Board of Directors of the Company shall, in accordance with The Companies Act
(Sw:Aktiebolagslagen), cause the transfer of the Company Shares to the Buyer
contemplated by this Agreement to be entered into the share register of the
Company.
1.2 FURTHER ASSURANCES. At any time and from time to time after the
Closing, at the Buyer's request and without further consideration to any of the
Company Stockholders, the Company Stockholders shall promptly execute and
deliver such instruments of sale, transfer, conveyance, assignment and
confirmation, and take all such other action as the Buyer may reasonably
request, more effectively to transfer, convey and assign to the Buyer, and to
confirm the Buyer's title to, all of the Company Shares, to put the Buyer
(through its ownership of the Company) in
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actual possession and operating control of the assets (including without
limitation the original corporate minute books of the Company and all corporate
seals), properties and business of the Company, to assist the Buyer in
exercising all rights with respect thereto and to carry out the purpose and
intent of this Agreement and the Other Stock Purchase Agreements (as defined
below).
1.3 THE CLOSING.
(a) The Closing shall take place at the offices of Hale and
Dorr LLP, 60 State Street, Boston, Massachusetts 02109 commencing at 10:00 a.m.,
local time, on July 15, 1997, or, if all of the conditions to the obligations of
the Parties to consummate the transactions contemplated hereby have not been
satisfied or waived by such date, on such mutually agreeable later date as soon
as practicable after the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(the "Closing Date").
(b) Unless otherwise agreed by the Buyer and the
Stockholders' Representative (as defined below), the Closing of the transactions
contemplated by this Agreement shall take place simultaneously with the closing
of the acquisition by the Buyer of additional shares of the issued and
outstanding capital stock of the Company which, when added to the Company
Shares, represent not less than 90% of the capital stock and votes of the
Company issued and outstanding immediately prior to the Closing (including
without limitation at least 90% of the Company's Series A Stock and at least 90%
of the Company's Series B Stock) (all such issued and outstanding capital stock
being hereinafter referred to as the "Outstanding Company Shares"). Such
acquisitions (collectively, the "Acquisition") shall be effected by this
Agreement and certain other Stock Purchase Agreements (the "Other Stock Purchase
Agreements") entered into on or prior the date hereof among the Buyer, the
Company and the holders of such Outstanding Company Shares (such holders of
Outstanding Company Shares, including the Company Stockholders, being
hereinafter referred to as the "Selling Stockholders").
1.4 ACTIONS AT THE CLOSING. At the Closing:
(a) the Company shall deliver to the Buyer the various
certificates, instruments and documents referred to in paragraphs (e) through
(o) of Section 6.1 below;
(b) the Buyer shall deliver to the Company the various
certificates, instruments and documents referred to in paragraphs (c) through
(f) of Section 6.2 below;
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(c) the Buyer shall be entered into the share register of
the Company as the owner of the Company Shares sold by the Company Stockholders
pursuant to this Agreement;
(d) the Buyer shall deliver to the Stockholders'
Representative, for distribution to the Company Stockholders, certificates
representing the Initial Shares (as defined below) in accordance with Section
1.5 below; and
(e) the Buyer, each of the Company Stockholders and the
Escrow Agent (as defined therein) shall execute and deliver an Escrow Agreement
in substantially the form attached hereto as EXHIBIT A (the "Escrow Agreement")
and the Buyer shall deliver to the Escrow Agent a certificate for the Escrow
Shares (as defined below) being placed in escrow on the Closing Date pursuant to
Section 1.7 below.
1.5 PURCHASE PRICE. The purchase price to be paid by the Buyer for
each of the Company Shares issued and outstanding immediately prior to the
Closing shall be such number of shares of common stock, $.01 par value per
share, of the Buyer ("Buyer Common Stock") as is equal to the Conversion Ratio.
The "Conversion Ratio" shall initially be equal to a fraction, (a) the numerator
of which shall be 2,900,000 and (b) the denominator of which shall be the sum of
(i) the number of shares of capital stock of the Company issued and outstanding
immediately prior to the Closing (other than Outstanding Company Shares owned by
any Subsidiary (as such term is defined below)) and (ii) the number of shares of
capital stock of the Company issuable upon exercise of the Options (as defined
below), whether vested, unvested or subject to repurchase by the Company
following such exercise. The Conversion Ratio shall be subject to equitable
adjustment in the event of any stock split, stock dividend, reverse stock split,
share combination or subdivision, reclassification, recapitalization,
reorganization or similar event affecting the Buyer Common Stock between the
date of this Agreement and the Closing. The Company Stockholders shall be
entitled to receive immediately 90% of the shares of Buyer Common Stock issuable
with respect to their Company Shares pursuant to this Section 1.5 (the "Initial
Shares"). The remaining 10% of the shares of Buyer Common Stock issuable with
respect to Company Shares pursuant to this Section 1.5 (the "Escrow Shares")
shall be deposited in escrow pursuant to Section 1.7 and shall be held and
disposed of in accordance with the terms of the Escrow Agreement. The Initial
Shares and the Escrow Shares shall together be referred to herein as the "Buyer
Shares."
1.6 [INTENTIONALLY OMITTED.]
1.7 ESCROW. On the Closing Date, the Buyer shall deliver to the
Escrow Agent a certificate (issued in the name of the Escrow Agent or its
nominee) representing the Escrow Shares, as described in Section 1.5, for the
purpose of securing the indemnification obligations of the Company Stockholders
set forth in
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this Agreement. The Escrow Shares shall be held by the Escrow Agent under the
Escrow Agreement pursuant to the terms thereof. The Escrow Shares shall be held
as a trust fund and shall not be subject to any lien, attachment, trustee
process or any other judicial process of any creditor of any party, and shall be
held and disbursed solely for the purposes and in accordance with the terms of
the Escrow Agreement.
1.8 OPTIONS AND WARRANTS.
(a) As of the Closing, (i) the Buyer shall assume the
Securix, Inc. 1996 Stock Option Plan (the "Stock Plan") and (ii) all options to
purchase shares of capital stock of the Company issued pursuant to the Stock
Plan ("Options"), whether vested, unvested or subject to repurchase by the
Company following such exercise, shall be assumed by the Buyer. Immediately
after the Closing, each Option outstanding immediately prior to the Closing
shall be deemed to constitute an option to acquire, on the same terms and
conditions as were applicable under such Option immediately prior to the
Closing, such number of shares of Buyer Common Stock as is equal to the number
of shares of capital stock of the Company subject to the unexercised portion of
such Option multiplied by the Conversion Ratio (with any fraction resulting from
such multiplication to be rounded down to the next lowest whole number). The
exercise price per share of each such assumed Option shall be equal to the
exercise price of such Option immediately prior to the Closing, divided by the
Conversion Ratio (with any fraction of a cent resulting from such division to be
rounded up to the next highest whole cent). The term, exercisability, vesting
schedule, repurchase provisions, status as an "incentive stock option" under
Section 422 of the Internal Revenue Code of 1986 (as amended, the "Code"), if
applicable, and all of the other terms of the Options shall otherwise remain
unchanged.
(b) As soon as practicable after the Closing, the Buyer
shall deliver to the holders of Options appropriate notices setting forth such
holders' rights pursuant to such Options, as amended by this Section 1.8, and
the agreements evidencing such Options shall continue in effect on the same
terms and conditions (subject to the amendments provided for in this Section 1.8
and such notice).
(c) The Buyer shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Buyer Common Stock for
delivery upon exercise of the Options assumed in accordance with this Section
1.8. As soon as practicable (and in any event no later than five business days
after the Closing Date), the Buyer shall file a Registration Statement on Form
S-8 (or any successor form) under the United States Securities Act of 1933 (as
amended, the "Securities Act") with respect to all shares of Buyer Common Stock
subject to such Options that may be registered on a Form S8, and shall use its
best efforts to maintain the effectiveness of such Registration Statement for so
long as such Options remain outstanding.
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(d) The Company shall cause the termination, as of the
Closing, of any warrants or options to purchase shares of capital stock of the
Company other than the Options (the "Warrants") which remain unexercised, all of
which are set forth in Section 1.8(d) of the Disclosure Schedule (as defined
below).
(e) The Company shall use all reasonable efforts to obtain,
prior to the Closing, the consent from each holder of an Option or a Warrant to
the amendment (in the case of Options) or termination (in the case of Warrants)
of such Option or Warrant pursuant to this Section 1.8.
1.9 FRACTIONAL SHARES. No certificates or scrip representing
fractional Initial Shares shall be issued to Company Stockholders in exchange
for the Company Shares, and such Company Stockholders shall not be entitled to
any voting rights, rights to receive any dividends or distributions or other
rights as a stockholder of the Buyer with respect to any fractional Initial
Shares that would otherwise be issued to such Company Stockholders. In lieu of
any fractional Initial Shares that would otherwise be issued, each Company
Stockholder that would have been entitled to receive a fractional Initial Share
shall be entitled to receive a cash payment equal to the average last sale price
per share of the Buyer Common Stock on the Nasdaq National Market, as reported
by Nasdaq, on the ten consecutive trading days immediately preceding the Closing
Date, multiplied by the fraction of a share that such Company Stockholder would
otherwise be entitled to receive.
1.10 STOCKHOLDERS' REPRESENTATIVE.
(a) In order to efficiently administer the Acquisition and
the transactions contemplated hereby, including (i) the waiver of any condition
to the obligations of the Company Stockholders to consummate the Acquisition and
the transactions contemplated hereby and (ii) the defense and/or settlement of
any claims for which the Company Stockholders and/or the other Selling
Stockholders may be required to indemnify the Buyer and/or the Company pursuant
to the Escrow Agreement and Article VII below, the Company Stockholders hereby
designate Rolf Ljung as their representative (the "Stockholders'
Representative").
(b) The Company Stockholders hereby authorize the
Stockholders' Representative (i) to take all action necessary in connection with
the waiver of any condition to the obligations of the Company Stockholders to
consummate the Acquisition and the transactions contemplated hereby, or the
defense and/or settlement of any claims for which the Company Stockholders
and/or the other Selling Stockholders may be required to indemnify the Buyer
and/or the Company pursuant to Article VII below, (ii) to give and receive all
notices required to be given under this Agreement and the Escrow Agreement, and
(iii) to take any and all additional action as is contemplated to be taken by or
on behalf of the Company
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Stockholders and/or the other Selling Stockholders by the terms of this
Agreement or the Escrow Agreement.
(c) In the event that the Stockholders' Representative dies,
becomes unable to perform his responsibilities hereunder or resigns from such
position, the Selling Stockholders holding, prior to the Closing, a majority of
the Outstanding Company Shares as set forth in Attachment A to the Escrow
Agreement shall select another representative to fill such vacancy and such
substituted representative shall be deemed to be the Stockholders'
Representative for all purposes of this Agreement and the documents delivered
pursuant hereto.
(d) All decisions and actions by the Stockholders'
Representative, including without limitation any agreement between the
Stockholders' Representative and the Buyer relating to the defense or settlement
of any claims for which the Company Stockholders and/or the other Selling
Stockholders may be required to indemnify the Buyer and/or the Company pursuant
to Article VII below, shall be binding upon all of the Company Stockholders and
no Company Stockholder shall have the right to object, dissent, protest or
otherwise contest the same.
(e) By his execution of this Agreement, each Company
Stockholder agrees that:
(i) the Buyer shall be able to rely conclusively on
the instructions and decisions of the Stockholders' Representative as to the
settlement of any claims for indemnification by the Buyer and/or the Company
pursuant to Article VII below or any other actions required or permitted to be
taken by the Stockholders' Representative hereunder, and no party hereunder
shall have any cause of action against the Buyer to the extent the Buyer has
relied upon the instructions or decisions of the Stockholders' Representative;
(ii) all actions, decisions and instructions of the
Stockholders' Representative shall be conclusive and binding upon all of the
Company Stockholders and no Company Stockholder shall have any cause of action
against the Stockholders' Representative for any action taken, decision made or
instruction given by the Stockholders' Representative under this Agreement, any
of the Other Stock Purchase Agreements or the Escrow Agreement, except for fraud
or willful breach of this Agreement or any such agreement by the Stockholders'
Representative;
(iii) the provisions of this Section 1.10 are
independent and severable, are irrevocable and coupled with an interest and
shall be enforceable notwithstanding any rights or remedies that any Company
Stockholder may have in connection with the Acquisition and the transactions
contemplated by this Agreement or any of the Other Stock Purchase Agreements;
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(iv) remedies available at law for any breach of the
provisions of this Section 1.10 are inadequate; therefore, the Buyer and the
Company shall be entitled to temporary and permanent injunctive relief without
the necessity of proving damages if either the Buyer and/or the Company brings
an action to enforce the provisions of this Section 1.10; and
(v) the provisions of this Section 1.10 shall be
binding upon the executors, heirs, legal representatives, personal
representatives, successor trustees, and successors of each Company Stockholder,
and any references in this Agreement to a Company Stockholder or the Company
Stockholders shall mean and include the successors to the Company Stockholder's
rights hereunder, whether pursuant to testamentary disposition, the laws of
descent and distribution or otherwise.
(f) The Buyer shall reimburse the Stockholders' Representative for
his reasonable out-of-pocket expenses incurred in performing his services in
connection with the Acquisition, up to a maximum reimbursement of $5,000. Any
expenses in excess of such amount shall be paid by the Selling Stockholders in
proportion to their ownership of Outstanding Company Shares as set forth in
Attachment A to the Escrow Agreement. Notwithstanding the foregoing, the Buyer
shall also reimburse the Stockholders' Representative for his reasonable
out-of-pocket expenses incurred in successfully defending against any claims for
indemnification pursuant to this Agreement, the Other Stock Purchase Agreements
and/or the Escrow Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE COMPANY STOCKHOLDERS
The Company and each of the Company Stockholders, jointly and severally,
represents and warrants to the Buyer that the statements contained in this
Article II are true and correct, except as set forth in the disclosure schedule
attached hereto (the "Disclosure Schedule"). The Disclosure Schedule shall be
arranged in sections and paragraphs corresponding to the numbered and lettered
sections and paragraphs contained in this Article II, and the disclosures in any
section or paragraph of the Disclosure Schedule shall qualify other sections or
paragraphs in this Article II only to the extent that it is clear from a reading
of the disclosure that such disclosure is applicable to such other sections or
paragraphs.
2.1 ORGANIZATION, QUALIFICATION, CORPORATE POWER AND AUTHORITY.
(a) The Company is a corporation duly organized and validly
existing as a limited liability company under the laws of Sweden. The Company is
duly qualified to conduct business and is in corporate and tax good standing
under
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the laws of each jurisdiction in which the nature of its businesses or the
ownership or leasing of its properties requires such qualification, each of
which jurisdictions is set forth in Section 2.1 of the Disclosure Schedule. The
Company has all requisite corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. The Company has furnished to the Buyer true and complete copies of
its Articles of Association and registration certificate, each as amended and as
in effect on the Agreement Date. The Company has at all times complied with, and
is not in default under or in violation of, any provision of its articles of
association.
(b) The Company has all requisite power and authority to
execute and deliver the Fundamental Agreements (as defined below in this Section
2.1(b)) and to perform its obligations under the Fundamental Agreements. The
Fundamental Agreements have each been (or in the case of the Fundamental
Agreements to be entered into on the Closing Date, shall be when delivered) duly
and validly (i) executed and delivered by the Company and (ii) authorized by all
necessary corporate action on the part of the Company. Each Fundamental
Agreement constitutes (or, in the case of the Fundamental Agreements to be
entered into on the Closing Date, shall constitute) a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to the effect of bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and except
as the availability of equitable remedies may be limited by general principles
of equity. For purposes of this Agreement, the term "Fundamental Agreements"
means this Agreement, the Escrow Agreement, the Registration Rights Agreement in
the form attached hereto as EXHIBIT B (the"Registration Rights Agreement") and,
with respect to the Company and the Company Stockholders party thereto, the
Offer Letters attached hereto as EXHIBIT C and the Consulting Agreements
attached hereto as EXHIBIT D.
2.2 CAPITALIZATION. The authorized capital stock of the Company
consists of 10,000,000 shares of capital stock, SEK one par value per share, of
which (a) 5,538,000 shares have been designated Series A Stock, all of which are
issued and outstanding and none of which are held in the treasury of the
Company, and (b) 4,462,000 shares have been designated Series B Stock, all of
which are issued and outstanding and none of which are held in the treasury of
the Company. Section 2.2 of the Disclosure Schedule sets forth a complete and
accurate list of (a) all stockholders of the Company, indicating the number of
Outstanding Company Shares held by each stockholder, and (b) all holders of
Options and Warrants, indicating the number of Company Shares subject to each
Option and Warrant and the exercise price thereof. Copies of all Options and
Warrants have previously been provided to the Buyer. All of the Outstanding
Company Shares are, and all shares of capital stock of the Company that may be
issued upon exercise of Options and Warrants will be, duly authorized, validly
issued, fully paid, nonassessable and free of all preemptive rights. None of the
outstanding capital stock of the Company is evidenced by share
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certificates. There are no outstanding or authorized options, warrants, rights,
calls, convertible instruments, agreements or commitments to which the Company
is a party or which are binding upon the Company providing for the issuance,
disposition or acquisition of any of its capital stock, other than the Options
and Warrants listed in Section 2.2 of the Disclosure Schedule. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. There are no agreements, voting trusts, proxies or
understandings with respect to the voting, or registration under the Securities
Act or any foreign securities laws, of any Outstanding Company Shares. All of
the Outstanding Company Shares were issued in compliance with all applicable
laws.
2.3 NONCONTRAVENTION. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state and foreign
securities laws, neither the execution and delivery by the Company or the
Company Stockholders of the Fundamental Agreements nor the consummation of the
transactions contemplated thereby will (a) conflict with or violate any
provision of the Articles of Association of the Company, (b) require on the part
of the Company or any corporation, partnership, limited liability company or
other form of business association (a "Business Entity") with respect to which
the Company, directly or indirectly, has the power to vote or direct the voting
of sufficient securities to elect a majority of the directors or managers (a
"Subsidiary") any filing with, or any permit, authorization, consent or approval
of, any court, arbitrational tribunal, administrative agency or commission or
other governmental or regulatory authority or agency (a "Governmental Entity"),
(c) conflict with, result in a breach of, constitute (with or without due notice
or lapse of time or both) a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify or cancel, or require
any notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest (as defined below) or other
arrangement to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary is bound or to which any of their respective assets is
subject, (d) result in the imposition of any Security Interest upon any assets
of the Company or any Subsidiary, or (e) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company, any Subsidiary or
any of their respective properties or assets. For purposes of this Agreement,
"Security Interest" means any mortgage, pledge, security interest, encumbrance,
charge or other lien (whether arising by contract or by operation of law), other
than (i) mechanic's, materialmen's and similar liens, (ii) liens arising under
worker's compensation, unemployment insurance, social security, retirement and
similar legislation, and (iii) liens on goods in transit incurred pursuant to
documentary letters of credit, in each case arising in the ordinary course of
business consistent with past custom and practice (including with respect to
frequency and amount) ("Ordinary Course of Business") of the Company and its
Subsidiaries.
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2.4 SUBSIDIARIES. Section 2.4 of the Disclosure Schedule sets forth
for each Subsidiary (a) its name and jurisdiction of incorporation, (b) the
number of shares of authorized capital stock of each class of its capital stock,
(c) the number of issued and outstanding shares of each class of its capital
stock, the names of the holders thereof and the number of shares held by each
such holder, (d) the number of shares of its capital stock held in treasury, and
(e) its directors, managers and officers. Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each Subsidiary is duly qualified to conduct
business and is in corporate and tax good standing under the laws of each
jurisdiction in which the nature of its businesses or the ownership or leasing
of its properties requires such qualification. Each Subsidiary has all requisite
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it. The Company has
delivered to the Buyer correct and complete copies of the charter and By-laws of
each Subsidiary, as amended to date. No Subsidiary is in default under or in
violation of any provision of its charter or By-laws. All of the issued and
outstanding shares of capital stock of each Subsidiary are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights. All
shares of each Subsidiary that are held of record or owned beneficially by
either the Company or any Subsidiary are held or owned free and clear of any
restrictions on transfer (other than restrictions under the Securities Act and
state or foreign securities laws), claims, Security Interests, options,
warrants, rights, contracts, calls, commitments, equities and demands. There are
no outstanding or authorized options, warrants, rights, agreements or
commitments to which the Company or any Subsidiary is a party or which are
binding on any of them providing for the issuance, disposition or acquisition of
any capital stock of any Subsidiary. There are no outstanding stock
appreciation, phantom stock or similar rights with respect to any Subsidiary.
There are no voting trusts, proxies or other agreements or understandings with
respect to the voting of any capital stock of any Subsidiary. Except as set
forth in Section 2.4 of the Disclosure Schedule, the Company does not control
directly or indirectly or have any direct or indirect equity participation in
any corporation, partnership, trust or other business association which is not a
Subsidiary.
2.5 FINANCIAL STATEMENTS. The Company has previously furnished to
the Buyer or its advisors complete and accurate copies of its (a) audited
balance sheets and related statements of profit and loss for the fiscal years
ended June 30, 1997, 1996 and 1995, together with reports thereon by Lindebergs,
independent auditors of the Company and the Subsidiaries (the "Audited Financial
Statements"), including the audited balance sheet (the "Most Recent Balance
Sheet") for the 12 months ended June 30, 1997 (the "Balance Sheet Date"). The
foregoing financial statements (the "Financial Statements") have been prepared
in accordance with Swedish generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods covered thereby (except as
may be indicated therein or in the notes thereto), fairly present the financial
condition and results of operations of the
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<PAGE> 16
Company and the Subsidiaries as of the respective dates thereof and for the
periods referred to therein, and are consistent with the books and records of
the Company and the Subsidiaries.
2.6 ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date, (a)
there has not been any material adverse change in the assets, business,
financial condition or results of operations of the Company or any Subsidiary,
nor has there occurred any event or development that could reasonably be
foreseen to result in such a material adverse change in the future, and (b)
neither the Company nor any Subsidiary has taken any of the actions set forth in
subsections (a) through (o) of Section 5.1 below.
2.7 UNDISCLOSED LIABILITIES. None of the Company and its
Subsidiaries has any liability (whether known or unknown, whether absolute or
contingent, whether liquidated or unliquidated and whether due or to become
due), except for (a) liabilities shown or expressly reserved for on the Most
Recent Balance Sheet, a copy of which is included in Section 2.7 of the
Disclosure Schedule, (b) liabilities that have arisen since the Balance Sheet
Date in the Ordinary Course of Business of the Company and its Subsidiaries and
that are similar in nature and amount to the liabilities that arose during the
comparable period of time in the immediately preceding fiscal period, and (c)
contractual liabilities incurred in the Ordinary Course of Business of the
Company and the Subsidiaries that are not required to be reflected on the Most
Recent Balance Sheet and that are not in the aggregate material.
2.8 TAX MATTERS.
(a) Each of the Company and the Subsidiaries has filed all
Tax Returns (as defined below) that it was required to file through the Closing
Date and all such Tax Returns were correct and complete in all respects. Each of
the Company and the Subsidiaries has paid all Taxes (as defined below) that are
shown to be due on any such Tax Returns, except such as are being contested in
good faith by appropriate proceedings (to the extent any such proceedings are
required) and with respect to which the Company is maintaining reserves adequate
for their payment. The accruals and reserves for Taxes set forth on the Most
Recent Balance Sheet are sufficient to pay all unpaid Taxes of the Company and
the Subsidiaries attributable to all periods ended on or before the date of the
Most Recent Balance Sheet, and all Taxes attributable to the period from and
after the Balance Sheet Date and continuing through the Closing Date are
attributable to the operation of the Company and the Subsidiaries in the
Ordinary Course of Business of the Company and the Subsidiaries. None of the
Company or any of the Subsidiaries has any actual or potential liability for any
Tax obligation of any taxpayer (including without limitation any affiliated or
combined group of corporations or other entities that included the Company or
any Subsidiary during a prior period) other than the Company and the
Subsidiaries. All Taxes that the Company or any Subsidiary is or was required by
law to withhold or collect have been duly withheld or collected and, to the
extent
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<PAGE> 17
required, have been paid to the proper Governmental Entity. For purposes of
determining the amount of Taxes attributable to a specified period (e.g., the
period from the date of the Most Recent Balance Sheet through the Closing Date)
other than a Tax Period, each Tax shall be computed as if the specified period
were a Tax Period. For purposes of this Agreement, a Tax Period means a period
for which a Tax is required to be computed under applicable statutes and
regulations. For purposes of this Agreement, "Taxes" means all taxes, charges,
fees, levies, custom duties (social security fees) or other similar assessments
or liabilities, including without limitation income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property, sales, use,
transfer, transfer gains, withholding, employment, payroll and franchise taxes
imposed by any internal, local or foreign government, or any agency thereof, or
other political subdivision of the United States or any such government, and any
interest, fines, penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any tax or any contest or dispute
thereof and any amounts of Taxes of another person that the Company or any
Subsidiary is liable to pay by law or otherwise. For purposes of this Agreement,
"Tax Returns" means all reports, returns, declarations, statements or other
information required to be supplied to a taxing authority in connection with
Taxes.
