1
Exhibit 2.1
SHARE PURCHASE AGREEMENT
between
the Equity Holders of COCOM A/S, Denmark
and
Cisco Systems, Inc., USA
2
CONTENTS:
---------
1. Definitions................................................. 4
2. The Share Exchange.......................................... 6
3. Representations and Warranties of the Sellers............... 10
4. Representations and Warranties of Cisco..................... 28
5. Tax-Exempted Exchange of Shares............................. 29
6. Pooling Accounting.......................................... 30
7. Conduct Prior to the Effective Time......................... 30
8. Additional Agreements....................................... 35
9. Conditions for Obligations of Cisco......................... 38
10. Conditions for Obligations of the Sellers.................. 40
11. Covenant of Principal Equity Holders....................... 41
12. Escrow and Indemnification................................. 41
13. Indemnification of the Sellers............................. 47
14. Miscellaneous.............................................. 48
15. Holding Period............................................. 52
16. Non-Competition............................................ 52
17. List of Appendices......................................... 56
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This AGREEMENT CONCERNING SHARE PURCHASE by way of EXCHANGE OF SHARES (the
"Agreement") is made on this 14th day of September 1999 between for the one part
Xxxxxx Xxxxxxxxxx ApS
Xxx.xx. ApS 196.232
Xxxx 00
Xxxxxxxxxx
XX-Xxxxxxxx
Xxxxxxx
and 2M Invest A/S
Reg. no. A/S 209.034
Xxxxxxxxxx 00
XX-0000 Xxxxxxxxx X
Xxxxxxx
and Gregers Kronborg ApS
Xxx.xx. ApS 230.795
Xxxxxxxxx 00
XX-0000 Xxxxxx
Xxxxxxx
and Slottsbacken Venture Capital KB
Xxx.xx. 969626-1313
Xxxxxxxxxxxxxxx 0
X-00000 Xxxxxxxxx
Xxxxxx
and DB U.K. Finance plc.
0 Xxxxxxxxxxx
Xxxxxx XX00 0XX
Xxxxxxx
(hereinafter "DB")
hereinafter collectively referred to as the "Principal Equity
Holders"
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and the following signatory minority shareholders:
Xxxxx Xxxxxxxxx
Claus X. Xxxxx
Horsefeather ApS
Vestergaard Holding ApS
Lars Froslev Xxxxxxx
Xxxxxx Hebsgaard
Xxxxx Xxxxxxxx
Xxxxxxxxx Xxxxxxxx
Xxxx X. Xxxxxxxxxxxxxx
Xxxxxx Xxxxxxxx
Xxxx Xxxxxxxxxxx
Xxx Xxxxx
Xxxx X. Xxxxxxxxxxx
Xxxx Xxxxxxx
Xxxxxxx Xxxxxx
Stig Xxxxxxxx
Xxxxx Xxxxxxx
Xxxxxxx Osted
Xxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxx
hereinafter collectively referred to as the "Minority
Shareholders"
and the following signatory holders of warrants in the Company:
Claus Xxxxx
Xxxx Froslev Xxxxxxx
Xxx Xxxxxx
Xxxxxx Xxxx Kronborg
Xxxx Xxxxxxx Xxxxxxxxxxxxxx
Per Xxxxxxxxxx
Xxxxxx Xxxxxxxxxx
Xxxx-Xxxx Xxxxx
Xxxx Xxxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxxx Osted
Xxxx Xxxxxxxxxxx
Xxxx Xxxxxxx
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Xxxxx Xxxxxxx
Xxxx Xxxxxx
Xxxxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxxx
Xxxx Xxxxx Xxxxxxxxx
Horsefeather ApS
Xxxxxxx Xxxxxx
Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxx
Claus X. Xxxxxx
Xxxx Xxxxxxx
Xxxxxxx Xxxxxx
Xxxxxxx Xxxxx
Kjaer og Kjaerulf A/S
Xxx Xxxxxxx Xxxxxxxxx
Vestergaard Holding ApS
Xxxx Xxxxxxxxx Jan Schionning
Slottsbacken Venture Capital KB
hereinafter collectively referred to as the "Warrantholders" and
upon an exercise of their warrants at Closing (as defined below),
forming part of the Minority Shareholders as at the Effective
Date (as defined below).
The Principal Equity Holders, the Minority Shareholders and the
Warrantholders hereinafter collectively referred to as the
"Sellers",
and for the
other part Cisco Systems, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000-00000
XXX
(hereinafter referred to as "Cisco")
concerning Cisco's acquisition of the equity capital of COCOM A/S, a company
incorporated in Denmark, xxx.xx. A/S 220.522 (hereinafter referred to as the
"Company"), by way of exchange of shares.
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WHEREAS Cisco wishes to acquire the equity capital of Company (the Company
Equity Capital (as defined below)) by way of an exchange of shares;
WHEREAS Cisco wishes to acquire Company as a strategic acquisition;
WHEREAS the Principal Equity Holders wish to sell their equity holdings of the
Company to Cisco on this basis and accept the remuneration provided therefor in
Cisco Shares (as defined below);
NOW THEREFORE, it is hereby agreed as follows:
1. Definitions
1.1 In this Agreement and in the Appendices hereto, save as otherwise
specifically stated and/or unless there be something in the
subject-matter or content inconsistent herewith:
(i) "Affiliate" shall mean any Principal Equity Holder, any member
of the Company's board of Directors (Bestyrelse) and
registered executive officers (Direktorer) as specified in the
Company's corporate summary contained in Appendix 4.
(ii) The "Cisco Shares" shall have the meaning given to it in
Section 2.1.
(iii) The "Cisco Share Price" means USD 69.11875.
(iv) A "Cisco Recapitalization" shall have the meaning given to it
in Section 2.3.4.
(v) The "Company" means COCOM A/S, a company incorporated in
Denmark with the Danish Companies' Registrar as company number
A/S 220.522 and domiciled at Xxxxxxxxxxxx 0, 0000 Xxxxxx,
Xxxxxxx.
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(vi) The "Company Equity Capital" means the entirety of the equity
interest in the Company and includes the entire issued share
capital of the Company at the date of the signing of this
Agreement, all granted warrants and the Convertible
Subordinated Loan, all of which are set out in the attached
Appendix 1. For the purposes of this present definition, such
warrants and the Convertible Subordinated Loan shall be
regarded as exercised and/or converted, respectively. At the
signing, the Company Share Capital has a nominal value of DKK
4,148,000.00, and the Company Equity Capital has a nominal
value of DKK 5,704,125. For the avoidance of doubt, the
Company Equity Capital shall not include warrants which
are issued but not yet granted.
(vii) The "Company Warrant Programme" means all documentation
relating to the Company's warrants programme as set forth in
the Company's Articles of Association and documentation
disclosed to Cisco, a summary of which is contained in the
attached Appendix 2.
(viii) The "Convertible Subordinated Loan" means the convertible
subordinated loan relating to a loan of DKK 21,000,000.00
given by DB to the Company with effect as of 21 May and 18
June, 1999, convertible into shares of the Company at a price
of 2100 (DKK 21.00 per share of nominally DKK 1.00).
(ix) The "Exchange Ratio" means the factor of 0,166577052.
(x) The "Shares" mean the entire share holdings of the Principal
Equity Holders and the Minority Shareholders of the Company's
common stock at Closing and such shares of Company's common
stock which are issued or will be issued upon the
Warrantholders' exercise at Closing of their warrants and DB's
conversion at Closing of the Convertible Subordinated Loan.
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2. The Share Exchange
2.1 SALE OF SHARES AND PURCHASE PRICE. Subject to the terms and conditions
of this Agreement, the Sellers will sell their portion of the Shares,
the Warrantholders will exercise their warrants and sell their portion
of the Shares, and DB will convert its Convertible Subordinated Loan
and sell its portion of the Shares to Cisco. It is agreed that the
purchase price for the entire Company Equity Capital shall be
950,197 shares of Cisco common stock
in writing nine hundred and fifty thousand one hundred and ninety
seven shares of Cisco common stock (the "Cisco Shares"), payable as
set forth herein. The purchase price shall be allocated to the Sellers
as set forth in Appendix 1.
2.2 CLOSING; EFFECTIVE DATE
2.2.1 EFFECTIVE DATE. The closing of the transaction contemplated hereby
(the "Closing"/the "Effective Date") shall take place on 29 September
1999. The Closing shall take place at the offices of the law firm of
Horten and Partners A/S, Ved Xxxxxxxx 00, Xxxxxxxxxx X, Xxxxxxx or at
such other location as the parties hereto agree.
2.2.2 TRANSACTIONS AT CLOSING. Closing shall include the following
transactions:
(i) The Board of Directors of the Company shall effectuate the
issuance of shares of Company stock relating to Subsections (ii)
and (iii) immediately below by making the decisions set forth in
the attached draft Minutes of Board Meeting, Appendix 10.
(ii) The Company shall present and deliver to Cisco an original
subscription list duly signed by the
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Board of Directors and all Warrantholders, according to which
the Warrantholders exercise their warrants as of the Effective
Date and other than Xx Xxx Xxxxxx in relation to whom the
provisions in question do not apply consent to an amendment of
Section 7 a) and b) on notice period and time of exercise, of
their Warrant Agreements.
(iii) The Company shall present and deliver to Cisco copies of DB's
written notice to the effect that the Convertible Subordinated
Loan is converted into shares of Company stock as of Closing.
(iv) The Warrantholders' payment upon exercise of the warrants,
DKK 7,522,500 shall be transferred to a client account of Cisco'
counsel in the name of the Company with Den Xxxxxx Xxxx,
Xxxxxxxxxxxxxxxxx 0, 0000 Xxxxxxxxx K, xxx.xx. 4180, account
number 4310 507 032.
(v) The Sellers shall deliver to Cisco:
(a) The share certificates representing the portion of the Shares
owned by the Principal Equity Holders and of the Minority
Shareholders as well as interim certificates representing the
portion of the Shares owned by the Warrantholders and DB, duly
endorsed for transfer to Cisco together with the original
Shareholders' Register.
(b) The signed Escrow Agreement in the form as attached hereto as
Appendix 9.
(c) Letters of resignation from the board from all members of the
Company's board of directors, which letters shall include
declarations to the effect that the board member in question
does not as of Closing have claims against the Company,
including without limitation claims for remuneration in cash or
in equity interest for the time the board member has served on
the board. For the
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avoidance of doubt, the board members do not by such declaration
waive future recourse claims against the Company as regards
claims arising from the period in which the board members have
served on the board of the Company.
(d) The certificate called for by Section 9.1 (iii) of this
Agreement.
(e) In the event of the Sellers not being able to deliver such
certificate as called for by Section 9.1 (iii) hereof, an
Addendum to the Disclosure Schedule, Appendix 3, shall be
delivered by the Sellers which Addendum shall specify any fact
which has as its consequence that the warranties and
representations set out in Section 3 are not true and correct as
of Closing and which has arisen or been discovered between
signing and Closing. A draft of such Addendum shall be delivered
to Cisco not later than 5 working days prior to Closing. If
Cisco chooses to close the transactions contemplated hereby, the
Disclosure Schedule shall, for purposes of Sections 3 and 12
hereof be deemed to include the contents of such Addendum.
