Exhibit 10.2
Entrust Technologies Inc.
SERIES B NON-VOTING COMMON STOCK PURCHASE AGREEMENT
dated January 31, 1997
Table of Contents
-----------------
Page No.
1. Authorization and Sale of Shares........................................................1
1.1 Authorization.................................................................1
1.2 Sale of Shares................................................................1
2. The Closing.............................................................................1
3. Representations of the Company..........................................................1
3.1 Exception to Section 3.2 of the Purchase Agreement............................2
3.2 Exception to Section 3.4 of the Purchase Agreement............................3
3.3 Exception to Section 3.5 of the Purchase Agreement............................3
3.4 Exception to Section 3.6 of the Purchase Agreement............................4
4. Representations of the Purchaser........................................................4
4.1 Investment....................................................................4
4.2 Authority.....................................................................4
4.3 Experience....................................................................5
4.4 Accredited Investor Status....................................................5
5. Conditions to the Obligations of the Parties............................................5
5.1 Conditions to the Obligation of the Purchaser.................................5
5.2 Condition to the Obligation of the Company....................................6
6. Covenants of the Company................................................................6
6.1 Exception to Section 7.11 of the Purchase Agreement...........................6
6.2 Exception to Section 7.12(b) of the Purchase Agreement........................6
7. Transfer of Shares......................................................................6
7.1 Restricted Shares.............................................................6
7.2 Requirements for Transfer.....................................................6
7.3 Legend........................................................................7
7.4 Rule 144A Information.........................................................7
-i-
8. Miscellaneous...........................................................................7
8.1 Successors and Assigns........................................................7
8.2 Confidentiality...............................................................8
8.3 Survival of Representations and Warranties....................................8
8.4 Notices.......................................................................8
8.5 Brokers.......................................................................9
8.6 Entire Agreement..............................................................9
8.7 Amendments and Waivers........................................................9
8.8 Counterparts.................................................................10
8.9 Section Headings.............................................................10
8.10 Severability.................................................................10
8.11 Governing Law................................................................10
EXHIBITS
--------
Exhibit A - Articles of Amendment
Exhibit B - List of Stockholders
Exhibit C - Exceptions of Representations
Exhibit D - Form of Stockholder Agreement and Waiver
-ii-
SERIES B NON-VOTING COMMON STOCK PURCHASE AGREEMENT
---------------------------------------------------
This Agreement dated as of January 31, 1997 is entered into by and among
Entrust Technologies Inc., a Maryland corporation (the "Company"), and Societe
Generale Investment Corporation (the "Purchaser"). Except as otherwise provided
herein, all capitalized terms have the same meaning as in the Series B Common
Stock Purchase Agreement dated as of December 31, 1996 entered into by and among
the Company and the individuals and entities listed on Exhibit A thereto (the
---------
"Purchase Agreement").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. Authorization and Sale of Shares.
--------------------------------
1.1 Authorization. The Company has, or before the Closing (as
-------------
defined in Section 2) will have, duly authorized the sale and issuance, pursuant
to the terms of this Agreement, of 2,500 shares of its Series B Non-Voting
Common Stock, $.01 par value per share (the "Series B Non-Voting Common Stock"),
having the rights, restrictions, privileges and preferences set forth in the
Articles of Amendment to the Charter attached hereto as Exhibit A (the "Articles
---------
of Amendment"). The Company has, or before the Closing will have, adopted and
filed the Articles of Amendment with the State Department of Assessments and
Taxation of the State of Maryland.
1.2 Sale of Shares. Subject to the terms and conditions of this
--------------
Agreement, at the Closing the Company will sell and issue to the Purchaser, and
the Purchaser will purchase, 2,500 shares of Series B Non-Voting Common Stock
for the purchase price of $100 per share. The shares of Series B Non-Voting
Common Stock being sold under this Agreement are referred to as the "Shares."
2. The Closing. The closing ("Closing") of the sale and purchase of the
-----------
Shares under this Agreement shall take place at the offices of Xxxx and Xxxx
LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx at 10:00 a.m. on January 31, 1997.
At the Closing, the Company shall deliver to the Purchaser a certificate for the
Shares being purchased by the Purchaser, registered in the name of the
Purchaser, against payment to the Company of the purchase price therefor, by
wire transfer, check, or other method acceptable to the Company. The date of
the Closing is hereinafter referred to as the "Closing Date."