(b) The Company has delivered to the Buyer or its advisors
correct and complete copies of all income Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by the Company or any
Subsidiary since the fiscal year ended June 30, 1992. The income Tax Returns of
the Company have been audited by the Tax Authority in the County of Stockholm or
are closed by the applicable statute of limitations for all taxable years
through June 30, 1996. No examination or audit of any Tax Returns of the Company
or any Subsidiary by any Governmental Entity is currently in progress or, to the
Sellers' Knowledge (as such term is defined in Section 10.15), threatened or
contemplated.
(c) Neither the Company nor any Subsidiary is a party to any
Tax allocation or sharing agreement or any Tax indemnity agreement. Neither the
Company nor any Subsidiary has waived any statute of limitations with respect to
Taxes or agreed to an extension of time with respect to a Tax assessment or
deficiency. Neither the Company nor any Subsidiary has ever filed Tax Returns on
a combined, consolidated or unitary basis with any other Business Entity in any
jurisdiction or has otherwise been liable for any Taxes of any other Business
Entity. Neither the Company nor any Subsidiary has participated in, nor will
participate in, an international boycott within the meaning of Section 999 of
the Code. Neither the Company nor any Subsidiary is a party to any agreement,
contract, arrangement or plan that has resulted, or would result, separately or
in the aggregate, in the payment of any excess "parachute payments" within the
meaning of Section 280G of the Code.
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(d) Neither the Company nor any Subsidiary is a party to any
tax litigation or is the subject of any tax auditing. Neither the Company nor
any Subsidiary has any reason to suspect any tax litigation attributable to
periods ended before the Closing Date. Neither the Company nor any Subsidiary is
or has been a party to any specific transaction the main purpose of which has
been to avoid, defer or reduce Taxes. Classifications, definitions, valuation
and principles used in the accounts of the Company or any Subsidiary are in
accordance with classifications, definitions, valuations and principles used in
the Tax Returns of the Company or such Subsidiary, so the case may be. Neither
the Company nor any Subsidiary is or has been a party to any transaction or
agreement which is in conflict with the tax rules on transfer pricing in any
relevant jurisdiction.
2.9 ASSETS. Each of the Company and the Subsidiaries owns or leases
all tangible assets necessary for the conduct of its businesses as presently
conducted and as presently proposed by the Company or any Subsidiary to be
conducted. Each such tangible asset is free from material defects, has been
maintained in accordance with normal industry practice, is in good operating
condition and repair (subject to normal wear and tear) and is suitable for the
purposes for which it presently is used. No asset of the Company or any
Subsidiary (tangible or intangible) is subject to any Security Interest.
2.10 OWNED REAL PROPERTY. None of the Company or any Subsidiary owns,
or has ever owned, any real property.
2.11 INTELLECTUAL PROPERTY.
(a) Each of the Company and the Subsidiaries owns, or is
licensed or otherwise possesses legally enforceable right to use, all
Intellectual Property (as defined below in this Section 2.11) used in the
operation of its business or necessary for the operation of its businesses as
presently proposed to be conducted. Each item of Intellectual Property owned by
or used in the operation of the business of the Company or any Subsidiary at any
time during the fiscal year ended June 30, 1997 will be owned or available for
use by the Company or a Subsidiary on identical terms and conditions immediately
following the Closing. Each of the Company and the Subsidiaries has taken
reasonable measures to protect the proprietary nature of each item of
Intellectual Property and to maintain in confidence all trade secrets and
confidential information, that it owns or uses. To the Sellers' Knowledge, (i)
no other person or Business Entity has any rights to any of the Intellectual
Property owned or used by the Company or any Subsidiary (other than any rights
in any such Intellectual Property (A) not owned by the Company or any Subsidiary
that constitutes commercially available software generally available to the
public or (B) owned by the Company or any Subsidiary granted pursuant to
software licenses entered into in the Ordinary Course of Business), and (ii) no
other person or Business Entity is infringing, violating or misappropriating any
of the Intellectual Property that
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<PAGE> 19
the Company or any Subsidiary owns or uses. The Company or a Subsidiary has
acquired all rights to Intellectual Property developed or held by any employees
(within the scope and term of their employment or otherwise relating to the
current or proposed business of the Company or any of its Subsidiaries) or third
parties who developed Intellectual Property for the Company or any Subsidiary.
For purposes of this Agreement, "Intellectual Property" means all (A) patents,
patent applications, patent disclosures and all related continuation,
continuation in part, divisional, reissue, reexamination, utility model,
certificate of invention and design patents, patent applications, registrations
and applications for registrations, (B) trademarks, service marks, trade dress,
logos, trade names and corporate names and registrations and applications for
registration thereof, (C) copyrights and registrations and applications for
registration thereof, (D) computer software, data and documentation, (E) trade
secrets and confidential business information, whether patentable or
unpatentable and whether or not reduced to practice, know-how, manufacturing and
production processes and techniques, research and development information,
copyrightable works, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and
information, (F) other proprietary rights relating to any of the foregoing, and
(G) copies and tangible embodiments thereof.
(b) None of the activities or business conducted by the
Company or any of the Subsidiaries infringes, violates or constitutes a
misappropriation of (or in the past infringed, violated or constituted a
misappropriation of) any Intellectual Property rights of any other person or
Business Entity. Neither the Company nor any Subsidiary has received any
complaint, claim or notice alleging any such infringement, violation or
misappropriation, and to the Sellers' Knowledge there is no basis for any such
complaint, claim or notice.
(c) Section 2.11(c) of the Disclosure Schedule identifies
each (i) patent or registration that has been issued to the Company or any
Subsidiary with respect to any of its Intellectual Property, (ii) pending patent
application or application for registration that the Company or any Subsidiary
has made with respect to any of its Intellectual Property, and (iii) material
license or other material agreement pursuant to which the Company or any
Subsidiary has granted any rights to any third party with respect to any of its
Intellectual Property. The Company has delivered to the Buyer or its advisors
correct and complete copies of all such patents, registrations, applications,
licenses and agreements (as amended to date) and has specifically identified and
made available to the Buyer or its advisors correct and complete copies of all
other written documentation evidencing ownership of, and any claims or disputes
relating to, each such item. Except as set forth in Section 2.11(c) of the
Disclosure Schedule, with respect to each item of Intellectual Property that the
Company or any Subsidiary owns:
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<PAGE> 20
(A) subject to such rights as have been granted by
the Company or any Subsidiary under license agreements entered into in the
Ordinary Course of Business of the Company and the Subsidiaries, the Company or
a Subsidiary possesses all right, title and interest in and to such item;
(B) such item is not subject to any outstanding
judgment, order, decree, stipulation or injunction; and
(C) except in accordance with the terms of Company's
standard form of software license agreement, a copy of which has previously been
provided to the Buyer or its advisors, neither the Company nor any Subsidiary
has agreed to indemnify any person or Business Entity for or against any
infringement, misappropriation or other conflict with respect to such item.
(d) Section 2.11(d) of the Disclosure Schedule identifies
each item of Intellectual Property used in the operation of the business of the
Company and the Subsidiaries at any time during the period covered by the
Financial Statements, or that the Company or any Subsidiary plans to use in the
future, that is owned by a party other than the Company or a Subsidiary (other
than commercially available software generally available to the public, which is
not listed in Section 2.11(d) of the Disclosure Schedule but with respect to
which the representations set forth below in this Section 2.11(d) are true). The
Company has supplied the Buyer or its advisors with correct and complete copies
of all licenses, sublicenses or other agreements (as amended to date) pursuant
to which the Company or any Subsidiary uses such Intellectual Property, all of
which are listed on Section 2.11(d) of the Disclosure Schedule. Except as set
forth in Section 2.11(d) of the Disclosure Schedule, with respect to each such
item of Intellectual Property:
(i) the license, sublicense or other agreement
covering such item is legal, valid, binding, enforceable and in full force and
effect with respect to the Company or any Subsidiary party thereto, and to the
Sellers' Knowledge is legal, valid, binding, enforceable and in full force and
effect with respect to each other party thereto, in either case subject to the
effect of bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and except as the availability of
equitable remedies may be limited by general principles of equity;
(ii) such license, sublicense or other agreement will
continue to be legal, valid, binding, enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect prior to the Closing, subject to the effect of bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and except as the availability of equitable remedies may be limited by
general principles of equity;
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<PAGE> 21
(iii) neither the Company or any Subsidiary nor, to
the Sellers' Knowledge, any other party to such license, sublicense or other
agreement is in breach or default, and no event has occurred which with notice
or lapse of time would constitute a breach or default by the Company or any
Subsidiary or, to the Sellers' Knowledge, by any such other party, or permit
termination, modification or acceleration thereunder;
(iv) the underlying item of Intellectual Property is
not subject to any outstanding judgment, order, decree, stipulation or
injunction to which the Company or any Subsidiary is a party or has been
specifically named, nor to the Sellers' Knowledge subject to any other
outstanding judgment, order, decree, stipulation or injunction;
(v) neither the Company nor any Subsidiary has
agreed to indemnify any person or Business Entity for or against any
interference, infringement, misappropriation or other conflict with respect to
such item; and
(vi) no license or other fee is payable upon any
transfer or assignment of such license, sublicense or other agreement by the
terms thereof or the terms of any other agreement or arrangement with the other
party or parties thereto.
2.12 REAL PROPERTY LEASES. Section 2.12 of the Disclosure Schedule
lists all real property leased or subleased to the Company or any Subsidiary.
The Company has delivered to the Buyer or its advisors correct and complete
copies of the leases and subleases (as amended to date) listed in Section 2.12
of the Disclosure Schedule. With respect to each lease and sublease listed in
Section 2.12 of the Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding,
enforceable and in full force and effect, subject to the effect of bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and except as the availability of equitable remedies
may be limited by general principles of equity;
(b) the lease or sublease will continue to be legal, valid,
binding, enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect prior to the Closing,
subject to the effect of bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and except as the
availability of equitable remedies may be limited by general principles of
equity;
(c) neither the Company or any Subsidiary nor, to the
Sellers' Knowledge, any other party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of time, would
constitute a breach or
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<PAGE> 22
default by the Company or any Subsidiary or, to the Sellers' Knowledge, by any
such other party, or permit termination, modification or acceleration
thereunder;
(d) there are no disputes, oral agreements or forbearance
programs in effect as to the lease or sublease;
(e) neither the Company nor any Subsidiary has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in
the leasehold or subleasehold;
(f) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation of said
facilities; and
(g) no construction, alteration or other leasehold
improvement work with respect to the lease or sublease remains to be paid for or
performed by the Company or any Subsidiary.
2.13 CONTRACTS.
(a) Section 2.13 of the Disclosure Schedule lists the
following written arrangements (including without limitation written agreements)
to which the Company or any Subsidiary is a party:
(i) any written arrangement (or group of related
written arrangements) for the lease of personal property from or to third
parties providing for lease payments in excess of $50,000 per annum;
(ii) any written arrangement (or group of related
written arrangements), currently in force or effect or which by its terms may in
the future be in force or effect, for the licensing or distribution of software,
products or other personal property or for the furnishing or receipt of services
(i) which calls for performance by the Company or any Subsidiary (other than the
performance solely of indemnification obligations) over a period of more than
one year following the date hereof, (ii) which involves the payment or receipt
of more than the sum of $100,000 following the date hereof, or (iii) in which
the Company or any Subsidiary has granted rights to license, sublicense or copy,
"most favored nation" pricing provisions or marketing or distribution rights
relating to any products or territory or has agreed to purchase a minimum
quantity of goods or services or has agreed to purchase goods or services
exclusively from a certain party;
(iii) any written arrangement establishing a
partnership or joint venture;
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<PAGE> 23
(iv) any written arrangement (or group of related
written arrangements) under which it has created, incurred, assumed or
guaranteed (or may create, incur, assume or guarantee) indebtedness (including
capitalized lease obligations) involving more than $50,000 or under which it has
imposed (or may impose) a Security Interest on any of its assets, tangible or
intangible;
(v) any written arrangement concerning
confidentiality, non- solicitation or non-competition (other than the Company's
standard form of confidentiality, nonsolicitation and non-competition agreement
with its employees, a copy of which has been provided to the Buyer or its
advisors, and the nondisclosure agreements entered into among any of the Parties
in connection with the transactions contemplated by this Agreement);
(vi) any written arrangement involving any of the
Company Stockholders or their Affiliates (for the purposes of this Agreement,
"Affiliate" shall mean (A) in the case of an individual, the members of the
immediate family (including parents, siblings and children) of (i) the
individual and (ii) the individual's spouse, and (iii) any Business Entity that
directly or indirectly, through one or more intermediaries controls, or is
controlled by, or is under common control with any of the foregoing individuals,
or (B) in the case of a Business Entity, another Business Entity or a person
that directly or indirectly, through one or more intermediaries controls, or is
controlled by, or is under common control with the Business Entity);
(vii) any written arrangement under which the
consequences of a default or termination could have a material adverse effect on
the assets, business, financial condition, results of operations or future
prospects of the Company or any Subsidiary; and
(viii) any other written arrangement (or group of
relate d written arrangements) either involving more than $100,000 or not
entered into in the Ordinary Course of Business of the Company or any
Subsidiary.
(b) The Company has delivered to the Buyer or its advisors a
correct and complete copy of each written arrangement (as amended to date)
listed in Section 2.13 of the Disclosure Schedule. With respect to each written
arrangement so listed: (i) the written arrangement is legal, valid, binding and
enforceable and in full force and effect with respect to the Company or any
Subsidiary party thereto, and to the Sellers' Knowledge is legal, valid,
binding, enforceable and in full force and effect with respect to each other
party thereto, in either case subject to the effect of bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and except as the availability of equitable remedies may be limited by
general principles of equity; (ii) the written arrangement will continue to be
legal, valid, binding and enforceable and in full force and effect immediately
following the Closing in accordance with the terms thereof as in effect prior to
the
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<PAGE> 24
Closing, subject to the effect of bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and except
as the availability of equitable remedies may be limited by general principles
of equity; and (iii) neither the Company or any Subsidiary nor, to the Sellers'
Knowledge, any other party, is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default by the
Company or any Subsidiary or, to the Sellers' Knowledge, by any such other
party, or permit termination, modification or acceleration, under the written
arrangement. Neither the Company nor any Subsidiary is a party to any oral
contract, agreement or other arrangement which, if reduced to written form,
would be required to be listed in Section 2.13 of the Disclosure Schedule under
the terms of this Section 2.13. Neither the Company nor any Subsidiary is
restricted by any arrangement from carrying on its business anywhere in the
world.
2.14 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of the Company or any Subsidiary.
2.15 INSURANCE. Section 2.15 of the Disclosure Schedule lists each
insurance policy (including fire, theft, casualty, general liability, workers
compensation, business interruption, environmental, product liability and
automobile insurance policies and bond and surety arrangements) to which the
Company or any Subsidiary has been a party, a named insured, or otherwise the
beneficiary of coverage at anytime within the past year. Each such insurance
policy is enforceable and in full force and effect and will continue to be
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect prior to the Closing. Neither the
Company nor any Subsidiary is in breach or default (including with respect to
the payment of premiums or the giving of notices) under any such policy, and no
event has occurred which, with notice or the lapse of time, would constitute
such a breach or default or permit termination, modification or acceleration,
under such policy; and neither the Company nor any Subsidiary has received any
notice from the insurer disclaiming coverage or reserving rights with respect to
a particular claim or such policy in general. Section 2.15 of the Disclosure
Schedule identifies all claims asserted by the Company or any Subsidiary
pursuant to any insurance policy since January 1, 1996 and describes the nature
and status of each such claim. Neither the Company nor any Subsidiary has
incurred any loss, damage, expense or liability covered by any such insurance
policy for which it has not properly asserted a claim under such policy. Each of
the Company and the Subsidiaries is covered by insurance in scope and amount
customary and reasonable for the businesses in which it is engaged and the
jurisdictions in which such businesses are conducted.
2.16 LITIGATION. Except as identified and described in Section 2.16
of the Disclosure Schedule, (a) there is no action, suit, proceeding or
investigation to which the Company or any Subsidiary is a party (either as a
plaintiff or defendant) pending
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<PAGE> 25
or, to the Sellers' Knowledge, threatened before any court, Governmental Entity
or arbitrator, and to the Sellers' Knowledge, there is no basis for any such
action, suit, proceeding or investigation; (b) neither the Company or any
Subsidiary nor, to the Sellers' Knowledge, any officer, director or employee of
the Company or any Subsidiary has been permanently or temporarily enjoined by
any order, judgment or decree of any court or Governmental Entity from engaging
in or continuing to conduct the business of the Company or any Subsidiary; and
(c) no order, judgment or decree of any court or Governmental Entity has been
issued in any proceeding to which the Company or any Subsidiary is or was a
party or, to the Sellers' Knowledge, in any other proceeding that enjoins or
requires the Company or any Subsidiary to take any action of any kind with
respect to its business, assets or properties. None of the actions, suits,
proceedings or investigations set forth in Section 2.16 of the Disclosure
Schedule, individually or collectively, if determined adversely to the interests
of the Company or any of its Subsidiaries, could have a material adverse effect
on the assets, business, financial condition, results of operations or future
prospects of the Company and the Subsidiaries taken as a whole.
2.17 EMPLOYEES AND SUBCONTRACTORS.
(a) Section 2.17(a) of the Disclosure Schedule contains a
list of (i) all current employees of the Company and the Subsidiaries (the
"Employees"), along with the position, date of hire and annual rate of monetary
compensation, including salary (or, with respect to Employees compensated on an
hourly or per diem basis, the hourly or per diem rate of monetary compensation),
(ii) all employment contracts or agreements relating to employment which are not
terminable by the Company or a Subsidiary without penalty upon less than 30 days
notice (other than any inability to terminate or penalties imposed by Swedish
law), and (iii) all Employees who have executed confidentiality, non-
competition or nonsolicitation agreements.
(b) There are no collective bargaining agreements to which
the Company or any Subsidiary is a party other than as set forth in Section 2.17
(b) of the Disclosure Schedule. Neither the Company nor any Subsidiary has
experienced any strikes, grievances, claims of unfair labor practices or other
collective bargaining disputes and, to the Sellers' Knowledge, no organizational
effort is presently being made or threatened by or on behalf of any labor union
with respect to the Employees. There is no cause to assume that any labor strike
or other work force disturbance will occur in the Company or any of the
Subsidiaries.
(c) Section 2.17(c) of the Disclosure Schedule sets forth
(i) a list of all subcontractors currently performing services or under contract
to perform future services for the Company or a Subsidiary and (ii) the start
date, type of services to be provided, estimated completion date and hourly or
per diem pay rate of such subcontractors.
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(d) To the Sellers' Knowledge, no employee or group of
employees employed by the Company or a Subsidiary that includes any of the
Selling Stockholders and/or any of Company's ten most highly compensated
engineers has any plans to terminate employment with the Company or a
Subsidiary.
(e) Neither the Company, any of the Company Stockholders or
any Subsidiary nor any director or officer, or, to the Sellers' Knowledge, any
other key employee of the Company or any of the Subsidiaries, or, to the
Sellers' Knowledge, any relatives of any of the foregoing, owns, directly or
indirectly, individually or collectively, any interest in any corporation,
company, partnership, entity or organization which is in a business competitive
with the businesses of the Company and the Subsidiaries or which has any
existing undisclosed contractual relationship with the Company or any of the
Subsidiaries (other than a passive investment interest in any publicly traded
company representing in the aggregate not more than 3% of the outstanding voting
power of such company).
(f) Neither the Company nor any of the Subsidiaries has
violated any labor legislation, regulation or agreement in any relevant
jurisdiction, including without limitation the Swedish lagen (1976:580) om
medbestammande i arbetslivet (MBL).
2.18 EMPLOYEE BENEFITS.
(a) Section 2.18(a) of the Disclosure Schedule contains a
complete and accurate list of all Employee Benefit Plans (as defined below in
this Section 2.18(a)) maintained, or contributed to, by the Company, any
Subsidiary or any ERISA Affiliate (as defined below in this Section 2.18(a)).
For purposes of this Agreement, "Employee Benefit Plan" means any "employee
pension benefit plan" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), any "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA), and any other written or
oral plan, agreement or arrangement involving direct or indirect compensation,
including without limitation insurance coverage, severance benefits, disability
benefits, pension, retirement plans, profit sharing, deferred compensation,
bonuses, stock options, stock purchase, phantom stock, stock appreciation or
other forms of incentive compensation or post-retirement compensation. Full
reservations have been made in the Financial Statements for all present and
reasonably estimated future liabilities in respect of pensions and other
payments related to compensation to be paid to employees. For purposes of this
Agreement, "ERISA Affiliate" means any member of (i) a controlled group of
corporations (as defined in Section 414(b) of the Code), (ii) a group of trades
or businesses under common control (as defined in Section 414(c) of the Code),
or (iii) an affiliated service group (as defined under Section 414(m) of the
Code or the regulations under Section 414(o) of the Code), any of which includes
the Company or a Subsidiary. Complete and accurate copies of (i) all Employee
Benefit Plans that
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have been reduced to writing, (ii) written summaries of all unwritten Employee
Benefit Plans, (iii) all related trust agreements, insurance contracts and
summary plan descriptions, and (iv) all annual reports filed on IRS Form 5500,
5500C or 5500R for the last five plan years for each Employee Benefit Plan, and
(v) all qualification letters issued by the Internal Revenue Service with
respect to every Employee Benefit Plan that is intended to qualify under Section
401(k) of the Code, have been delivered to the Buyer or its advisors. Each
Employee Benefit Plan has been administered in accordance with its terms, and
each of the Company, the Subsidiaries and the ERISA Affiliates has met its
obligations (if any) with respect to such Employee Benefit Plan and has made all
required contributions (if any) thereto. The Company and all Employee Benefit
Plans are in compliance with the currently applicable provisions (if any) of
ERISA, the Code and other applicable federal, state and foreign laws and the
regulations thereunder. Each Employee Benefit Plan that is intended to qualify
under Section 401(k) of the Code is so qualified. Nothing has occurred that
might cause a loss of such qualification and no loss of qualification has been
threatened.
(b) To the Sellers' Knowledge, there are no inquiries or
investigations by any Governmental Entity, termination proceedings or other
claims (except claims for benefits payable in the normal operation of the
Employee Benefit Plans and proceedings with respect to qualified domestic
relations orders), suits or proceedings against or involving any Employee
Benefit Plan or asserting any rights or claims to benefits under any Employee
Benefit Plan.
(c) Neither the Company nor any Subsidiary or ERISA
Affiliate has ever maintained an Employee Benefit Plan subject to Section 412 of
the Code, Part 3 of Subtitle B of Title I or ERISA, or Title IV of ERISA. Except
as set forth in Section 2.18(c) of the Disclosure Schedule, at no time has the
Company, any Subsidiary or any ERISA Affiliate been obligated to contribute to
any "multi-employer plan" (as defined in Section 4001(a)(3) of ERISA) that is
subject to Title IV of ERISA. No act or omission has occurred and no condition
exists with respect to any Employee Benefit Plan maintained by the Company, any
Subsidiary, any of their respective Affiliates or any ERISA Affiliate that would
subject the Company, any Subsidiary or any ERISA Affiliate to any fine, penalty,
Tax or liability of any kind imposed under ERISA or the Code. No prohibited
transaction (as defined in Section 406 of ERISA or Section 4975 of the Code) has
occurred with respect to any Employee Benefit Plan that is subject to ERISA or
the Code. No Employee Benefit Plan, plan documentation or agreement, summary
plan description or other written communication distributed generally to
employees by its terms prohibits the Company or a Subsidiary from amending or
terminating any such Employee Benefit Plan and any Employee Benefit Plan may be
terminated without liability to the Company, any Subsidiary or the Buyer, except
for benefits accrued through the date of termination. No former employees
participate in any welfare benefit plans listed in Section 2.18(a) of the
Disclosure Schedule. No Employee Benefit Plan includes in
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its assets any securities issued by the Company or any Subsidiary. No Employee
Benefit Plan has been subject to tax under Section 511 of the Code.