(vi) Cisco shall deliver or cause to be delivered:
(a) Documentation to the effect that each Seller has or will as of
Closing obtain ownership of the portion of the Cisco Shares set
forth in Appendix 1, subject to the provisions of Section 12.1
and the Escrow Agreement.
(b) The certificate called for by Section 10.1 (iii) of this
Agreement.
(c) Documentation to the Sellers to the effect that each Seller's
proportion of the Cisco Shares that is going into the escrow
account is duly transferred to the escrow account in the
individual
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Seller's name, and are issued to or duly endorsed to that
individual Seller.
The Principal Equity Holders and Cisco may in agreement supplement or
amend the items of transaction that are to take place at Closing.
2.2.3 POST-CLOSING TRANSACTIONS. Cisco shall hold a general meeting of
shareholders of the Company to elect new members of the Company's
board of directors, and effect the filing with the Danish Companies'
Registrar of the documents required in relation to the Warrantholders'
exercise of their warrants into shares of Company common stock and
DB's conversion of the Convertible Subordinated Loan.
2.3 SHARE EXCHANGE
2.3.1 EXCHANGE OF SHARES OF COMPANY'S COMMON STOCK. At the Effective Date,
the Shares shall be assigned and transferred to Cisco in exchange for
that number of shares of Cisco Common Stock (Cisco Shares) that equals
that Seller's number of shares of Company's common stock with a par
value of DKK 1.00 multiplied by the Exchange Ratio, adjusted according
to the provisions of 2.3.4 if applicable.
2.3.2 THE CONVERTIBLE SUBORDINATED LOAN. DB agrees that the Convertible
Subordinated Loan shall be converted into shares of Company's common
stock at Closing and consequently such shares of Company's common
stock will become subject to the provisions of Section 2.3.1.
2.3.3 WARRANTS. The Warrantholders agree to exercise their warrants at
Closing and consequently become a Minority Shareholder upon Closing
and become subject to the provisions of Section 2.3.1.
2.3.4 ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be adjusted in
the event of any Cisco Recapitalisation, being it a stock split,
reverse split, stock dividend (including any dividend or distribution
of securities
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convertible into Cisco common stock), reorganization, recapitalization
or other like change with respect to Cisco common stock (a "Cisco
Recapitalisation") occurring after the date hereof and prior to the
Effective Date, so as to provide the Sellers and Cisco the same
economic effect as contemplated by this Agreement prior to such stock
split, reverse split, stock dividend, reorganization,
recapitalization, like change or increase.
2.3.5 FRACTIONAL SHARES. No fraction of a share of the Cisco Shares will be
issued by virtue of the exchange of shares as set forth in Section
2.3.1. The amount of Cisco Shares to be issued to any Seller who would
otherwise be entitled to a fraction of a share of the Cisco common
stock shall be rounded up to the nearest whole number of Shares.
2.3.6 EXEMPTION FROM REGISTRATION. The Cisco Shares to be issued hereunder
will be issued in a transaction exempt from registration under the
U.S. Securities Act of 1933, as amended by reason of either
Regulation S thereunder or Section 4(2) thereof. Cisco shall prepare
and file, as promptly as practicable, and, in any event, within 21
business days following the Effective Date, a registration statement
with the U.S. Securities and Exchange Commission (the "SEC") covering
the resale of such Cisco Shares issued pursuant to this Agreement, and
Cisco shall use commercially reasonable efforts to cause such
registration statement to become effective as promptly as practicable
after filing and to keep such registration statement effective until
one (1) year after the Effective Date.
3. Representations and Warranties of the Sellers
3.1 DEFINED TERMS RELATING TO WARRANTIES AND REPRESENTATIONS. In this
Agreement, any reference to a "Material Adverse Effect" with respect
to either Company or Cisco means any event, change or effect that is
materially adverse to the condition (financial or otherwise),
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properties, assets, liabilities, business, operations, results of
operations or prospects of such person and its subsidiaries, taken as
a whole, provided, however, that none of the following shall be deemed
by itself or by themselves, either alone or in combination, to
constitute a Material Adverse Effect on such person:
(a) any change in the market price or trading volume of such
person;
(b) with respect to Company, any adverse effect on the bookings,
revenues, gross margins or earnings of Company, or any delay
in or reduction or cancellation of orders of Company's
products, or any employee attrition, following execution of
this Agreement to the extent attributable to the announcement
of the execution of this Agreement and the transactions
contemplated hereby; or
(c) any change to the extent attributable to conditions affecting
the economy or industry of such person in general and not
specific to such person or its products, services or
technology, which conditions do not affect such person in a
materially disproportionate manner relative to other
participants in the economy or such industry, respectively.
In this Agreement, any reference to the Sellers' "knowledge" means the
knowledge of any Affiliate after diligent inquiry of the officers,
directors and other employees charged with senior administrative or
operational responsibility for such matters of the Company.
3.2 DISCLOSURES. Except as specifically disclosed in a document of even
date herewith and attached hereto as Appendix 3 (the "Disclosure
Schedule") and referring to the representations and warranties in this
Agreement by Subsection (e.g. 3.4, Capital Structure), the Sellers
represent and warrant to Cisco as set forth in Section 3.3 to 3.24
below. Cisco acknowledges receipt of the documentation specified in
the List of Documents Received by Cisco, Appendix 3.A. However any
information therein which renders the representations and warran-
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ties of this Section 3 untrue or incorrect shall not be deemed
disclosed unless information regarding such breach is set forth on the
Disclosure Schedule. Any information contained in the documentation
specified in Appendix 3.B which renders the representations and
warranties of this Section 3 untrue or incorrect shall be deemed
disclosed only if such information is obvious from the face of a
document specified in Appendix 3.B, without any such document being
read in conjunction with other documentation.
3.3 ORGANIZATION, STANDING AND POWER. The Company is a corporation duly
organized, validly existing and in good standing under the laws of
Denmark. The Company has the corporate power to own its properties and
to carry on its business as now being conducted and as currently
proposed to be conducted, and is duly qualified and in good standing
in each jurisdiction where the failure to be so qualified and in good
standing would have a Material Adverse Effect on the Company. The
Sellers have delivered a true and correct English translation of the
latest corporate summary (Sammenskrevet resume) of the Company from
the Danish Companies' Registrar, and of Company's presently registered
Articles of Association as amended to date, including the filing dated
11 August 1999, which are attached hereto as Appendix 4. The Company
is not in violation of any of the provisions of its corporate summary
or its Articles of Association or equivalent organizational documents.
The Company has no subsidiaries and Company does not directly or
indirectly own any equity interest in, or any interest convertible or
exchangeable or exercisable for, any equity interest in, any
corporation, partnership, joint venture or other business association
or entity.
3.4 CAPITAL STRUCTURE. As of the date hereof, the Company Equity Capital
is as appears from the attached Appendix 1. The shares, as listed in
Appendix 1, (consisting of 4,148,000 shares of Common Stock, DKK 1.00
par value), are all issued and outstanding, filed and registered
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with the Danish Companies' Registrar as of the close of business on 14
September 1999. As appears from Appendix 1 (cf. Appendix 2), the
Company has granted warrants (exercisable into 556,125 shares of
Company Common Stock, DKK 1.00 par value) and has obtained a
Convertible Subordinated Loan of which DKK 21,000,000 is outstanding,
convertible into 1,000,000 shares of Company Common Stock, DKK 1.00
par value. There are no other outstanding shares of capital stock or
voting securities and no outstanding commitments to issue any shares
of capital stock or voting securities. All issued shares of Company
Common Stock are duly authorized, validly issued, fully paid and
non-assessable and are free of any liens or encumbrances other than
any liens or encumbrances created by or imposed upon the holders
thereof, and are not subject to preemptive rights or rights of first
refusal created by statute, the charter documents of Company, or by
agreement, except the provision of the Company's Articles of
Association giving allowance for the protection of the pre-emptive
rights and rights of first refusal, etc., subject to the Shareholders'
Agreement dated 14 May 1999, attached hereto as Appendix 5, entered
into in connection with the Company obtaining the Convertible
Subordinated Loan, according to an Investment Agreement and a Loan
Agreement of 14 May 1999 with DB, attached hereto as Appendix 6.
None of the Company's shares are subject to stock purchase rights of
any nature. There are no other options, warrants, calls, rights,
commitments or agreements of any character to which the Company's
shareholders and/or the Company are a party or by which these are
bound, obligating Company to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of capital stock of Company or obligating Company
to grant, extend, accelerate the vesting of, change the price of, or
otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement. There are no other contracts, commitments or
agreements relating to voting, purchase or sale of Company's capital
stock
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(i) between or among Company and any of its stockholders and (ii) to
the knowledge of the Sellers, between or among any of Company's
stockholders. The terms of the Company Warrant Plans do not permit the
assumption of or substitution of warrants to purchase Cisco Common
Stock, without the consent or approval of the holders of such
warrants. True and complete copies of all agreements and instruments
relating to or issued under the Company Warrant Plans have been
delivered to Cisco and such agreements and instruments have not been
amended, modified or supplemented other than as specifically
contemplated by the provisions of this Agreement, and there are no
agreements to amend, modify or supplement such agreements or
instruments in any case from the form made available to Cisco, other
than as expresly permitted by this Agreement.
The Sellers are entitled to sell and transfer to Cisco the full legal
and beneficial ownership of their Shares, free from all liens,
options, charges, encumbrances, rights of pre-emption, rights of
pledge or any other third party rights on the terms of this Agreement
without the consent of any third party and no claim has been made by
any person to be entitled to any of the foregoing. Included within
Appendix 1 is a list of the Company's current shareholders, showing
the record name of each such shareholder and the number of shares held
by such shareholder.
3.5 AUTHORITY. The Sellers have all requisite corporate or other power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of the
Sellers. This Agreement has been duly executed and delivered by each
Seller, and constitutes the valid and binding obligation of each such
Seller, enforceable against them in accordance with its terms, except
as enforceability may be limited by bankruptcy and other laws
affecting the rights and remedies of creditors generally and general
principles of equity.
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The execution and delivery of this Agreement by such shareholders does
not, and the consummation of the transactions contemplated hereby will
not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a
right of termination, cancellation or acceleration of any obligation
or loss of any benefit under (i) any provision of the charter
documents of Company, (ii) any mortgage, lease, contract or other
agreement or instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Company or any of its properties or assets which would
have a Material Adverse Effect on the Company. No consent, approval,
order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other
governmental authority ("Governmental Entity") is required by or with
respect to Company or any of its shareholders in connection with the
execution and delivery of this Agreement, or the consummation of the
transactions contemplated hereby, except for (i) the filing of any
amendments to the Company's Articles of Association as a consequence
of the issuance of new shares as contemplated herein with the Danish
Companies' Registrar; (ii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be
required under applicable Danish securities laws and the securities
and/or other laws of any foreign country; (iii) such filings as may be
required under the Danish Antitrust law; and (iv) such other consents,
authorizations, filings, approvals and registrations which, if not
obtained or made, would not have a Material Adverse Effect on Company
and would not prevent, or materially alter or delay any of the
transactions contemplated by this Agreement.