3. Representations of the Company. Except as set forth below or in
------------------------------
Exhibit C hereto, each of the representations and warranties contained in
---------
Sections 3.1 to 3.26 of the Purchase Agreement is true and correct on and as of
the date hereof with the
same effect as though such representation or warranty had been made on and as of
the date hereof. Except as set forth below or in Exhibit C hereto, such
---------
representations and warranties, and the exhibits referred to therein, are
incorporated by reference herein and shall be deemed to be a part of this
Agreement; provided, however, that (a) any defined term contained in the
representations and warranties that is redefined in this Agreement shall have
the meaning set forth in this Agreement and (b) all references to Exhibit C
---------
contained in such representations and warranties shall be deemed to refer to
Exhibit C to the Purchase Agreement.
---------
3.1 Exception to Section 3.2 of the Purchase Agreement. Section 3.2
--------------------------------------------------
of the Purchase Agreement is hereby deleted in its entirety and the following
Section 3.2 is inserted in lieu thereof:
"3.2 Capitalization. The authorized capital stock of the Company
--------------
(immediately prior to the Closing) consists of (a) 15,000,000 shares of
Series A Common Stock, $.01 par value per share (the "Series A Common
Stock"), of which 507,500 shares are issued and outstanding, (b) 260,000
shares of Series B Common Stock, $.01 par value per share, of which 257,500
shares are issued and outstanding (the "Series B Common Stock"), (c)
260,000 shares of Series B Non-Voting Common Stock, none of which shares
are issued and outstanding, (d) 2,500,000 shares of Special Voting Stock,
$.01 par value per share, of which 192,500 shares are issued and
outstanding, and (e) 500,000 shares of Preferred Stock, $.01 par value per
share, none of which shares are issued or outstanding (such shares of
capital stock of the Company referred to in clauses (a), (b), (c), (d) and
(e) of this sentence being collectively referred to herein as the "Company
Capital Stock"). The authorized capital stock of the Canadian Subsidiary
(immediately prior to the Closing) consists of (a) an unlimited number of
common shares, without par value per share, of which 100,000 shares are
issued and outstanding (the "Canadian Common Shares"), (b) an unlimited
number of exchangeable shares, without par value per share, of which
192,500 shares are issued and outstanding (the "Exchangeable Shares"), and
(c) an unlimited number of special shares, without par value per share, of
which no shares are issued and outstanding (the "Special Shares"), which,
together with the Canadian Common Shares and the Exchangeable Shares, are
referred to herein as the "Canadian Capital Stock." The Board of Directors
of the Company has declared (a) a ten-for-one split of the Series A Common
Stock in the form of a stock dividend in which holders of record of Series
A Common Stock on February 5, 1997 (the "Record Date") will receive, on or
about February 7, 1997 (the "Distribution Date"), nine shares of Series A
Common Stock for each share of Series A Common Stock held as of the Record
Date and (b) a ten-for-one split of the Special Voting Stock in the form of
a
-2-
stock dividend in which holders of record of Special Voting Stock on the
Record Date will receive, on or about the Distribution Date, nine shares of
Special Voting Stock for each share of Special Voting Stock held as of the
Record Date. The Board of Directors of the Canadian Subsidiary has
declared a ten-for-one split of the Exchangeable Shares in the form of a
stock dividend in which holders of record of Exchangeable Shares on the
Record Date will receive, on or about the Distribution Date, nine
Exchangeable Shares for each Exchangeable Share held as of the Record Date.
All of the issued and outstanding shares of Company Capital Stock and
Canadian Capital Stock (together, the "Entrust Capital Stock") have been
duly authorized and validly issued, are fully paid and nonassessable.
Except as otherwise waived or as set forth in Exhibit C to the Purchase
---------
Agreement or pursuant to the terms of the Entrust Capital Stock, (a) no
subscription, warrant, option, convertible security or other right
(contingent or otherwise) to purchase or acquire any shares of Entrust
Capital Stock is authorized or outstanding, (b) neither the Company nor the
Canadian Subsidiary has any obligation (contingent or otherwise) to issue
any subscription, warrant, option, convertible security or other such right
or to issue or distribute to holders of any shares of its capital stock any
evidences of indebtedness or assets of the Company or the Canadian
Subsidiary, as the case may be, and (c) neither the Company nor the
Canadian Subsidiary has any obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any shares of its capital stock or
any interest therein or to pay any dividend or make any other distribution
in respect thereof. All of the issued and outstanding shares of Entrust
Capital Stock have been offered, issued and sold by the Company or the
Canadian Subsidiary, as the case may be, in compliance with applicable
Federal, Canadian, state and provincial securities laws."
3.2 Exception to Section 3.4 of the Purchase Agreement. The
--------------------------------------------------
reference to "Exhibit D" in Section 3.4 of the Purchase Agreement shall be
---------
deemed to refer to Exhibit B of this Agreement.