(d) Section 2.18(d) of the Disclosure Schedule discloses
each: (i) agreement with any director, executive officer or other key employee
of the Company or any Subsidiary (A) the benefits of which are contingent, or
the terms of which are altered, upon the occurrence of a transaction involving
the Company or any Subsidiary of the nature of any of the transactions
contemplated by this Agreement, (B) providing any term of employment or
compensation guarantee or (C) providing severance benefits or other benefits
after the termination of employment of such director, executive officer or key
employee; (ii) agreement, plan or arrangement under which any person may receive
payments from the Company or any Subsidiary that may be subject to the tax
imposed by Section 4999 of the Code or included in the determination of such
person's "parachute payment" under Section 280G of the Code; and (iii) agreement
or plan binding the Company or any Subsidiary, including without limitation any
stock option plan, stock appreciation right plan, restricted stock plan, stock
purchase plan, severance benefit plan, or any Employee Benefit Plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
2.19 ENVIRONMENTAL MATTERS.
(a) Each of the Company and the Subsidiaries has complied
with all applicable Environmental Laws (as defined below in this Section
2.19(a)). There is no pending or, to the Sellers' Knowledge, threatened civil or
criminal litigation, written notice of violation, formal administrative
proceeding, or investigation, inquiry or information request by any Governmental
Entity, relating to any Environmental Law involving the Company or any
Subsidiary. For purposes of this Agreement, "Environmental Law" means any
foreign, federal, state, local or European Union ("EU") law, statute, rule or
regulation or the common or decisional law relating to the environment or
occupational health and safety, including without limitation any statute,
regulation or order pertaining to (i) treatment, storage, disposal, generation
and transportation of industrial, toxic or hazardous substances or solid or
hazardous waste; (ii) air, water and noise pollution; (iii) groundwater and soil
contamination; (iv) the release or threatened release into the environment of
industrial, toxic or hazardous substances, or solid or hazardous waste,
including without limitation emissions, discharges, injections, spills, escapes
or dumping of pollutants, contaminants or chemicals; (v) the protection of wild
life, marine sanctuaries and wetlands, including without limitation all
endangered and threatened species; (vi) storage tanks, vessels and containers;
(vii) underground and other storage tanks or vessels, abandoned, disposed or
discarded barrels, containers and other closed
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receptacles; (viii) health and safety of employees and other persons; and (ix)
manufacture, processing, use, distribution, treatment, storage, disposal,
transportation or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or oil or petroleum products or solid or hazardous
waste. As used in this Section 2.19, the terms "release" and "environment" shall
have the meaning set forth in the United States Comprehensive Environmental
Compensation, Liability and Response Act of 1980 ("CERCLA").
(b) There have been no releases of any Materials of
Environmental Concern (as defined below in this Section 2.19(b)) into the
environment at any parcel of real property or any facility formerly or currently
owned, operated or controlled by the Company or a Subsidiary for which the
Company or any Subsidiary may be liable under any Environmental Law of the
jurisdiction in which such property or facility is located. With respect to any
such releases of Materials of Environmental Concern, the Company or a Subsidiary
has given all required notices (if any) to Governmental Entities (copies of
which have been provided to the Buyer). Neither the Company nor any Subsidiary
is aware of any releases of Materials of Environmental Concern at parcels of
real property or facilities other than those owned, operated or controlled by
the Company or a Subsidiary that could reasonably be expected to have an impact
on the real property or facilities owned, operated or controlled by the Company
or a Subsidiary. For purposes of this Agreement, "Materials of Environmental
Concern" means any chemicals, pollutants or contaminants, hazardous substances
(as such term is defined under CERCLA or any Environmental Law), solid wastes
and hazardous wastes (as such terms are defined under the United States
Resources Conservation and Recovery Act or any Environmental Law), toxic
materials, oil or petroleum and petroleum products, or any other material
subject to regulation under any Environmental Law, except for normal office and
cleaning products.
(c) Set forth in Section 2.19(c) of the Disclosure Schedule
is a list of all environmental reports, investigations and audits known to the
Company, any Subsidiary or any of the Company Stockholders (whether conducted by
or on behalf of the Company, a Subsidiary or a third party, and whether done at
the initiative of the Company, a Subsidiary or directed by a Governmental Entity
or other third party) issued or conducted during the past five years relating to
premises currently or previously owned or operated by the Company or a
Subsidiary. Complete and accurate copies of any such report, or the results of
any such investigation or audit, have been provided to the Buyer or its
advisors.
(d) Neither the Company nor any Subsidiary is aware of any
material environmental liability of the solid and hazardous waste transporters
and treatment, storage and disposal facilities that have been utilized by the
Company or a Subsidiary.
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2.20 LEGAL COMPLIANCE. Each of the Company and the Subsidiaries, and
the conduct and operations of their respective businesses, are and have been in
compliance with each law (including rules and regulations thereunder) of any
federal, state, local or foreign government, or any Governmental Entity, that
(a) affects or relates to this Agreement or the transactions contemplated hereby
or (b) is applicable to the Company or a Subsidiary or their respective
businesses.
2.21 PERMITS. The Company and the Subsidiaries have all permits,
licenses, registrations, certificates, orders or approvals from any Governmental
Entity (including without limitation those issued or required under applicable
export laws or regulations and those relating to the occupancy or use of owned
or leased real property) ("Permits") required for the Company and the
Subsidiaries to conduct their respective businesses as presently conducted or as
proposed to be conducted. Each such Permit is in full force and effect and, to
the Sellers' Knowledge, no suspension or cancellation of such Permit is
threatened and to the Sellers' Knowledge there is no basis for believing that
such Permit will not be renewable upon expiration. Each such Permit will
continue in full force and effect following the Closing.
2.22 CERTAIN BUSINESS RELATIONSHIPS WITH AFFILIATES. No Company
Stockholder or any Affiliate of any Company Stockholder (a) owns any property or
right, tangible or intangible, which is used in the business of the Company or
any Subsidiary, (b) has any claim or cause of action against the Company or any
Subsidiary, (c) is a party to any contract or other arrangement, written or
verbal, with the Company or any Subsidiary, or (d) owes any money to the Company
or any Subsidiary or is owed any money by the Company or any Subsidiary (the
agreements, arrangements and relationships described in this sentence are
hereinafter referred to as "Related Party Transactions"). Section 2.22 of the
Disclosure Schedule summarizes any Related Party Transactions.
2.23 BOOKS AND RECORDS. The minute books and other similar records of
the Company and each Subsidiary contain true and complete records of all actions
taken at any meetings of the Company's or such Subsidiary's stockholders, Board
of Directors or any committee thereof and of all written consents executed in
lieu of the holding of any such meeting. The books and records of the Company
and each Subsidiary accurately reflect the assets, liabilities, business,
financial condition and results of operations of the Company or such Subsidiary
and have been maintained in accordance with good business and bookkeeping
practices consistent with the practices of similar companies in the applicable
jurisdiction.
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2.24 BANKING FACILITIES. Section 2.24 of the Disclosure Schedule
identifies:
(a) Each bank, savings and loan or similar financial
institution in which the Company or any Subsidiary has an account or safety
deposit box and the numbers of the accounts or safety deposit boxes maintained
by the Company or such Subsidiary thereat; and
(b) The names of all persons authorized to draw on each such
account or to have access to any such safety deposit box facility.
2.25 BROKERS' FEES. Except as disclosed in Section 2.25 of the
Disclosure Schedule, neither the Company nor any of the Subsidiaries or Company
Stockholders has any liability or obligation to pay any fees or commissions to
any broker, finder or agent with respect to the transactions contemplated by
this Agreement.
2.26 POOLING. To the best of the Sellers' Knowledge, neither the
Company nor any of its Affiliates has through the date of this Agreement taken
or agreed to take any action that could reasonably be expected to prevent the
Company and the Buyer from accounting for the Acquisition as a "pooling of
interests" in conformity with United States generally accepted accounting
principles ("U.S. GAAP").
2.27 DISCLOSURE. No representation or warranty by the Company or any
of the Company Stockholders contained in this Agreement, and no statement
contained in the Disclosure Schedule or any other document, certificate or other
instrument delivered to or to be delivered by or on behalf of the Company or the
Company Stockholders pursuant to this Agreement, contains or will as of the
Closing Date contain any untrue statement of a material fact or omits or will as
of the Closing Date omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
ARTICLE III
FURTHER REPRESENTATIONS AND WARRANTIES
OF THE COMPANY STOCKHOLDERS
Each Company Stockholder severally represents and warrants to the Buyer
as follows:
3.1 OWNERSHIP OF STOCK; AUTHORITY.
(a) The Company Stockholder has good and marketable title,
free and clear of any and all Security Interests, to all of the Company Shares
listed on SCHEDULE I as being owned by such Company Stockholder. The Company
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Stockholder has the full right, power and authority to transfer, convey and sell
to the Buyer at the Closing the Company Shares to be sold by such Company
Stockholder and, upon consummation of the purchase contemplated hereby, the
Buyer will acquire from such Company Stockholder good and marketable title to
such Company Shares, free and clear of all covenants, conditions, restrictions,
voting trust arrangements, liens, charges, encumbrances, options and adverse
claims or rights whatsoever.
(b) The Company Stockholder has all requisite power and
authority to execute and deliver the Fundamental Agreements to which such
Company Stockholder is a party and to perform such Company Stockholder's
obligations under such Fundamental Agreements. Such Fundamental Agreements have
each been (or in the case of the Fundamental Agreements to be entered into on
the Closing Date, shall be when delivered) duly and validly executed and
delivered by such Company Stockholder, and each constitutes (or, in the case of
the Fundamental Agreements to be entered into on the Closing Date, shall
constitute) a valid and binding obligation of such Company Stockholder,
enforceable against such Company Stockholder in accordance with its terms,
subject to the effect of bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and except as the
availability of equitable remedies may be limited by general principles of
equity.
(c) Neither the execution and delivery of any or all of the
Fundamental Agreements to which such Company Stockholder is a party by such
Company Stockholder, nor the consummation by such Company Stockholder of the
transactions contemplated hereby or thereby, will (i) conflict with, result in a
breach of, constitute (with or without due notice or lapse of time or both) a
default under, or require any notice, consent or waiver under, any instrument,
contract, agreement or arrangement to which such Company Stockholder is a party
or by which such Company Stockholder is bound, (ii) result in the imposition of
any Security Interest upon the Company Shares owned by such Company Stockholder,
or (iii) violate any order, writ, injunction or decree applicable to such
Company Stockholder or to the Company Shares.
3.2 INVESTMENT REPRESENTATIONS. With respect to the Buyer Shares
issued to and acquired by the Company Stockholder hereunder:
(a) The Company Stockholder will be acquiring the Buyer
Shares to be issued to such Company Stockholder for his or her own account for
investment only, and not with a view to, or for sale in connection with, any
distribution of such Buyer Shares in violation of the Securities Act or any rule
or regulation under the Securities Act or any state or foreign securities law.
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(b) The Company Stockholder has had adequate opportunity to
obtain from representatives of the Buyer such information, in addition to the
representations set forth in the Agreement, as is necessary to evaluate the
merits and risks of the investment by such Company Stockholder in the Buyer;
provided, however, that the foregoing shall not limit or modify the
representations and warranties of the Buyer set forth in Article IV of this
Agreement or the right of any Company Stockholder to rely thereon.
(c) The Company Stockholder has sufficient experience in
business, financial and investment matters to be able to evaluate the risks
involved in the acquisition of the Buyer Shares to be issued to such Company
Stockholder and to make an informed investment decision with respect to such
investment.
(d) The Company Stockholder understands that the Buyer
Shares, if and when issued, will not have been registered under the Securities
Act and will be "restricted securities" within the meaning of Rule 144 under the
Securities Act; and the Buyer Shares will not be eligible to be sold,
transferred or otherwise disposed of unless they are subsequently registered
under the Securities Act or an exemption from registration is then available.
(e) A legend substantially in the following form will be
placed on the certificate representing any Buyer Shares which may be issued to
such Company Stockholder:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may
not be sold, transferred or otherwise disposed of in the absence
of an effective registration statement under such Act or an
opinion of counsel satisfactory to the corporation to the effect
that such registration is not required."
3.3 ADDITIONAL REPRESENTATIONS BY NON-U.S. PERSONS. Each Company
Stockholder who is not a "U.S. person" (as defined in Regulation S promulgated
under the Securities Act ("Regulation S")) makes the following additional
representations with respect to the Buyer Shares issued to and acquired by such
Company Stockholder hereunder:
(a) The Company Stockholder understands and acknowledges
that (i) the Buyer Shares have not been registered under the Securities Act and
may not be offered or sold in the United States or to, or for the account or
benefit of, any U.S. person unless such securities are registered under the
Securities Act or such offer or sale is made pursuant to an exemption from the
registration requirements of the Securities Act and (ii) the Buyer Shares are
being distributed by the Buyer pursuant to the terms of Regulation S, which
permits securities to be sold to non-U.S. persons
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in "offshore transactions" (as defined in Regulation S), subject to certain
terms and conditions.
(b) The Company Stockholder is not a U.S. person and has
signed this Agreement outside the United States.
(c) The Company Stockholder acknowledges that for a period
of 40 days following the Closing Date (the "Restricted Period"), the Company
Stockholder shall not (i) engage in any activity for the purpose of, or which
may reasonably be expected to have the effect of, conditioning the market in the
United States for the Buyer Shares or (ii) unless such Buyer Shares are
registered under the Securities Act or an exemption from the registration
requirements of the Securities Act is available, offer, sell or transfer the
Buyer Shares in the United States or to, or for the account or benefit of, a
U.S. person. The Company Stockholder understands that the Buyer Shares or any
interest therein are only transferable on the books and records of the transfer
agent and registrar of the Buyer. The Company Stockholder further understands
that such transfer agent and registrar will not register any transfer of the
Buyer Shares which the Buyer in good faith believes violates the restrictions
set forth in this paragraph (c), and that the Buyer may place stop transfer
orders with its transfer agent with respect to certificates representing Buyer
Shares.
(d) Unless the Buyer Shares shall first have been registered
under the Securities Act, any proposed offer, sale or transfer during the
Restricted Period of any of the Buyer Shares shall be subject to the condition
that the Company Stockholder must deliver to the Buyer (i) a written
certification that neither record nor beneficial ownership of the Buyer Shares
has been offered or sold in the United States or to, or for the account or
benefit of, any U.S. person, (ii) a written certification of the proposed
transferee that such transferee (or any account for which such transferee is
acquiring such Buyer Shares) is not a U.S. person, that such transferee is
acquiring such Buyer Shares for such transferee's own account (or an account
over which he or she has investment discretion), and that such transferee is
knowledgeable of and agrees to be bound by the restrictions on re-sale set forth
in this section and Regulation S during the Restricted Period, and (iii) a
written opinion of United States counsel, in form and substance reasonably
satisfactory to the Buyer, to the effect that the offer, sale and transfer of
such Buyer Shares are exempt from registration under the Securities Act.
(e) The Company Stockholder agrees that for the duration of
the Restricted Period the stock certificates representing the Buyer Shares shall
bear the legend set forth below:
"The shares of Common Stock represented by this certificate may
not be offered, sold or transferred except in
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accordance with the provisions of Regulation S under the
Securities Act of 1933, as amended."
3.4 ADDITIONAL REPRESENTATIONS BY U.S. PERSONS. Each Company
Stockholder who is a U.S. person represents and warrants that he is an
Accredited Investor within the definition of Rule 501(a) under the Securities
Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to each Company Stockholder as
follows:
4.1 ORGANIZATION. The Buyer is a corporation duly organized, validly
existing and in corporate and tax good standing under the laws of the State of
Delaware.
4.2 CAPITALIZATION. The authorized capital stock of the Buyer
consists of 80,000,000 shares of Buyer Common Stock, of which 35,055,430 shares
were issued and outstanding and 509 shares were held in the treasury of the
Buyer as of June 30, 1997. All of the issued and outstanding shares of Buyer
Common Stock are duly authorized, validly issued, fully paid, nonassessable and
free of all preemptive rights. All of the Buyer Shares will be, when issued in
accordance with this Agreement, duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights.
4.3 AUTHORIZATION OF TRANSACTION. The Buyer has all requisite power
and authority to execute and deliver the Fundamental Agreements to which it is a
party and the Other Stock Purchase Agreements and to perform its obligations
under each such agreement. The execution and delivery of such agreements by the
Buyer and the performance of such agreements and the consummation of the
transactions contemplated thereby by the Buyer have been (or, in the case of the
Fundamental Agreements to be entered into on the Closing Date and the Other
Stock Purchase Agreements, shall be when delivered) duly and validly authorized
by all necessary corporate action on the part of the Buyer. Each Fundamental
Agreement to which the Buyer is a party and the Other Stock Purchase Agreements
has been (or, in the case of the Fundamental Agreements to be entered into on
the Closing Date and the Other Stock Purchase Agreements, shall be when
delivered) duly and validly executed and delivered by the Buyer and constitutes
(or, in the case of the Fundamental Agreements to be entered into on the Closing
Date and the Other Stock Purchase Agreements, shall constitute when delivered) a
valid and binding obligation of the Buyer, enforceable against the Buyer in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
moratorium or other similar laws affecting the
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enforcement of creditors' rights generally and except as the availability of
equitable remedies may be limited by general principles of equity.
4.4 NONCONTRAVENTION. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state and foreign
securities laws, neither the execution and delivery by the Buyer of the
Fundamental Agreements to which the Buyer is a party nor the consummation of the
transactions contemplated thereby will (a) conflict with or violate any
provision of the charter or By-laws of the Buyer, (b) require on the part of the
Buyer any filing with, or permit, authorization, consent or approval of, any
Governmental Entity, (c) conflict with, result in breach of, constitute (with or
without due notice or lapse of time or both) a default under, result in the
acceleration of, create in any party any right to accelerate, terminate, modify
or cancel, or require any notice, consent or waiver under, any contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest or
other arrangement to which the Buyer is a party or by which the Buyer is bound
or to which any of its assets are subject, or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Buyer or any
of its properties or assets.
4.5 REPORTS AND FINANCIAL STATEMENTS. The Buyer has previously
furnished to the Company complete and accurate copies, as amended or
supplemented, of the Buyer's (a) Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, as filed by the Buyer with the United States Securities
and Exchange Commission (the "SEC"), and (b) all reports filed by the Buyer with
the SEC under Section 13 or 15 of the Securities Exchange Act of 1934 (as
amended, the "Exchange Act") since December 31, 1996 (such materials, together
with any amendments or supplements thereto, are collectively referred to herein
as the "Buyer Reports"). As of their respective dates, the Buyer Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited financial statements and unaudited interim financial statements of the
Buyer included in the Buyer Reports (i) comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, (ii) have been prepared in
accordance with U.S. GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated therein or in the notes thereto, and
in the case of quarterly financial statements, as permitted by Form 10-Q under
the Exchange Act), (iii) fairly present the consolidated financial condition,
results of operations and cash flows of the Buyer as of the respective dates
thereof and for the periods referred to therein, and (iv) are consistent with
the books and records of the Buyer.
4.6 ABSENCE OF MATERIAL ADVERSE CHANGES. Since December 31, 1996,
there has not been any material adverse change in the assets, business,
financial condition
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or results of operations of the Buyer, nor has there occurred any event or
development which could reasonably be foreseen to result in such a material
adverse change in the future.
4.7 POOLING. To the best knowledge of the Buyer, neither the Buyer
nor any of its Affiliates has through the date of this Agreement taken or agreed
to take any action that could reasonably be expected to prevent the Company and
the Buyer from accounting for the Acquisition as a "pooling of interests" in
conformity with U.S. GAAP.
4.8 BROKERS' FEES. The Buyer has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement except to Robertson, Stephens &
Company LLC.
4.9 DISCLOSURE. No representation or warranty by the Buyer contained
in this Agreement, and no statement contained in the any document, certificate
or other instrument delivered to or to be delivered by or on behalf of the Buyer
pursuant to this Agreement, contains or will as of the Closing Date contain any
untrue statement of a material fact or omits or will as of the Closing Date omit
to state any material fact necessary, in light of the circumstances under which
it was or will be made, in order to make the statements herein or therein not
misleading.
4.10 OPINION OF FINANCIAL ADVISOR. The Buyer has received an opinion
of Robertson, Stephens & Company LLC, the financial advisor to the Buyer, to the
effect that the consideration payable for the Outstanding Company Shares and
shares of capital stock of the Company issuable upon exercise of the Options in
connection with the Acquisition is fair, from a financial point of view, to the
Buyer.
4.11 REPORTING ISSUER. The Buyer represents and warrants to each
Company Stockholder that is not a U.S. person that the Buyer is a "reporting
issuer" (as defined in Regulation S). The Buyer, its Affiliates and any person
acting on behalf of, or as agent of, any of the foregoing, whether as principal
or agent, (a) has distributed or will distribute the Buyer Shares to such
Company Stockholders only in "offshore transactions" (as defined in Regulation
S), (b) has not engaged and will not engage with respect to the Buyer Shares
issued or to be issued to such Company Stockholders in any "directed selling
efforts" (as defined in Regulation S) in or directed toward the United States,
and (c) has complied and will comply with all "offering restrictions" (as
defined in Regulation S) in respect of such Buyer Shares.
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ARTICLE V
COVENANTS
5.1 CONDUCT OF BUSINESS. Except as contemplated by this Agreement,
during the period from the date of this Agreement to the Closing, the Company
shall (and shall cause each Subsidiary to) conduct its operations in the
Ordinary Course of Business and in compliance with all applicable laws and
regulations and, to the extent consistent therewith, use all reasonable efforts
to preserve intact its current business organization, keep its physical assets
in good working condition, keep available the services of its current officers
and employees and preserve its relationships with customers, suppliers and
others having business dealings with it to the end that its goodwill and ongoing
business shall not be impaired in any material respect. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the Closing, neither the Company nor any Subsidiary shall, without the prior
written consent of the Buyer:
(a) issue, sell, deliver or agree or commit to issue, sell
or deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) or authorize the
issuance, sale or delivery of, or redeem or repurchase, any stock of any class
or any other securities or any rights, warrants or options to acquire any such
stock or other securities (except pursuant to the conversion or exercise of
convertible securities, Options or Warrants outstanding on the date hereof), or
amend any of the terms of any such convertible securities, Options or Warrants;
(b) split, combine or reclassify any shares of its capital
stock or declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of its capital
stock;
(c) create, incur or assume any debt not currently
outstanding (including obligations in respect of capital leases) except in the
Ordinary Course of Business; assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other person or entity; or make any loans, advances or
capital contributions to, or investments in, any other person or entity;
(d) enter into, adopt or amend any Employee Benefit Plan or
any employment or severance agreement or arrangement of the type described in
Section 2.18(d) or (except for normal increases in the Ordinary Course of
Business) increase in any manner the compensation or fringe benefits of, or
materially modify the employment terms of, its directors, officers or employees,
generally or individually, or pay any benefit not required by the terms in
effect on the date hereof of any existing Employee Benefit Plan;
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(e) acquire, sell, lease, encumber or dispose of any assets
or property (including without limitation any shares or other equity interests
in or securities of any Subsidiary or any corporation, partnership, association
or other business organization or division thereof), other than purchases and
sales of assets in the Ordinary Course of Business;
(f) amend its articles of association, charter and/or
by-laws, as applicable;
(g) change in any material respect its accounting methods,
principles or practices, except insofar as may be required by a generally
applicable change in GAAP;
(h) discharge or satisfy any Security Interest or pay any
obligation or liability other than in the Ordinary Course of Business;
(i) mortgage or pledge any of its property or assets or
subject any such assets to any Security Interest;
(j) sell, assign, transfer or license any Intellectual
Property, other than in the Ordinary Course of Business;
(k) enter into, amend, terminate, take or omit to take any
action that would constitute a violation of or default under, or waive any
rights under, any material contract or agreement;
(l) make or commit to make any capital expenditure in excess
of $50,000 per item or $250,000 in the aggregate;
(m) take any action or fail to take any action permitted by
this Agreement with the knowledge that such action or failure to take action
would result in (i) any of the representations and warranties of the Company or
the Company Stockholders set forth in this Agreement or any of the Other Stock
Purchase Agreements becoming untrue or (ii) any of the conditions to any Party's
obligations set forth in Article VI not being satisfied;
(n) take any action that would jeopardize the treatment of
the Acquisition as a "pooling of interests" for accounting purposes; or
(o) agree in writing or otherwise to take any of the
foregoing actions.