3.6 FINANCIAL STATEMENTS. The Sellers have delivered to Cisco a true and
complete copy of the financial reports of Company, as of 31 December,
1998, accompanied by an audit report delivered by KPMG X. Xxxxxxxxx,
the Company's independent certified public accountants, to-
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gether with the balance sheet as at 30 June, 1999, (the "Company
Financial Statements"), which, together with prior financial reports
of the Company, are attached hereto as Appendix 7. The Company
Financial Statements were complete and correct in all material
respects as of their respective dates, complied as to form in all
material respects with applicable accounting requirements and have
been prepared in accordance with Danish generally accepted accounting
principles applied on a basis consistent throughout the periods
indicated and consistent with each other (except as may be indicated
in the notes thereto or, in the case of unaudited statements, as it
appears herein. The Company Financial Statements fairly present the
financial condition and operating results of Company at the dates and
during the periods indicated therein (subject, in the case of
unaudited statements, to normal, recurring year-end adjustments).
3.7 ABSENCE OF CERTAIN CHANGES. Since 31 December, 1998 (the "Company
Balance Sheet Date"), Company has conducted its business in the
ordinary course consistent with past practice and there has not
occurred:
(i) any change, event or condition (whether or not covered by
insurance) that has resulted in or would reasonably be
expected to result in a Material Adverse Effect to Company;
(ii) any acquisition, sale or transfer of any material asset of
Company;
(iii) any change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by
Company or any revaluation by Company's assets;
(iv) any declaration, setting aside, or payment of a dividend or
other distribution with respect to the shares of Company, or
any direct or indirect
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redemption, purchase or other acquisition by Company of any of
its shares of capital stock,;
(v) any amendment or change to the corporate summary or Articles
of Association of the Company other than as specified in
Appendix 4;
(vi) any increase in or modification of the compensation or
benefits payable or to become payable by Company to any of its
directors or employees;
(vii) any amendment or termination of, or default under or breach by
the Company of, any material contract to which the Company is
a party or by which it is bound which would have a Material
Adverse Effect; or
(viii) any agreements by the Company to do any of the acts
contemplated by clauses (i) through (vii) above.
3.8 ABSENCE OF UNDISCLOSED LIABILITIES. To the knowledge of the Sellers,
Company has no material obligations or liabilities of any nature
(matured or unmatured, fixed or contingent) other than
(i) those set forth or adequately provided for in the Balance
Sheet or in the related Notes to Financial Statements included
in Company's Annual Report for the period ended 31 December,
1998 (the "Company Balance Sheet"), or in the Company's
interim balance sheet as of June 30, 1999, a copy of which has
been delivered to Cisco,
(ii) those incurred in the ordinary course of business since the
date of the Company Balance Sheet and not required to be
included by generally accepted accounting principles to be
included in the interim balance sheet; and,
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(iii) those incurred in connection with the execution of this
Agreement.
3.9 LITIGATION. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any
agency, court or tribunal, foreign or domestic, or, to the knowledge
of the Sellers, threatened, against Company or any of its properties
or any of their respective officers or directors (in their capacities
as such), or to which the Company is a party. There is no judgment,
decree or order against Company, or any of their respective directors
or officers (in their capacities as such), that could prevent, enjoin,
alter or materially delay any of the transactions contemplated by this
Agreement, or that could reasonably be expected to have a Material
Adverse Effect on Company.
3.10 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement, judgment,
injunction, order or decree binding upon Company which has or
reasonably could be expected to have the effect of prohibiting or
materially impairing any business practice of Company, any acquisition
of property by Company or the conduct of business by Company.
3.11 GOVERNMENTAL AUTHORIZATION. Company has obtained any governmental
consent, license, permit, grant, or other authorization of a
Governmental Entity (i) pursuant to which Company currently operates
or holds any interest in any of its properties or (ii) that is
required for the operation of Company's business or the holding of any
such interest ((i) and (ii) herein collectively called "Company
Authorizations"), and all of such Company Authorizations are in full
force and effect, except where the failure to obtain or have any of
such Company Authorizations could not reasonably be expected to have a
Material Adverse Effect on Company.
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3.12 TITLE TO PROPERTY. Company has good and valid title to all of its
properties, interests in properties and assets, real and personal,
reflected in the Company Balance Sheet or acquired after the Company
Balance Sheet Date (except properties, interests in properties and
assets sold or otherwise disposed of since the Company Balance Sheet
Date in the ordinary course of business), or in the case of leased
properties and assets, valid leasehold interests in, free and clear of
all mortgages, liens, pledges, charges or encumbrances of any kind or
character, except (i) such imperfections of title, liens and easements
as do not and will not materially detract from or interfere with the
use of the properties subject thereto or affected thereby, or
otherwise materially impair business operations involving such
properties, and (ii) liens securing debt which is reflected on the
Company Balance Sheet. The plants, property and equipment of Company
and its subsidiaries that are used in the operations of their
businesses are in good operating condition and repair. All properties
used in the operations of Company are reflected in the Company Balance
Sheet to the extent generally accepted accounting principles require
the same to be reflected.
3.13 INTELLECTUAL PROPERTY.
(a) Company owns, or is licensed or otherwise possesses legally
enforceable rights to use all patents, trademarks, trade
names, service marks, domain names, database rights,
copyrights, and any applications therefor, maskworks, net
lists, schematics, technology, know-how, trade secrets,
inventory, ideas, algorithms, processes, computer software
programs or applications (in both source code and object code
form), and tangible or intangible proprietary information or
material ("Intellectual Property") that are used in the
business of Company as currently conducted. Company has not
(i) licensed any of its Intellectual Property in source
code form to any party;
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(ii) entered into any agreement requiring the Company to
license or otherwise provide future versions, upgrades
or enhancements of its Intellectual Property in source
code form; or
(iii) entered into any exclusive agreements relating to its
Intellectual Property.
No royalties or other continuing payment obligations are due
in respect of Third Party Intellectual Property Rights (as
defined below).
(b) The Disclosure Schedule lists (i) all patents and patent
applications, and all registered and unregistered trademarks,
trade names and service marks, registered copyrights and
maskworks included in the Intellectual Property owned by the
Company, including the jurisdictions in which each such
Intellectual Property right has been issued or registered or
in which any application for such issuance or registration has
been filed; (ii) all licenses, sublicenses or other agreements
as to which the Company is a party or pursuant to which the
Company is authorized to use any third party patents,
trademarks or copyrights, including software ("Third Party
Intellectual Property Rights") which are incorporated in, are,
or form a part of any product of Company; and (iii) all
licenses, sublicenses and other agreements as to which Company
is a party and pursuant to which any person other than the
Company is authorized to use any Intellectual Property.
(c) There is no unauthorized use, disclosure, infringement or
misappropriation of any Intellectual Property rights owned by
Company, or any Intellectual Property right of any third party
to the extent licensed by or through Company, by any third
party, including any employee or former employee of Company.
Company has not entered into any agreement to indemnify any
other person against
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any charge of infringement of any Intellectual Property owned
by the Company, other than indemnification provisions
contained in purchase orders, distribution agreements and
license agreements arising in the ordinary course of business,
copies of the forms of which have been made available to
Cisco.
(d) Company is not, and will not be, as a result of the execution
and delivery of this Agreement or the performance of its
obligations under this Agreement, in breach of any license,
sublicense or other agreement relating to the Intellectual
Property or Third Party Intellectual Property Rights.
(e) All patents, trademarks, service marks and copyrights held by
Company are valid and subsisting. Company (i) is not and has
not been subject to any suit, action or proceeding, or
received any notice or threat, which involves a claim of
infringement of any patents, trademarks, service marks,
copyrights or violation of any trade secret or other
intellectual property right of any third party and (ii) has
not brought any action, suit or proceeding for infringement of
Intellectual Property or breach of any license or agreement
involving Intellectual Property against any third party. The
manufacture, marketing, licensing or sale of Company's
products does not, except as set forth on the Disclosure
Schedule, infringe any patent, trademark, service xxxx,
copyright, trade secret or other intellectual property right
of any third party.
(f) Company has secured from all employees and consultants who
contributed to the creation or development of Intellectual
Property valid written assignments of the rights to such
contributions that Company does not already own by operation
of law.
(g) Company has taken all reasonably necessary and appropriate
measures to protect and preserve the
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confidentiality of all non-public Intellectual Property not
otherwise protected by patents, or patent applications or
copyright ("Confidential Information"). All use, disclosure or
appropriation of Confidential Information owned by Company by
or to a third party has been pursuant to the terms of a
written agreement between Company and such third party
pursuant to which the third party has undertaken to protect
and not disclose Confidential Information. All use, disclosure
or appropriation of Confidential Information not owned by
Company has been pursuant to the terms of a written agreement
between Company and the owner of such Confidential
Information, or is otherwise lawful.
3.14 TAXES. The Company has properly completed and timely filed all Tax
Returns required to be filed by it and has paid all Taxes shown
thereon to be due. The Company Financial Statements reflect any
accrued Taxes that have not been paid through the dates thereof. The
Company has no material liability for unpaid Taxes accruing after the
date of the latest Company Financial Statements, other than Taxes
arising in the ordinary course of its business. There is no material
claim for Taxes that is a lien against the property of the Company or
is being asserted against the Company. The Company has not been
notified and the Principals have no other knowledge that any audit of
any Tax Return of the Company is being conducted by a Tax Authority.
The ComCompany has not been and will, to the knowledge of the Sellers,
not be required to include any material adjustment in Taxable income
for any Tax period (or portion thereof) under any applicable Tax laws
as a result of transactions, events or accounting methods employed
prior to this Agreement. The Company has not filed any correspondence
to prevent the imposition of penalties with respect to any Tax
reporting position taken on any Tax Return. The Company has in its
possession receipts for any Taxes paid to Tax authorities. For
purposes of this Agreement, the following terms have the following
meanings: "Tax" (and, with correlative meaning, "Taxes"
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and "Taxable") means (i) any net income, alternative or add-on tax,
gross income, gross receipts, sales, use, transfer, franchise,
profits, license, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, environmental or windfall profit
tax, custom, duty or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with any
interest or any penalty, in addition to tax or additional amount
imposed by any governmental entity (a "Tax Authority") responsible for
the imposition of any such tax (domestic or foreign), (ii) any
liability for the payment of any amounts of the type described in (i)
as a result of being a member of an affiliated, consolidated, combined
or unitary group for any Taxable period, and (iii) any liability for
the payment of any amounts of the type described in (i) or (ii) as a
result of being a transferee of or successor to any person or as a
result of any express or implied obligation to indemnify any other
person. As used herein, "Tax Return" shall mean any return, statement,
report or form (including, without limitation, estimated tax returns
and reports, withholding tax returns and reports and information
reports and returns) required to be filed with respect to Taxes.
3.15 EMPLOYEES, CONSULTANTS AND DIRECTORS.
(a) The Disclosure Schedule lists all employees and executive
officers of the Company and a summary of their employment
terms as of the date of signing.
