1
EXHIBIT 10.4
AGREEMENT
Whereas pursuant to Paragraph 13 of the Heads of Agreement between VASCO
CORPORATION (<< Vasco >>), VASCO DATA SECURITY EUROPE S.A. (<< VDSE >> or <<
the Buyer >>), DIGILINE INTERNATIONAL LUXEMBOURG (<< DIL >> or << the Seller
>>), DIGILINE S.A. (<< DB >>), DIGIPASS S.A. (<< DP >>), Xxxxxxxxx XXXXXX (<<
Xxxxxx >>) and TOPS S.A. (<< TP >>), it was contemplated that certain
additional terms and conditions with respect to the matters contemplated by the
Heads of Agreement would be agreed to and executed by the parties;
Whereas below are set forth such additional terms and conditions as have been
agreed to by the parties;
Whereas for purposes hereof (i) these additional terms and conditions together
with the Heads of Agreement are collectively herein referred to as the <<
Agreement >> and (ii) the assets and liabilities heretofore conducted by DB
(which will prior to the Closing Date be transferred to DP) and the business
presently conducted by DP are hereinafter collectively referred to as the <<
Seller's Business >>;
Whereas the Buyer aknowledges that it has performed the necessary amount of due
diligence which it believed to be appropriate for a transaction of the type
contemplated herein, that such due diligence has included, amongst others, the
review of the complete data put at the disposal of the Buyer and its advisors
and accountants at its request and investigations by the Buyer with the
management of the Seller.
Article 1
As is contemplated by the Heads of Agreement, TP has transferred its shares of
the capital stock of DP for book value to DP. As these shares have been
canceled, DIL is currently the sole owner of 100 % of the shares of DP.
As is contemplated by the Heads of Agreement, the capital of DP has been
increased and certain assets and liabilities from DB transferred to DP. VASCO
and VDSE agree on the terms and conditions of the purchase agreement relating
to the transfer of the assets and liabilities from DB to DP.
Vasco and VDSE therefore represent that the conditions set forth in the Bank
Guarantee issued by the Bank Paribas have been fully completed by DIL, DP, DB,
TP and COLARD.
Vasco and VDSE agree that only the transfer of any amount by VDSE to DIL which
specifically relates to the payment of the purchase price of the shares by VDSE
to DL as from the Closing Date will diminish the said Bank Guarantee issued by
the Bank Paribas for the same amount.
Article 2
For purpose of this Agreement, the term << Material >> shall mean:
(a) with respect to any contract, (i) having a remaining duration of at least
12 months and (ii) involving a commitment to expenditure of at least BEF 1 500
000 or involving the generation of income of at least BEF 1 500 000;
(b) with respect to any asset or liability or change in financial condition, an
asset having a book value of at least BEF 1 500 000 or a liability involving an
expenditure of at least BEF 1 500 000.
Article 3
DL hereby represents and warrants to and agrees with Vasco and VDSE as follows:
1. DIL is the lawful owner of record of 42 653 shares of the capital stock of
DP (<< DP Stock >>).
2
2. There are no shares of the capital stock of DP issued or outstanding other
than those shares held currently by DIL.
3. The shares of DP owned by D1L are free and clear of all liens, charges,
encumbrances and restrictions of any kind and nature whatsoever and none of
such shares is subject to any agreement whatsoever with respect to the voting,
sale or pledge thereof with respect to any such DP Stock.
4. Except as set forth on Schedule 1, none of DIL, TP, DB or Colard has any
interest in any property, real or personal, tangible or intangible, used in the
Seller's Business.
5. Any shares of Vasco Common Stock to be acquired by DIL at the sole election
of DIL pursuant to this Agreement will be acquired by DIL solely for the
purpose of investment and not with a view to, or for sale in connection with,
any distribution thereof DL acknowledges that all such shares of Vasco Common
Stock will not be registered under the Securities Act of 1933, as amended, or
the securities laws of any state or other jurisdiction, and that all such
shares of Vasco Common Stock will bear a legend in substantially the following
form:
<< THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. AS AMENDED, (THE <>) AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS A REGISTRATION STATEMENT
WITH RESPECT TO THESE SHARES HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, OR
THE CORPORATION HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED. >>
6. True, complete and correct copies of (a) the Certificate of
Incorporation as amended to date, of DP and (b) the by-laws, as currently in
effect, of DP are annexed hereto as Schedule 2.