---------
3.3 Exception to Section 3.5 of the Purchase Agreement. Section 3.5
--------------------------------------------------
of the Purchase Agreement is hereby deleted in its entirety and the following
Section 3.5 is inserted in lieu thereof:
"3.5 Issuance of Shares. The issuance, sale and delivery of the
------------------
Shares in accordance with this Agreement, the issuance and delivery of the
shares of Series B Common Stock issuable upon exchange of the Shares, and
the issuance and delivery of the shares of Series A Common Stock issuable
upon conversion of such shares of Series B Common Stock, have been, or will
be on or prior to the Closing, duly authorized by all
-3-
necessary corporate action on the part of the Company, and all such
shares have been duly reserved for issuance. The Shares when so
issued, sold and delivered against payment therefor in accordance with
the provisions of this Agreement, the shares of Series B Common Stock
issuable upon exchange of the Shares, and the shares of Series A
Common Stock issuable upon conversion of such shares of Series B
Common Stock, when issued upon such exchange or conversion, as the
case may be, will be duly and validly issued, fully paid and non-
assessable."
3.4 Exception to Section 3.6 of the Purchase Agreement. The first
--------------------------------------------------
sentence in Section 3.6 of the Purchase Agreement is hereby deleted in its
entirety and the following sentence inserted in lieu thereof:
"The execution, delivery and performance by the Company of this
Agreement, the Stockholder Agreement and Waiver of even date hereof by
and among the Company and the persons whose signatures are set forth
therein (the "Stockholder Agreement and Waiver") and all other
agreements required to be executed by the Company on or prior to
December 31, 1996 pursuant to Section 5.4 of the Purchase Agreement
(with the Stockholder Agreement and Waiver, the "Ancillary
Agreements"), and the consummation by the Company of the transactions
contemplated hereby and thereby, have been duly authorized by all
necessary corporate action."
4. Representations of the Purchaser. The Purchaser represents and
--------------------------------
warrants to the Company as follows:
4.1 Investment. The Purchaser is acquiring the Shares, the shares of
----------
Series B Common Stock for which the Shares may be exchanged, and the shares of
Series A Common Stock into which such shares of Series B Common Stock may be
converted, for its own account for investment and not with a view to, or for
sale in connection with, any distribution thereof, nor with any present
intention of distributing or selling the same; and, except as contemplated by
this Agreement and the Exhibits hereto, the Purchaser has no present or
contemplated agreement, undertaking, arrangement, obligation, indebtedness or
commitment providing for the disposition thereof.
4.2 Authority. The Purchaser has full power and authority to enter
---------
into and to perform this Agreement in accordance with its terms. The Purchaser
represents that it has not been organized, reorganized or recapitalized
specifically for the purpose of investing in the Company.
-4-
4.3 Experience. The Purchaser has carefully reviewed the
----------
representations concerning the Company contained in this Agreement, has read the
Company's Confidential Private Placement Memorandum, dated November 1996, and
has made detailed inquiry concerning the Company, its business and its
personnel; the officers of the Company have made available to the Purchaser any
and all written information which it has requested and have answered to the
Purchaser's satisfaction all inquiries made by the Purchaser; and the Purchaser
has sufficient knowledge and experience in investing in companies similar to the
Company so as to be able to evaluate the risks and merits of its investment in
the Company and is able financially to bear the risks thereof.
4.4 Accredited Investor Status. The Purchaser is an "accredited
--------------------------
investor" as defined in Rule 501(a) under the Securities Act.
5. Conditions to the Obligations of the Parties.
--------------------------------------------
5.1 Conditions to the Obligation of the Purchaser. The obligation of
---------------------------------------------
the Purchaser to purchase the Shares at the Closing is subject to the
fulfillment, or the waiver by the Purchaser, of each of the following conditions
on or before the Closing:
(a) Accuracy of Representations and Warranties. Each representation
------------------------------------------
and warranty contained in, or incorporated by reference in, Section 3 shall be
true on and as of the Closing Date with the same effect as though such
representation and warranty had been made on and as of that date.
(b) Performance. The Company shall have performed and complied with
-----------
all agreements and conditions contained in this Agreement required to be
performed or complied with by the Company prior to or at the Closing.
(c) Opinion of Counsel. The Purchaser shall have received an opinion
------------------
form Xxxx and Xxxx LLP, counsel for the Company, dated the Closing Date,
addressed to the Purchaser, and substantially in the form delivered in
connection with the closing of the transactions contemplated by the Purchase
Agreement.
