**Exhibit 2.1**

 

**SHARE PURCHASE AGREEMENT**

** **

**BY AND AMONG**

** **

**VALUECLICK, INC.,**

** **

**PRICERUNNER HOLDING AB**

** **

**THE SHAREHOLDERS OF PRICERUNNER AB**

** **

**AND**

** **

**SPARK INVESTORS AB**

**(as Shareholder Agent)**

** **

**Dated as of August 3, 2004**

 

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**TABLE OF CONTENTS**

 
| ARTICLE I AGREEMENT TO PURCHASE AND SELL  SHARES                 |   |
|------------------------------------------------------------------|--------|
|                                                             |   | 1.1 |   | Agreement to Purchase and Sell Shares |   |
|                                                             |   | 1.2 |   | Adjustment to Aggregate Initial  Consideration |   |
|                                                             |   | 1.3 |   | Establishment of Escrow; Interest and  Dividends |   |
|                                                             |   | 1.4 |   | Distribution of the Aggregate Initial  Consideration |   |
|                                                             |   | 1.5 |   | Lock-Up of Share Consideration |   |
|                                                             |   | 1.6 |   | Additional Consideration |   |
|                                                             |   | 1.7 |   | Adjustment Events |   |
|                                                             |   | 1.8 |   | Closing |   |
|                                                             |   |   |   |   |   |
| ARTICLE II REPRESENTATIONS AND WARRANTIES  OF THE SHAREHOLDERS 9 |   |
|                                                             |   | 2.1 |   | Organization and Qualification;  Subsidiaries, Interests and Joint Ventures |   |
|                                                             |   | 2.2 |   | Company Capital Structure |   |
|                                                             |   | 2.3 |   | Subsidiaries |   |
|                                                             |   | 2.4 |   | Authority |   |
|                                                             |   | 2.5 |   | Company Financial Statements; Working  Capital Calculations |   |
|                                                             |   | 2.6 |   | No Undisclosed Liabilities |   |
|                                                             |   | 2.7 |   | No Changes |   |
|                                                             |   | 2.8 |   | Tax and Other Returns and Reports |   |
|                                                             |   | 2.9 |   | Restrictions on Business Activities |   |
|                                                             |   | 2.10 |   | Title to Properties; Absence of Liens and  Encumbrances; Condition of Equipment |   |
|                                                             |   | 2.11 |   | Intellectual Property |   |
|                                                             |   | 2.12 |   | Agreements, Contracts and Commitments |   |
|                                                             |   | 2.13 |   | Interested Party Transactions |   |
|                                                             |   | 2.14 |   | Company Authorizations |   |
|                                                             |   | 2.15 |   | Litigation |   |
|                                                             |   | 2.16 |   | Accounts Receivable |   |
|                                                             |   | 2.17 |   | Records |   |
|                                                             |   | 2.18 |   | Environmental Matters |   |
|                                                             |   | 2.19 |   | Brokers’ and Finders’ Fees; Third Party  Expenses |   |
|                                                             |   | 2.20 |   | Employee Benefit Plans |   |
|                                                             |   | 2.21 |   | Compliance with Laws |   |
|                                                             |   | 2.22 |   | Warranties; Indemnities |   |
|                                                             |   | 2.23 |   | Software Development Agreements |   |
|                                                             |   | 2.24 |   | Representations Complete |   |
|                                                             |   | 2.25 |   | Insurance |   |
|                                                             |   | 2.26 |   | Certain Business Practices |   |
|                                                             |   | 2.27 |   | Complete Copies of Materials |   |
|                                                             |   | 2.28 |   | Customers and Suppliers |   |
|                                                             |   | 2.29 |   | Export Control Laws |   |

 

