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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).
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"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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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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(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
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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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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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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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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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The Company: Security Dynamics Technologies, Inc.
00 Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: President
With a copy to: Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
Any
Rightsholder: To the address set forth below
such Rightsholder's name on
SCHEDULE I hereto
With copies to: Xxxx Xxxx Xxxx & Freidenrich
A Professional Corporation
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxx X. Xxxxxx, Esq.
Xxxxxxxxx & Xxxxx
0000 Xxxxxx Xxxxxxx Xxxxxxx - Xxxxx X
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, 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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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SECURITY DYNAMICS TECHNOLOGIES, INC.
/s/ Xxxxxxx X. Xxxxxxx, Xx.
------------------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
Title: Chairman and CEO
STOCKHOLDERS:
/s/ Xxxxx X. Xxxx
------------------------------------
Xxxxx Xxxx
THE XXXXX X. XXXX CHARITABLE
REMAINDER UNITRUST
By: /s/ Xxxxx X. Xxxx
--------------------------------
Xxxxx X. Xxxx, sole trustee
/s/ Xxxx Xxxx
------------------------------------
Xxxx Xxxx
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SCHEDULE I
LIST OF STOCKHOLDERS
Xxxxx Xxxx
000 Xxxxxxxx Xxxx #0
Xxxxxxxxxx, XX 00000
Xxxxx X. Xxxx, as trustee of
The Xxxxx X. Xxxx Charitable
Remainder Unitrust
000 Xxxxxxxx Xxxx #0
Xxxxxxxxxx, XX 00000
Xxxx Xxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
