Exhibit 7.04
HOLDBACK AGREEMENT
This Holdback Agreement (this "Agreement") is entered into as of
November 16, 1995 by and among The Software Developer's Company Inc., a Delaware
corporation ("SDC"), and the former shareholder of Internet Security
Corporation, a Massachusetts corporation ("ISC"), Xxxxxxx Xxxxxxxx ("Exchanging
Stockholder").
RECITALS
A. SDC, ISC Acquisition Corp., a Massachusetts corporation and wholly
owned subsidiary of SDC ("ISC Acquisition"), ISC and the Exchanging Stockholder
are parties to an Agreement and Plan of Merger (the "Merger Agreement") pursuant
to which SDC will acquire ISC through a merger of ISC Acquisition with and into
ISC (the "Merger") in which shares of SDC's common stock, $.01 par value per
share ("Common Stock"), will be issued to the Exchanging Stockholder as set
forth in the Merger Agreement.
B. To induce SDC to effect the Merger, the Exchanging Stockholder has
agreed that certain shares of Common Stock issued to him in the Merger will
pledged to and held by SDC in order to provide a partial source of payment of
the Exchanging Stockholder's indemnification obligations under the Merger
Agreement.
AGREEMENT
In consideration of the foregoing premises and the mutual and dependent
promises hereinafter set forth, the parties agree as follows:
1. HOLDBACK
The 46,583 shares of Common Stock to be issued to the Exchanging
Stockholder under Section 2.4(b) of the Merger Agreement (together with any
distributions accrued or made thereon and any other securities or property which
may be issued in exchange for such shares in any merger or recapitalization or
similar transaction involving SDC, the "Holdback Shares") are hereby pledged by
the Exchanging Stockholder to, and shall be held by, SDC pursuant to this
Agreement. The Exchanging Stockholder shall deliver to SDC at the time this
Agreement is executed and delivered appropriate stock powers endorsed in blank
and such other documentation as SDC may prescribe to carry out the purposes of
this Agreement. So long as any Holdback Shares are held by SDC hereunder, SDC
shall have, and the Exchanging Stockholder hereby grant, as of and from the date
of this Agreement, a perfected, first-priority security interest in such
Holdback Shares to secure payment of amounts payable by the Exchanging
Stockholder in respect of indemnification claims under Article 9 of the Merger
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Agreement. In connection therewith, Exchanging Stockholder expressly agrees to
execute and deliver such instruments as SDC may from time to time reasonably
request for the purposes of evidencing and perfecting such security interest.
2. ENTIRE AGREEMENT
This Agreement, together with the Merger Agreement, contains the entire
understanding and agreement of the parties hereto with respect to the
transactions contemplated hereby and supersedes and may not be supplemented or
varied by any prior oral or written understandings or agreements. The headings
in this Agreement are inserted for convenience of reference only and shall not
be a part of or control or affect the meaning hereof.
3. TAXATION OF INTEREST EARNED ON INVESTMENTS OF HOLDBACK DEPOSIT
Exchanging Stockholder hereby acknowledges that, for federal and state
income tax purposes, any dividends or other distributions with respect to the
Holdback Shares shall be income of the Sellers.
4. AMENDMENT AND WAIVER
This Agreement may be amended, modified, supplemented or altered only
by a writing duly executed by SDC and Exchanging Stockholder. No failure or
delay by a party hereto in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, and no single or partial exercise thereof
shall preclude any right of further exercise or the exercise of any other right,
power or privilege. No waiver of any rights, power or privilege hereunder shall
be effective unless set forth in writing, executed by the party against whom the
waiver is sought to be enforced.
5. SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible.
6. GOVERNING LAW
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts, as applied to
contracts executed and to be fully performed in such State.
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7. COUNTERPARTS
This Agreement may be executed by the parties hereto individually or in
any combination, in one or more counterparts, each of which shall be an original
and all of which shall together constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THE SOFTWARE DEVELOPER'S INTERNET SECURITY
COMPANY, INC. CORPORATION
BY: /s/ Xxxxx X. Xxxxxx BY: /s/ Xxxxxxx Xxxxxxxx
XXXXX X. XXXXXX, PRESIDENT XXXXXXX XXXXXXXX, PRESIDENT
ISC ACQUISITION CORP. EXCHANGING STOCKHOLDER:
By: /s/ Xxxxx X. Xxxxxx /s/ Xxxxxxx Xxxxxxxx
XXXXX X. XXXXXX, PRESIDENT XXXXXXX XXXXXXXX, PERSONALLY