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|                                                                                |   | 2.30   |   | Banks and Brokerage Accounts                                      |   |
|-------------------------------------------------------------------------------------|--------|--------|--------|-------------------------------------------------------------------|--------|
|                                                                                |   | 2.31   |   | Takeover Statutes                                                 |   |
|                                                                                |   | 2.32   |   | Internal Controls                                                 |   |
|                                                                                |   | 2.33   |   | Due Authorization of Shareholders                                 |   |
|                                                                                |   | 2.34   |   | Title to Shares                                                   |   |
|                                                                                |   | 2.35   |   | Litigation Regarding Shareholders                                 |   |
|                                                                                |   | 2.36.  |   | Representations Regarding Parent Shares                           |   |
|                                                                                |   |   |   |                                                              |   |
| ARTICLE III REPRESENTATIONS AND WARRANTIES  OF PARENT AND PURCHASER                 |   |
|                                                                                |   | 3.1    |   | Organization, Standing and Power                                  |   |
|                                                                                |   | 3.2    |   | Authority                                                         |   |
|                                                                                |   | 3.3    |   | No  Conflicts                                                     |   |
|                                                                                |   | 3.4    |   | SEC Reports; Financial Statements                                 |   |
|                                                                                |   | 3.5    |   | No Prior Activities                                               |   |
|                                                                                |   | 3.6    |   | Brokers’ and Finders’ Fees                              |   |
|                                                                                |   |   |   |                                                              |   |
| ARTICLE IV CONDUCT PRIOR TO THE CLOSING                                             |   |
|                                                                                |   | 4.1    |   | Conduct of Business of the Company                                |   |
|                                                                                |   | 4.2    |   | Negative Covenants                                                |   |
|                                                                                |   | 4.3    |   | No Solicitation                                                   |   |
|                                                                                |   |   |   |                                                              |   |
| ARTICLE V ADDITIONAL AGREEMENTS                                                     |   |
|                                                                                |   | 5.1    |   | Access to Information; Cooperation                                |   |
|                                                                                |   | 5.2    |   | Confidentiality                                                   |   |
|                                                                                |   | 5.3    |   | Public Disclosure                                                 |   |
|                                                                                |   | 5.4    |   | Consents                                                          |   |
|                                                                                |   | 5.5    |   | Reasonable Efforts                                                |   |
|                                                                                |   | 5.6    |   | Notification of Certain Matters                                   |   |
|                                                                                |   | 5.7.   |   | Release                                                           |   |
|                                                                                |   | 5.8.   |   | Director Discharge                                                |   |
|                                                                                |   | 5.9.   |   | Preemptive Rights                                                 |   |
|                                                                                |   |   |   |                                                              |   |
| ARTICLE VI CONDITIONS TO THE CLOSING                                                |   |
|                                                                                |   | 6.1    |   | Conditions to Obligations of Each Party                           |   |
|                                                                                |   | 6.2    |   | Additional Conditions to Obligation of the  Shareholders          |   |
|                                                                                |   | 6.3    |   | Additional Conditions to the Obligations of  Parent and Purchaser |   |
|                                                                                |   |   |   |                                                              |   |
| ARTICLE VII SURVIVAL OF REPRESENTATIONS AND  WARRANTIES; INDEMNIFICATION AND ESCROW |   |
|                                                                                |   | 7.1    |   | Survival of Representations and Warranties                        |   |
|                                                                                |   | 7.2    |   | Indemnity and Escrow Arrangements                                 |   |

 

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| ARTICLE VIII TERMINATION, EXPENSES,  AMENDMENT AND WAIVER |   |
|-----------------------------------------------------------|--------|
|                                                      |   | 8.1 |   | Termination |   |
|                                                      |   | 8.2 |   | Effect of Termination |   |
|                                                      |   | 8.3 |   | Fees and Expenses |   |
|                                                      |   | 8.4 |   | Amendment |   |
|                                                      |   | 8.5 |   | Extension; Waiver |   |
|                                                      |   |   |   |   |   |
| ARTICLE IX GENERAL PROVISIONS                             |   |
|                                                      |   | 9.1 |   | Notices |   |
|                                                      |   | 9.2 |   | Interpretation |   |
|                                                      |   | 9.3 |   | Counterparts |   |
|                                                      |   | 9.4 |   | Entire Agreement; Assignment |   |
|                                                      |   | 9.5 |   | Severability |   |
|                                                      |   | 9.6 |   | Remedies; Exercise of Rights |   |
|                                                      |   | 9.7 |   | Governing Law |   |
|                                                      |   | 9.8 |   | Jurisdiction and Venue; Attorney’s Fees |   |
|                                                      |   | 9.9 |   | Specific Performance |   |
|                                                      |   | 9.10 |   | Rules of Construction |   |
|                                                      |   | 9.11 |   | Parent Guarantee |   |

 

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**INDEX OF EXHIBITS**

 
| **Exhibit**    | ** ** | **Description**                   |
|----------------|------------|-----------------------------------|
| Exhibit A |       | Form of Employment Agreement      |
| Exhibit B      |       | Form of Warranty Escrow Agreement |
| Exhibit C |       | Form of Lock-Up Agreement         |
| Exhibit D      |       | Index of Due Diligence Material   |

 