7. DP is a corporation duly organized, validly existing and in good standing
under the laws of Belgium and has full corporate power and authority to conduct
the Seller's Business.
8. This Agreement has been duly and validly executed and delivered by DIL and
constitutes its valid obligation, enforceable against it in accordance with its
terms. Except any notification which might be necessary towards the Region
wallonne and except for any notices and consents required in relation to the
transfer of assets and liabilities of DB to DP, no consent is required to be
obtained in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby.
9. The performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in a breach or violation of any of the
terms or provisions of, or constitute a default under, (i) the articles of
incorporation of by-laws or similar governing documents of DP, or (ii) any law,
order, rule, regulation, writ, injunction or decree applicable to Seller's
Business.
To its knowledge, DP and its conduct of the Seller's Business are in compliance
in all material respects with all, and not in violation in any material respect
of any applicable law or ordinance, or any order, rule or regulation of any
governmental agency or body to which DP or the Seller's Business are subject;
nor to its knowledge has DP failed to obtain or to adhere in all material
respects to the requirements of any government license, permit or authorization
necessary to the ownership of its assets or to the conduct of the Seller's
Business. All material governmental permits, licenses and authorizations
required by DP in the conduct of the Seller's Business are set forth in
Schedule 3.
10. Except as provided in Schedule 4, DP and the Seller's Business have paid
all taxes (payroll, income, franchise, etc.) required to be paid and DP and DB
have no liability whatsoever for any taxes except as may be reflected in the
Financial Statements of DB and DP for the year ended December 31, 1995 and in
3
the intermediary financial statements of DB ended June 30, 1996 (hereafter <<
the Financial Statements >>) and except for any taxes to be paid by DP and
relating to its business conducted since January 1st, 1996 for the six-month
period ended June 30, 1996.
All Material tangible assets and properties owned by DP or used in the Seller's
Business are as of the date hereof usable.
11. All accounts receivables reflected in the Financial Statements and all
accounts receivables acquired or created by the Seller's Business subsequent to
January 1, 1996, to and including the Closing Date, arose from beneficial
transactions in the ordinary course of business.
12. All inventory reflected on the Financial Statements and all inventory
relating to the Seller's Business acquired subsequent to December 31, 1995 to
and including the Closing Date are of a quality and quantity usable or salable
in the ordinary course of business. The values of the inventory carried on the
Financial Statements represent the acquisition price of such inventory.
13. Except as set forth on Schedule 5, since December 31, 1995, either DP nor
DB (insofar as the assets and liabilities transferred by it to DP are
concerned) has:
(a) sold, assigned or transferred any of its assets or properties necessary for
the operation of the Seller's Business, except in the ordinary course of
business consistent with past practice;
(b) made any amendment or termination of any material contract, commitment or
agreement relating to the Seller's Business to which it is a party or by which
it is bound; or
(c) with respect to the employees of the Sellers' Business, received notice or
had knowledge of any strike or disruption of work of a concerted nature or any
threat thereof;
14. Except for the claim received by the Dutch PTT and Security Dynamics, DP
has not received notice of any claims which have been asserted by any person to
the use of any patents, trademarks, trademark registrations, logos, trade
names, assumed names, copyright and copyright registrations or challenging or
questioning the validity or effectiveness of any such license or agreement.
15. There are no strikes or disruptions of work involving the employees of the
Seller's Business of a concerted nature. DP is not a party to any collective
bargaining agreement with any union or other representative of employees except
for such collective bargaining agreements (<< conventions collectives>>) which
are applicable to all employees in the same business sector.
16. DP represents that he has not hidden any verbal or written notice of any
threatened termination or cancellation of the business relationship of the
Seller's Business since January 1, 1995 with (a) a major customer of the
Seller's Business, or (b) a major supplier of the Seller's Business which
would, either individually or in the aggregate have a material adverse effect
on the Seller's Business.