(b) Copies of all material general employee benefit plans and
arrangements (including, but not limited to, the bonus scheme
and the warrant programme) have been delivered to Cisco,
(c) each loan to a non-officer employee, consultant, executive
officer or director, and any stock option, stock purchase,
phantom stock, stock appreciation right, supplemental
retirement, severance, surplus sabbatical, medical, dental,
vision care, disability, employee relocation, cafeteria
benefit
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or dependent care, life insurance or accident insurance plans,
programs or arrangements have been delivered to Cisco,
(d) all bonus, Company paid pension, profit sharing, savings,
deferred compensation or incentive plans, programs or
arrangements have been delivered to Cisco,
(e) all other fringe or employee benefit plans, programs or
arrangements that apply to executive officers of Company and
that do not generally apply to all employees have been
delivered to Cisco in the form of the executive officers'
employment contracts,
(f) any current employment or executive compensation or severance
agreements, written or otherwise, relating to any present
employee, consultant or executive officer of Company are set
forth in the Disclosure Schedule, and there are no claims or
unfulfilled severance or compensation agreement towards former
employees or consultants of the Company, and
(g) none of the Employment Contracts promises or provides retiree
medical or other retiree welfare benefits to any person,
except as required by applicable law.
3.16 CERTAIN AGREEMENTS AFFECTED BY THE SHARE EXCHANGE. Neither the
execution and delivery of this Agreement nor the consummation of the
transaction contemplated hereby will (i) result in any payment
(including, without limitation, severance, contractual or statutory
redundancy pay, liquidated damages, damages for breach of contract or
wrongful dismissal, unemployment compensation, golden parachute, bonus
or otherwise) becoming due to any present or former officer, director,
employee or consultant of Company, (ii) materially increase or create
any benefits otherwise payable by Company or (iii) result in the
acceleration of the time of
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payment or vesting of any such benefits, except as contemplated in
this Agreement or set forth on the Disclosure Schedule.
3.17 EMPLOYEE MATTERS.
(a) Company is in compliance in all material respects with all
currently applicable laws and regulations and other
requirements having the force of law, respecting employment,
discrimination in employment, terms and conditions of
employment, wages, hours and occupational safety and health
and employment practices, and is not engaged in any unfair
labor practice.
(b) Company has withheld all amounts required by law or by
agreement to be withheld from the wages, salaries, and other
payments to officers, directors, employees and consultants;
and has, in relation to such persons, discharged its
obligations in full and is not liable for any past due wages,
salaries, fees, commissions, bonuses, overtime pay, pension
contributions, or any taxes or insurance contributions, nor
for penalties for failure to comply with any of the foregoing.
(c) Company is not liable for any material payment to any trust or
other fund or to any governmental or administrative authority,
with respect to unemployment compensation benefits, social
security or other benefits or obligations for employees (other
than routine payments to be made in the normal course of
business and consistent with past practice).
(d) There are no pending claims against Company for any material
amounts under any workers compensation plan or policy or for
long term disability that are not covered by insurance.
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(e) There are no controversies pending or, to the knowledge of the
Sellers, threatened, between Company and any of its employees
or consultants, which controversies have or could reasonably
be expected to result in an action, suit, proceeding, claim,
arbitration or investigation before any agency, court or
tribunal, foreign or domestic.
(f) Company is not a party to any collective bargaining agreement
or other labor union contract.
(g) To the knowledge of the Sellers, no employee or consultant of
Company is in violation of any term of any employment
contract, patent disclosure agreement, noncompetition
agreement, or any restrictive covenant to a former employer
relating to the right of any such individual to perform
services for Company because of the nature of the business
conducted or presently proposed to be conducted by Company or
to the use of trade secrets or proprietary information of
others.
(h) No employees of Company have given notice to Company, nor are
the Affiliates otherwise aware, that any such employee intends
to terminate his or her employment with Company.
(i) There are no existing service or other agreements or contracts
between the Company and any of its directors, officers,
employees or consultants that cannot be lawfully terminated by
no more than three months' notice without giving rise to any
claim for damages or compensation.
The above Sections 3.17 (a-i) are subject to such employee, consultant
or director matter not having a Materially Adverse Effect on the
Company.
3.18 INTERESTED PARTY TRANSACTIONS. Company is not indebted to any
director, officer, employee or consultant of Company (except for
amounts due as normal salaries and
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bonuses and in reimbursement of ordinary expenses), and no such person
is indebted to Company.
3.19 INSURANCE. The Company has made available to Cisco all policies of
insurance. There is no material claim pending under any of such
policies as to which coverage has been questioned, denied or disputed
by the underwriters of such policies. All premiums due and payable
under all such policies have been paid and Company is otherwise in
compliance in all material respects with the terms of such policies
and bonds. The Sellers have no knowledge of any threatened termination
of, or material premium increase with respect to, any of such
policies.
3.20 COMPLIANCE WITH LAWS. Company has complied with, is not in violation
of, and has not received any notices of violation with respect to, any
applicable law or regulation with respect to the conduct of its
business, or the ownership or operation of its business, the
infringement of which would have a Materially Adverse Effect on the
Company.
3.21 BROKERS' AND FINDERS' FEES. Company has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or investment bankers' fees or any similar
charges in connection with this Agreement or any transaction
contemplated hereby.
3.22 YEAR 2000. None of the products sold or licensed by the Company will
malfunction, will cease to function, will generate incorrect data or
will produce incorrect results and will not cause any of the above
with respect to the property or business of third parties using such
products or services when processing, providing or receiving (i)
date-related data from, into and between the 20th and 21st centuries,
or (ii) date-related data in connection with any valid date in the
20th and 21st centuries. The Company has not made any representations
or warranties specifically relating to the ability of any product or
service sold, licensed, rendered, or
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30
otherwise provided by the Company that such product or service is Year
2000 compliant.
3.23 REPRESENTATIONS AND DISCLOSURES COMPLETE. None of the representations,
warranties or disclosures made by the Sellers herein, including the
Disclosure Schedule attached hereto, with respect to the business,
operations, assets, results of operations and financial condition of
the Company and the transactions contemplated by this Agreement, when
read together in their entirety, contains or will contain on the
Effective Date any untrue statement of material fact, or omits or will
omit on the Effective Date to state any material fact relevant in the
evaluation of the Company or necessary in order to make the statements
contained herein or therein complete and correct.
3.24 NO IMPLIED WARRANTIES. The Sellers have not made any implied or
otherwise implicit warranties or representations.
4. Representations and Warranties of Cisco
Except as otherwise made publicly available prior to Closing,
including without limitation via publicized financial records, filings
with the SEC or the NASD or any other securities exchange, Cisco
represents and warrants to the Sellers as follows:
4.1 ORGANIZATION, STANDING AND POWER. Cisco is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Cisco has the corporate power to own its
properties and to carry on its business as now being conducted. Cisco
is not in violation of any of the provisions of its Articles of
Incorporation or Bylaws or equivalent organizational documents.
4.2 THE CISCO SHARES. The Cisco Shares to be issued pursuant to this
Agreement will be duly authorized, validly issued, fully paid,
non-assessable, and listed on the Nasdaq National Market.
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31
4.3 AUTHORITY. Cisco has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement, when duly executed and delivered,
will constitute the valid and binding obligation of Cisco enforceable
against Cisco in accordance with its terms.
4.4 FINANCIAL STATEMENTS. The financial statements of Cisco of the last
three fiscal years, including the notes thereto (the "Cisco Financial
Statements") were complete and correct in all material respects as of
their respective dates and were prepared in accordance with generally
accepted accounting principles applied on a basis consistent
throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of
unaudited statements included in Quarterly Reports on Form 10-Qs, as
permitted by Form 10-Q of the SEC). The Cisco Financial Statements
fairly present the consolidated financial condition and operating
results of Cisco at the dates and during the periods indicated therein
(subject, in the case of unaudited statements, to normal, recurring
year-end adjustments).
4.5 APPROVAL. The Board of Directors of Cisco has approved the transaction
contemplated hereby. No consent or approval of the shareholders of
Cisco is required or necessary for Cisco to enter into this Agreement
or to consummate the transactions contemplated hereby.
5. Tax-Exempted Exchange of Shares
Cisco is informed that the Sellers may receive approval from the
Danish tax authorities for the share transaction (Share Exchange) to
be approved as a tax-exempted share exchange. An application for such
exemption was prepared and submitted by the Sellers on 3 September
1999. If the approval stipulates as a condition precedent to
tax-exemption for the Sellers that Cisco shall, for a specified
period, give advance notice of any contemplated change with respect to
the facts that formed
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the basis for the approval, then Cisco will comply with such
obligation to give advance notice. Further, Cisco undertakes to comply
with the conditions imposed by the Danish tax authorities following
such advance notice.
6. Pooling Accounting
6.1 DISCLOSED INFORMATION ON SECURITIES TRANSACTIONS. Cisco has received
information as to securities transactions in the Company within the
last two (2) years, a summary of which is contained in Appendix 8.
Subject to Section 6.2 below, the Sellers do not undertake any
liability whatsoever and disclaim any liabilities as to the fact
whether the transaction as contemplated in this Agreement will qualify
as a pooling of interests transaction.
6.2 NO ACTIONS CONTRARY TO POOLING. Cisco has provided the Principal
Equity Holders and the Affiliates with the Memorandum of Pooling
Requirements, attached hereto as Appendix 13. The Principal Equity
Holders and the Affiliates shall in the period from the signing of
this Agreement and until the Closing refrain from acting contrary to
Memorandum of Pooling Requirements.
6.3 POOLING OPINION LETTER. The Sellers shall use all reasonable efforts
to cause to be delivered to the Sellers a letter of KPMG, the
Company's independent auditors, to the effect that they concur with
the assertions of the Company's management that no conditions exist
that represent violations of certain of the specific conditions that
must be met for pooling of interest accounting to be appropriate,
including (i) autonomy, (ii) independence, (iii) change in equity
interests, and (iv) treasury stock. A form Pooling Letter which is
acceptable to Cisco is attached hereto as Appendix 14.
7. Conduct Prior to the Effective Time
7.1 CONDUCT OF BUSINESS OF COMPANY. During the period from the date of
this Agreement and continuing until the Effective Date, the Principal
Equity Holders and the Com-
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pany agree (except to the extent consented to in writing by Cisco), to
carry on its business in the ordinary course in substantially the same
manner as heretofore conducted, to pay debts and Taxes when due
subject to good faith disputes over such debts or taxes, to pay or
perform other obligations when due, and to use all reasonable efforts
consistent with past practice and policies to preserve intact its
present business organizations, use commercially reasonable efforts
consistent with past practice to keep available the services of its
present officers and key employees and use commercially reasonable
efforts consistent with past practice to preserve its relationships
with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, to the end that its goodwill
and ongoing businesses shall be unimpaired at the Effective Date.
Company agrees to promptly notify Cisco of any material event or
occurrence not in the ordinary course of its business, and of any
event which could have a Material Adverse Effect.
7.2 RESTRICTIONS ON CONDUCT OF BUSINESS OF COMPANY. During the period from
the date of this Agreement and continuing until the Effective Date,
except as expressly contemplated by this Agreement, the Principal
Equity Holders and Company shall not do, cause or permit any of the
following to be done in respect of the Company, without the prior
written consent of Cisco:
(a) CHARTER DOCUMENTS. Cause or permit any amendments to its
Bylaws, except as caused by the exercise of warrants and/or
the conversion of the Convertible Subordinated Loan;
(b) DIVIDENDS. Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect
of any of its capital stock, except as provided for in this
Agreement, or split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in
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substitution for shares of its capital stock, or repurchase or
otherwise acquire, directly or indirectly, any shares of its
capital stock except from former employees, directors and
consultants in accordance with agreements providing for the
repurchase of shares in connection with any termination of
service to it;
(c) WARRANT PLANS, ETC. Take any action to accelerate, amend or
change the period of exercisability or vesting of warrants or
other rights granted under its warrant plan (other than as
permitted by this Agreement).