5.2 NOTICE OF BREACHES. The Company shall promptly deliver to the
Buyer written notice of any event or development that would (a) render any
statement, representation or warranty of the Company or the Company Stockholders
in this
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Agreement (including the Disclosure Schedule) inaccurate or incomplete in any
respect, or (b) constitute or result in a breach by the Company of, or a failure
by the Company to comply with, any agreement or covenant in this Agreement
applicable to such party. No such disclosure shall be deemed to avoid or cure
any such misrepresentation or breach.
5.3 EXCLUSIVITY. Neither the Company nor any of the Company
Stockholders shall, and the Company shall use its best efforts to cause its
Affiliates and each of its officers, directors, employees, representatives and
agents not to, directly or indirectly, (a) solicit, initiate, engage or
participate in or encourage discussions or negotiations with any person or
entity (other than the Buyer) concerning any merger, consolidation, sale of
material assets, tender offer, recapitalization, accumulation of Outstanding
Company Shares, proxy solicitation or other business combination involving the
Company, any Subsidiary or any division of the Company or any Subsidiary or (b)
provide any nonpublic information concerning the business, properties or assets
of the Company or any Subsidiary to any person or entity (other than the Buyer).
The Company shall immediately notify the Buyer of, and shall disclose to the
Buyer all details of, any inquiries, discussions or negotiations of the nature
described in the first sentence of this Section 5.3.
5.4 AGREEMENTS FROM CERTAIN AFFILIATES OF THE COMPANY. Concurrently
with the execution of this Agreement, the Company shall deliver to the Buyer a
list of all persons or entities who are at such time Affiliates of the Company
(the "Company Affiliates"). In order to help ensure that the Acquisition will be
accounted for as a "pooling of interests" and that the issuance of Buyer Shares
will comply with the Securities Act, the Company shall cause each Company
Affiliate to execute and deliver to the Buyer, on the Agreement Date, a written
agreement substantially in the form attached hereto as EXHIBIT E.
5.5 LISTING OF BUYER SHARES. The Buyer shall use its best efforts to
list the Buyer Shares and the shares of Buyer Common Stock to be issued under
the Other Stock Purchase Agreements on the Nasdaq National Market and shall use
its best efforts to cause such listing to be approved prior to the Closing.
5.6 DELIVERY OF INTERIM FINANCIAL STATEMENTS. As promptly as
possible following the last day of each month after the Agreement Date until the
Closing Date, and in any event within 20 days after the end of each such month,
the Company shall deliver to the Buyer the unaudited balance sheet of the
Company and the related statements profit and loss for the one-month period then
ended, all certified by the chief financial officer of the Company to the effect
that such interim financial statements are prepared in accordance with GAAP and
fairly present the financial condition of the Company as of the date thereof and
for the period covered thereby.
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5.7 BEST EFFORTS TO OBTAIN SATISFACTION OF CONDITIONS. Each of the
Parties shall use its best efforts, to the extent commercially reasonable, to
take all actions and to do all things necessary, proper or advisable to
consummate Acquisition and the transactions contemplated by this Agreement and
the Other Stock Purchase Agreements; provided, however, that notwithstanding
anything in this Agreement to the contrary, the Buyer shall not be required to
sell or dispose of or hold separately (through a trust or otherwise) any assets
or businesses of the Buyer or its Affiliates.
5.8 NOTICES AND CONSENTS. Each of the Buyer, the Company and the
Company Stockholders shall use its respective best efforts to obtain, at its
expense, all such waivers, permits, consents, approvals or other authorizations
from third parties and Governmental Entities, and to effect all such
registrations, filings and notices with or to third parties and Governmental
Entities, as may be required by or with respect to the Buyer, the Company or the
Selling Stockholders, respectively, in connection with the transactions
contemplated by this Agreement and the Other Stock Purchase Agreements
(including without limitation, with respect to the Company, those listed in
Section 2.3 of the Disclosure Schedule).
5.9 FULL ACCESS. The Company shall (and shall cause each Subsidiary
to) permit representatives of the Buyer to have full access (at all reasonable
times, and in a manner so as not to interfere with the normal business
operations of the Company and the Subsidiaries) to all premises, properties,
financial and accounting records, contracts, other records and documents, and
personnel, of or pertaining to the Company and each of the Subsidiaries. The
officers and management of the Company and the Subsidiaries shall cooperate
fully with the Buyer's representatives and agents and shall make themselves
available to the extent necessary to complete the due diligence process and the
Closing. The Company shall, at the request of the Buyer, introduce the Buyer to
the principal suppliers, customers and employees and the Company and the
Subsidiaries to facilitate discussions between such persons and the Buyer in
regard to the conduct of the business of the Company and the Subsidiaries
following the Closing.
5.10 WAIVER OF RIGHTS OF FIRST REFUSAL. Each Company Stockholder, by
his or her execution of this Agreement, expressly waives any and all rights of
first refusal and rights of first offer, including without limitation the rights
of first refusal set forth in the Company's Articles of Association and in the
Consortium Agreement dated September 15, 1995, as amended, among the holders of
the Company's Series A Stock, with respect to any offer to sell or sale of
Outstanding Company Shares by any person or entity in connection with the
Acquisition.
5.11 INDEMNIFICATION; DISCHARGE OF DIRECTOR LIABILITY.
(a) From and after the Closing Date, the Buyer will fulfill,
assume and honor in all respects the obligations of the Company and its
Subsidiaries with
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respect to any written indemnification agreement or arrangement between the
Company and/or its Subsidiaries and any of their respective directors and
officers existing and in force as of the date hereof, copies of which are
attached to Section 5.11 of the Disclosure Schedule.
(b) The Buyer shall discharge or procure the discharge of
all directors of the Company and its Subsidiaries in office immediately prior to
Closing from their personal liability for the period from July 1, 1996 to June
30, 1997 on the next annual general meetings of the Company and the
Subsidiaries, which discharges shall not in any way limit or restrict or be
construed to limit or restrict the Buyer's rights against any of the Selling
Stockholders under this Agreement or any of the Other Stock Purchase Agreements.
In addition, the Buyer shall, provided that the auditors so recommend, discharge
or procure the discharge of all directors of the Company and its Subsidiaries in
office immediately prior to Closing from their personal liability for the period
from July 1, 1997 to the Closing at the annual general meetings of the Company
and the Subsidiaries for the fiscal year ending June 30, 1998, which discharges
shall not in any way limit or restrict or be construed to limit or restrict the
Buyer's rights against any of the Selling Stockholders under this Agreement or
any of the Other Stock Purchase Agreements.
(c) From and after the Closing Date, the Buyer shall
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date of this Agreement, a director or officer of the Company
or any of its Subsidiaries (the "Indemnified Parties") against all losses,
claims, damages, costs, expenses, liabilities or judgments or amounts that are
paid in settlement with the approval of the Buyer (which approval shall not be
unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation under any United States corporate law and asserted
or claimed after the Closing Date based in whole or in part on or arising in
whole or in part out of the fact that such person is or was a director or
officer of the Company or any of its Subsidiaries, whether pertaining to any
matter exiting or occurring at or prior to the Closing Date ("Indemnified
Liabilities"), including without limitation all losses, claims, damages, costs,
expenses, liabilities or judgments based in whole or in part on, or arising in
whole or in part out of, or pertaining to this Agreement or the transactions
contemplated hereby, in each case to the full extent a corporation is permitted
under the Delaware General Corporation Law of the United States (the "DGCL"), or
the General Corporation Law of the State of California (the "CGCL"), as
applicable, to indemnify its own directors and officers. In addition, the Buyer
will pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party upon receipt of the undertaking
contemplated by Section 145(e) of the DGCL or Section 317(f) of the CGCL, as may
be applicable. Without limiting the foregoing, in the event any such claim,
action, suit, proceeding or investigation is brought against any Indemnified
Party after the Closing Date, (i) the Indemnified Parties may retain counsel
reasonably satisfactory to the Buyer, (ii) the Buyer shall pay all reasonable
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fees and expenses of such counsel for the Indemnified Parties promptly as
statements therefor are received, and (iii) the Buyer will use all reasonable
efforts to assist in the vigorous defense of any such matter, provided that the
Buyer shall not be liable for any settlement of any claim effected without its
written consent, which consent, however, shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this Section 5.11(c),
upon learning of any such claim, action, suit, proceeding or investigation,
shall promptly notify the Buyer (but the failure so to notify the Buyer shall
not relieve it from any liability which it may have under this Section 5.11(c)
except to the extent such failure prejudices such party) and shall deliver to
the Buyer the undertaking contemplated by Section 145(e) of the DGCL or Section
317(f) of the CGCL, as may be applicable. The Indemnified Parties as a group may
retain only one law firm to represent them with respect to each such matter
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Parties.
(d) The Buyer shall honor, and shall cause the U.K.
Subsidiary of the Company to honor, all indemnification obligations of the
Company's U.K. Subsidiary to each present and former director and officer of the
Company's U.K. Subsidiary to the fullest extent that may be required by the U.K.
Subsidiary's Article's of Association and Paragraph 118 of Table A of the
Companies Act 1995 and the laws of the United Kingdom or any political
subdivision thereof.
5.12 SHARING OF DATA. The Company Stockholders shall have the right
for a period of seven years following the Closing Date to have reasonable access
to the financial and Tax information acquired by the Buyer in connection with
the Acquisition for the limited purpose of complying with their respective
obligations under applicable Tax laws and regulations.
5.13 LEGEND REMOVAL. The Buyer agrees to use all reasonable efforts
to promptly respond to any appropriate requests for the removal of the legends
affixed to the certificates representing the Buyer Shares.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligation of the
Buyer to consummate the transactions to be performed by the Buyer in connection
with the Closing is subject to the satisfaction, or waiver by the Buyer, of the
following conditions:
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(a) the Company and the Company Stockholders shall have
obtained all of the waivers, permits, consents, approvals or other
authorizations, and effected all of the registrations, filings and notices,
necessary for the consummation by the Company and the Seller Shareholders of the
Acquisition and the transactions contemplated by this Agreement and the Other
Stock Purchase Agreements;
(b) the representations and warranties of the Company and
the Company Stockholders set forth in Articles II and III above shall have been
true and correct when made on the Agreement Date and shall be true and correct
in all material respects as of the Closing Date as if made as of the Closing
Date, except for representations and warranties made as of a specific date,
which shall be true and correct as of such date;
(c) each of the Company and the Company Stockholders shall
have performed or complied with their agreements and covenants required to be
performed or complied with under this Agreement as of or prior to the Closing;
(d) no action, suit or proceeding shall be pending or
threatened by or before any Governmental Entity wherein an unfavorable judgment,
order, decree, stipulation or injunction would (i) prevent consummation of the
Acquisition or any of the transactions contemplated by this Agreement or any of
the Other Stock Purchase Agreements, (ii) cause the Acquisition or any of the
transactions contemplated by this Agreement or any of the Other Stock Purchase
Agreements to be rescinded following consummation, or (iii) affect adversely the
right of the Company or any of the Subsidiaries to own, operate or control any
of its assets or operations, and no such judgment, order, decree, stipulation or
injunction shall be in effect;
(e) the Company and the Stockholders' Representative shall
have delivered to the Buyer a certificate (without qualification as to knowledge
or materiality or otherwise) to the effect that each of the conditions specified
in clauses (a) through (d) of this Section 6.1 is satisfied in all respects;
(f) the Buyer shall have received from Lagerlof & Leman,
Swedish counsel to the Company and the Selling Stockholders, and Gray Cary Ware
& Freidenrich, United States special counsel to the Company, opinions in the
forms attached hereto as EXHIBITS F-1 and F-2, addressed to the Buyer and dated
as of the Closing Date;
(g) the Buyer and each of the Company Stockholders named
therein shall have entered into the Registration Rights Agreement and such
Agreement shall be in full force and effect on the Closing Date in accordance
with its terms;
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(h) the Buyer, the Selling Stockholders and the Escrow Agent
shall have entered into the Escrow Agreement and such Agreement shall be in full
force and effect on the Closing Date in accordance with its terms;
(i) the Buyer shall have received the resignations,
effective as of the Closing Date, of each director of the Company and the
Subsidiaries;
(j) the Company shall have delivered to the Buyer a
registration certificate issued by the Patent and Registration Office as of the
Closing Date as to the continued legal existence of the Company and its Swedish
Subsidiary as of the Closing Date;
(k) the Company shall have delivered to the Buyer copies of
the resolutions authorizing the Acquisition and the transactions contemplated by
this Agreement;
(l) the Buyer shall have received a letter from each of
Lindebergs and Deloitte & Touche, L.L.P., auditors for the Company and the
Buyer, respectively, in a form reasonably satisfactory to the Buyer, to the
effect that the Company and, in the case of the letter from Deloitte & Touche,
L.L.P., the Buyer may treat the Acquisition as a "pooling of interests" for
accounting purposes;
(m) each of Hans Tholander, Johan Borendal, Bjorn Oste,
Khris Loux and Peter Rostin shall have received an employment offer letter from
the Company or the Buyer in substantially the form attached hereto as EXHIBIT C;
(n) each of Rolf Ljung and Peter Loux shall have entered
into a Consulting Agreement with the Company and the Buyer in substantially the
form attached hereto as EXHIBIT D and each such Agreement shall be in full force
and effect on the Closing Date in accordance with its terms;
(o) the Buyer shall have consummated the transactions
contemplated by the Other Stock Purchase Agreements; and
(p) all actions to be taken by the Company and the Company
Stockholders in connection with the Acquisition and the consummation of the
transactions contemplated hereby and all certificates, opinions, instruments and
other documents required to effect the transactions contemplated hereby shall be
reasonably satisfactory in form and substance to the Buyer.
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE COMPANY
STOCKHOLDERS. The obligation of the Company and the Company Stockholders to
consummate the transactions to be performed by them in connection with the
Closing
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are subject to the satisfaction, or waiver by the Company and the Stockholders'
Representative, of the following conditions:
(a) the Buyer shall have obtained all of the waivers,
permits, consents, approvals or other authorizations, and effected all of the
registrations, filings and notices, necessary for the consummation by the Buyer
of the Acquisition and the transactions contemplated by this Agreement and the
Other Stock Purchase Agreements;
(b) the representations and warranties of the Buyer as set
forth in Article IV above shall have been true and correct when made on the
Agreement Date and shall be true and correct in all material respects as of the
Closing Date as if made as of the Closing Date, except for representations and
warranties made as of a specific date, which shall be true and correct as of
such date;
(c) the Buyer shall have performed or complied with its
agreements and covenants required to be performed or complied with under this
Agreement as of or prior to the Closing;
(d) the Buyer shall have delivered to the Company and the
Stockholders' Representative a certificate (without qualification as to
knowledge or materiality or otherwise) to the effect that each of the conditions
specified in clauses (a) through (c) of this Section 6.2 is satisfied in all
respects;
(e) the Stockholders' Representative shall have received
from Hale and Dorr LLP, counsel to the Buyer, an opinion in the form attached
hereto as EXHIBIT G, addressed to the Selling Stockholders and dated as of the
Closing Date;
(f) the Buyer and each of the Company Stockholders named
therein shall have entered into the Registration Rights Agreement and such
Agreement shall be in full force and effect on the Closing Date in accordance
with its terms;
(g) the Buyer, the Selling Stockholders and the Escrow Agent
shall have entered into the Escrow Agreement and such Agreement shall be in full
force and effect on the Closing Date in accordance with its terms;
(h) the Buyer shall have delivered to the Stockholders'
Representative a certificate issued by the Secretary of State of the State of
Delaware as of the Closing Date as to the continued legal existence and good
standing of the Buyer in Delaware as of the Closing Date;
(i) the Buyer shall have delivered to the Stockholders'
Representative copies of the resolutions authorizing the Acquisition and the
transactions contemplated by this Agreement;
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(j) the Stockholders' Representative shall have received a
copy of a letter from each of Lindebergs and Deloitte & Touche, L.L.P., auditors
for the Company and the Buyer, respectively, in a form reasonably satisfactory
to the Buyer, to the effect that the Company and, in the case of the letter from
Deloitte & Touche, L.L.P., the Buyer may treat the Acquisition as a "pooling of
interests" for accounting purposes;
(k) each of Hans Tholander, Johan Borendal, Bjorn Oste,
Khris Loux and Peter Rostin shall have received an employment offer letter from
the Company or the Buyer in substantially the form attached hereto as EXHIBIT C;
(l) each of Rolf Ljung and Peter Loux shall have entered
into a Consulting Agreement with the Company and the Buyer in substantially the
form attached hereto as EXHIBIT D and each such Agreement shall be in full force
and effect on the Closing Date in accordance with its terms;
(m) the Buyer Shares and the shares of Buyer Common Stock to
be issued under the Other Stock Purchase Agreements shall have been approved for
listing on the Nasdaq National Market, subject to official notice of issuance;
and
(n) all actions to be taken by the Buyer in connection with
the Acquisition and the consummation of the transactions contemplated hereby and
all certificates, opinions, instruments and other documents required to effect
the transactions contemplated hereby shall be reasonably satisfactory in form
and substance to the Stockholders' Representative.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION. Subject to the terms of Section 7.2 below, the
Company Stockholders shall indemnify the Buyer and, if the Closing occurs, the
Company (together, the "Indemnified Persons") in respect of, and hold the
Indemnified Persons harmless against, any and all claims, debts, obligations and
other liabilities (whether absolute, accrued, contingent, fixed or otherwise,
known or unknown, due or to become due or otherwise), monetary damages, fines,
fees, penalties, interest obligations, deficiencies, losses and expenses
(including without limitation amounts paid in settlement, interest, court costs,
costs of investigators, reasonable fees and expenses of attorneys, accountants,
financial advisors and other experts, and other expenses of litigation) incurred
or suffered by the Indemnified Persons or any Affiliate thereof ("Damages"):
(a) resulting from, relating to or constituting any
misrepresentation, breach of warranty or failure to perform any covenant or
agreement of the Company,
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the Company Stockholders or any of the other Selling Stockholders contained in
this Agreement or any of the Other Stock Purchase Agreements; or
(b) resulting from or relating to any claim by a stockholder
or former stockholder of the Company, or any other person or Business Entity,
seeking to assert, or based upon: (A) ownership or rights to ownership of any
shares of stock of the Company; (B) any rights of a stockholder (other than the
right to receive the Buyer Shares pursuant to this Agreement or any of the Other
Stock Purchase Agreements), including any option, preemptive rights or rights to
notice or to vote; or (C) any rights under the Articles of Association of the
Company; or
(c) resulting from or relating to any untrue statement of a
material fact or omission of a material fact necessary in order to make any of
the statements included in the Information Package (as defined below) not
misleading (provided that the Company Stockholders shall have no responsibility
for, and shall have no indemnification obligation with respect to, the accuracy
or completeness of any of the Buyer Reports or any of the other written
materials provided by the Buyer to the Company and included in the Information
Package). For purposes of this Agreement, the term "Information Package" shall
mean the transaction summary regarding (i) the Acquisition, (ii) the terms of
the Fundamental Agreements and the Other Stock Purchase Agreements, (iii) the
Company and (iv) the Buyer, together with the materials provided to stockholders
of the Company in connection therewith, prepared and distributed by the Company
to Selling Stockholders.
Each Company Stockholder acknowledges that he or she has received copies of the
Other Stock Purchase Agreements and has reviewed such Agreements.
7.2 METHOD OF ASSERTING CLAIMS.
(a) All claims for indemnification by an Indemnified Person
pursuant to this Article VII shall be made in accordance with the provisions of
this Section 7.2 and the Escrow Agreement.
(b) The Indemnified Person shall give prompt written
notification to the Stockholders' Representative of the commencement of any
action, suit or proceeding relating to a third party claim for which
indemnification pursuant to this Article VII and/or the corresponding
indemnification provisions of any of the Other Stock Purchase Agreements may be
sought; provided, however, that no delay on the part of the Indemnified Person
in notifying the Stockholders' Representative shall relieve the Selling
Stockholders from any liability or obligation under this Article VII and/or the
corresponding indemnification provisions of any of the Other Stock Purchase
Agreements except to the extent of any damage or liability caused by or arising
out of such delay. Within 20 days after delivery of such notification, the
Stockholders' Representative may, upon written notice thereof to the Indemnified
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Person, assume control of the defense of such action, suit or proceeding with
counsel reasonably satisfactory to the Indemnified Person, provided the
Stockholders' Representative acknowledges in writing to the Indemnified Person,
on behalf of the Selling Stockholders, that the Selling Stockholders shall
indemnify the Indemnified Person with respect to all elements of such action,
suit or proceeding and any Damages, fines, costs or other liabilities that may
be assessed against the Indemnified Person in connection with such action, suit
or proceeding. If the Stockholders' Representative does not so assume control of
such defense, the Indemnified Person shall control such defense. The party not
controlling such defense may participate therein at its own expense; provided,
that if the Stockholders' Representative assumes control of such defense and the
Indemnified Person reasonably concludes that the indemnifying parties and the
Indemnified Person have conflicting interests or different defenses available
with respect to such action, suit or proceeding, the reasonable fees and
expenses of counsel to the Indemnified Person shall be considered "Damages" for
purposes of this Agreement. The party controlling such defense shall keep the
other party advised of the status of such action, suit or proceeding and the
defense thereof and shall consider in good faith recommendations made by the
other party with respect thereto. The Indemnified Person shall not agree to any
settlement or the entry of a judgment in any such action, suit or proceeding
without the prior written consent of the Stockholders' Representative, which
shall not be unreasonably withheld or delayed. The Stockholders' Representative
shall not agree to any settlement or the entry of a judgment in any action, suit
or proceeding without the prior written consent of the Indemnified Person, which
shall not be unreasonably withheld (it being understood that it is reasonable to
withhold such consent if, among other things, the settlement or the entry of a
judgment (A) lacks a complete release of the Indemnified Person for all
liability with respect thereto or (B) imposes any liability or obligation on the
Indemnified Person).
7.3 SURVIVAL.
(a) Unless otherwise specified in this Section 7.3 or
elsewhere in this Agreement, all provisions of this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby and shall
continue forever in full force and effect in accordance with their terms.
(b) The representations and warranties of the Company
Stockholders set forth in Articles II and III above and the indemnification
obligations set forth in this Article VII:
(i) shall survive the Closing and the consummation
of the transactions contemplated hereby and continue until the first anniversary
of the Closing Date (except in the case of the representations and warranties
set forth in clause (a) of Section 2.6 of this Agreement and the indemnification
obligations with
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respect to the representations and warranties set forth in the corresponding
provision of the Other Stock Purchase Agreement entered into with the Company
Stockholders who are parties hereto, which shall continue until the issuance of
the Buyer's audited financial statements for the year ending December 31, 1997);
and
(ii) shall not be affected by any examination made
for or on behalf of the Buyer or the knowledge of any of the Buyer's officers,
directors, stockholders, employees or agents.
(c) The date on which any particular representation,
warranty or indemnification obligation of each of the Company Stockholders
terminates shall be referred to herein and in the Escrow Agreement as the
"Termination Date." If a notice of a claim is given in accordance with the
notice provisions of this Agreement or the Escrow Agreement before the
Termination Date, then (notwithstanding the occurrence of the Termination Date)
the representation, warranty or indemnification obligation applicable to such
claim shall survive until, but only for purposes of, the resolution of such
claim.