**INDEX OF SCHEDULES**

 
| **Schedule** | ** ** | **Description**                               |
|--------------|------------|-----------------------------------------------|
| I            |       | Shareholders of the Company                   |
| II           |       | Allocation of Aggregate Initial Consideration |
| III          |       | Preliminary Working Capital Estimate          |
| 1.2          |       | Certain Transaction Expenses                  |
| 1.6(c)(ii)   |       | 2004/2005 Budget                              |
| 2.1          |       | Subsidiaries and Jurisdictions                |
| 2.2          |       | Company Capital Structure                     |
| 2.5          |       | Company Financials                            |
| 2.6          |       | No Undisclosed Liabilities                    |
| 2.7          |       | No Changes                                    |
| 2.8          |       | Tax and Other Returns and Reports             |
| 2.9          |       | Restrictions on Business Activities           |
| 2.10         |       | Title to Properties                           |
| 2.11         |       | Intellectual Property                         |
| 2.12         |       | Material Contracts                            |
| 2.13         |       | Interested Party Transactions                 |
| 2.14         |       | Company Authorizations                        |
| 2.15         |       | Litigation                                    |
| 2.16         |       | Accounts Receivable                           |
| 2.19         |       | Fees and Third Party Expenses                 |
| 2.20         |       | Employee Benefit Plans                        |
| 2.21         |       | Compliance with Laws                          |
| 2.22         |       | Warranty Obligations                          |
| 2.25         |       | Insurance                                     |
| 2.28         |       | Customers and Suppliers                       |
| 2.30         |       | Banks and Brokerage Accounts                  |

 

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**SHARE PURCHASE AGREEMENT**

 

This SHARE PURCHASE AGREEMENT (the “**Agreement**”)is made and entered into as of August 3, 2004 by and among ValueClick, Inc., aDelaware corporation (“**Parent**”),Pricerunner Holding AB, a Swedish corporation with registration no. 556656-3820and a wholly-owned subsidiary of Parent (“**Purchaser**”), the Shareholders (as defined below) ofPricerunner AB, a Swedish corporation with registration no. 556566-7796 (the “**Company**”), and Spark Investors AB, in itscapacity as Shareholder Agent (as defined in Section 7.2(h)).

 

**RECITALS**

 

A.            Parent wishes to acquire the Companyand wishes to effect the acquisition through Purchaser.

 

B.            Purchaser desires to purchase fromthe shareholders of the Company included on the signature pages hereto andlisted on Schedule I hereto (each a “**Shareholder**”and collectively, the “**Shareholders**”),and the Shareholders desire to sell to Purchaser the Company’s shares held bysuch Shareholders (collectively, the “**Shares**”)in exchange for cash and stock consideration as provided below.

 

C.            The Shares owned by the Shareholdersas listed on Schedule I represent 100% of the Company’s fully dilutedequity securities.

 

D.            Parent, Purchaser and theShareholders desire to make certain representations and warranties and otheragreements in connection with the transactions contemplated hereby.

 

E.             In recognition of the considerationreceivable pursuant to the Agreement and in connection with the purchase of alltheir respective Shares, certain individuals have agreed to enter intoemployment agreements with non-competition provisions with Parent andPurchaser substantially in the form of **ExhibitA** attached hereto (the “**EmploymentAgreement**”).

 

**AGREEMENT**

 

NOW,THEREFORE, in consideration of the foregoing premises and the covenants,agreements, representations and warranties set forth herein, and intending tobe legally bound hereby, the parties to this Agreement hereby agree as follows:

 

**ARTICLE I**

 

**AGREEMENT TO PURCHASE AND SELL SHARES**

 

1.1           Agreement toPurchase and Sell Shares.  Subject to the terms and conditions hereof,the Shareholders agree to sell to Purchaser, and Purchaser agrees to purchasefrom the Shareholders, the Shares, which represent 100% of the fully-dilutedequity of the Company, for (a) an aggregate purchase price (the “**Purchase Price**”) of U.S.$30,000,000, which,as initially adjusted pursuant to Section 1.2(b), shall consist of (i)cash consideration (the “**Cash**

 

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**Consideration**”)in the amount of U.S.$26,715,385 and (ii) 263,467 shares of Parent’s commonstock, par value $0.001 per share (the “**ParentShares**”), as determined by *dividing*(A) U.S.$2,709,630 by (B) the Average Closing Price (the “**Share Consideration**”) and (b) theAdditional Consideration (as defined below), if any.  The Share Consideration and CashConsideration, subject to further adjustment as provided in Section 1.2(d)(such amount, as adjusted, the “**Aggregate InitialConsideration**”), shall be allocated to the Shareholders and paid tothe Shareholders and into the Warranty Escrow Fund (as defined below) asprovided on Schedule II attached hereto. For purposes of this Agreement, the “**AverageClosing Price**” means $10.28.