(d) MATERIAL CONTRACTS. Enter into any contract or commitment, or
violate, amend or otherwise modify or waive any of the terms
of any of its contracts, other than in the ordinary course of
business consistent with past practice;
(e) ISSUANCE OF SECURITIES. Issue, deliver or sell or authorize or
propose the issuance, delivery or sale of, or purchase or
propose the purchase of, any shares of its capital stock or
securities convertible into, or subscriptions, rights,
warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such
shares or other convertible securities, other than the
issuance of shares of its Common Stock pursuant to the
exercise of warrants and/or conversion of the Convertible
Subordinated Loan or other rights therefor outstanding as of
the date of this Agreement;
(f) INTELLECTUAL PROPERTY. Transfer to any person or entity any
rights to its Intellectual Property other than the transfer of
non-exclusive rights to its Intellectual Property in the
ordinary course of business consistent with past practice;
(g) EXCLUSIVE RIGHTS. Enter into or amend any agreements pursuant
to which any other party is granted
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35
exclusive marketing or other exclusive rights of any type or
scope with respect to any of its products or technology;
(h) DISPOSITIONS. Sell, lease, license or otherwise dispose of or
encumber any of its properties or assets which are material,
individually or in the aggregate, to its business, taken as a
whole, except in the ordinary course of business consistent
with past practice;
(i) GUARANTEES. Guarantee any indebtedness of third party or
guarantee any debt securities of others, except in the
ordinary course of business consistent with past practice;
(j) LEASES. Enter into any operating lease in excess of $50,000;
(k) PAYMENT OF OBLIGATIONS. Pay, discharge or satisfy in an amount
in excess of $10,000 in any one case, any claim, liability or
obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise) arising other than in the ordinary
course of business, other than the payment, discharge or
satisfaction of liabilities reflected or reserved against in
the Company Financial Statements or otherwise disclosed to
Cisco;
(l) CAPITAL EXPENDITURES. Make any capital expenditures, capital
additions or capital improvements except in the ordinary
course of business and consistent with past practice;
(m) INSURANCE. Materially reduce the amount of any material
insurance coverage provided by existing insurance policies;
(n) TERMINATION OR WAIVER. Terminate or waive any right of
substantial value, other than in the ordinary course of
business;
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36
(o) EMPLOYEE BENEFIT PLANS; NEW HIRES; PAY INCREASES. Adopt or
amend any general employee benefit or stock purchase or option
plan, or hire any new director level or management level
employee, pay any special bonus or special remuneration to any
employee or director, or increase the salaries or wage rates
of its employees other than in the ordinary course of business
consistent with past practice;
(p) SEVERANCE ARRANGEMENTS. Grant any severance or termination pay
(i) to any director or officer or (ii) to any other employee
except payments made pursuant to written agreements
outstanding on the date hereof other than in the ordinary
course of business consistent with past practice.
(q) LAWSUITS. Commence a lawsuit other than (i) for the routine
collection of bills, (ii) in such cases where it in good faith
determines that failure to commence suit would result in the
material impairment of a valuable aspect of its business,
provided that it consults with Cisco prior to the filing of
such a suit, or (iii) for a breach of this Agreement or any
Exhibits hereto;
(r) ACQUISITIONS. Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of
the assets of, or by any other manner, any business or any
corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or
agree to acquire any assets which are material, individually
or in the aggregate, to its business, taken as a whole, or
acquire or agree to acquire any equity securities of any
corporation, partnership, association or business
organization;
(s) TAXES. Other than in the ordinary course of business, make or
change any material election in respect of Taxes, adopt or
change any accounting method in respect of Taxes, file any
material Tax
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37
Return or any amendment to a material Tax Return, enter into
any closing agreement, settle any claim or assessment in
respect of Taxes;
(t) NOTICES. Company shall give all notices and other information
required to be given to the employees of Company under Danish
law in connection with the transactions provided for in this
Agreement;
(u) REVALUATION. Revalue any of its assets, including without
limitation writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course
of business;
8. Additional Agreements
8.1 ACCESS TO INFORMATION.
(a) Upon reasonable notice, the Principal Equity Holders shall
provide for Company affording Cisco and its accountants,
counsel and other representatives, reasonable access during
normal business hours during the period prior to the Effective
Date to (i) all of Company's properties, books, contracts,
commitments and records, and (ii) all other information
concerning the business, properties and personnel of Company
as Cisco may reasonably request. The Principal Equity Holders
agree to let Company provide to Cisco and its accountants,
counsel and other representatives copies of internal financial
statements promptly upon request. Cisco shall treat all such
information as confidential pursuant to the terms of the
Confidentiality Agreement.
(b) Subject to compliance with applicable law, from the date
hereof until the Effective Date, each of Cisco and Company
shall confer on a regular and frequent basis with one or more
representatives of the other party (being at the same time
representatives of the Principal Equity Holders) to report
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operational matters of materiality and the general status of
ongoing operations.
(c) No information or knowledge obtained in any investigation
pursuant to this Section 8.1 shall affect or be deemed to
modify any representation or warranty contained herein.
8.2 CONFIDENTIALITY. The parties acknowledge that each of Cisco and the
Principal Equity Holders on behalf of Company have previously executed
a non-disclosure agreement dated 11 June 1999 (the "Confidentiality
Agreement"), which Confidentiality Agreement shall continue in full
force and effect in accordance with its terms.
8.3 PUBLIC DISCLOSURE. Unless otherwise permitted by this Agreement, Cisco
and Company shall consult with each other before issuing any press
release or otherwise making any public statement or making any other
public (or non-confidential) disclosure (whether or not in response to
an inquiry) regarding the terms of this Agreement and the transactions
contemplated hereby, and neither shall issue any such press release or
make any such statement or disclosure without the prior approval of
the other (which approval shall not be unreasonably withheld), except
as may be required by law or by obligations pursuant to any listing
agreement with any national securities exchange or with the NASD, in
which case the party proposing to issue such press release or make
such public statement or disclosure shall use commercially reasonable
efforts to consult with the other party before issuing such press
release or making such public statement or disclosure.
8.4 CONSENTS; COOPERATION.
(a) Each of Cisco and the Principal Equity Holders and the Company
shall promptly apply for or otherwise seek, and use its commercially
reasonable efforts to obtain, all consents and approvals required to
be obtained by it for the consummation of this Agreement, including
such that might be required under HSR, and shall use
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its commercially reasonable efforts to obtain all necessary consents,
waivers and approvals under any of its material contracts in
connection with the consummation of this Agreement. The parties hereto
will consult and cooperate with one another, and consider in good
faith the views of one another, in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in
connection with proceedings relating to this Agreement.
8.5 LEGAL REQUIREMENTS. Each of Cisco, the Principal Equity Holders and
the Company will take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on them with
respect to the consummation of the transactions contemplated by this
Agreement and will promptly cooperate with and furnish information to
any party hereto necessary in connection with any such requirements
imposed upon such other party in connection with the consummation of
the transactions contemplated by this Agreement and will take all
reasonable actions necessary to obtain (and will cooperate with the
other parties hereto in obtaining) any consent, approval, order or
authorization of, or any registration, declaration or filing with, any
Governmental Entity or other person, required to be obtained or made
in connection with the taking of any action contemplated by this
Agreement.
8.6 BLUE SKY LAWS. Cisco shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions
which are applicable to the issuance of the Cisco Common Stock in
connection with this Share Exchange. The Principal Equity Holders
shall use commercially reasonable efforts to assist Cisco as may be
necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable in connection with the issuance of
Cisco Common Stock in connection with this Agreement
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8.7 LISTING OF ADDITIONAL SHARES. Prior to the Effective Date, Cisco shall
file with the Nasdaq National Market a Notification Form for Listing
of Additional Shares with respect to the shares to be issued in
connection with this Agreement.
8.8 COMMERCIALLY REASONABLE EFFORTS AND FURTHER ASSURANCES. Each of the
Principal Equity Holders on the one hand and Cisco on the other hand
shall use its commercially reasonable efforts to effectuate the
transactions contemplated hereby and to fulfil and cause to be
fulfilled the conditions to closing under this Agreement. Each party
hereto, at the reasonable request of another party hereto, shall
execute and deliver such other instruments and do and perform such
other acts and things as may be necessary or desirable for effecting
completely the consummation of this Agreement and the transactions
contemplated hereby.
9. Conditions for Obligations of Cisco
9.1 CLOSING. Cisco's obligation to acquire the Shares at Closing is, at
the option of Cisco, which may waive any such conditions, subject to
the fulfilment on or prior to the Closing Date of the following
conditions:
(i) REPRESENTATIONS AND WARRANTIES CORRECT. The representations
and warranties made by the Principal Equity Holders in Section
3 hereof shall be true and correct as of the Effective Date as
though such representations and warranties were made on and as
of such time, except to the extent that the cumulative effect
of any failure of such warranties and representations to be
true and correct as of the Effective Date does not have a
Material Adverse Effect on the Company and except for failures
occurring in the ordinary course of the Company's business.
(ii) COVENANTS. All covenants, agreements and conditions contained
in this Agreement to be per-
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formed by the Sellers on or prior to the Effective Date
shall have been performed or complied with in all material
respects.
(iii) CERTIFICATE OF PRINCIPAL EQUITY HOLDERS. Cisco shall have been
provided with a certificate executed on behalf of each
Principal Equity Holders by its President and its Chief
Financial Officer certifying that the conditions set forth in
Section 9.1(i) and (ii) shall have been fulfilled.
(iv) NO ORDER PENDING. There shall not at Closing be in effect any
order enjoining or restraining the transactions contemplated
by this Agreement.
(v) NO LAW PROHIBITING OR RESTRICTING SUCH SALE. There shall not
be in effect any law, rule or regulation prohibiting or
restricting the sale of the Shares or other transactions
contemplated herein, or requiring any consent or approval of
any person which shall not have been obtained to transfer the
Shares. For the avoidance of doubt, laws, rules or regulations
relating to whether the Company qualifies for
pooling-of-interests accounting in its business combination
with Cisco shall not be deemed laws, rules or regulations
prohibiting or restricting the sale of the Shares.
(vi) KEY EMPLOYEES. The following key employees of the Company
shall have agreed to employment agreements on the basis of the
template attached hereto as Appendix 12:
- Xxxxxx Xxxxxxxxxx
- Gregers Kronborg
- Xxx Xxxxxx
- Xxxx Xxxxxxxxxxxxxx
- Xxxxx Xxxxxx
- Xxxxxxxxx Xxxxxxxx, and
- Xxxxxx Xxxxxxxx.
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(vii) TAX TREATMENT. Cisco shall have received, reviewed and found
that nothing contained in the tax approval to be obtained by
the Sellers, see Section 5 above, is, in the opinion of Cisco,
materially adverse for Cisco.