7.4 LIMITATIONS. Notwithstanding anything to the contrary herein,
except as otherwise provided in Section 5(c) of the Escrow Agreement, (a) the
aggregate liability of the Company Stockholders for Damages under this Article
VII shall not exceed the fair market value of the Escrow Shares, as determined
in accordance with the Escrow Agreement, and shall be satisfied only from the
Escrow Shares, and (b) the Company Stockholders and the other Selling
Stockholders shall be liable under the indemnification provisions contained in
Section 7.1(a) of this Agreement and the indemnification provisions contained in
the Other Stock Purchase Agreements for only that portion of the aggregate
Damages which exceeds $500,000. No Company Stockholder shall have any right of
contribution against the Company with respect to any breach by the Company of
any of its representations, warranties, covenants or agreements. Except with
respect to claims based on fraud and except as otherwise provided in Section
5(c) of the Escrow Agreement, the shares of Buyer Common Stock held pursuant to
the Escrow Agreement shall be the Buyer's sole and exclusive remedy for Damages
resulting from or relating to any breach of any representation, warranty,
covenant or indemnification obligation under this Agreement or the Other Stock
Purchase Agreements. The indemnification obligations of the Company Stockholders
pursuant to this Article VII shall be joint and several except as otherwise
provided in Section 5(c) of the Escrow Agreement.
ARTICLE VIII
TERMINATION
8.1 TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement prior to the Closing Date only as provided below:
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<PAGE> 51
(a) the Parties may terminate this Agreement by mutual
written consent;
(b) the Buyer may terminate this Agreement by giving written
notice to the Company and the Stockholders' Representative in the event the
Company or any of the Selling Stockholders are in breach, and the Company or the
Stockholders' Representative may terminate this Agreement by giving written
notice to the Buyer in the event the Buyer is in breach, of any material
representation, warranty or covenant contained in this Agreement or any of the
Other Stock Purchase Agreements, and such breach is not remedied within 10 days
of delivery of written notice thereof;
(c) the Buyer may terminate this Agreement by giving written
notice to the Company and the Stockholders' Representative if the Closing shall
not have occurred on or before August 31, 1997 by reason of the failure of any
condition precedent under Section 6.1 above (unless the failure results
primarily from a breach by the Buyer of any representation, warranty or covenant
contained in this Agreement or any of the Other Stock Purchase Agreements); and
(d) the Company and the Stockholders' Representative may
terminate this Agreement by giving written notice to the Buyer if the Closing
shall not have occurred on or before August 31, 1997 by reason of the failure of
any condition precedent under Section 6.2 above (unless the failure results
primarily from a breach by the Company or the Selling Stockholders of any
representation, warranty or covenant contained in this Agreement or any of the
Other Stock Purchase Agreements).
8.2 EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 8.1 above, all obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party (except for any
liability of any Party for breaches of this Agreement).
ARTICLE IX
DEFINITIONS
For purposes of this Agreement, each of the following defined terms is
defined in the Section of this Agreement indicated below.
DEFINED TERM SECTION
------------ -------
Acquisition 1.3(b)
Affiliate 2.13(a)(vi)
Agreement Introduction
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<PAGE> 52
Agreement Date Introduction
Audited Financial Statements 2.5
Balance Sheet Date 2.5
Business Entity 2.3
Buyer Introduction
Buyer Common Stock 1.5
Buyer Reports 4.5
Buyer Shares 1.5
CERCLA 2.19(a)
CGCL 5.11(c)
Closing 1.1
Closing Date 1.3(a)
Code 1.8(a)
Company Introduction
Company Affiliates 5.4
Company Shares Preliminary Statement
Company Stockholders Introduction
Damages 7.1
DGCL 5.11(c)
Disclosure Schedule Article II
Employees 2.17(a)
Employee Benefit Plan 2.18(a)
Environmental Law 2.19(a)
ERISA 2.18(a)
ERISA Affiliate 2.18(a)
Escrow Agreement 1.4(e)
Escrow Shares 1.5
Exchange Act 4.5
Financial Statements 2.5
Fundamental Agreements 2.1(b)
GAAP 2.5
Governmental Entity 2.3
Indemnified Liabilities 5.11(c)
Indemnified Parties 5.11(c)
Indemnified Persons 7.1
Information Package 7.1(c)
Initial Shares 1.5
Intellectual Property 2.11(a)
Materials of Environmental Concern 2.19(b)
Most Recent Balance Sheet 2.5
Options 1.8(a)
Ordinary Course of Business 2.3
Other Stock Purchase Agreements 1.3(b)
Outstanding Company Shares 1.3(b)
-47-
<PAGE> 53
Parties Introduction
Permits 2.21
Registration Rights Agreement 2.1(b)
Related Party Transactions 2.22
Regulation S 3.3
Restricted Period 3.3
SEC 4.5
Securities Act 1.8(c)
Security Interest 2.3
Selling Stockholders 1.3(b)
Stockholders' Representative 1.10(a)
Stock Plan 1.8(a)
Subsidiary 2.3
Tax Returns 2.8(a)
Taxes 2.8(a)
Termination Date 7.3(c)
U.S. GAAP 2.27
U.S. person 3.3
Warrants 1.8(d)
ARTICLE X
GENERAL PROVISIONS
10.1 PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement without
the prior written approval of the other Parties; provided, however, that any
Party may make any public disclosure it believes in good faith is required by
law or regulation (in which case the disclosing Party shall advise the other
Parties and provide them with a copy of the proposed disclosure prior to making
the disclosure).
10.2 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.
10.3 ENTIRE AGREEMENT. This Agreement, the Fundamental Agreements and
the Other Stock Purchase Agreements and the exhibits and schedules attached
thereto, together with the Confidential Disclosure Agreement dated February 27,
1997, by and between the Buyer and the Company, constitute the entire agreement
among the Parties and supersede any prior understandings, agreements or
representations by or among the Parties, written or oral, that may have related
in any way to the Acquisition.
-48-
<PAGE> 54
10.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests or obligations hereunder without the prior written
approval of the other Parties, provided that the Buyer may assign its rights,
interests and/or obligations under this Agreement to an Affiliate of the Buyer
by notice to the Company and the Stockholders' Representative.
10.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
10.6 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.
10.7 NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered three
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or two business days after it is sent via a
reputable international overnight courier service, in each case to the intended
recipient as set forth below:
IF TO THE COMPANY: COPIES TO:
- ----------------- ---------
DynaSoft AB Lagerlof & Leman
Box 10704 Strandvagen 7A
Arenavagen 29 Box 5402
S-121 29 Stockholm S-114 84 Stockholm
SWEDEN SWEDEN
Attn: Chairman of the Board Attn: Per-Erik Hasselberg
Gray Cary Ware & Freidenrich
A Professional Corporation
400 Hamilton Avenue
Palo Alto, CA 94301
Attn: Rod J. Howard, Esq.
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<PAGE> 55
IF TO THE COMPANY STOCKHOLDERS: COPIES TO:
Rolf Ljung, Lagerlof & Leman
as Stockholders' Representative Strandvagen 7A
c/o DynaSoft AB Box 5402
Box 10704 S-114 84 Stockholm
Arenavagen 29 SWEDEN
S-121 29 Stockholm Attn: Per-Erik Hasselberg
SWEDEN
IF TO THE BUYER: COPY TO:
Security Dynamics Technologies, Inc. Hale and Dorr LLP
20 Crosby Drive 60 State Street
Bedford, MA 01730 Boston, MA 02109
Attn: President Attn: Hal J. Leibowitz, Esq.
Any Party may give any notice, request, demand, claim or other communication
hereunder by personal delivery or telecopy, 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 Party for whom it is intended. Any Party
may change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
10.8 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the
Commonwealth of Massachusetts of the United States.
10.9 AMENDMENTS AND WAIVERS. The Parties may mutually amend any
provision of this Agreement at any time by a written instrument signed by all of
the Parties. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
10.10 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. If the final judgment of a court of
competent jurisdiction declares
-50-
<PAGE> 56
that any term or provision hereof is invalid or unenforceable, the Parties agree
that the court making the determination of invalidity or unenforceability shall
have the power to reduce the scope, duration, or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed.
10.11 EXPENSES. Except as set forth in the Escrow Agreement, each of
the Parties shall bear its or their own costs and expenses (including fees and
expenses of their respective legal, accounting and financial advisors) incurred
in connection with this Agreement and the transactions contemplated hereby;
provided, however, that if the Acquisition is consummated, the Company and the
Subsidiaries shall not incur fees and expenses of legal, accounting and
financial advisors in connection with the Acquisition in excess of the amounts
set forth in Section 10.11 of the Disclosure Schedule, and any such fees and
expenses incurred prior to or at the Closing by the Company and the Subsidiaries
in excess of such amounts shall be recovered by the Buyer pursuant to the Escrow
Agreement without regard to the provisions of the first sentence of Section 7.4.
10.12 SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that one or more of the other Parties would be damaged irreparably in the
event 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 terms and provisions hereof in any
action instituted in any court having jurisdiction over the Parties and the
matter, in addition to any other remedy to which it may be entitled, at law or
in equity.
10.13 CONSTRUCTION. The language used in this Agreement shall be
deemed to be the language chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
Any reference to any federal, state, local or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
10.14 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
-51-
<PAGE> 57
10.15 KNOWLEDGE. For purposes of this Agreement, the term "Sellers'
Knowledge" shall mean the actual knowledge, after due inquiry within the Company
and its Subsidiaries, of any of the Company's directors and executive officers
(which shall include, without limitation, Tomas Brostrom, the Company's
Financial Manager).
10.16 ARBITRATION. Any dispute, controversy or claim arising out of or
related to this Agreement, or the breach, termination or invalidity thereof,
shall be finally settled by arbitration in accordance with the UNCITRAL
Arbitration Rules. The arbitration shall be conducted in London, England, and
all proceedings shall be conducted in the English language. There shall be three
arbitrators, one of whom shall be appointed by the Buyer, one of whom shall be
appointed by the Stockholders' Representative and one of whom shall be appointed
by agreement of the first two arbitrators or, failing agreement, by the London
Court of International Arbitration. Disputes about arbitration procedure shall
be resolved by the arbitrators or, failing agreement, by the London Court of
International Arbitration. The arbitrators may proceed to an award
notwithstanding the failure of any party to participate in the proceedings.
Discovery shall be limited to mutual exchange of documents relevant to the
dispute, controversy or claim; depositions shall not be permitted unless agreed
to by the parties. The arbitrators shall be authorized to grant interim relief,
including to prevent the destruction of goods or documents involved in the
dispute, protect trade secrets and provide for security for a prospective
monetary award. The prevailing party shall be entitled to an award of reasonable
attorneys' fees incurred in connection with the arbitration in such amount as
may be determined by the arbitrators. The award of the arbitrators shall be the
sole and exclusive remedy of the parties and shall be enforceable in any court
of competent jurisdiction. Notwithstanding the foregoing, the Parties shall be
entitled to seek injunctive relief, security or other equitable remedies from
any court of competent jurisdiction in furtherance of the arbitration
proceedings.
10.17 CURRENCY. Unless otherwise expressly provided in this Agreement,
all references to monetary amounts included herein are expressed in U.S.
dollars.
[Signatures begin on the following page.]
-52-
<PAGE> 58
IN WITNESS WHEREOF, the Parties have executed this Stock Purchase
Agreement as of the date first above written.
SECURITY DYNAMICS TECHNOLOGIES, INC.
By: /s/ ARTHUR W. COVIELLO, JR.
--------------------------------------
Title: CHIEF OPERATING OFFICER
DYNASOFT AB
By: /s/ ROLF LJUNG
--------------------------------------
Title: CHAIRMAN OF THE BOARD
COMPANY STOCKHOLDERS:
[Counterpart signature pages for each of the
Company Stockholders are attached.]
-53-
<PAGE> 59
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Rolf Ljung
---------------------------------
Rolf Ljung
<PAGE> 60
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Hans Tholander
---------------------------------
Hans Tholander
<PAGE> 61
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Bjorn Oste
---------------------------------
Bjorn Oste
<PAGE> 62
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Peter Rostin
---------------------------------
Peter Rostin
<PAGE> 63
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Anders Wikstrom
---------------------------------
Anders Wikstrom
<PAGE> 64
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Johan Borendal
---------------------------------
Johan Borendal
<PAGE> 65
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Tomas Brostrom
---------------------------------
Tomas Brostrom
<PAGE> 66
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Lotta Ljung
---------------------------------
Lotta Ljung
<PAGE> 67
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Fanny Ljung-Lindberg
---------------------------------
Fanny Ljung-Lindberg
<PAGE> 68
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Agnes Ljung-Lindberg
---------------------------------
Agnes Ljung-Lindberg
<PAGE> 69
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Eva Ljung
---------------------------------
Eva Ljung
<PAGE> 70
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Elin Kempegard
---------------------------------
Elin Kempegard
<PAGE> 71
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Sara Kempegard
---------------------------------
Sara Kempegard
<PAGE> 72
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Jacob Tholander
---------------------------------
Jacob Tholander
<PAGE> 73
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Fredrik Tholander
---------------------------------
Fredrik Tholander
<PAGE> 74
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Mervi Brostrom
---------------------------------
Mervi Brostrom
<PAGE> 75
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Peter Loux
---------------------------------
Peter Loux
<PAGE> 76
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Khris Loux
---------------------------------
Khris Loux
<PAGE> 77
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
PETER C. LOUX CHARITABLE
REMAINDER UNITRUST
By: /s/ PETER C. LOUX
--------------------------------
Peter C. Loux, sole trustee
<PAGE> 78
SCHEDULE I
----------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Company Company
Stockholder Shares
- --------------------------------------------------------------------------------
<S> <C> <C>
Series A Series B
Rolf Ljung 1,944,342 425,078
- --------------------------------------------------------------------------------
Hans Tholander 734,400 212,883
- --------------------------------------------------------------------------------
Bjorn Oste 437,040 203,160
- --------------------------------------------------------------------------------
Peter Rostin 287,520 103,480
- --------------------------------------------------------------------------------
Anders Wikstrom 236,160 69,240
- --------------------------------------------------------------------------------
Johan Borendal 216,960 56,440
- --------------------------------------------------------------------------------
Tomas Brostrom 18,000 90,500
- --------------------------------------------------------------------------------
Lotta Ljung 0 96,900
- --------------------------------------------------------------------------------
Fanny Ljung-Lindberg 0 96,900
- --------------------------------------------------------------------------------
Agnes Ljung-Lindberg 0 96,900
- --------------------------------------------------------------------------------
Eva Ljung 0 96,900
- --------------------------------------------------------------------------------
Elin Kempegard 0 96,900
- --------------------------------------------------------------------------------
Sara Kempegard 0 96,900
- --------------------------------------------------------------------------------
Jacob Tholander 0 92,650
- --------------------------------------------------------------------------------
Fredrik Tholander 0 92,650
- --------------------------------------------------------------------------------
Mervi Brostrom 0 29,950
- --------------------------------------------------------------------------------
Peter Loux 382,890 58,710
- --------------------------------------------------------------------------------
Khris Loux 382,890 255,260
- --------------------------------------------------------------------------------
The Peter C. Loux Charitable 0 196,550
Remainder Unitrust
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 2.3
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
July 15, 1997 (the "Agreement Date") by and among Security Dynamics
Technologies, Inc., a Delaware corporation (the "Buyer"), DynaSoft AB, a
corporation organized under the laws of Sweden (the "Company"), and the
stockholders of the Company listed on SCHEDULE I to this Agreement (the "Company
Stockholders"). The Buyer, the Company and the Company Stockholders are referred
to collectively herein as the "Parties."
The Company Stockholders collectively own the outstanding shares of the
capital stock of the Company (the "Company Shares") set forth on SCHEDULE I
hereto. The Buyer desires to purchase, and the Company Stockholders desire to
sell, the Company Shares for the consideration set forth below subject to the
terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the
representations, warranties and covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
1.1 PURCHASE OF THE COMPANY SHARES FROM THE COMPANY STOCKHOLDERS.
Upon and subject to the terms and conditions of this Agreement, at the closing
of the transactions contemplated by this Agreement (the "Closing"), the Company
Stockholders shall sell, transfer, convey, assign and deliver to the Buyer, and
the Buyer shall purchase, acquire and accept from each Company Stockholder, all
of the Company Shares owned by such Company Stockholder.
1.2 FURTHER ASSURANCES. At any time and from time to time after
the Closing, at the Buyer's request and without further consideration to any of
the Company Stockholders, the Company Stockholders shall promptly execute and
deliver such instruments of sale, transfer, conveyance, assignment and
confirmation, and take all such other action as the Buyer may reasonably
request, more effectively to transfer, convey and assign to the Buyer, and to
confirm the Buyer's title to, all of the Company Shares, to assist the Buyer in
exercising all rights with respect thereto and to carry out the purpose and
intent of this Agreement and the Other Stock Purchase Agreements (as defined
below).
1.3 THE CLOSING.
(a) The Closing shall take place at the offices of Hale and
Dorr LLP, 60 State Street, Boston, Massachusetts 02109 commencing at 10:00 a.m.,
local time, on the date hereof (the "Closing Date").
<PAGE> 2
(b) Unless otherwise agreed by the Buyer and the Stockholders'
Representative (as defined below), the Closing of the transactions contemplated
by this Agreement shall take place simultaneously with the closing of the
acquisition by the Buyer of additional shares of the issued and outstanding
capital stock of the Company which, when added to the Company Shares, represent
not less than 90% of the capital stock of the Company issued and outstanding
immediately prior to the Closing (including without limitation at least 90% of
the Company's Series A Stock and at least 90% of the Company's Series B Stock)
(all such issued and outstanding capital stock being hereinafter referred to as
the "Outstanding Company Shares"). Such acquisitions (collectively, the
"Acquisition") shall be effected by this Agreement and certain other Stock
Purchase Agreements (the "Other Stock Purchase Agreements") entered into on or
prior to the date hereof among the Buyer, the Company and the holders of such
Outstanding Company Shares (such holders of Outstanding Company Shares,
including the Company Stockholders, being hereinafter referred to as the
"Selling Stockholders").
1.4 ACTIONS AT THE CLOSING. At the Closing:
(a) the Board of Directors of the Company shall, in accordance
with The Company's Act (Sw: Aktiebolagslagen), cause the transfer of the Company
Shares to the Buyer contemplated by this Agreement to be entered into the share
register of the Company;
(b) the Buyer shall deliver to the Stockholders'
Representative, for distribution to the Company Stockholders, certificates
representing the Initial Shares (as defined below) in accordance with Section
1.5 below; and
(c) the Buyer, each of the Company Stockholders and the Escrow
Agent (as defined therein) shall execute and deliver an Escrow Agreement in
substantially the form attached hereto as EXHIBIT A (the "Escrow Agreement") and
the Buyer shall deliver to the Escrow Agent a certificate for the Escrow Shares
(as defined below) being placed in escrow on the Closing Date pursuant to
Section 1.6 below.
1.5 PURCHASE PRICE. In exchange for each Company Share purchased
by the Buyer pursuant to this Agreement, each Company Stocholder shall receive
0.310576 shares of common stock, $.01 par value per share, of the Buyer ("Buyer
Common Stock"). The Company Stockholders shall be entitled to receive
immediately 90% of the shares of Buyer Common Stock issuable with respect to
their Company Shares pursuant to this Section 1.5 (the "Initial Shares"). The
remaining 10% of the shares of Buyer Common Stock issuable with respect to
Company Shares pursuant to this Section 1.5 (the "Escrow Shares") shall be
deposited in escrow pursuant to Section 1.6 and shall be held and disposed of in
accordance with the terms of the Escrow
-2-
<PAGE> 3
Agreement. The Initial Shares and the Escrow Shares shall together be referred
to herein as the "Buyer Shares."
1.6 ESCROW. On the Closing Date, the Buyer shall deliver to the
Escrow Agent a certificate (issued in the name of the Escrow Agent or its
nominee) representing the Escrow Shares, as described in Section 1.5, for the
purpose of securing the indemnification obligations of the Company Stockholders
set forth in this Agreement. The Escrow Shares shall be held by the Escrow Agent
under the Escrow Agreement pursuant to the terms thereof. The Escrow Shares
shall be held as a trust fund and shall not be subject to any lien, attachment,
trustee process or any other judicial process of any creditor of any party, and
shall be held and disbursed solely for the purposes and in accordance with the
terms of the Escrow Agreement.
1.7 FRACTIONAL SHARES. No certificates or scrip representing
fractional Initial Shares shall be issued to Company Stockholders in exchange
for the Company Shares, and such Company Stockholders shall not be entitled to
any voting rights, rights to receive any dividends or distributions or other
rights as a stockholder of the Buyer with respect to any fractional Initial
Shares that would otherwise be issued to such Company Stockholders. In lieu of
any fractional Initial Shares that would otherwise be issued, each Company
Stockholder that would have been entitled to receive a fractional Initial Share
shall be entitled to receive a cash payment equal to the average last sale price
per share of the Buyer Common Stock on the Nasdaq National Market, as reported
by Nasdaq, on the ten consecutive trading days immediately preceding the Closing
Date, multiplied by the fraction of a share that such Company Stockholder would
otherwise be entitled to receive.
1.8 STOCKHOLDERS' REPRESENTATIVE.
(a) In order to efficiently administer the Acquisition and the
transactions contemplated hereby, including (i) the waiver of any condition to
the obligations of the Company Stockholders to consummate the Acquisition and
transactions contemplated hereby and (ii) the defense and/or settlement of any
claims for which the Company Stockholders and/or the other Selling Stockholders
may be required to indemnify the Buyer and/or the Company pursuant to the Escrow
Agreement and Article IV below, the Company Stockholders hereby designate Rolf
Ljung as their representative (the "Stockholders' Representative").
(b) The Company Stockholders hereby authorize the
Stockholders' Representative (i) to take all action necessary in connection with
the waiver of any condition to the obligations of the Company Stockholders to
consummate the Acquisition and the transactions contemplated hereby, or the
defense and/or settlement of any claims for which the Company Stockholders
and/or the other Selling Stockholders may be required to indemnify the Buyer
and/or the Company pursuant to Article IV below, (ii) to give and receive all
notices required to be given
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under this Agreement and the Escrow Agreement, and (iii) to take any and all
additional action as is contemplated to be taken by or on behalf of the Company
Stockholders and/or the other Selling Stockholders by the terms of this
Agreement or the Escrow Agreement.
(c) In the event that the Stockholders' Representative
dies, becomes unable to perform his responsibilities hereunder or resigns from
such position, the Selling Stockholders holding, prior to the Closing, a
majority of the Outstanding Company Shares as set forth on Attachment A to the
Escrow Agreement shall select another representative to fill such vacancy and
such substituted representative shall be deemed to be the Stockholders'
Representative for all purposes of this Agreement and the documents delivered
pursuant hereto.
(d) All decisions and actions by the Stockholders'
Representative, including without limitation any agreement between the
Stockholders' Representative and the Buyer relating to the defense or settlement
of any claims for which the Company Stockholders and/or the other Selling
Stockholders may be required to indemnify the Buyer and/or the Company pursuant
to Article IV below, shall be binding upon all of the Company Stockholders and
no Company Stockholder shall have the right to object, dissent, protest or
otherwise contest the same.
(e) By his execution of this Agreement, each Company
Stockholder agrees that:
(i) the Buyer shall be able to rely conclusively
on the instructions and decisions of the Stockholders' Representative as to the
settlement of any claims for indemnification by the Buyer and/or the Company
pursuant to Article IV below or any other actions required or permitted to be
taken by the Stockholders' Representative hereunder, and no party hereunder
shall have any cause of action against the Buyer to the extent the Buyer has
relied upon the instructions or decisions of the Stockholders' Representative;
(ii) all actions, decisions and instructions of
the Stockholders' Representative shall be conclusive and binding upon all of the
Company Stockholders and no Company Stockholder shall have any cause of action
against the Stockholders' Representative for any action taken, decision made or
instruction given by the Stockholders' Representative under this Agreement, any
of the Other Stock Purchase Agreements or the Escrow Agreement, except for fraud
or willful breach of this Agreement or any such Agreement by the Stockholders'
Representative;
(iii) the provisions of this Section 1.8 are
independent and severable, are irrevocable and coupled with an interest and
shall be enforceable notwithstanding any rights or remedies that any Company
Stockholder may have in
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connection with the Acquisition and the transactions contemplated by this
Agreement or any of the Other Stock Purchase Agreements;
(iv) remedies available at law for any breach of
the provisions of this Section 1.8 are inadequate; therefore, the Buyer and the
Company shall be entitled to temporary and permanent injunctive relief without
the necessity of proving damages if either the Buyer and/or the Company brings
an action to enforce the provisions of this Section 1.8; and
(v) the provisions of this Section 1.8 shall be
binding upon the executors, heirs, legal representatives, personal
representatives, successor trustees, and successors of each Company Stockholder,
and any references in this Agreement to a Company Stockholder or the Company
Stockholders shall mean and include the successors to the Company Stockholder's
rights hereunder, whether pursuant to testamentary disposition, the laws of
descent and distribution or otherwise.