17. Set forth on Schedule 6 is the name of each employee of DP and each
employee transferred from DB to DP and the gross yearly compensation for each
employee with indication of extra legal advantages such as life-insurance,
rental costs of cars without fuel, repair and maintenance insurance and other
costs related to the use of the cars, luncheon vouchers and medical insurance.
18. The representations and warranties of DL contained in this Agreement shall
be true on and as of the date of the closing of the transactions contemplated
by this Agreement (the << Closing Date >>) with the same force and effect as
through made on and as of such date.
4
19. Seller represents that he fully complied with the requests for information
contained in the Buyer's due diligence lists submitted by the Buyer and its
auditors. Seller further represents that he did not hide or conceal any
agreement of a Material nature or information of a Material nature which would
have been vital to the due diligence process.
20. Notwithstanding anything to the contrary in this Article 3, Seller's
representations and warranties are expressly qualified by and limited by the
results of the Buyer's due diligence investigation referred to above; all of
Seller's representations and warranties shall be construed to be qualified by
all matters apparent from the due diligence investigation whether or not such
matters are expressly mentioned in this Article 3 or in any of the Schedules
attached to this Agreement.
Article 4
The Buyer and Vasco hereby represents and warrants to the Seller that:
4.1. It is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is established and has full
corporate power and authority to enter into and perform its obligations under
this Agreement.
4.2. This Agreement has been duly and validly executed and delivered by it and
constitutes its valid and binding obligation, enforceable in accordance with
its terms. No consent, authorization or approval of, exemption by, or filing
with, any governmental or administrative authority, or any court, is required
to be obtained or made by it in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby.
4.3. The performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in a breach or violation of any of the
terms or provisions of, or constitute a default under, (i) the articles of
incorporation or by-laws or similar governing documents of the Buyer or Vasco,
or (ii) any law, order, rule, regulation, writ, injunction or decree applicable
to the Buyer or Vasco.
Article 5
5.1. Closing. The Closing hereunder shall take place at the offices of DP
located in Charleroi, or at such other place as the Buyer and the Seller may
agree upon, on July 12th, 1996.
5.2. At the Closing, the Seller shall transfer to the Buyer the ownership of
the shares.
5.3. At the Closing the Buyer shall deliver to the Seller an original copy of
the Guarantee issued by Banque Paribas covering the balance of the Purchase
Price.
5.4 A shareholders' register shall be issued and signed by the appropriate
shareholders after the Closing.
Article 6
For the period beginning on the date hereof and ending June 30, 2001, Colard
hereby covenants and agrees with VDSE that, unless acting as an officer,
employee or consultant to VDSE or an affiliate of VDSE (which for purposes of
this Section shall include Vasco), or with VDSE's prior written consent, he
will not (i) compete, directly or indirectly, with VDSE, DP or any of their
affiliates in regard to the competing products as defined in Section 7 of the
Heads of Agreement (the << Competing Products >>), (ii) directly or indirectly,
on his own behalf of or as an employee or agent of any other person or entity,
contact or approach any person or business, wherever located, for the purpose
of competing with VDSE or DP in the Competing Products; (iii) participate as a
director, officer, consultant, or partner of, or have any other direct or
indirect financial interest in, any enterprise which engages in the Competing
Products; or (iv) participate as an employee, agent, representative or
consultant in, or render any services to, any enterprise
5
in which his responsibility competes, directly or indirectly, with the
Competing Products. Dynapark and Muslimclock are not considered competing
products.
Article 7
Colard agrees that he shall keep secret and retain in strictest confidence, and
shall not use for the benefit of himself or others, all confidential matters
relating to the Seller's Business. The Buyer and Vasco agree that they shall
keep secret and retain in strictest confidence and shall not use for the
benefit of themselves or others, all confidential informations relating to the
business of Colard or DB apart from the Seller's Business purchased by the
Buyer hereunder.
Article 8
The Buyer and Vasco undertake jointly and severally (i) to cause a Shareholders
Meeting of DP to be held on the Closing Date to appoint new Directors of DP,
and (ii) to procure that the former Directors who are resigning from their
offices in connection with the sale of the Seller's Business to the Buyer are
granted discharge from all liabilities incurred in their capacity as directors
of DP at the General Shareholders Meeting of DP which is to be convened for the
purpose of approving the 1996 financial statements of DP.