(d) Stockholder Agreement and Waiver. The Stockholder Agreement and
--------------------------------
Waiver attached hereto as Exhibit D (the "Stockholder Agreement") shall have
---------
been executed and delivered by the Company and each of the stockholders of the
Company.
(e) Certificates and Documents. The Company shall have delivered to
--------------------------
the Purchaser a certificate of the Secretary of the Company substantially in the
form delivered in connection with the closing of the transactions contemplated
by the Purchase Agreement.
-5-
(f) Compliance Certificate. The Company shall have delivered to the
----------------------
Purchaser a certificate, executed by the President of the Company, dated the
Closing Date, certifying to the fulfillment of the conditions specified in
Subsections (a), (b), (d) and (e) of Section 5.1 of this Agreement.
5.2 Condition to the Obligation of the Company. The obligation of
------------------------------------------
the Company under Section 1.2 of this Agreement is subject to the execution and
delivery of the Stockholder Agreement by each of the stockholders of the
Company.
6. Covenants of the Company. Except as set forth below, the Company
------------------------
agrees to all covenants contained in Section 7 of the Purchase Agreement other
than the covenants contained in Sections 7.10 and 7.12(c) of the Purchase
Agreement. Except as set forth below, such covenants (including the termination
provisions of Section 7.3 of the Purchase Agreement) are incorporated by
reference herein and shall be deemed to be a part of this Agreement; provided,
however, that any defined term contained in the covenants that is redefined in
this Agreement shall have the meaning set forth in this Agreement.
6.1 Exception to Section 7.11 of the Purchase Agreement. All
---------------------------------------------------
references to "the date hereof" in Section 7.11 of the Purchase Agreement shall
be deemed to refer to December 31, 1996.
6.2 Exception to Section 7.12(b) of the Purchase Agreement. The
------------------------------------------------------
reference to "the Closing Date" in Section 7.12(b) of the Purchase Agreement
shall be deemed to refer to December 31, 1996.
7. Transfer of Shares.
------------------
7.1 Restricted Shares. "Restricted Shares" means (a) the Shares, (b)
-----------------
the shares of Series B Common Stock issued or issuable in exchange for the
Shares, (c) the shares of Series A Common Stock issued or issuable upon
conversion of such shares of Series B Common Stock, and (d) any other shares of
capital stock of the Company issued in respect of such shares (as a result of
stock splits, stock dividends, reclassifications, recapitalizations, or similar
events).
7.2 Requirements for Transfer.
-------------------------
(a) Restricted Shares shall not be sold or transferred unless either
(i) they first shall have been registered under the Securities Act, or (ii) the
Company first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the effect that such sale or transfer
is exempt from the registration requirements of the Securities Act.
-6-
(b) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for a transfer (i) by any Purchaser which is a
partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner, if the transferee agrees in writing to be subject to
the terms of this Section 7 to the same extent as if he were an original
Purchaser hereunder, (ii) to any trust beneficiary, in the case of any Purchaser
that is a trust, (iii) to any member, in the case of any Purchaser that is a
limited liability company or (iv) made in accordance with Rule 144 under the
Securities Act.
7.3 Legend. Each certificate representing Restricted Shares shall
------
bear a legend substantially in the following form:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and may not be offered, sold or
otherwise transferred, pledged or hypothecated unless and until such shares
are registered under such Act or an opinion of counsel satisfactory to the
Company is obtained to the effect that such registration is not required."
The foregoing legend shall be removed from the certificates representing
any Restricted Shares, at the request of the holder thereof, at such time as
they become eligible for resale pursuant to Rule 144(k) under the Securities
Act.
7.4 Rule 144A Information. The Company shall, at all times during
---------------------
which it is neither subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act nor exempt from reporting pursuant to Rule 12g3-2(b) under
the Exchange Act, upon the written request of the Purchaser, provide in writing
to the Purchaser and to any prospective transferee of any Restricted Shares of
the Purchaser the Rule 144A Information. The Company's obligations under this
Section 7.4 shall at all times be contingent upon receipt from the prospective
transferee of Restricted Shares of a written agreement to take all reasonable
precautions to safeguard the Rule 144A Information from disclosure to anyone
other than persons who will assist such transferee in evaluating the purchase of
any Restricted Shares.
8. Miscellaneous.
-------------
8.1 Successors and Assigns. This Agreement, and the rights and
----------------------
obligations of the Purchaser hereunder, may be assigned by the Purchaser to any
person or entity to which Shares are transferred by the Purchaser, and such
transferee shall be deemed a "Purchaser" for purposes of this Agreement;
provided that the transferee provides written notice of such assignment to the
Company.