(f) The Buyer shall reimburse the Stockholders'
Representative for his reasonable out-of-pocket expenses incurred in performing
his services in connection with the Acquisition, up to a maximum reimbursement
of $5,000. Any expenses in excess of such amount shall be paid by the Selling
Stockholders in proportion to their ownership of Outstanding Company Shares as
set forth in Attachment A to the Escrow Agreement. Notwithstanding the
foregoing, the Buyer shall also reimburse the Stockholders' Representative for
his reasonable out-of-pocket expenses incurred in successfully defending against
any claims for indemnification pursuant to this Agreement, the Other Stock
Purchase Agreements and/or the Escrow Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY STOCKHOLDERS
Each Company Stockholder severally represents and warrants to the Buyer
as follows:
2.1 OWNERSHIP OF STOCK; AUTHORITY.
(a) The Company Stockholder has good and marketable title,
free and clear of any and all Security Interests (as defined below), to all of
the Company Shares listed on SCHEDULE I as being owned by such Company
Stockholder. The Company Stockholder has the full right, power and authority to
transfer, convey and sell to the Buyer at the Closing the Company Shares to be
sold by such Company Stockholder and, upon consummation of the purchase
contemplated hereby, the Buyer will acquire from such Company Stockholder good
and marketable title to
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such Company Shares, free and clear of all covenants, conditions, restrictions,
voting trust arrangements, liens, charges, encumbrances, options and adverse
claims or rights whatsoever.
(b) The Company Stockholder has all requisite power and
authority to execute and deliver this Agreement and the Escrow Agreement and to
perform such Company Stockholder's obligations under such agreements. Such
agreements have each been (or in the case of the Escrow Agreement, shall be when
delivered) duly and validly executed and delivered by such Company Stockholder,
and each constitutes (or, in the case of the Escrow Agreement, shall constitute)
a valid and binding obligation of such Company Stockholder, enforceable against
such Company Stockholder in accordance with its terms.
(c) Neither the execution and delivery of either or both of
this Agreement and the Escrow Agreement by such Company Stockholder, nor the
consummation by such Company Stockholder of the transactions contemplated hereby
or thereby, will (i) conflict with, result in a breach of, constitute (with or
without due notice or lapse of time or both) a default under, or require any
notice, consent or waiver under, any instrument, contract, agreement or
arrangement to which such Company Stockholder is a party or by which such
Company Stockholder is bound, (ii) result in the imposition of any mortgage,
pledge, security interest, encumbrance, charge or other lien (whether arising by
contract or by operation of law) (a "Security Interest") upon the Company Shares
owned by such Company Stockholder, or (iii) violate any order, writ, injunction
or decree applicable to such Company Stockholder or to the Company Shares.
2.2 INVESTMENT REPRESENTATIONS. With respect to the Buyer Shares
issued to and acquired by the Company Stockholder hereunder:
(a) The Company Stockholder has had adequate opportunity to
obtain from representatives of the Buyer such information, in addition to the
representations set forth in the Agreement, as is necessary to evaluate the
merits and risks of the investment by such Company Stockholder in the Buyer;
provided, however, that the foregoing shall not limit or modify the
representations and warranties of Buyer set forth in Article III of this
Agreement or the right of any Company Stockholder to rely thereon.
(b) The Company Stockholder is not a "U.S. person" (as defined
in Regulation S ("Regulation S") promulgated under the United States Securities
Act of 1933 (as amended, the "Securities Act")) and has signed this Agreement
outside the United States.
(c) The Company Stockholder understands and acknowledges that
(i) the Buyer Shares have not been registered under the Securities Act and may
not be
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<PAGE> 7
offered or sold in the United States or to, or for the account or benefit of,
any U.S. person unless such securities are registered under the Securities Act
or such offer or sale is made pursuant to an exemption from the registration
requirements of the Securities Act and (ii) the Buyer Shares are being
distributed by the Buyer pursuant to the terms of Regulation S, which permits
securities to be sold to non-U.S. persons in "offshore transactions" (as defined
in Regulation S), subject to certain terms and conditions.
(d) The Company Stockholder acknowledges that for a period of
40 days following the Closing Date (the "Restricted Period"), the Company
Stockholder shall not (i) engage in any activity for the purpose of, or which
may reasonably be expected to have the effect of, conditioning the market in the
United States for the Buyer Shares or (ii) unless such Buyer Shares are
registered under the Securities Act or an exemption from the registration
requirements of the Securities Act is available, offer, sell or transfer the
Buyer Shares in the United States or to, or for the account or benefit of, a
U.S. person. The Company Stockholder understands that the Buyer Shares or any
interest therein are only transferable on the books and records of the transfer
agent and registrar of the Buyer. The Company Stockholder further understands
that such transfer agent and registrar will not register any transfer of the
Buyer Shares which the Buyer in good faith believes violates the restrictions
set forth in this paragraph (d), and that the Buyer may place stop transfer
orders with its transfer agent with respect to certificates representing Buyer
Shares.
(e) Unless the Buyer Shares shall first have been registered
under the Securities Act, any proposed offer, sale or transfer during the
Restricted Period of any of the Buyer Shares shall be subject to the condition
that the Company Stockholder must deliver to the Buyer (i) a written
certification that neither record nor beneficial ownership of the Buyer Shares
has been offered or sold in the United States or to, or for the account or
benefit of, any U.S. person, (ii) a written certification of the proposed
transferee that such transferee (or any account for which such transferee is
acquiring such Buyer Shares) is not a U.S. person, that such transferee is
acquiring such Buyer Shares for such transferee's own account (or an account
over which he or she has investment discretion), and that such transferee is
knowledgeable of and agrees to be bound by the restrictions on re-sale set forth
in this section and Regulation S during the Restricted Period, and (iii) a
written opinion of United States counsel, in form and substance reasonably
satisfactory to the Buyer, to the effect that the offer, sale and transfer of
such Buyer Shares are exempt from registration under the Securities Act.
(f) Legends substantially in the following forms will be
placed on the certificate representing any Buyer Shares which may be issued to
such Company Stockholder:
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<PAGE> 8
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold, transferred or otherwise disposed of in the
absence of an effective registration statement under such Act
or an opinion of counsel satisfactory to the corporation to
the effect that such registration is not required."
"The shares of Common Stock represented by this certificate
may not be offered, sold or transferred except in accordance
with the provisions of Regulation S under the Securities Act
of 1933, as amended."
The Buyer agrees to use all reasonable efforts to promptly respond to any
appropriate requests for the removal of the legends affixed to the certificates
representing the Buyer Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to each Company Stockholder as
follows:
3.1 ORGANIZATION. The Buyer is a corporation duly organized, validly
existing and in corporate and tax good standing under the laws of the State of
Delaware.
3.2 CAPITALIZATION. The authorized capital stock of the Buyer consists
of 80,000,000 shares of Buyer Common Stock, of which 35,055,430 shares were
issued and outstanding and 509 shares were held in the treasury of the Buyer as
of June 30, 1997. All of the issued and outstanding shares of Buyer Common Stock
are duly authorized, validly issued, fully paid, nonassessable and free of all
preemptive rights. All of the Buyer Shares will be, when issued in accordance
with this Agreement, duly authorized, validly issued, fully paid, nonassessable
and free of all preemptive rights.
3.3 AUTHORIZATION OF TRANSACTION. The Buyer has all requisite power and
authority to execute and deliver this Agreement, the Escrow Agreement and the
Other Stock Purchase Agreements and to perform its obligations under each such
agreement. The execution and delivery of such agreements by the Buyer and the
performance of such agreements and the consummation of the transactions
contemplated thereby by the Buyer have been (or, in the case of the Escrow
Agreement and the Other Stock Purchase Agreements, shall be when delivered) duly
and validly authorized by all necessary corporate action on the part of the
Buyer. Each of this Agreement, the Escrow Agreement and the Other Stock Purchase
Agreements has been (or, in the case of the Escrow Agreement and the Other Stock
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<PAGE> 9
Purchase Agreements, shall be when delivered) duly and validly executed and
delivered by the Buyer and constitutes (or, in the case of the Escrow Agreement
and the Other Stock Purchase Agreements, shall constitute when delivered) a
valid and binding obligation of the Buyer, enforceable against the Buyer in
accordance with its terms.
3.4 NONCONTRAVENTION. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state and foreign
securities laws, neither the execution and delivery by the Buyer of this
Agreement or the Escrow Agreement nor the consummation of the transactions
contemplated thereby will (a) conflict with or violate any provision of the
charter or By-laws of the Buyer, (b) require on the part of the Buyer any filing
with, or permit, authorization, consent or approval of, any governmental entity,
(c) conflict with, result in breach of, constitute (with or without due notice
or lapse of time or both) a default under, result in the acceleration of, create
in any party any right to accelerate, terminate, modify or cancel, or require
any notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest or other arrangement to
which the Buyer is a party or by which the Buyer is bound or to which any of its
assets are subject, or (d) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Buyer or any of its properties or assets.
3.5 REPORTS AND FINANCIAL STATEMENTS. The Buyer has previously
furnished to the Company complete and accurate copies, as amended or
supplemented, of the Buyer's (a) Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, as filed by the Buyer with the United States Securities
and Exchange Commission (the "SEC"), and (b) all reports filed by the Buyer with
the SEC under Section 13 or 15 of the Securities Exchange Act of 1934 (as
amended, the "Exchange Act") since December 31, 1996 (such materials, together
with any amendments or supplements thereto, are collectively referred to herein
as the "Buyer Reports"). As of their respective dates, the Buyer Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited financial statements and unaudited interim financial statements of the
Buyer included in the Buyer Reports (i) comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, (ii) have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis throughout the periods covered thereby (except as may be
indicated therein or in the notes thereto, and in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act), (iii)
fairly present the consolidated financial condition, results of operations and
cash flows of the Buyer as of the respective dates thereof and for the periods
referred to therein, and (iv) are consistent with the books and records of the
Buyer.
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<PAGE> 10
3.6 ABSENCE OF MATERIAL ADVERSE CHANGES. Since December 31, 1996, there
has not been any material adverse change in the assets, business, financial
condition or results of operations of the Buyer, nor has there occurred any
event or development which could reasonably be foreseen to result in such a
material adverse change in the future.
ARTICLE IV
INDEMNIFICATION
4.1 INDEMNIFICATION. Subject to the terms of Section 4.2 below,
the Company Stockholders shall indemnify the Buyer and the Company (together,
the "Indemnified Persons") in respect of, and hold the Indemnified Persons
harmless against, any and all claims, debts, obligations and other liabilities
(whether absolute, accrued, contingent, fixed or otherwise, known or unknown,
due or to become due or otherwise), monetary damages, fines, fees, penalties,
interest obligations, deficiencies, losses and expenses (including without
limitation amounts paid in settlement, interest, court costs, costs of
investigators, reasonable fees and expenses of attorneys, accountants, financial
advisors and other experts, and other expenses of litigation) incurred or
suffered by the Indemnified Persons or any Affiliate (as such term is defined in
the Principals' Stock Purchase Agreements referred to below) thereof
("Damages"):
(a) resulting from, relating to or constituting any
misrepresentation, breach of warranty or failure to perform any covenant or
agreement of the Company, the Company Stockholders or any of the other Selling
Stockholders contained in this Agreement or any of the Other Stock Purchase
Agreements; or
(b) resulting from or relating to any claim by a stockholder
or former stockholder of the Company, or any other person or Business Entity,
seeking to assert, or based upon: (A) ownership or rights to ownership of any
shares of stock of the Company; (B) any rights of a stockholder (other than the
right to receive the Buyer Shares pursuant to this Agreement or any of the Other
Stock Purchase Agreements), including any option, preemptive rights or rights to
notice or to vote; or (C) any rights under the Articles of Association of the
Company; or
(c) resulting from or relating to any untrue statement of a
material fact or omission of a material fact necessary in order to make any of
the statements included in the Information Package (as defined below) not
misleading (provided that the Company Stockholders shall have no responsibility
for, and shall have no indemnification obligation with respect to, the accuracy
or completeness of any of the Buyer Reports or any of the other written
materials provided by the Buyer to the Company and included in the Information
Package). For purposes of this Agreement, the term "Information Package" shall
mean the transaction summary
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regarding (i) the Acquisition, (ii) the terms of the Fundamental Agreements and
the Other Stock Purchase Agreements, (iii) the Company and (iv) the Buyer,
together with the materials provided to stockholders of the Company in
connection therewith, prepared and distributed by the Company to Selling
Stockholders.
Each Company Stockholder acknowledges that he or she has received copies of the
Other Stock Purchase Agreements and has reviewed such Agreements, including
without limitation the provisions of Articles II and V of the Principals' Stock
Purchase Agreements (setting forth representations, warranties and covenants of
the Company and other Selling Stockholders with respect to which the Company
Stockholders may be obligated to indemnify the Buyer and/or the Company pursuant
to the provisions of this Section 4.1).
4.2 METHOD OF ASSERTING CLAIMS. All claims for indemnification by
an Indemnified Person pursuant to this Article IV shall be made in accordance
with the provisions of Section 7.2 of the Other Stock Purchase Agreements with
the Selling Stockholders who are not Company Stockholders (the "Principals'
Stock Purchase Agreements") and in accordance with the provisions of, and shall
be subject to the terms, conditions and limitations set forth in, the Escrow
Agreement.
4.3 SURVIVAL.
(a) Unless otherwise specified in this Section 4.3 or
elsewhere in this Agreement, all provisions of this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby and shall
continue forever in full force and effect in accordance with their terms.
(b) The representations and warranties of the Company
Stockholders set forth in Article II above and the indemnification obligations
set forth in this Article IV:
(i) shall survive the Closing and the
consummation of the transactions contemplated hereby and continue until the
first anniversary of the Closing Date (except in the case of the indemnification
obligations with respect to the representations and warranties set forth in
clause (a) of Section 2.6 of the Principals' Stock Purchase Agreements, which
shall continue until the issuance of the Buyer's audited financial statements
for the year ending December 31, 1997); and
(ii) shall not be affected by any examination
made for or on behalf of the Buyer or the knowledge of any of the Buyer's
officers, directors, stockholders, employees or agents.
(c) The date on which any particular representation,
warranty or indemnification obligation of each of the Company Stockholders
terminates shall be
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referred to herein and in the Escrow Agreement as the "Termination Date." If a
notice of a claim is given in accordance with the notice provisions of this
Agreement or the Escrow Agreement before the Termination Date, then
(notwithstanding the occurrence of the Termination Date) the representation,
warranty or indemnification obligation applicable to such claim shall survive
until, but only for purposes of, the resolution of such claim.
4.4 LIMITATIONS. Notwithstanding anything to the contrary herein, (a)
the aggregate liability of the Company Stockholders for Damages under this
Article IV shall not exceed the fair market value of the Escrow Shares, as
determined in accordance with the Escrow Agreement, and shall be satisfied only
from the Escrow Shares, and (b) the Company Stockholders and the other Selling
Stockholders shall be liable under the indemnification provisions contained in
Section 4.1(a) of this Agreement and the indemnification provisions contained in
the Other Stock Purchase Agreements for only that portion of the aggregate
Damages which exceeds $250,000. No Company Stockholder shall have any right of
contribution against the Company with respect to any breach by the Company of
any of its representations, warranties, covenants or agreements. Except with
respect to claims based on fraud, the shares of Buyer Common Stock held pursuant
to the Escrow Agreement shall be the Buyer's sole and exclusive remedy for
Damages resulting from or relating to any breach of any representation,
warranty, covenant or indemnification obligation under this Agreement or the
Other Stock Purchase Agreements. The indemnification obligations of the Company
Stockholders pursuant to this Article IV shall be joint and several except as
otherwise provided in Section 5(c) of the Escrow Agreement.
ARTICLE V
GENERAL PROVISIONS
5.1 PRESS RELEASES AND ANNOUNCEMENTS. Neither the Company nor any
Company Stockholder shall issue any press release or announcement relating to
the subject matter of this Agreement without the prior written approval of the
other Parties.
5.2 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.
5.3 ENTIRE AGREEMENT. This Agreement, the Escrow Agreement and the
Other Stock Purchase Agreements and the exhibits and schedules attached thereto,
together with the Confidential Disclosure Agreement dated February 27, 1997, by
and between the Buyer and the Company, constitute the entire agreement among the
Parties and supersede any prior understandings, agreements or representations by
or
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among the Parties, written or oral, that may have related in any way to the
Acquisition.
5.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Parties, provided that the Buyer may assign its rights, interests
and/or obligations under this Agreement to an Affiliate of the Buyer by notice
to the Company and the Stockholders' Representative.
5.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
5.6 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.
5.7 NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered three
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or two business days after it is sent via a
reputable international overnight courier service, in each case to the intended
recipient as set forth below:
IF TO THE COMPANY: COPIES TO:
DynaSoft AB Lagerlof & Leman
Box 10704 Strandvagen 7A
Arenavagen 29 Box 5402
S-121 29 Stockholm S-114 84 Stockholm
SWEDEN SWEDEN
Attn: Chairman of the Board Attn: Per-Erik Hasselberg
Gray Cary Ware & Freidenrich
A Professional Corporation
400 Hamilton Avenue
Palo Alto, CA 94301
Attn: Rod J. Howard, Esq.
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<PAGE> 14
Rolf Ljung, Lagerlof & Leman
as Stockholders' Representative Strandvagen 7A
c/o DynaSoft AB Box 5402
Box 10704 S-114 84 Stockholm
Arenavagen 29 SWEDEN
S-121 29 Stockholm Attn: Per-Erik Hasselberg
SWEDEN
IF TO THE BUYER: COPY TO:
Security Dynamics Technologies, Inc. Hale and Dorr LLP
20 Crosby Drive 60 State Street
Bedford, MA 01730 Boston, MA 02109
Attn: President Attn: Hal J. Leibowitz, Esq.
Any Party may give any notice, request, demand, claim or other communication
hereunder by personal delivery or telecopy, 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 Party for whom it is intended. Any Party
may change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
5.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the
Commonwealth of Massachusetts of the United States.
5.9 AMENDMENTS. The Parties may mutually amend any provision of this
Agreement at any time by a written instrument signed by all of the Parties.
5.10 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. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision,
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<PAGE> 15
and this Agreement shall be enforceable as so modified after the expiration of
the time within which the judgment may be appealed.
5.11 EXPENSES. Except as set forth in the Escrow Agreement, each of the
Parties shall bear its or their own costs and expenses (including fees and
expenses of their respective legal, accounting and financial advisors) incurred
in connection with this Agreement and the transactions contemplated hereby;
provided, however, that if the Acquisition is consummated, the Company and the
Subsidiaries shall not incur fees and expenses of legal, accounting and
financial advisors in connection with the Acquisition in excess of the amounts
set forth in Section 10.11 of the Disclosure Schedule to the Principals' Stock
Purchase Agreements, and any fees and expenses incurred by the Company and the
Subsidiaries in excess of such amounts shall be recovered by the Buyer pursuant
to the Escrow Agreement without regard to the provisions of the first sentence
of Section 6.4.
5.12 SPECIFIC PERFORMANCE. Each of the Parties acknowledges and agrees
that one or more of the other Parties would be damaged irreparably in the event
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 terms and provisions hereof in any action
instituted in any court having jurisdiction over the Parties and the matter, in
addition to any other remedy to which it may be entitled, at law or in equity.
5.13 CONSTRUCTION. The language used in this Agreement shall be deemed
to be the language chosen by the Parties hereto to express their mutual intent,
and no rule of strict construction shall be applied against any Party. Any
reference to any federal, state, local or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise.
5.14 ARBITRATION. Any dispute, controversy or claim arising out of or
related to this Agreement, or the breach, termination or invalidity thereof,
shall be finally settled by arbitration in accordance with the UNCITRAL
Arbitration Rules. The arbitration shall be conducted in London, England, and
all proceedings shall be conducted in the English language. There shall be three
arbitrators, one of whom shall be appointed by the Buyer, one of whom shall be
appointed by the Stockholders' Representative and one of whom shall be appointed
by agreement of the first two arbitrators or, failing agreement, by the London
Court of International Arbitration. Disputes about arbitration procedure shall
be resolved by the arbitrators or, failing agreement, by the London Court of
International Arbitration. The arbitrators may proceed to an award
notwithstanding the failure of any party to participate in the proceedings.
Discovery shall be limited to mutual exchange of documents relevant to the
dispute, controversy or claim; depositions shall not be
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permitted unless agreed to by the parties. The arbitrators shall be authorized
to grant interim relief, including to prevent the destruction of goods or
documents involved in the dispute, protect trade secrets and provide for
security for a prospective monetary award. The prevailing party shall be
entitled to an award of reasonable attorneys' fees incurred in connection with
the arbitration in such amount as may be determined by the arbitrators. The
award of the arbitrators shall be the sole and exclusive remedy of the parties
and shall be enforceable in any court of competent jurisdiction. Notwithstanding
the foregoing, the Parties shall be entitled to seek injunctive relief, security
or other equitable remedies from any court of competent jurisdiction in
furtherance of the arbitration proceedings.
5.15 CURRENCY. Unless otherwise expressly provided in this Agreement,
all references to monetary amounts included herein are expressed in U.S.
dollars.
5.16 WAIVER OF RIGHTS OF FIRST REFUSAL. Each Company Stockholder, by
his or her execution of this Agreement, expressly waives any and all rights of
first refusal and rights of first offer, including without limitation the rights
of first refusal set forth in the Company's Articles of Association and in the
Consortium Agreement dated September 15, 1995, as amended, among the holders of
the Company's Series A Stock, with respect to any offer to sell or sale of
Outstanding Company Shares by any person or entity in connection with the
Acquisition.
[Signatures begin on the following page.]
-16-
<PAGE> 17
IN WITNESS WHEREOF, the Parties have executed this Stock Purchase
Agreement as of the date first above written.
SECURITY DYNAMICS TECHNOLOGIES,
INC.
By: /s/ Arthur W. Coviello, Jr.
-------------------------------
Title: Chief Operating Officer
----------------------------
DYNASOFT AB
By: /s/ Rolf Ljung
-------------------------------
Title: Chairman of the Board
COMPANY STOCKHOLDERS:
[Counterpart signature pages for
each of the Company Stockholders
are attached.]
STOCKHOLDERS' REPRESENTATIVE:
The undersigned hereby enters into
this Agreement for the purpose of
acknowledging and agreeing to his
rights, responsibilities and
obligations hereunder.