10. Conditions for Obligations of the Sellers
10.1 CLOSING. The Sellers' obligation to sell the Shares at Closing is, at
the option of the Sellers, which may waive any such conditions,
subject to the fulfilment on or prior to the Closing Date of the
following conditions:
(i) REPRESENTATIONS AND WARRANTIES CORRECT. The representations
and warranties made by Cisco in Section 4 hereof shall be true
and correct as of the Effective Date as though such
representations and warranties were made on and as of such
time.
(ii) COVENANTS. All covenants, agreements and conditions contained
in this Agreement to be performed by Cisco on or prior to the
Effective Date shall have been performed or complied with in
all material respects.
(iii) CERTIFICATE OF CISCO. Company shall have been provided with a
certificate executed on behalf of Cisco by an individual
authorized to sign for Cisco certifying that the condition set
forth in Section 10.1(i) and (ii) shall have been fulfilled.
(iv) NO ORDER PENDING. There shall not at Closing be in effect any
order enjoining or restraining the transactions contemplated
by this Agreement.
(v) NO LAW PROHIBITING OR RESTRICTING SUCH SALE. There shall not
be in effect any law, rule or regulation prohibiting or
restricting the sale
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of the shares of Company's Common Stock or other transactions
contemplated herein, or requiring any consent or approval of
any person which shall not have been obtained to issue the
shares of Cisco Common Stock (the Cisco Shares).
(vi) LISTING OF ADDITIONAL SHARES. The filing with the Nasdaq
National Market of a Notification Form for Listing of
Additional Shares with respect to the shares of Cisco Common
Stock issuable upon closing in exchange of the Company Common
Stock shall have been made.
(vii) TAX TREATMENT. The Sellers shall have received the applicable
approval for tax-exemption as an exchange of shares, see
Section 5 above.
11. Covenant of Principal Equity Holders
11.1 The Principal Equity Holders covenant and agree that the Principal
Equity Holders will procure the waiver by any Minority Shareholder or
Warrantholder of applicable preemtpive rights, if any, relating to the
Shares under any Shareholders' Agreement or the like thereof.
11.2 By signing this Agreement, each Seller recognizes in relation to
Cisco, the Company and the other Sellers that the Company Equity
Capital is as appears from Appendix 1, and that the Cisco Shares shall
be distributed between the Sellers as set forth in Appendix 1.
12. Escrow and Indemnification
12.1 ESCROW FUND. At Closing, Cisco shall deposit pursuant to the Escrow
Agreement ten (10) percent of the Cisco Shares, exclusive of the
portion of the Cisco Shares relating to the Company's treasury stock,
with State Street Bank & Trust (or another institution selected by the
Principal Equity Holders and Cisco) (the "Escrow Agent"), such deposit
together with interest and other income and proceeds thereon to
constitute the "Escrow Fund" and to be governed by the terms set forth
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herein and in the Escrow Agreement. Each of the Sellers agrees to be
bound by the terms of the Escrow Agreement. The Escrow Fund shall be
available to compensate Cisco pursuant to the indemnification
obligations of the Sellers.
12.2 INDEMNIFICATION.
(a) Subject to the limitations set forth in this Section 12, the
Sellers will, on a pro rata basis in relation to each Seller's
proportion of the Company Equity Capital as set forth in Appendix 1,
indemnify and hold harmless Cisco and its officers, directors, agents
and employees, and each person, if any, who controls or may control
Cisco within the meaning of the Securities Act (hereinafter referred
to individually as an "Indemnified Person" and collectively as
"Indemnified Persons") from and against any and all losses, costs,
damages, liabilities and expenses arising from claims, demands,
actions, causes of action, including, without limitation, reasonable
legal fees, (collectively, "Damages") arising out of any
misrepresentation or breach of, or default in connection with, any of
the representations, warranties, covenants and agreements given or
made by the Sellers in this Agreement. Cisco will notify the
Shareholders' Agent in accordance with Section 12.5 as soon as is
reasonably practical with respect to each event or circumstance that
gives rise to Damages that are subject to indemnification hereunder.
The Escrow Fund shall be security for this indemnity obligation
subject to the limitations in this Agreement.
(b) Cisco and the Sellers each acknowledge that such Damages, if any,
would relate to unresolved contingencies existing at the Effective
Date, which if resolved at the Effective Time would have led to a
reduction in the total number of shares Cisco would have agreed to
issue in connection with the share exchange.
(c) After Closing, recovery from the Escrow Fund shall be Cisco's
exclusive remedy for any breach by the Sellers hereof or Damages
described in Section 12.2(a);
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provided, however, that (i) in the event of any willful
misrepresentation, any willful breach or any fraudulent conduct by any
Seller, all Sellers shall be liable on a pro rata basis up and until
their pro rata share, as set forth in Appendix 1, of the cash value of
the Cisco Shares at the signing hereof; and (ii) nothing herein shall
limit the liability of a Seller who has acted fraudulently.
(d) If the transaction contemplated hereby does not close due to any
negligence of any one Seller, the Sellers shall on a pro rata basis be
liable towards Cisco up to an amount of USD 6,567,500, provided that
the liability of a Seller shall not be limited if such Seller has
acted fraudulently or such Seller has transferred or assigned rights
to any third party in his portion of the Shares after signing.
12.3 INDEMNITY THRESHOLD AND CAP. Cisco may not receive any Cisco Shares
from the Escrow Fund unless and until an Officer's Certificate or
Certificates (as defined in Section 12.5 below), identifying Damages
the aggregate amount of which exceeds USD 75,000 (the "Indemnity
Threshold") has been delivered to the Escrow Agent as provided in
Section 12.5 below and such amount is determined pursuant to this
Section 12 to be payable, in either which case Cisco shall receive
Cisco Shares equal in value to the full amount of Damages. In
determining the amount of any Damage attributable to a specific
breach, if the representation, warranty or covenant in question
contains a materiality standard and it is determined that the specific
event is in fact material, then the materiality standard contained
therein shall be disregarded and the full amount of the Damages
attributable to such breach shall be subject to the procedures set
forth in this Section 12.
12.4 ESCROW PERIOD. The Escrow Period shall terminate (i) for those matters
that are not expected to be encountered and resolved in the audit of
Cisco's financial statements for its fiscal year because of
materiality considerations or otherwise, at the one
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year anniversary of the Effective Date or (ii) for all other matters
at the earlier of the one year anniversary of the Effective Date or
the issuance of the audited consolidated financial statements of Cisco
for its fiscal year which include the results of the Company;
provided, however, that a portion of the Escrow Fund, which is
necessary to satisfy any unsatisfied claims specified in any Officer's
Certificate theretofore delivered to the Escrow Agent prior to
termination of the Escrow Period with respect to facts and
circumstances existing prior to expiration of the Escrow Period, shall
remain in the Escrow Fund until such claims have been resolved. Cisco
shall deliver to the Escrow Agent a certificate specifying the
Effective Date.
12.5 CLAIMS UPON ESCROW FUND. Upon receipt by the Escrow Agent on or before
the last day of the Escrow Period set out in Section 12.4 above of a
certificate signed by any officer of Cisco (an "Officer's
Certificate") (i) stating that, a claim under this present Section 12
exists; and (ii) specifying in reasonable detail the individual items
of such claim as well as the nature of the misrepresentation, breach
of warranty or other action or omission on behalf of the Sellers that
gave rise to the claim, the Escrow Agent shall, subject to Section
12.6 and 12.7 below, deliver to Cisco out of the Escrow Fund, as
promptly as practicable, cash or other assets held in the Escrow Fund
having a value equal to the claim made. Any amounts paid out of the
Escrow Fund to Cisco shall constitute a reduction of the consideration
paid to the Sellers for the Company Equity Capital.
12.6 OBJECTIONS TO CLAIMS. At the time of delivery of any Officer's
Certificate to the Escrow Agent, a duplicate copy of such Officer's
Certificate shall be delivered to the Shareholders' Agent (defined in
Section 12.8 below) and for a period of forty-five (45) days after
such delivery to the Escrow Agent of such Officer's Certificate, the
Escrow Agent shall make no delivery of Cisco Common Stock pursuant to
Section 12.5 hereof un-
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less the Escrow Agent shall have received written authorization from
the Shareholders' Agent to make such delivery. After the expiration of
such forty-five (45) day period, the Escrow Agent shall make delivery
of Cisco Shares or other funds then in the Escrow Fund in accordance
with Section 12.5 hereof, provided that no such payment or delivery
may be made if the Shareholders' Agent shall object in a written
statement to the claim made in the Officer's Certificate, and such
statement shall have been delivered to the Escrow Agent and to Cisco
prior to the expiration of such forty-five (45) day period. Any such
objection by the Shareholders' Agent need not include a specification
of the reasons for the objection to be considered timely received.
12.7 RESOLUTION OF CONFLICTS; ARBITRATION.
(a) In case the Shareholders' Agent shall so object in writing to any
claim or claims by Cisco made in any Officer's Certificate, Cisco
shall have forty-five (45) days after receipt by the Escrow Agent of
an objection by the Shareholders' Agent to respond in a written
statement to the objection of the Shareholders' Agent. If after such
forty-five (45) day period there remains a dispute as to any claims,
the Shareholders' Agent and Cisco shall attempt in good faith for
sixty (60) days to agree upon the rights of the respective parties
with respect to each of such claims. If the Shareholders' Agent and
Cisco should so agree, a memorandum setting forth such agreement shall
be prepared and signed by both parties and shall be furnished to the
Escrow Agent. The Escrow Agent shall be entitled to rely on any such
memorandum and shall distribute Cisco Shares or other funds from the
Escrow Fund in accordance with the terms thereof.
(b) If no such agreement can be reached after good faith negotiation,
either Cisco or the Sellers may refer the issue to arbitrations in
accordance with Section 14.3 below.
12.8 SHAREHOLDERS' AGENT.
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(a) 2M Invest A/S shall be constituted and appointed as agent
("Shareholders' Agent") for and on behalf of the Sellers to give and
receive notices and communications, to authorize delivery to Cisco
from the Escrow Fund in satisfaction of claims by Cisco, to object to
such deliveries, to agree to, negotiate, enter into settlements and
compromises of, and demand arbitration and comply with orders of
courts and awards of arbitrators with respect to such claims, and to
take all actions necessary or appropriate in the judgment of the
Shareholders' Agent for the accomplishment of the foregoing. Such
agency may be changed by the holders of a majority in interest of the
Escrow Fund from time to time upon not less than ten (10) days' prior
written notice to Cisco. No bond shall be required of the
Shareholders' Agent, and the Shareholders' Agent shall receive no
compensation for his services. Notices or communications to or from
the Shareholders' Agent shall constitute notice to or from each of the
Sellers. (b) The Shareholders' Agent shall not be liable for any act
done or omitted hereunder as Shareholders' Agent while acting in good
faith and in the exercise of reasonable judgment, and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence
of such good faith. The Principal Equity Holders shall severally
indemnify the Shareholders' Agent and hold him harmless against any
loss, liability or expense incurred without gross negligence or bad
faith on the part of the Shareholders' Agent and arising out of or in
connection with the acceptance or administration of his duties
hereunder.
12.9 ACTIONS OF THE SHAREHOLDERS' AGENT. A decision, act, consent or
instruction of the Shareholders' Agent shall constitute a decision of
all Sellers and shall be final, binding and conclusive upon each
Seller, and the Escrow Agent and Cisco may rely upon any decision,
act, consent or instruction of the Shareholders' Agent as being the
decision, act, consent or instruction of each and every such Seller.