Article 9
9.1. Subject to the limits set forth in this Article 9, the Seller will, on
demand by the Buyer, indemnify the Buyer from and against any and all loss,
Liability, damage or deficiency (including interest, penalties and reasonable
attorneys' fees) that the Buyer may suffer or incur as a result of the
inaccuracy of any representation or the breach of any warranty, covenant,
undertaking or other agreement of the Seller contained in this Agreement (any
such inaccuracies or breaches being hereinafter collectively referred to as <<
Breaches >> and each individually as a << Breach >>). Such an indemnification
will be considered as an adjustment of the purchase price paid by the Buyer.
9.2. Any losses, damages or expenses incurred by the Buyer or DP and any
respective indemnification by the Seller shall be taken into account
after discounting of any tax effect in DP resulting in a reduction of such
losses, damages or expenses incurred or the respective indemnification; for
this purpose, the Buyer shall make or procure to be made available to the
Seller all relevant books of account, records and correspondence of the Buyer,
DP and Vasco relevant to the Breach, subject to the Seller's keeping such
information confidential.
9.3. Notwithstanding any other provision of this Agreement, the Liability of
the Seller in respect of any Breach shall be Limited to claims of not less than
BEF 500 000 (five hundred thousand Belgian Francs) in respect of any single
Breach or any number of Breaches of the same nature arising out of the same
causal event (hereinafter referred to as << Significant Claims >>) and any
references in this Agreement to Seller's liability for breach of warranty shall
be construed to refer only to liability for Significant Claims.
9.4. The Seller shall have no liability whatsoever in respect of any
Significant Claim unless and until the amount recoverable from the Seller in
respect of that Significant Claim, when aggregated with all other amounts so
recoverable in respect of other Significant Claims, exceeds BEF 3 500 000
(three million five hundred thousand Belgian Francs), whereupon the Seller
shall be liable for the whole of all such Significant Claims subject, however,
to all provisions of this Article 9.
9.5. The Seller shall have no liability for any Significant Claim unless
notice in writing of the Significant Claim, stating in reasonable detail the
nature of the claim and the amount of the Significant Claim, shall have been
given to the Seller on or before December 31, 1997 (such notice being
hereinafter referred to as the << Notice >>).
6
9.6. If a Breach may occur or has occurred, the Buyer shall notify the Seller
in writing without delay, stating in detail the nature of the Breach, and shall
afford the Seller the opportunity, within 120 days, to take reasonable steps to
remedy or avoid such Breach or potential Breach.
9.7. The Buyer shall, and shall procure that DP shall, take at Seller's cost
and expense such actions as Seller may request to avoid, dispute, resist,
appeal, compromise or mitigate any claim by any third party which would give
rise to a Breach or any matter which might give rise to a Breach. For the
purpose of enabling the Seller to remedy or mitigate a Breach or to otherwise
determine the amount of any such claim, the Buyer shall make or procure to be
made available to the Seller all relevant books of account,
records and correspondence of the Buyer or DP relevant to the Breach, subject
to the Seller keeping such information confidential.
9.8. The Seller shall not be liable:
a) in respect of any Breach if, and to the extent that, such Breach occurs as a
result of any legislation or amendment to existing legislation not in force on
the date hereof;
b) in respect of any Breach, if and to the extent that it would not have arisen
but for any voluntary act, omission, transaction or arrangement after the date
hereof by the Buyer, DP or Vasco or any change in the nature or manner of
conduct of the Seller's Business after the Closing;
c) in respect of any Breach, to the extent that any liability arises or is
increased as a result of any statutory change in the basis or method of
calculation of or increase in the rate or rates of taxation;
d) in respect of any Breach, to the extent of the amount of any provisions in
the financial statements of DB or DP as of December 31, 1995 or the intermediary
financial statements as of June 30, 1996, in respect of the liability giving
rise to the Breach in question.