-7-
8.2 Confidentiality. The Purchaser agrees that it will keep
---------------
confidential and will not disclose or divulge or use any confidential,
proprietary or secret information which the Purchaser may obtain from the
Company pursuant to the Memorandum or financial statements, reports and other
materials submitted by the Company to the Purchaser pursuant to this Agreement,
or pursuant to visitation or inspection rights granted hereunder, unless such
information is known, or until such information becomes known, to the public;
provided, however, that the Purchaser may disclose such information (a) to its
-------- -------
attorneys, accountants, consultants, and other professionals to the extent
necessary to obtain their services in connection with its investment in the
Company, (b) to any prospective purchaser of any Shares from the Purchaser as
long as such prospective purchaser agrees in writing to be bound by the
provisions of this Section 8.2 or (c) to any affiliate of the Purchaser or to a
partner, beneficiary, member, shareholder or subsidiary of the Purchaser who
agrees in writing to be bound by the provisions of this Agreement.
8.3 Survival of Representations and Warranties. All agreements,
------------------------------------------
representations and warranties contained herein, or incorporated by reference
herein, shall survive the execution and delivery of this Agreement and the
closing of the transactions contemplated hereby.
8.4 Notices. All notices, requests, consents, and other
-------
communications under this Agreement shall be in writing and shall be deemed
delivered (a) two business days after being sent by registered or certified
mail, return receipt requested, postage prepaid or (b) one business day after
being sent via a reputable nationwide overnight courier service guaranteeing
next business day delivery, in each case to the intended recipient as set forth
below:
If to the Company, at Entrust Technologies Inc., 0 Xxxxxxxxxxxxx Xxxxxxxx,
Xxxxxx, Xxxxxxx, Xxxxxx X0X 0X0, Attention: President, or at such other address
or addresses as may have been furnished in writing by the Company to the
Purchaser, with a copy to Xxxx X. Xxxxxxx, Esq., Xxxx and Xxxx LLP, 00 Xxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000; or
If to the Purchaser, at Societe Generale Investment Corporation, 1221
Avenue of the Xxxxxxxx, Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx
X. Xxxxxxx, or at such other address or addresses as may have been furnished to
the Company in writing by the Purchaser, with a copy to Xxxxxxx Xxxxxxxx, Esq.,
Xxxxx Xxxxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended.
-8-
Any party may change the address to which notices, requests, consents or other
communications hereunder are to be delivered by giving the other parties notice
in the manner set forth in this Section 8.4.
8.5 Brokers. The Purchaser (a) represents and warrants to the
-------
Company that it has retained no finder or broker in connection with the
transactions contemplated by this Agreement, and (b) will indemnify and save the
Company harmless from and against any and all claims, liabilities or obligations
with respect to brokerage or finders' fees or commissions, or consulting fees in
connection with the transactions contemplated by this Agreement asserted by any
person on the basis of any statement or representation alleged to have been made
by such indemnifying party. The Company (a) represents and warrants to the
Purchaser that except for its retention of DLJ, it has retained no finder or
broker in connection with the transactions contemplated by this Agreement and
(b) will indemnify and save the Purchaser harmless from and against any and all
claims, liabilities or obligations with respect to brokerage or finders' fees or
commissions, or consulting fees in connection with the transactions contemplated
by this Agreement asserted by any person on the basis of any statement or
representation alleged to have been made by such indemnifying party.
8.6 Entire Agreement. This Agreement, together with the provisions
----------------
of the Purchase Agreement specifically incorporated by reference herein,
embodies the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter.
8.7 Amendments and Waivers. Except as otherwise expressly set forth
----------------------
in this Agreement, any term of this Agreement may be amended and the observance
of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and Purchasers holding at least two-thirds of the shares of Series B
Common Stock issued or issuable upon exchange of the Shares. Any amendment or
waiver effected in accordance with this Section 8.7 shall be binding upon all
Purchasers, each future holder of any Shares (including shares of Series B
Common Stock into which such Shares have been converted), and the Company. No
waivers of or exceptions to any term, condition or provision of this Agreement,
in any one or more instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such term, condition or provision.
-9-
8.8 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same document.
8.9 Section Headings. The section headings are for the convenience
----------------
of the parties and in no way alter, modify, amend, limit, or restrict the
contractual obligations of the parties.
8.10 Severability. The invalidity or unenforceability of any
------------
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
8.11 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Maryland, without giving
effect to conflict-of-laws principles.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
ENTRUST TECHNOLOGIES INC.
By: /s/ Xxxx X. Xxxx
-----------------------------
Name: Xxxx X. Xxxx
Title: President
SOCIETE GENERALE INVESTMENT
CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