The Escrow Agent and Cisco are hereby relieved from any liability to
any person for
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any acts done by them in accordance with such decision, act, consent
or instruction of the Shareholders' Agent.
12.10 THIRD-PARTY CLAIMS. In the event Cisco becomes aware of a third-party
claim which Cisco believes may result in a demand against the Escrow
Fund, Cisco shall promptly notify the Shareholders' Agent of such
claim, and the Shareholders' Agent shall be entitled, at the Sellers'
expense, to participate in any defense of such claim. Cisco shall have
the right in its sole discretion to settle any such claim; provided,
however, that Cisco may not effect the settlement of any such claim
without the consent of the Shareholders' Agent, which consent shall
not be unreasonably withheld. In the event that the Shareholders'
Agent has consented to any such settlement, the Shareholders' Agent
shall have no power or authority to object under Section 12.6 or any
other provision of this Section 12 to the amount of any claim by Cisco
against the Escrow Fund for indemnity with respect to such settlement.
13. Indemnification of the Sellers
13.1 INDEMNITY OBLIGATION. Cisco will indemnify and hold harmless each
Seller and its officers, directors, agents and employees and each
person, who controls or may control any Seller (hereinafter referred
to individually as an "Indemnified Person" or collectively as
"Indemnified Persons") from and against any and all losses, costs,
damages, liabilities and expenses arising from claims, demands,
actions, causes of action, including, without limitation, reasonable
legal fees, arising out of any misrepresentation or breach of, or
default in connection with, any of the representations, warranties,
covenants and agreements given or made by Cisco in this Agreement. The
Shareholders' Agent shall notify Cisco as soon as is reasonably
practical with respect to each event or circumstance that gives rise
to a claim against Cisco hereunder.
13.2 INDEMNITY THRESHOLD AND CAP. The Sellers shall not be entitled to
indemnification unless and until the Share-
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holders' Agent has presented a claim in writing to Cisco identifying
damages the aggregate amount of which exceeds USD 75,000 (the
"Indemnity Threshold") and either Cisco agrees that such amount is
payable, or an arbitration award to the effect that such amount is
payable has been delivered, in either which case the Sellers shall be
indemnified in the full amount of damages. In determining the amount
of any damage attributable to a specific breach, if the
representation, warranty or covenant in question contains a
materiality standard and it is determined that the specific event is
in fact material, then the materiality standard contained therein
shall be disregarded and the full amount of the damages attributable
to such breach shall be subject to the procedures set forth in this
Section 13. If the transactions contemplated by this Agreement are
consummated, the entire liability of Cisco hereunder shall be limited
to the amount of USD 6,567,500, absent any fraud or willful misconduct
on the part of Cisco.
13.3 INDEMNITY PERIOD. The period in which Cisco shall be under an
obligation to indemnify the Sellers shall terminate (i) for those
matters that are not expected to be encountered and resolved in the
audit of Cisco's financial statements for its fiscal year because of
materiality considerations or otherwise, at the one year anniversary
of the Effective Date or (ii) for all other matters at the earlier of
the one year anniversary of the Effective Date or the issuance of the
audited consolidated financial statements of Cisco for its fiscal year
which include the results of the Company, unless Cisco has been
presented with a written claim from the Shareholders' Agent pursuant
to Section 13.2 above prior to such time, in which event Cisco's
obligation to indemnify the Sellers shall survive the expiry of the
indemnity period with respect to the claims specified in the
Shareholders' Agents' claim.
14. Miscellaneous
14.1 LOANS AND GUARANTEES GRANTED BY 2M INVEST A/S. Cisco is informed of
the obligations of the Company under a Loan
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Agreement between 2M Invest A/S and the Company dated 28 August 1998
and 2M Invest A/S' guarantee obligations in relation to the Company's
debts. Provided that the transactions contemplated hereby are closed,
Cisco undertakes to ensure that the said loan by 2M Invest A/S is
repaid, in Cisco's discretion when due or before the due date, and
that 2M Invest A/S is discharged of their obligations under the said
guarantee obligations.
14.2 GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of Denmark, without reference to conflict of
laws principles.
14.3 ARBITRATION. Any dispute or claim between the parties under this
Agreement shall be finally settled by binding arbitration in
accordance with the Rules of Procedure of the Danish Institute of
Arbitration (Copenhagen Arbitration). For the purposes of this Section
14.2, the Sellers shall be deemed to be one party. The Arbitration
Tribunal shall be composed of three arbitrators. Each party shall
appoint one arbitrator and the Arbitration Institute shall appoint a
third arbitrator who shall chair the Tribunal. If a party has not
appointed an arbitrator within thirty (30) days of having requested or
received notice of the arbitration, such arbitrator shall be appointed
by the Arbitration Institute. The place of arbitration shall be
Copenhagen. The language of the arbitration shall be English.
14.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and assigns. This Agreement may not be assigned by a party
without the prior written consent of the other party which shall not
be unreasonably withheld.
14.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement and any other documents
delivered pursuant hereto constitute the full and entire understanding
and agreement between the Sellers and Cisco with regard to the subject
matter hereof and thereof and supersedes all prior agreements and
understandings among the parties or one or more
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Principal Shareholders and Cisco relating to the subject matter
hereof. Neither this Agreement nor any term hereof may by amended,
waived, discharged or terminated other than by a written instrument
signed by all parties to any such amendment.
14.6 NOTICES AND DATES. Any notice or other communication given under this
Agreement shall be sufficient if in writing and sent by registered
mail, return receipt requested, postage prepaid to the below
addresses.
To Cisco:
Cisco Systems, Inc.
000 Xxxx Xxxxxx Xxxxx, Xxxxxxxx 00
Xxx Xxxx, XX 00000-0000
XXX
Attention: Xxxxxx X. Xxxxxx, Director
With copies to:
Xxxxxxx, Xxxx and Xxxx
Xxxxxxxxx Xxxxx
00 Xxxxxxxxxxx
Xxxxxx X0X 0XX
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
and
Kromann & Xxxxxx
Xxxxxxxxxxxxx 00
0000 Xxxxxxxxx X
Xxxxxxx
Attention: Xxx Xxxxxxx Xxxxxxxxx, Esq.
To Shareholders' Agent on behalf of the Sellers:
2M Invest A/S
Xxxxxxxxxx 00
0000 Xxxxxxxxx X
Xxxxxxx
Attention: Xxxxxxx Xxxxxxxxx, Chairman and CEO
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With a copy to:
Horten & Partners A/S
Ved Xxxxxxxx 00
0000 Xxxxxxxxx X
Xxxxxxx
Attention: Xxxxx X. Loft, Esq.
All such notices and communications shall be effective when received
by the addressee.
14.7 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or
invalidated. The parties shall consult with each other to replace the
non-binding provisions with other provisions that are binding, in such
a way that the new provisions differ as little as possible from the
non-binding provisions, taking into account the object and the purpose
of this Agreement.
14.8 COSTS AND EXPENSES. The costs and expenses incurred on behalf of the
Sellers in connection with the drafting and execution of this
Agreement shall be borne by the Principal Equity Holders in proportion
to their respective equity holdings in the Company prior to signing.
Cisco shall pay its own costs and expenses incurred in connection
herewith.
14.9 DANISH DUTIES. Danish share transfer duty shall, with respect to the
transfer from each Seller, if applicable, be borne by that Seller.
14.10 NO THIRD PARTY RIGHTS. Nothing in this Agreement shall create or be
deemed to create any rights in any person or entity not a party to
this Agreement.
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14.11 REMEDIES CUMULATIVE. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will de deemed
cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a
party of any one remedy will not preclude the exercise of any other
remedy.
14.12 EFFECT. This Agreement shall become binding and effective only if and
then as from the time of signature hereto by on the one side Cisco and
on the other side all Principal Equity Holders and the last Minority
Shareholder or Warrantholder to sign with the effect that the Sellers
that are signatories hereto represent 95% or more of the Company
Equity Capital.
15. Holding Period
At the signing hereof each Affiliate shall sign an Affiliate
Agreement, a form of which is attached as Appendix 11, which will
include an obligation upon the Affiliate not to trade in the Cisco
Shares before the second trading day after the day that Cisco
publishes financial results covering at least thirty (30) days of
combined operations of Cisco and the Company.
16. Non-Competition
16.1 XXXXXX XXXXXXXXXX. As an integral part of the consideration for the
Cisco Shares paid to his wholly-owned holding company, Xxxxxx
Xxxxxxxxxx agrees and undertakes as follows:
During a period which will end on the second (2nd) anniversary date of
the Effective Date, Xxxxxx Xxxxxxxxxx will not directly or indirectly
own, manage, operate, join, control, participate in, invest in, or
otherwise be connected in any manner with, whether as an officer,
director, employee, partner, investor or otherwise, any entity, other
than the Company or Cisco, which is engaged in any business which
competes with the business of Cisco and/or the Company.
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55
During a period which will end on the fifth (5th) anniversary date of
the Effective Date, Xxxxxx Xxxxxxxxxx will not directly or indirectly
(i) own, manage, operate, join, control, participate in, invest in, or
otherwise be connected in any manner with, whether as an officer,
director, employee, partner, investor or otherwise, any entity, other
than the Company or Cisco, which is engaged in any business which
competes with the business of the Company as of the Effective Date; or
(ii) for himself, or on behalf of any other entity, call on any
supplier of the Company or be in contact in any way with any customer
or employee of the Company for the purpose of soliciting, diverting or
taking away any supplier, customer or employee of the Company.
Notwithstanding the terms of this Section 16.1, Xxxxxx Xxxxxxxxxx may
directly or indirectly make normal portfolio investments in any
publicly listed securities.
Cisco shall be entitled to injunctive protection, without presenting
security or escrow, in the event of breach. Xxxxxx Xxxxxxxxxx shall,
in the event of a breach hereof, pay liquidated damages in the amount
of DKK 5,000,000 for each individual breach. Where the breach consists
in continuing a situation contrary to this present provision, Xxxxxx
Xxxxxxxxxx shall in addition to the said initial amount pay liquidated
damages in the amount of DKK 125,000 per month that such breach
exists. Cisco shall be entitled to claim damages for any loss in
excess of amounts paid as liquidated damages.
If Xxxxxx Xxxxxxxxxx is dismissed from the Company without due cause,
the above covenants shall lapse when Henrik Hvidtfeldt's employment
terminates.
16.2 GREGERS KRONBORG. As an integral part of the consideration for the
Cisco Shares paid to his wholly-owned holding company, Gregers
Kronborg agrees and undertakes as follows:
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During a period which will end on the second (2nd) anniversary date of
the Effective Date, Gregers Kronborg will not directly or indirectly
own, manage, operate, join, control, participate in, invest in, or
otherwise be connected in any manner with, whether as an officer,
director, employee, partner, investor or otherwise, any entity, other
than the Company or Cisco, which is engaged in any business which
competes with the business of Cisco and/or the Company.