/s/ Rolf Ljung
-----------------------------------
Rolf Ljung
-17-
<PAGE> 18
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Niclas Vester
----------------------------------
Niclas Vester
<PAGE> 19
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Patric Sporrong
-----------------------------------
Patric Sporrong
<PAGE> 20
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Elizabeth Coles
-----------------------------------
Elizabeth Coles
<PAGE> 21
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Mikko Tyolajarvi
-----------------------------------
Mikko Tyolajarvi
<PAGE> 22
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Rolf Almroth
-----------------------------------
Rolf Almroth
<PAGE> 23
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Patrik Floding
-----------------------------------
Patrik Floding
<PAGE> 24
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Mikael Hubsch
-----------------------------------
Mikael Hubsch
<PAGE> 25
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Martin Walden
-----------------------------------
Martin Walden
<PAGE> 26
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Michael Ferguson
-----------------------------------
Michael Ferguson
<PAGE> 27
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Zoltan Keleman
-----------------------------------
Zoltan Kelemen
<PAGE> 28
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Vincemt Lenngren
-----------------------------------
Vincent Lenngren
<PAGE> 29
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Fredrik Kjellander
-----------------------------------
Fredrik Kjellander
<PAGE> 30
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Dag Stroman
-----------------------------------
Dag Stroman
<PAGE> 31
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Tommy Magnusson
-----------------------------------
Tommy Magnusson
<PAGE> 32
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Sture Nystrand
-----------------------------------
Sture Nystrand
<PAGE> 33
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Stefan Johansson
-----------------------------------
Stefan Johansson
<PAGE> 34
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Robert Lofgren
-----------------------------------
Robert Lofgren
<PAGE> 35
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Lars W. Ullman
-----------------------------------
Lars W. Ullman
<PAGE> 36
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Ewa Engstrom
-----------------------------------
Ewa Engstrom
<PAGE> 37
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Stefan Rosengren
-----------------------------------
Stefan Rosengren
<PAGE> 38
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Per Hall
-----------------------------------
Per Hall
<PAGE> 39
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Tord Fransson
-----------------------------------
Tord Fransson
<PAGE> 40
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Jonas Thylin
----------------------------------
Jonas Thylin
<PAGE> 41
COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND AMONG
SECURITY DYNAMICS TECHNOLOGIES, INC., DYNASOFT AB AND THE STOCKHOLDERS OF
DYNASOFT AB NAMED ON SCHEDULE I THERETO, DATED JULY 15, 1997
COMPANY STOCKHOLDERS:
/s/ Magnus Nystrom
----------------------------------
Magnus Nystrom
<PAGE> 42
<TABLE>
SCHEDULE I
----------
<CAPTION>
- ------------------------------------------------------------------------------
Company Company Number of
Stockholder Shares Buyer Shares
- ------------------------------------------------------------------------------
Series A Series B
<S> <C> <C> <C>
- ------------------------------------------------------------------------------
Johannes Sjogren 126,768 84,512 65,618
- ------------------------------------------------------------------------------
Niclas Vester 57,000 38,000 29,504
- ------------------------------------------------------------------------------
Patric Sporrong 48,000 32,000 24,846
- ------------------------------------------------------------------------------
Elizabeth Coles 38,700 25,800 20,032
- ------------------------------------------------------------------------------
Mikko Tyolajarvi 31,500 21,000 16,305
- ------------------------------------------------------------------------------
Rolf Almroth 26,700 17,800 13,820
- ------------------------------------------------------------------------------
Patrik Floding 24,720 16,480 12,795
- ------------------------------------------------------------------------------
Mikael Hubsch 21,120 14,080 10,932
- ------------------------------------------------------------------------------
Martin Walden 18,300 12,200 9,472
- ------------------------------------------------------------------------------
Michael Ferguson 18,000 12,000 9,317
- ------------------------------------------------------------------------------
Zoltan Kelemen 18,000 12,000 9,317
- ------------------------------------------------------------------------------
Vincent Lenngren 18,000 12,000 9,317
- ------------------------------------------------------------------------------
Fredrik Kjellander 16,800 11,200 8,696
- ------------------------------------------------------------------------------
Dag Stroman 14,400 9,600 7,453
- ------------------------------------------------------------------------------
Tommy Magnusson 13,200 8,800 6,832
- ------------------------------------------------------------------------------
Sture Nystrand 12,000 8,000 6,211
- ------------------------------------------------------------------------------
Stefan Johansson 9,600 6,400 4,969
- ------------------------------------------------------------------------------
Robert Lofgren 9,600 6,400 4,969
- ------------------------------------------------------------------------------
Lars W. Ullman 9,150 6,100 4,736
- ------------------------------------------------------------------------------
Ewa Engstrom 8,700 5,800 4,503
- ------------------------------------------------------------------------------
Stefan Rosengren 7,320 4,880 3,789
- ------------------------------------------------------------------------------
Per Hall 3,600 2,400 1,863
- ------------------------------------------------------------------------------
Tord Fransson 2,400 1,600 1,242
- ------------------------------------------------------------------------------
Jonas Thylin 1,200 800 621
- ------------------------------------------------------------------------------
Magnus Nystrom 0 2,667 828
- ------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 2.4
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
July 15, 1997 (the "Agreement Date") by and between Security Dynamics
Technologies, Inc., a Delaware corporation (the "Buyer"), and the undersigned
stockholder (the "Company Stockholder") of DynaSoft AB, a corporation organized
under the laws of Sweden (the "Company"). The Buyer and the Company Stockholder
are referred to together herein as the "Parties."
The Company Stockholder (a) owns the number of outstanding shares of
Series A and Series B stock of the Company set forth below his name on the
signature page to this Agreement (the "Company Shares") and (b) holds the number
of options to acquire shares of capital stock of the Company set forth below his
name on the signature page to this Agreement (the "Options"). The Buyer desires
to purchase, and the Company Stockholder desires to sell, the Company Shares for
the consideration set forth below subject to the terms and conditions of this
Agreement. In addition, the Company Stockholder has agreed, in exchange for
foregoing the right to have his Options assumed by the Buyer and amended so as
to constitute options to acquire shares of Buyer Common Stock, to the
termination of the Options for the consideration set forth below. NOW,
THEREFORE, in consideration of the representations, warranties and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. PURCHASE OF COMPANY SHARES AND TERMINATION OF OPTIONS. Upon and
subject to the terms and conditions of this Agreement, at the closing of the
transactions contemplated by this Agreement (the "Closing"), (a) the Company
Stockholder shall sell, transfer, convey, assign and deliver to the Buyer, and
the Buyer shall purchase, acquire and accept from the Company Stockholder, all
of the Company Shares, and (b) the Options shall be terminated and the Company
Stockholder shall have no further rights or claims thereunder or in connection
therewith.
2. FURTHER ASSURANCES. At any time and from time to time after the
Closing, at the Buyer's request and without further consideration to the Company
Stockholder, the Company Stockholder shall promptly execute and deliver such
instruments of sale, transfer, conveyance, assignment and confirmation, and take
all such other action as the Buyer may reasonably request, more effectively to
transfer, convey and assign to the Buyer, and to confirm the Buyer's title to,
all of the Company Shares, to assist the Buyer in exercising all rights with
respect thereto, to effect the cancellation of the Options and to carry out the
purpose and intent of this Agreement.
<PAGE> 2
3. THE CLOSING. The Closing shall take place at the offices of Hale
and Dorr LLP, 60 State Street, Boston, Massachusetts 02109 commencing at 10:00
a.m., local time, on the date hereof, or such other time as the Parties shall
mutually agree.
4. ACTIONS AT THE CLOSING. At the Closing (a) the Board of
Directors of the Company shall, in accordance with The Companies Act (Sw:
Aktiebolagslagen), cause the transfer of the Company Shares to the Buyer
contemplated by this Agreement to be entered into the share register of the
Company, (b) the Options shall be deemed terminated and of no further force or
effect, (c) the Buyer shall pay to the Company Stockholder, for each Company
Share purchased by the Buyer pursuant to this Agreement, the sum of U.S. $11.30,
and (d) the Buyer shall pay to the Company Stockholder, for each share of
capital stock of the Company covered by the Option, the sum of U.S. $11.06.
5. REPRESENTATIONS AND WARRANTIES. The Company Stockholder
represents and warrants to the Buyer as follows:
(a) The Company Stockholder has good and marketable title,
free and clear of any and all Security Interests (as defined below), to all of
the Company Shares and Options, subject to Section 2.2 of the Disclosure
Schedule to the Stock Purchase Agreement of even date herewith among the Buyer,
the Company and the stockholders of the Company listed on Schedule I thereto.
The Company Stockholder has the full right, power and authority to transfer,
convey and sell to the Buyer at the Closing the Company Shares and, upon
consummation of the purchase contemplated hereby, the Buyer will acquire from
the Company Stockholder good and marketable title to the Company Shares, free
and clear of all covenants, conditions, restrictions, voting trust arrangements,
liens, charges, encumbrances, options and adverse claims or rights whatsoever.
(b) The Company Stockholder has all requisite power and
authority to execute and deliver this Agreement and to perform the Company
Stockholder's obligations hereunder. This Agreement has been duly and validly
executed and delivered by the Company Stockholder, and constitutes a valid and
binding obligation of the Company Stockholder, enforceable against the Company
Stockholder in accordance with its terms.
(c) Except for the waiver set forth in Section 8 of this
Agreement, neither the execution and delivery of this Agreement by the Company
Stockholder, nor the consummation by the Company Stockholder of the transactions
contemplated hereby, will (i) conflict with, result in a breach of, constitute
(with or without due notice or lapse of time or both) a default under, or
require any notice, consent or waiver under, any instrument, contract, agreement
or arrangement to which the Company Stockholder is a party or by which the
Company Stockholder is bound,
-2-
<PAGE> 3
(ii) result in the imposition of any mortgage, pledge, security interest,
encumbrance, charge or other lien (whether arising by contract or by operation
of law) (a "Security Interest") upon the Company Shares, or (iii) violate any
order, writ, injunction or decree applicable to the Company Stockholder or to
the Company Shares.
6. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the
Commonwealth of Massachusetts of the United States.
7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8. WAIVER OF RIGHTS OF FIRST REFUSAL. The Company Stockholder, by
his or her execution of this Agreement, expressly waives any and all rights of
first refusal and rights of first offer, including without limitation the rights
of first refusal set forth in the Company's Articles of Association and in the
Consortium Agreement dated September 15, 1995, as amended, among the holders of
the Company's Series A Stock, with respect to any offer to sell or sale of
capital stock of the Company by any person or entity to the Buyer on or about
the date hereof.
[Remainder of page intentionally left blank.]
-3-
<PAGE> 4
IN WITNESS WHEREOF, the Parties have executed this Stock Purchase
Agreement as of the date first above written.
SECURITY DYNAMICS TECHNOLOGIES, INC.
By: /s/ CHARLES R. STUCKEY, JR.
-------------------------------------
CHARLES R. STUCKEY, JR.
Title: Chairman and CEO
COMPANY STOCKHOLDER:
/s/ Ian Anderson
----------------------------------
(Signature)
Name: Ian Anderson
Number of Series A Shares: 115,530
Number of Series B Shares: 102,520
Total Purchase Price for
Company Shares: U.S. $2,463,965
Number of Options: 21,250
Total Payment for
Termination of Options: U.S. $235,025
-4-
<PAGE> 1
EXHIBIT 2.5
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
July 15, 1997 (the "Agreement Date") by and between Security Dynamics
Technologies, Inc., a Delaware corporation (the "Buyer"), and the undersigned
stockholder (the "Company Stockholder") of DynaSoft AB, a corporation organized
under the laws of Sweden (the "Company"). The Buyer and the Company Stockholder
are referred to together herein as the "Parties."
The Company Stockholder owns the number of outstanding shares of Series
A and Series B stock of the Company set forth below his name on the signature
page to this Agreement (the "Company Shares"). The Buyer desires to purchase,
and the Company Stockholder desires to sell, the Company Shares for the
consideration set forth below subject to the terms and conditions of this
Agreement. NOW, THEREFORE, in consideration of the representations, warranties
and covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
1. PURCHASE OF THE COMPANY SHARES FROM THE COMPANY STOCKHOLDER.
Upon and subject to the terms and conditions of this Agreement, at the closing
of the transactions contemplated by this Agreement (the "Closing"), the Company
Stockholder shall sell, transfer, convey, assign and deliver to the Buyer, and
the Buyer shall purchase, acquire and accept from the Company Stockholder, all
of the Company Shares.
2. FURTHER ASSURANCES. At any time and from time to time after the
Closing, at the Buyer's request and without further consideration to the Company
Stockholder, the Company Stockholder shall promptly execute and deliver such
instruments of sale, transfer, conveyance, assignment and confirmation, and take
all such other action as the Buyer may reasonably request, more effectively to
transfer, convey and assign to the Buyer, and to confirm the Buyer's title to,
all of the Company Shares, to assist the Buyer in exercising all rights with
respect thereto and to carry out the purpose and intent of this Agreement.
3. THE CLOSING. The Closing shall take place at the offices of Hale
and Dorr LLP, 60 State Street, Boston, Massachusetts 02109 commencing at 10:00
a.m., local time, on the date hereof, or such other time as the Parties shall
mutually agree.
4. ACTIONS AT THE CLOSING. At the Closing (a) the Board of
Directors of the Company shall, in accordance with The Companies Act (Sw:
Aktiebolagslagen), cause the transfer of the Company Shares to the Buyer
contemplated by this Agreement to be entered into the share register of the
Company, and (b) the Buyer shall pay to the
<PAGE> 2
Company Stockholder, for each Company Share purchased by the Buyer pursuant to
this Agreement, the sum of U.S. $11.30.
5. REPRESENTATIONS AND WARRANTIES. The Company Stockholder
represents and warrants to the Buyer as follows:
(a) The Company Stockholder has good and marketable title,
free and clear of any and all Security Interests (as defined below), to all of
the Company Shares. The Company Stockholder has the full right, power and
authority to transfer, convey and sell to the Buyer at the Closing the Company
Shares and, upon consummation of the purchase contemplated hereby, the Buyer
will acquire from the Company Stockholder good and marketable title to the
Company Shares, free and clear of all covenants, conditions, restrictions,
voting trust arrangements, liens, charges, encumbrances, options and adverse
claims or rights whatsoever.
(b) The Company Stockholder has all requisite power and
authority to execute and deliver this Agreement and to perform the Company
Stockholder's obligations hereunder. This Agreement has been duly and validly
executed and delivered by the Company Stockholder, and constitutes a valid and
binding obligation of the Company Stockholder, enforceable against the Company
Stockholder in accordance with its terms.
(c) Except for the waiver set forth in Section 8 of this
Agreement, neither the execution and delivery of this Agreement by the Company
Stockholder, nor the consummation by the Company Stockholder of the transactions
contemplated hereby, will (i) conflict with, result in a breach of, constitute
(with or without due notice or lapse of time or both) a default under, or
require any notice, consent or waiver under, any instrument, contract, agreement
or arrangement to which the Company Stockholder is a party or by which the
Company Stockholder is bound, (ii) result in the imposition of any mortgage,
pledge, security interest, encumbrance, charge or other lien (whether arising by
contract or by operation of law) (a "Security Interest") upon the Company
Shares, or (iii) violate any order, writ, injunction or decree applicable to the
Company Stockholder or to the Company Shares.
6. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the
Commonwealth of Massachusetts of the United States.
7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8. WAIVER OF RIGHTS OF FIRST REFUSAL. The Company Stockholder, by
his or her execution of this Agreement, expressly waives any and all rights of
first refusal
-2-
<PAGE> 3
and rights of first offer, including without limitation the rights of first
refusal set forth in the Company's Articles of Association and in the Consortium
Agreement dated September 15, 1995, as amended, among the holders of the
Company's Series A Stock, with respect to any offer to sell or sale of capital
stock of the Company by any person or entity to the Buyer on or about the date
hereof.
IN WITNESS WHEREOF, the Parties have executed this Stock Purchase
Agreement as of the date first above written.
SECURITY DYNAMICS TECHNOLOGIES, INC.
By: /s/ Charles R. Stuckey, Jr.
------------------------------------
CHARLES R. STUCKEY, JR.
Title: Chairman and CEO
COMPANY STOCKHOLDER:
/s/ Joakim Borell
----------------------------------
(Signature)
Name: Joakim Borell
Number of Series A Shares: 142,320
----------
Number of Series B Shares: 94,880
----------
Total Purchase Price: U.S. $2,680,360
----------
-3-
<PAGE> 1
EXHIBIT 2.6
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
July 15, 1997 (the "Agreement Date") by and between Security Dynamics
Technologies, Inc., a Delaware corporation (the "Buyer"), and the undersigned
stockholder (the "Company Stockholder") of DynaSoft AB, a corporation organized
under the laws of Sweden (the "Company"). The Buyer and the Company Stockholder
are referred to together herein as the "Parties."
The Company Stockholder owns the number of outstanding shares of Series
A and Series B stock of the Company set forth below his name on the signature
page to this Agreement (the "Company Shares"). The Buyer desires to purchase,
and the Company Stockholder desires to sell, the Company Shares for the
consideration set forth below subject to the terms and conditions of this
Agreement. NOW, THEREFORE, in consideration of the representations, warranties
and covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
1. PURCHASE OF THE COMPANY SHARES FROM THE COMPANY STOCKHOLDER.
Upon and subject to the terms and conditions of this Agreement, at the closing
of the transactions contemplated by this Agreement (the "Closing"), the Company
Stockholder shall sell, transfer, convey, assign and deliver to the Buyer, and
the Buyer shall purchase, acquire and accept from the Company Stockholder, all
of the Company Shares.
2. FURTHER ASSURANCES. At any time and from time to time after the
Closing, at the Buyer's request and without further consideration to the Company
Stockholder, the Company Stockholder shall promptly execute and deliver such
instruments of sale, transfer, conveyance, assignment and confirmation, and take
all such other action as the Buyer may reasonably request, more effectively to
transfer, convey and assign to the Buyer, and to confirm the Buyer's title to,
all of the Company Shares, to assist the Buyer in exercising all rights with
respect thereto and to carry out the purpose and intent of this Agreement.
3. THE CLOSING. The Closing shall take place at the offices of Hale
and Dorr LLP, 60 State Street, Boston, Massachusetts 02109 commencing at 10:00
a.m., local time, on the date hereof, or such other time as the Parties shall
mutually agree.
4. ACTIONS AT THE CLOSING. At the Closing (a) the Board of
Directors of the Company shall, in accordance with The Companies Act (Sw:
Aktiebolagslagen), cause the transfer of the Company Shares to the Buyer
contemplated by this Agreement to be entered into the share register of the
Company, and (b) the Buyer shall pay to the
<PAGE> 2
Company Stockholder, for each Company Share purchased by the Buyer pursuant to
this Agreement, the sum of U.S. $11.30.
5. REPRESENTATIONS AND WARRANTIES. The Company Stockholder
represents and warrants to the Buyer as follows:
(a) The Company Stockholder has good and marketable title,
free and clear of any and all Security Interests (as defined below), to all of
the Company Shares. The Company Stockholder has the full right, power and
authority to transfer, convey and sell to the Buyer at the Closing the Company
Shares and, upon consummation of the purchase contemplated hereby, the Buyer
will acquire from the Company Stockholder good and marketable title to the
Company Shares, free and clear of all covenants, conditions, restrictions,
voting trust arrangements, liens, charges, encumbrances, options and adverse
claims or rights whatsoever.
(b) The Company Stockholder has all requisite power and
authority to execute and deliver this Agreement and to perform the Company
Stockholder's obligations hereunder. This Agreement has been duly and validly
executed and delivered by the Company Stockholder, and constitutes a valid and
binding obligation of the Company Stockholder, enforceable against the Company
Stockholder in accordance with its terms.
(c) Except for the waiver set forth in Section 8 of this
Agreement, neither the execution and delivery of this Agreement by the Company
Stockholder, nor the consummation by the Company Stockholder of the transactions
contemplated hereby, will (i) conflict with, result in a breach of, constitute
(with or without due notice or lapse of time or both) a default under, or
require any notice, consent or waiver under, any instrument, contract, agreement
or arrangement to which the Company Stockholder is a party or by which the
Company Stockholder is bound, (ii) result in the imposition of any mortgage,
pledge, security interest, encumbrance, charge or other lien (whether arising by
contract or by operation of law) (a "Security Interest") upon the Company
Shares, or (iii) violate any order, writ, injunction or decree applicable to the
Company Stockholder or to the Company Shares.
6. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the
Commonwealth of Massachusetts of the United States.
7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8. WAIVER OF RIGHTS OF FIRST REFUSAL. The Company Stockholder, by
his or her execution of this Agreement, expressly waives any and all rights of
first refusal
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<PAGE> 3
and rights of first offer, including without limitation the rights of first
refusal set forth in the Company's Articles of Association and in the Consortium
Agreement dated September 15, 1995, as amended, among the holders of the
Company's Series A Stock, with respect to any offer to sell or sale of capital
stock of the Company by any person or entity to the Buyer on or about the date
hereof.
IN WITNESS WHEREOF, the Parties have executed this Stock Purchase
Agreement as of the date first above written.
SECURITY DYNAMICS TECHNOLOGIES, INC.
By: /s/ Charles R. Stuckey, Jr.
------------------------------------
CHARLES R. STUCKEY, JR.
Title: Chairman and CEO
COMPANY STOCKHOLDER:
/s/ Jean Paul Link
----------------------------------
(Signature)
Name: Jean Paul Link
Number of Series A Shares: 18,000
--------
Number of Series B Shares: 12,000
--------
Total Purchase Price: U.S. $339,000
--------
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<PAGE> 1
EXHIBIT 2.7
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
July 15, 1997 (the "Agreement Date") by and between Security Dynamics
Technologies, Inc., a Delaware corporation (the "Buyer"), and the undersigned
stockholder (the "Company Stockholder") of DynaSoft AB, a corporation organized
under the laws of Sweden (the "Company"). The Buyer and the Company Stockholder
are referred to together herein as the "Parties."
The Company Stockholder owns the number of outstanding shares of Series
A and Series B stock of the Company set forth below his name on the signature
page to this Agreement (the "Company Shares"). The Buyer desires to purchase,
and the Company Stockholder desires to sell, the Company Shares for the
consideration set forth below subject to the terms and conditions of this
Agreement. NOW, THEREFORE, in consideration of the representations, warranties
and covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
1. PURCHASE OF THE COMPANY SHARES FROM THE COMPANY STOCKHOLDER. Upon
and subject to the terms and conditions of this Agreement, at the closing of the
transactions contemplated by this Agreement (the "Closing"), the Company
Stockholder shall sell, transfer, convey, assign and deliver to the Buyer, and
the Buyer shall purchase, acquire and accept from the Company Stockholder, all
of the Company Shares.
2. FURTHER ASSURANCES. At any time and from time to time after the
Closing, at the Buyer's request and without further consideration to the Company
Stockholder, the Company Stockholder shall promptly execute and deliver such
instruments of sale, transfer, conveyance, assignment and confirmation, and take
all such other action as the Buyer may reasonably request, more effectively to
transfer, convey and assign to the Buyer, and to confirm the Buyer's title to,
all of the Company Shares, to assist the Buyer in exercising all rights with
respect thereto and to carry out the purpose and intent of this Agreement.
3. THE CLOSING. The Closing shall take place at the offices of Hale and
Dorr LLP, 60 State Street, Boston, Massachusetts 02109 commencing at 10:00 a.m.,
local time, on the date hereof, or such other time as the Parties shall mutually
agree.
4. ACTIONS AT THE CLOSING. At the Closing (a) the Board of Directors of
the Company shall, in accordance with The Companies Act (Sw: Aktiebolagslagen),
cause the transfer of the Company Shares to the Buyer contemplated by this
Agreement to be entered into the share register of the Company, and (b) the
Buyer shall pay to the
<PAGE> 2
Company Stockholder, for each Company Share purchased by the Buyer pursuant to
this Agreement, the sum of U.S. $11.30.
5. REPRESENTATIONS AND WARRANTIES. The Company Stockholder
represents and warrants to the Buyer as follows:
(a) The Company Stockholder has good and marketable title,
free and clear of any and all Security Interests (as defined below), to all of
the Company Shares. The Company Stockholder has the full right, power and
authority to transfer, convey and sell to the Buyer at the Closing the Company
Shares and, upon consummation of the purchase contemplated hereby, the Buyer
will acquire from the Company Stockholder good and marketable title to the
Company Shares, free and clear of all covenants, conditions, restrictions,
voting trust arrangements, liens, charges, encumbrances, options and adverse
claims or rights whatsoever.
(b) The Company Stockholder has all requisite power and
authority to execute and deliver this Agreement and to perform the Company
Stockholder's obligations hereunder. This Agreement has been duly and validly
executed and delivered by the Company Stockholder, and constitutes a valid and
binding obligation of the Company Stockholder, enforceable against the Company
Stockholder in accordance with its terms.
(c) Except for the waiver set forth in Section 8 of this
Agreement, neither the execution and delivery of this Agreement by the Company
Stockholder, nor the consummation by the Company Stockholder of the transactions
contemplated hereby, will (i) conflict with, result in a breach of, constitute
(with or without due notice or lapse of time or both) a default under, or
require any notice, consent or waiver under, any instrument, contract, agreement
or arrangement to which the Company Stockholder is a party or by which the
Company Stockholder is bound, (ii) result in the imposition of any mortgage,
pledge, security interest, encumbrance, charge or other lien (whether arising by
contract or by operation of law) (a "Security Interest") upon the Company
Shares, or (iii) violate any order, writ, injunction or decree applicable to the
Company Stockholder or to the Company Shares.
6. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts) of
the Commonwealth of Massachusetts of the United States.
7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8. WAIVER OF RIGHTS OF FIRST REFUSAL. The Company Stockholder, by
his or her execution of this Agreement, expressly waives any and all rights of
first refusal
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<PAGE> 3
and rights of first offer, including without limitation the rights of first
refusal set forth in the Company's Articles of Association and in the Consortium
Agreement dated September 15, 1995, as amended, among the holders of the
Company's Series A Stock, with respect to any offer to sell or sale of capital
stock of the Company by any person or entity to the Buyer on or about the date
hereof.