9.9. The Buyer shall or shall cause DP to reimburse to the Seller any amount
paid by the Seller under this Article 9 to the extent that such amount is
subsequently recovered by or paid to the Buyer, to DP or to Vasco by any third
party (including under any policy of insurance) as a result of the same facts
or matters which have given rise to the payment of the sum paid by the Seller
less any costs of recovery of such amount from such third party and after
discounting any overall tax effect, and the Buyer shall and shall procure that
DP or any third party take all reasonable steps to obtain such recoveries and
payments.
Article 10
The representations, warranties and covenants contained in this Agreement shall
survive the execution of this Agreement and the closing of the transactions
contemplated hereby.
Article 11
In addition to the above additional terms and conditions to the Agreement, the
parties agree that the Heads of Agreement shall be modified as follows:
AA. The purchase Price to be paid by VDSE for 100% of the stock of DP shall be
$ 8 200 000 (U.S. Dollars).
BB. The purchase Price of $ 8 200 000 (U.S. Dollars) shall be paid as follows:
1. Payment no. 1 of $ 4 800 000 (U.S. Dollars) in cash shall be paid at the
Closing.
2. Payment no. 2 of $ 3 400 000 (U.S. Dollars) shall be due and payable on
December 31, 1997, and
7
3. As provided in the Heads of Agreement, Payment no. 2 shall be irrevocably
and unconditionally guaranteed by means of an Irrevocable Letter of Credit or
Irrevocable Bank Guarantee in favor of DL issued by a first-class bank
acceptable to DIL.
Article 12
12.1. The validity, interpretation and performance of this Agreement shall be
governed by the laws of the Kingdom of Belgium.
12.2. Any dispute concerning the validity, the interpretation or the
performance of this Agreement shall be finally settled by arbitration under the
rules of the CEPANI, by three arbitrators appointed in accordance with said
Rules, one to be appointed by the Seller, one to be appointed by the Buyer and
the third to be appointed by the first two or otherwise in accordance with such
Rules. The place of arbitration shall be Brussels, Belgium. The proceedings
shall be conducted in the French language. Any dispute arising between the
contracting parties shall be subject to prior conciliation.
IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement in six
original copies as of the 9th day of July 1996.
VASCO Corp.
By: /s/ Xxxxxxx Xxxx
VASCO DATA SECURITY EUROPE S.A.
By: /s/ Xxxxxxx Xxxx
DIGILINE S.A.
By: /s/ Xxxxxxxxx XXXXXX
DIGIPASS S.A.
By: /s/ Xxxx Xxxxx DALCQ
By: /s/ Xxxx XXXXXX
/s/ Xxxxxxxxx XXXXXX
8
SCHEDULE 1
DC has a consultancy contract with TP
TP has a consultancy contract with DP
DP rents the office building from TP
DP rents 4 cars from DB
DC owns patents rights in relation to security tokens
DB has an outstanding debt towards DIL of 4.500.000 BEF plus interests (900.000
BEF at June30, 1996)
SCHEDULE 2
Certificate of Incorporation as amended to date and by laws of DP.
SCHEDULE 3
Not applicable
SCHEDULE 4
Any taxes to be paid pursuant to an examination by the tax authorities of the
accounts of DP and DB for any period before June 30th, 1996.
SCHEDULE 5
Not applicable
9
SCHEDULE 6
Annual employees charges
Annual Holiday 13th Meal Medical
Date in Monthly Cost Cost Cost Month Check Insur. Cost Car Total
J. Valke 2/11/88 242000 2904000 69928 406404 3380332
X. Xxxxxx 200000 2400000 2400000
X. Xxxxx 23/09/91 86700 1040400 73695 117088 39600 41616 1920 1314319
N. Buseyne 2/9/91 86853 1042236 73825 117295 39600 41689 1920 1316565
C. Skworcz 29/6/92 45902 550824 39017 61991 39600 1920 693351
A. Avi 16/10/92 93244 1118928 79257 125926 39600 44757 1920 1410389
X. Xxxxx 2/8/93 73834 886008 62759 99713 39600 35440 1920 1125440
Ph. Back 22/10/93 84897 1018764 72162 114653 39600 40751 1920 1287850
JP. Lafot 2/5/96 119231 1430772 101346 161021 39600 57231 1920 1791891