During a period which will end on the fifth (5th) anniversary date of
the Effective Date, Gregers Kronborg will not directly or indirectly
(i) own, manage, operate, join, control, participate in, invest in, or
otherwise be connected in any manner with, whether as an officer,
director, employee, partner, investor or otherwise, any entity, other
than the Company or Cisco, which is engaged in any business which
competes with the Company's business as of the Effective Date; or (ii)
for himself, or on behalf of any other entity, call on any supplier of
the Company or be in contact in any way with any customer or employee
of the Company for the purpose of soliciting, diverting or taking away
any supplier, customer or employee of the Company.
Notwithstanding the terms of this Section 16.2, Gregers Kronborg may
directly or indirectly make normal portfolio investments in any
publicly listed securities.
Cisco shall be entitled to injunctive protection, without presenting
security or escrow, in the event of breach. Gregers Kronborg shall, in
the event of a breach hereof, pay liquidated damages in the amount of
DKK 5,000,000 for each individual breach. Where the breach consists in
continuing a situation contrary to this present provision, Gregers
Kronborg shall in addition to the said initial amount pay liquidated
damages in the amount of DKK 125,000 per month that such breach
exists. Cisco shall be entitled to claim damages for any loss in
excess of amounts paid as liquidated damages.
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If Gregers Kronborg is dismissed from the Company without due cause,
the above covenants shall lapse when Gregers Kronborg's employment
terminates.
16.3 XXX XXXXXX. As an integral part of the consideration for the Cisco
Shares paid to him, Xxx Xxxxxx agrees and undertakes as follows:
During a period which will end on the sooner of (i) the second (2nd)
anniversary date of the Effective Date, or (ii) 12 months from the
date when he ceases to be employed with the Company, Xxx Xxxxxx will
not directly or indirectly (i) own, manage, operate, join, control,
participate in, invest in, or otherwise be connected in any manner
with, whether as an officer, director, employee, partner, investor or
otherwise, any entity, other than the Company or Cisco, which is
engaged in any business which competes with the Company's business at
the time he ceases his employment; or (ii) for himself, or on behalf
of any other entity, call on any supplier of the Company or be in
contact in any way with any customer or employee of the Company for
the purpose of soliciting, diverting or taking away any supplier,
customer or employee of the Company. Notwithstanding the above, Xxx
Xxxxxx may directly or indirectly make normal portfolio investments in
any publicly listed securities.
Cisco shall be entitled to injunctive protection, without presenting
security or escrow, in the event of breach. Xxx Xxxxxx shall, in the
event of a breach hereof, pay liquidated damages in the amount of DKK
1,000,000 for each individual breach. Where the breach consists in
continuing a situation contrary to this present provision, Xxx Xxxxxx
shall in addition to the said initial amount pay liquidated damages in
the amount of DKK 50,000 per month that such breach exists. Cisco
shall be entitled to claim damages for any loss in excess of amounts
paid as liquidated damages.
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If Xxx Xxxxxx is dismissed from the Company without due cause, the
above covenants shall lapse when Xxx Xxxxxx'x employment terminates.
17. List of Appendices
Appendix 1: Company Equity Capital and allocation to the Sellers of
the Cisco Shares.
- 1.1 Company Equity Capital and Schedule of Cisco
Shares in exchange for shares of Company stock per
Seller,
- 1.2 Share Register of the Company prior to Closing.
Appendix 2: Company Warrant Programme.
- 2.1 COCOM Employee Warrant Plan
- 2.2 Warrant Agreement
- 2.3 Shareholders' Agreement for COCOM Employee Share
and Warrantholders
- 2.4 Log of Warrant Agreements as of September 14,
1999.
Appendix 3: Disclosure Schedule.
Appendix 3.A: List of Documents Received.
Appendix 3.B: List of Documents Disclosed, cf. Section 3.2
Appendix 4: The Company's Articles of Association and Corporate
Summary.
- 4.1 Articles of Association
- 4.2 Corporate Summary
- 4.3 Filing of 11 August 1999
Appendix 5: Shareholders' Agreement of 14 May 1999.
Appendix 6: The Convertible Subordinated Loan
- 6.1 Investment Agreement of 14 May 1999
- Loan Agreement of 14 May 1999.
Appendix 7: Financial Statements.
- 7.1 Profits and Loss Accounts as of 30 June
- Annual Accounts for the Company for the year ended
1998
- 7.3 Long-form audit report in respect of the annual
accounts for 1998
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- 7.4 Annual Accounts for Cebra Technology A/S for the
year ended 1997
- 7.5 Annual Accounts for COCOM A/S for the year ended
1997
- 7.6 Annual Accounts for Cebra Technology A/S for the
year ended 1996
- 7.7 Annual Accounts for Cebra Technology A/S for the
year ended 0000
Xxxxxxxx 8: Summary of information as to securities transactions in
the Company within the last 2 years.
Appendix 9: Form Escrow Agreement.
Appendix 10: Draft Minutes of Board Meeting of Company to be held at
Closing.
Appendix 11: Form Affiliate Agreement.
Appendix 12: Template Employment Agreement.
Appendix 13: Memorandum of Pooling Requirements.
Appendix 14: Form Pooling Opinion Letter.
IN WITNESS WHEREOF, the parties hereto have caused this Share Purchase Agreement
to be executed by their respective authorised officers as of the date aforesaid.
This Share Purchase Agreement shall be executed in two originals, one for the
Sellers and one for Cisco.
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Date:
For Cisco Systems, Inc.:
/s/ Xxxxxx Esthn
------------------------
Xxxxxx Esthn
Date:
As Sellers:
Xxxxxx Xxxxxxxxxx ApS: 2M Invest A/S:
/s/ Xxxxxx Xxxxxxxxxx /s/ Xxxxxxx Xxxxxxxxx
---------------------------------- -----------------------------------------
Xxxxxx Xxxxxxxxxx Xxxxxxx Xxxxxxxxx
Gregers Kronborg ApS: Slottsbacken Venture Capital KB:
/s/ Gregers Kronborg /s/ Nils Xxxxx Xxxxxxxx
---------------------------------- -----------------------------------------
Gregers Kronborg Nils Xxxxx Xxxxxxxx
For DB U.K. Finance plc.:
/s/ Xxx Xxxxxxxx /s/ Xxxxx Xxxxxxxxx
---------------------------------- -----------------------------------------
Name: Xxx Xxxxxxxx Xxxxx Xxxxxxxxx
For Horsefeather ApS:
/s/ Claus X. Xxxxx /s/ Xxxxx X. Xxxxxxxxxxx
---------------------------------- -----------------------------------------
Claus X. Xxxxx Name: Xxxxx X. Xxxxxxxxxxx
For Vestergaard Holding ApS:
/s/ Xxxxx Xxxxxx Vestergaard /s/ Lars Froslev Xxxxxxx
---------------------------------- -----------------------------------------
Xxxxx Xxxxxx Xxxxxxxxxxx Xxxx Froslev Xxxxxxx
/s/ Xxxxxx Xxxxxxxxx /s/ Xxxxx Xxxxxxxx
---------------------------------- -----------------------------------------
Xxxxxx Xxxxxxxxx Xxxxx Xxxxxxxx
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/s/ Xxxxxxxxx Xxxxxxxx /s/ Xxxx X. Xxxxxxxxxxxxxx
---------------------------------- -----------------------------------------
Xxxxxxxxx Xxxxxxxx Xxxx X. Xxxxxxxxxxxxxx
/s/ Xxxxxx Xxxxxxxx /s/ Xxxx Xxxxxxxxxxx
---------------------------------- -----------------------------------------
Xxxxxx Xxxxxxxx Xxxx Xxxxxxxxxxx
/s/ Xxx Xxxxx /s/ Xxxx X. Xxxxxxxxxxx
---------------------------------- -----------------------------------------
Xxx Xxxxx Xxxx X. Xxxxxxxxxxx
/s/ Xxxx Xxxxxxx /s/ Xxxxxxx Xxxxxx
---------------------------------- -----------------------------------------
Xxxx Xxxxxxx Xxxxxxx Xxxxxx
/s/ Xxxx Xxxxxxxx /s/ Xxxxx Xxxxxxx
---------------------------------- -----------------------------------------
Xxxx Xxxxxxxx Xxxxx Xxxxxxx
/s/ Xxxxxxx Osted /s/ Xxxxxxx Xxxxxxxxx
---------------------------------- -----------------------------------------
Xxxxxxx Osted Xxxxxxx Xxxxxxxxx
/s/ Xxxxxx Xxxxxxxx /s/ Xxx Xxxxxx
---------------------------------- -----------------------------------------
Xxxxxx Xxxxxxxx Xxx Xxxxxx
/s/ Xxxxxx Xxxx Kronborg /s/ Xxxx Xxxxxxx Xxxxxxxxxxxxxx
---------------------------------- -----------------------------------------
Xxxxxx Xxxx Kronborg Xxxx Xxxxxxx Xxxxxxxxxxxxxx
/s/ Per Kristensen /s/ Xxxxxx Xxxxxxxxxx
---------------------------------- -----------------------------------------
Per Xxxxxxxxxx Xxxxxx Chebotarev
/s/ Xxxx-Xxxx Xxxxx /s/ Xxxxx X. Xxxxxxx
---------------------------------- -----------------------------------------
Xxxx-Xxxx Xxxxx Xxxxx X. Xxxxxxx
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/s/ Xxxx Xxxxxx /s/ Xxxx Xxxxx Xxxxxxxxx
---------------------------------- -----------------------------------------
Xxxx Xxxxxx Xxxx Xxxxx Xxxxxxxxx
/s/ Xxxxxxx Xxxx /s/ Xxxxxx Xxxxxxxx
---------------------------------- -----------------------------------------
Xxxxxxx Xxxx Xxxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxx /s/ Claus X. Xxxxxx
---------------------------------- -----------------------------------------
Xxxxxx Xxxxxx Claus X. Xxxxxx
/s/ Xxxx Xxxxxxx /s/ Xxxxxxx Xxxxxx
---------------------------------- -----------------------------------------
Xxxx Xxxxxxx Xxxxxxx Xxxxxx
For Kjaer og Kjaerulf A/S:
/s/ Xxxxxxx Xxxxx /s/ Xxxxx X. Xxxxxxxxxxx
---------------------------------- -----------------------------------------
Xxxxxxx Xxxxx Name: Xxxxx X. Xxxxxxxxxxx
/s/ Xxx Xxxxxxx Xxxxxxxxx /s/ Xxxx Xxxxxxxxx
---------------------------------- -----------------------------------------
Xxx Xxxxxxx Xxxxxxxxx Xxxx Xxxxxxxxx
/s/ Jan Schionning
----------------------------------
Jan Schionning
Date:
Accepted as regards Sections 2.2.2, 6.2, 7, 14.2 and 14.3:
For COCOM A/S:
/s/ Xxxxx Xxxxxx Vestergaard
----------------------------------
Xxxxx Xxxxxx Vestergaard
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Date:
Accepted as regards Section 16.1:
/s/ Xxxxxx Xxxxxxxxxx
----------------------------------
Xxxxxx Xxxxxxxxxx
Date:
Accepted as regards Section 16.2:
/s/ Gregers Kronborg
----------------------------------
Gregers Kronborg
Date:
Accepted as regards Section 16.3:
/s/ Xxx Xxxxxx
----------------------------------
Xxx Xxxxxx
14 September 1999
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