IN WITNESS WHEREOF, the Parties have executed this Stock Purchase
Agreement as of the date first above written.
SECURITY DYNAMICS TECHNOLOGIES, INC.
By: /s/ Charles R. Stuckey, Jr.
--------------------------------
Title: Chairman and CEO
COMPANY STOCKHOLDER:
/s/ Sten Sorenson
------------------------------------
(Signature)
Name: Sten Sorenson
Number of Series A Shares: 16,800
--------
Number of Series B Shares: 11,200
--------
Total Purchase Price: U.S. $316,400
--------
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<PAGE> 1
EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of July 15, 1997, by and among Security Dynamics Technologies,
Inc., a corporation organized under the laws of the State of Delaware (the
"Company"), and each of the parties listed on SCHEDULE I to this Agreement
(individually, a "Stockholder" and collectively, the "Stockholders").
INTRODUCTION
The Company, the Stockholders, Dynasoft AB, a corporation organized
under the laws of Sweden (the "Seller"), and certain other stockholders of Dino
have entered into a Stock Purchase Agreement, dated as of July 15, 1997 (the
"Purchase Agreement"), pursuant to which, upon and subject to the occurrence of
the Closing thereunder, the Company will issue to the Stockholders shares of
Common Stock, $.01 par value per share ("Common Stock"), of the Company. The
Stockholders wish to have, and the Company is willing to grant to them, certain
rights with respect to the registration of such shares of Common Stock.
In consideration of the mutual covenants and promises contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Stockholders agree as
follows:
1. CERTAIN DEFINITIONS. As used in this Section 1 and elsewhere
in this Agreement, the following terms shall have the following respective
meanings:
"COMMISSION" means the Securities and Exchange Commission, or
any other Federal agency at the time administering the Securities Act.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"REGISTRABLE SHARES" means (a) the shares of Common Stock
issued to the Stockholders pursuant to the Purchase Agreement and (b) any other
shares of Common Stock of the Company issued in respect of such shares (because
of stock splits, stock dividends, reclassifications, recapitalizations or
similar events); provided, however, that shares of Common Stock which are
Registrable Shares shall cease to be Registrable Shares (i) upon any sale
pursuant to a Registration Statement, Section 4(1) of the Securities Act or Rule
144 under the Securities Act or upon any sale in any manner to a person or
entity which, by virtue of Section 9 of this Agreement, is not entitled to the
rights provided in this Agreement, (ii) at such time as all of the Registrable
Shares then held by the Rightsholders may be sold without restriction as to
volume under Rule 144, or (iii) with respect to a Rightsholder, at such time as
all such shares may be sold by such Rightsholder under Rule 144(k).
<PAGE> 2
"REGISTRATION EXPENSES" means the expenses described in
Section 5.
"REGISTRATION STATEMENT" means a registration statement filed
by the Company with the Commission for a public offering and sale of securities
of the Company (other than a registration statement on Form S-8 or Form S-4, or
their successors, or any other form for a limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
"RIGHTSHOLDERS" means the Stockholders and any other person or
entity who becomes a Rightsholder under this Agreement pursuant to Section 9.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
Other terms used herein and not otherwise defined shall have the
respective meanings ascribed to them in the Purchase Agreement.
2. RESALE REGISTRATION STATEMENT.
(a) Subject to the provisions of paragraph (b) below, on or
prior to the 40th day following the Closing Date, the Company shall file a
Registration Statement on Form S-3 (or any successor form relating to secondary
offerings) (the "Resale Registration Statement") registering the Registrable
Shares under the Securities Act and shall use its best efforts to cause the
Resale Registration Statement to become effective promptly following the filing
thereof and to remain effective until the first anniversary of the Closing Date;
provided, however, that each Company Affiliate agrees not to sell any
Registrable Shares pursuant to the Resale Registration Statement until after
such time as the Company has published (within the meaning of Accounting Series
Release No. 130, as amended, of the Commission) financial results covering at
least 30 days of combined operations of the Company and the Seller (the "Release
Date").
(b) Anything contained herein to the contrary notwithstanding,
with respect to the registration required pursuant to this Section 2, the
Company may include in such registration any issued and outstanding shares of
Common Stock held by others; provided, however, that the inclusion of such
issued and outstanding shares of Common Stock by others in such registration
shall not prevent the Rightsholders from registering the entire number of
Registrable Shares held by them.
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<PAGE> 3
3. INCIDENTAL REGISTRATION RIGHTS.
(a) From and after the date hereof, whenever the Company
proposes to file a Registration Statement at any time and from time to time
relating to an offering in which the Company proposes to sell shares of Common
Stock for its own account, it will, prior to such filing, give at least 20 days'
written notice to all Rightsholders of its intention to do so (subject to the
limitations set forth in paragraph (c) below) and, upon the written request of a
Rightsholder or Rightsholders given within 20 days after the Company provides
such notice (which request shall state the intended method of disposition of
such Registrable Shares), the Company shall use its best efforts to cause all
Registrable Shares which the Company has been requested by such Rightsholder or
Rightsholders to register to be registered under the Securities Act to the
extent necessary to permit their sale or other disposition in accordance with
the intended methods of distribution specified in the request of such
Rightsholder or Rightsholders; provided, that (i) the Company shall have the
right to postpone or withdraw any registration effected pursuant to this Section
3 without obligation to any Rightsholder, and (ii) no Company Affiliate may sell
any Registrable Shares pursuant to any such registration until after the Release
Date.
(b) In connection with any offering under this Section 3
involving an underwriting, the Company shall not be required to include any
Registrable Shares in such underwriting unless the holders thereof accept the
terms of the underwriting as agreed upon between the Company and the
underwriter(s) of such offering. If in the opinion of the managing
underwriter(s) of such offering the registration of all, or part of, the shares
of Common Stock (the "Incidental Shares") which the Rightsholders have requested
to be included pursuant to this Section 3 and/or which other holders of shares
of Common Stock or other securities of the Company entitled to include shares of
Common Stock in such registration have requested to be included would materially
and adversely affect such public offering, then the Company shall be required to
include in the underwriting only that number of such shares, if any, which the
managing underwriter(s) believe(s) may be sold without causing such adverse
effect. If the number of Registrable Shares to be included in the underwriting
in accordance with the foregoing is less than the total number of shares which
the Rightsholders have requested to be included, then (i) the Company shall be
entitled to include all shares that it desires to be registered and (ii) the
Rightsholders who have requested registration and other holders of shares of
Common Stock or other securities of the Company entitled to include shares of
Common Stock in such registration on a parity with the Rightsholders shall
participate in the underwriting pro rata based upon their total ownership of
shares of Common Stock of the Company.
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<PAGE> 4
(c) Notwithstanding anything in the foregoing to the contrary,
the Company shall not be required to provide any advance notice to Rightsholders
in connection with any offering under this Section 3 involving an underwriting
if the Company has been informed that in the opinion of the managing
underwriter(s) the inclusion of any Incidental Shares in such offering would
materially and adversely affect the offering. In such event, the Company will
provide written notice to all Rightsholders of such managing underwriter's(s')
opinion, which notice need not be given prior to the filing of the applicable
Registration Statement.
4. REGISTRATION PROCEDURES. If and whenever the Company is
required by the provisions of this Agreement to use its best efforts to effect
the registration of any of the Registrable Shares under the Securities Act, the
Company shall:
(a) file with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become and remain effective for the period specified
in paragraph (b) below;
(b) as expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary to keep
the Registration Statement effective for a period ending on the earlier of (i)
the first Anniversary of the Closing Date, and (ii) the date on which all
Registrable Shares registered under such Registration Statement have been sold;
provided, however, that the Company may by written notice require that each
Rightsholder (a "Selling Holder") who is selling shares pursuant to such
registration immediately cease sales of shares pursuant to such Registration
Statement (a "Black Out Requirement") at any time that (A) the Company becomes
engaged in a business activity or negotiation which is not disclosed in the
Registration Statement (or the prospectus included therein) which the Company
reasonably believes must be disclosed therein under applicable law and which the
Company desires to keep confidential for business purposes, the disclosure of
which at such time the Company believes could have an adverse effect on the
Company or its business or prospects or on the successful completion of such
business activity or negotiation or on the market price of the Company's stock,
(B) the Company believes that a particular disclosure so determined to be
required to be disclosed therein would be premature or would adversely affect
the Company or its business or prospects or the market price of the Company's
stock, or (C) the Registration Statement can no longer be used under the
existing rules and regulations promulgated under the Securities Act; provided
further, that the Company shall not impose a Black Out Requirement if such
requirement would result in the Resale Registration Statement being effective
and not subject to any Black Out Requirement for less than 53 calendar days
(whether or not consecutive) during the period commencing on the Release Date
and ending on December 31, 1997 unless, with respect to a Selling Holder, such
Selling Holder (I) has been, or will prior to December 31, 1997 be, provided
with an opportunity to sell
-4-
<PAGE> 5
in an underwritten offering a number of shares of Common Stock which, when taken
together with any shares of Common Stock sold by the Selling Holder prior to the
commencement of such Black Out Requirement, equals at least 55% of the shares of
Common Stock acquired by the Selling Holder pursuant to the Purchase Agreement
(the "Minimum Number of Shares") or (II) has sold, prior to the commencement of
such Black Out Requirement, the Minimum Number of Shares. The Company shall not
be required to disclose to the Selling Holder(s) the reasons for requiring a
suspension of sales hereunder, and the Selling Holder(s) shall not disclose to
any third party the existence of any such suspension;
(c) as expeditiously as possible furnish to each Selling
Holder such reasonable numbers of copies of the prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as the Selling Holder may reasonably request in
order to facilitate the public sale or other disposition of the Registrable
Shares owned by the Selling Holder; and
(d) as expeditiously as possible use its best efforts to
register or qualify the Registrable Shares covered by the Registration Statement
under the securities or Blue Sky laws of such states as the Selling Holders
shall reasonably request, and do any and all other acts and things that may
reasonably be necessary or desirable to enable the Selling Holders to consummate
the public sale or other disposition in such states of the Registrable Shares
owned by the Selling Holders; provided, however, that the Company shall not be
required in connection with this paragraph (d) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction.
If the Company has delivered preliminary or final prospectuses
to the Selling Holders and after having done so the prospectus is amended to
comply with the requirements of the Securities Act, the Company shall promptly
notify the Selling Holders and, if requested, the Selling Holders shall
immediately cease making offers of Registrable Shares and return all
undistributed prospectuses to the Company. The Company shall promptly provide
the Selling Holders with revised prospectuses and, following receipt of the
revised prospectuses, the Selling Holders shall be free to resume making offers
of the Registrable Shares.
5. ALLOCATION OF EXPENSES. The Company will pay all Registration
Expenses of all registrations under this Agreement. For purposes of this Section
5, the term "Registration Expenses" shall mean all expenses incurred by the
Company in complying with this Agreement, including without limitation all
registration and filing fees, exchange listing fees, printing expenses, fees and
disbursements of counsel for the Company, state Blue Sky fees and expenses, the
expense of any special audits incident to or required by any such registration
and disbursements of one counsel for all holders of registration rights
participating in the registration (with such counsel
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<PAGE> 6
being selected by the participating holders of registration rights), but
excluding underwriting discounts and selling commissions.
6. INDEMNIFICATION. In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Agreement, the
Company will indemnify and hold harmless the seller of such Registrable Shares,
each underwriter of such Registrable Shares, and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities Act or
the Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act, the Exchange Act, state securities or Blue Sky
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any Registration
Statement under which such Registrable Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to such Registration
Statement, or arise out of or are based upon the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company will reimburse such seller,
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by such seller, underwriter or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or omission made in such
Registration Statement, preliminary prospectus or prospectus, or any such
amendment or supplement, in reliance upon and in conformity with information
furnished to the Company, in writing, by or on behalf of such seller,
underwriter or controlling person specifically for use in the preparation
thereof.
In the event of any registration of any of the Registrable Shares under
the Securities Act pursuant to this Agreement, each seller of Registrable
Shares, severally and not jointly, will indemnify and hold harmless the Company,
each of its directors and officers and each underwriter (if any) and each
person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company, such directors
and officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are
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<PAGE> 7
based upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
the statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of such seller,
specifically for use in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement; provided, however, that the
obligations of such Rightsholders hereunder shall be limited to an amount equal
to the proceeds to each Rightsholder of Registrable Shares sold as contemplated
herein.
Each party entitled to indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, provided, further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement unless and to the extent that the Indemnifying
Party is adversely affected by such failure. The Indemnified Party may
participate in such defense at such party's expense; provided, however, that the
Indemnifying Party shall pay such expense if representation of such Indemnified
Party by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests between the Indemnified Party and
any other party represented by such counsel in such proceeding. No Indemnifying
Party, in the defense of any such claim or litigation shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect of such claim or litigation, and no Indemnified Party
shall consent to entry of any judgment or settle such claim or litigation
without the prior written consent of the Indemnifying Party.
7. INFORMATION BY HOLDER. Each Rightsholder of Registrable Shares
included in any registration shall furnish to the Company such information
regarding such holder and the distribution proposed by such holder as the
Company may reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this
Agreement.
8. EFFECTIVENESS. This Agreement shall become effective upon the
occurrence of the Closing under the Purchase Agreement. If the Purchase
Agreement shall be terminated without the occurrence of such a Closing, this
Agreement (and all of the rights and obligations of the parties hereunder) shall
terminate simultaneously.
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<PAGE> 8
9. TRANSFERS OF CERTAIN RIGHTS; ADDITIONAL RIGHTSHOLDERS.
(a) GENERAL. The rights granted to each Rightsholder pursuant
to the terms of this Agreement may be transferred by such Rightsholder to
another Rightsholder, to any affiliate of such Rightsholder, or to any member of
the immediate family of such Rightsholder, or any trust established for the
benefit of any of the foregoing; provided, however, that in the case of any
transfer referred to in this paragraph (a), the Company is given written notice
by the transferor at the time of such transfer stating the name and address of
the transferee and identifying the securities with respect to which such rights
are being assigned.
(b) TRANSFEREES. Any transferee to whom rights hereunder are
transferred shall, as a condition to such transfer, deliver to the Company a
written instrument by which such transferee agrees to be bound by the
obligations imposed upon Rightsholders under this Agreement to the same extent
as if such transferee were a party hereto.
(c) SUBSEQUENT TRANSFEREES. A transferee to whom rights are
transferred pursuant to this Section 9 may not again transfer such rights to any
other person or entity, other than as provided in (a) and (b) above.
10. NO ASSIGNMENT. Except as provided in Section 10 hereof, the
rights granted pursuant to this Agreement may not be transferred or assigned by
any Rightsholder.
11. AMENDMENTS. The provisions of this Agreement may be modified
or amended at any time and from time to time only by an agreement or consent in
writing executed by the Company and the holders of a majority of the Registrable
Shares then outstanding; provided, however, that the registration rights granted
under this Agreement may be amended only in a manner which affects all
Registrable Shares in the same fashion.
12. TERMINATION. All of the Company's obligations to register
Registrable Shares under this Agreement and to maintain the effectiveness of any
Registration Statement(s) shall terminate on the first anniversary of the
Closing Date.
13. NOTICES. All notices, requests, consents and other
communications required to be given pursuant to this Agreement shall be in
writing and shall be given by personal delivery or by certified or registered
mail, postage prepaid, return receipt requested. Notices shall be deemed
effective when personally delivered or three days after being so mailed, as the
case may be, to the parties at the following respective addresses or at such
other address of which either party shall notify the other in accordance with
this Section 13:
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<PAGE> 9
The Company: Security Dynamics Technologies, Inc.
20 Crosby Drive
Bedford, MA 01730
Attention: President
With a copy to: Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: Hal J. Leibowitz, Esq.
Any
Rightsholder: To the address set forth below
such Rightsholder's name on
SCHEDULE I hereto
With copies to: Gray Cary Ware & Freidenrich
A Professional Corporation
400 Hamilton Avenue
Palo Alto, CA 94301
Attention: Rod J. Howard, Esq.
Mendelson & Brown
1040 Marina Village Parkway - Suite B
Alameda, CA 94501
Attention: Richard A. Lyons, Esq.
14. ENTIRE AGREEMENT; GOVERNING LAW. This Agreement, together with the
Purchase Agreement, embodies the entire agreement and understanding between the
parties, and supersedes all prior agreements and understandings relating to the
subject matter hereof. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Massachusetts of the
United States, without giving effect to conflict of laws provisions.
15. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16. HEADINGS. The headings of the sections, subsections, and paragraphs
of this Agreement have been added for convenience only and shall not be deemed
to be a part hereof.
[Remainder of page intentionally left blank.]
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SECURITY DYNAMICS TECHNOLOGIES, INC.
/s/ Charles R. Stuckey, Jr.
------------------------------------
Name: Charles R. Stuckey, Jr.
Title: Chairman and CEO
STOCKHOLDERS:
/s/ Peter C. Loux
------------------------------------
Peter Loux
THE PETER C. LOUX CHARITABLE
REMAINDER UNITRUST
By: /s/ Peter C. Loux
--------------------------------
Peter C. Loux, sole trustee
/s/ Kris Loux
------------------------------------
Kris Loux
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SCHEDULE I
LIST OF STOCKHOLDERS
Peter Loux
945 Rollings Road #1
Burlingame, CA 94010
Peter C. Loux, as trustee of
The Peter C. Loux Charitable
Remainder Unitrust
945 Rollings Road #1
Burlingame, CA 94010
Kris Loux
483 Hoffman Avenue
San Francisco, CA 94114
<PAGE> 1
EXHIBIT 99
SECURITY DYNAMICS ACQUIRES DYNASOFT
Transaction Valued at Approximately $115 Million
Combined Entity Will Deliver Enterprise-Wide
Security Solutions to Customers
BEDFORD, Mass., July 15, 1997 - Security Dynamics Technologies, Inc. (NASDAQ:
SDTI), a leading provider of enterprise security solutions and RSA cryptographic
technology, today announced that it has acquired DynaSoft AB, a leading provider
of security solutions for protecting access to corporate information and
applications. Based in Stockholm, Sweden, DynaSoft offers a broad range of
security solutions through its flagship product family, BoKS, and sells in the
United States directly through its subsidiary and also through its recent
licensing agreements with Sun Microsystems and Hewlett-Packard. With the
addition of DynaSoft's expertise and technology, including its secure single
sign-on (SSSO) solutions, Security Dynamics is broadening its offerings to
provide customers with secure access to information wherever it resides in the
enterprise.
Security Dynamics issued or reserved for issuance approximately 2.7 million
shares of Common Stock in exchange for approximately 95% of the outstanding
shares and all of the outstanding options to acquire shares of DynaSoft.
Security Dynamics also paid approximately $6 million to certain stockholders of
DynaSoft in exchange for the remaining outstanding shares. Based on the closing
price of Security Dynamics on the Nasdaq National Market on July 14, 1997, the
transaction is valued at approximately $115 million. The transaction will be
accounted for as a pooling of interests.
"Acquiring DynaSoft is the next major step in our plan to deliver on our promise
of Enterprise Security Services (ESS) through acquisitions, strategic
partnerships and products we develop ourselves," said Charles R. Stuckey, Jr.,
chairman, president and CEO of Security Dynamics. "With the addition of
DynaSoft, Security Dynamics now has the de facto standard for strong
authentication through SecurID(R), the de facto standard for encryption through
RSA, and what we feel could become the standard for secure single sign-on
solutions through DynaSoft's BoKS family. No other security company is
delivering so many best-of-class security solutions to customers today."
"We believe that the synergies between Security Dynamics and DynaSoft are
tremendous. Our technology, products, people and distribution channels are
highly complementary," said Rolf Ljung, chairman of DynaSoft, AB. "There is a
natural affinity between Security Dynamics' core business of strong
authentication, and our application level access control and flexible secure
single sign-on solutions. Over the coming months, we will provide details on how
the Security Dynamics and DynaSoft
<PAGE> 2
technologies will be integrated and delivered to customers."
DynaSoft's flagship product family, BoKS, provides a comprehensive, flexible set
of security capabilities that are designed to allow companies to ensure that
corporate information is not compromised as they adopt less secure networks -
such as intranets, extranets or the Internet for remote access. These
capabilities include user authentication using SecurID, application-level access
control, privacy and integrity of communications, platform security and audit.
Together, these solutions allow customers to realize the end user benefit of
secure single sign-on (SSSO).
With SSSO, users can log on and authenticate to the network once, and then
access a wide range of network information resources without re-authenticating
at each resource - eliminating the need for memorizing multiple passwords. SSSO
authentication can be achieved several ways, including through the use of tokens
like Security Dynamics' SecurID technology, or through smartcards.
The addition of BoKS will enhance Security Dynamics' Enterprise Security
Services (ESS) strategy in many ways, including by providing expanded security
management, application-level access control and SSO solutions. Announced in
February, ESS is being designed to give companies enterprise-wide security
solutions that help them conduct business securely, protect their corporate
information assets, and facilitate business-to-business electronic commerce. ESS
will provide strong authentication using tokens and smartcards, as well as other
encryption-based security services, such as key management, privilege management
and enterprise-wide security administration.
DynaSoft sells in the United States directly through its subsidiary and also
through its OEM relationships with Sun Microsystems and Hewlett-Packard, both of
whom have recently licensed DynaSoft's BoKS technology and incorporated it into
their own respective security strategies.
"Security Dynamics has been a long-time partner of Sun Microsystems, bringing
proven user authentication solutions to our customers. Likewise, DynaSoft and
Sun have partnered to bring a complete set of systems, application-level
security, and secure single sign-on (SSSO) solutions to Sun's users," said John
McFarlane, vice president and general manager of the Network Software Group at
Sun Microsystems, Inc. "Sun is looking forward to working with the combined
entity in providing tightly integrated network security solutions to our
customers."
"At Hewlett-Packard, we have partnered with both Security Dynamics and
enterprise," said Fred Luiz, general manager of the Internet Security Division
of Hewlett-Packard. "DynaSoft is the leading provider of secure single-sign-on
solutions. Similarly, Security Dynamics leads the market in providing reliable
user authentication technology. The combination of these companies gives us the
opportunity to bring powerful security solutions for extending our customers'
businesses."
Security Dynamics will continue actively to seek strategic relationships with
companies
<PAGE> 3
that can help further Security Dynamics' charter of delivering enterprise-wide
solutions to customers.
ABOUT SECURITY DYNAMICS
Security Dynamics is a leading provider of security solutions for remote access
to enterprise networks. Security Dynamics' solutions help companies conduct
business securely, protect corporate information assets and facilitate
business-to-business electronic commerce. Security Dynamics' products employ
patent-protected SecurID token technology and ACE/Server(R) software or hardware
access control products to authenticate the identity of users accessing
networked or standalone computing resources. With 1.8 million users in 2,000
companies, Security Dynamics is the world leader in two-factor user
identification and authentication. RSA Data Security Inc., a wholly owned
subsidiary of Security Dynamics, is the world's brand name for cryptography,
with more than 80 million copies of RSA encryption and authentication
technologies installed and in use worldwide. Security Dynamics and RSA can be
found on the World Wide Web at http://www.securitydynamics.com/ and
http://www.rsa.com/, respectively.
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SecurID and ACE/Server are registered trademarks of Security Dynamics
Technologies, Inc. BoKS is a trademark of DynaSoft AB, Sweden. All other
products and service names mentioned herein are trademarks of their respective
owners.
Please note: this press release contains forward-looking statements relating to
the acquisition of DynaSoft, the integration of DynaSoft's BoKS technology with
Security Dynamics' existing product line, the development and introduction of
Security Dynamics' Enterprise Security Services, and the expected benefits
therefrom, and such statements involve a number of risks and uncertainties.
Among the important factors that could cause actual results to differ materially
from those indicated by such forward-looking statements are challenges
associated with the integration of DynaSoft and its BoKS technology, delays in
product development, undetected software errors or bugs, competitive pressures,
technical difficulties, market acceptance of the products, changes in customer
requirements and government regulations, general economic conditions and the
risk factors detailed from time to time in Security Dynamics' periodic reports
and registration statements filed with the Securities Exchange Commission,
including without limitation Security Dynamics' Registration statement on Form
S-4 (File No. 33-7265) filed on June 28, 1996.