 

1.2           Adjustmentto Aggregate Initial Consideration.

 

(a)           The amount ofAggregate Initial Consideration paid to the Shareholders shall be subject todownward adjustment, on a dollar for dollar basis, to the extent that WorkingCapital is less than SEK 27 million as of the Closing Date.  For purposes of this Agreement, “**Working Capital**” is defined as(i) total current assets (as defined under accounting principles generallyaccepted in the United States (“**U.S. GAAP**”))of the Company and its subsidiaries on a combined basis, *less* (ii) the sum of (A) totalliabilities (as defined under U.S. GAAP) of the Company and its subsidiaries ona combined basis, (B) all fees, costs and expenses incurred by the Companyor the Shareholders, including legal fees, financial advisor fees, including,without limitation, the type described in Section 2.19, employee bonusesand severance benefits, in connection with the negotiation of this Agreement orthe transactions contemplated hereby, as set forth on Schedule 1.2,(C) costs associated with an incentive scheme for employees of the Companyin an amount set forth on Schedule 1.2 and (D) all of the fees, costsand expenses associated with preparing and filing any Tax Returns (as definedin Section 2.8) not timely filed prior to the Closing Date and payingany Pre-Closing Taxes (as defined in Section 7.2(l)) (including, in eachcase, accountant’s and attorney’s fees and the amount of any required paymentsfor Pre-Closing Taxes, any penalties and any interest thereon).  With respect to Schedule 1.2, forpurposes of the Preliminary Working Capital Estimate, such schedule shall beestimated by the Company, but, for purposes of the Working Capital Statement,the Company shall provide Parent with a final Schedule 1.2 no later thanfive days after the Closing Date.

 

(b)           The Company hasprepared and delivered to Parent prior to the Closing an estimate of theWorking Capital as of June 30, 2004 (using the items described in clauses (B)and (C) of Section 1.2(a) as reflected on the preliminary Schedule1.2), as set forth in Schedule III (the “**Preliminary Working Capital Estimate**”).  The Parties have agreed that the PreliminaryWorking Capital Estimate is SEK 22,597,285. The Aggregate Initial Consideration payable to the Shareholders pursuantto Section 1.1 has been reduced by U.S.$574,985, on a dollar for dollarbasis by the difference between SEK 27 million and such Preliminary WorkingCapital Estimate.

 

(c)           Within 30 days afterthe Closing, Parent shall calculate at Parent’s expense and deliver to theShareholder Agent a report (the “**WorkingCapital Statement**”) which shall include a calculation of the WorkingCapital as of the Closing Date.  TheWorking Capital Statement shall be signed by an executive officer of Parent andshall not be subject to revision or modification, except as providedimmediately below.  The Shareholder Agentshall be entitled to

 

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inspect the books and records of the Companyand its subsidiaries upon which the calculations reflected in the WorkingCapital Statement were made and any and all other books and records of theCompany and its subsidiaries which may be of relevance to the Working CapitalStatement and the determination of the Working Capital (the “**Relevant Working Capital Records**”), byproviding written notice to Parent of such request within five Business Days(as defined below) after the Working Capital Statement has been received by theShareholder Agent.  If the ShareholderAgent does not deliver such a written request within such five Business Dayperiod, the calculations and facts set forth in the Working Capital Statementshall be deemed irrevocably approved by the Shareholder Agent and shall beconclusive and binding upon the Shareholder Agent and each Shareholder.  If the Shareholder Agent does deliver awritten inspection request within five Business Days after the Working CapitalStatement is delivered, Purchaser shall cause the Company to provide reasonableaccess to the Relevant Working Capital Records during normal business hours nolater than five Business Days after the Shareholder Agent delivers the writteninspection request.  The ShareholderAgent shall have a period of fifteen Business Days (as defined below) after thedate access to the Relevant Working Capital Records is given to review andanalyze the same, and within five Business Days after the end of such fifteenBusiness Day inspection period shall give Parent written notice describing inreasonable detail the nature and amount of any purported differences betweenthe amounts and facts reflected in the Working Capital Statement and thosedetermined in good faith through the Shareholder Agent’s review.  If the Shareholder Agent fails to give properwritten notice to Parent of any purported differences within the requiredperiod, the calculations and facts set forth in the Working Capital Statementshall be deemed irrevocably and unconditionally approved by the ShareholderAgent and shall be conclusive and binding upon the Shareholder Agent and eachShareholder.  If the Shareholder Agentdoes provide written notice of purported differences within the required period,the Shareholder Agent and an authorized representative of Parent shall promptlyseek in good faith to resolve any purported differences and agree to theappropriate amount of Additional Consideration payable to theShareholders.  If the parties are unableto come to a good faith resolution within fifteen Business Days aftercommencing such good faith discussions, either Parent or the Shareholder Agentmay commence an arbitration in accordance with Section 9.8 to resolvethe issue.  The Working Capital as of theClosing as finally determined pursuant to this Section 1.2(c) shall bereferred to herein as the “**Final WorkingCapital**.”

 

(d)           To the extent thatthe Final Working Capital is less than the Preliminary Working CapitalEstimate, the Aggregate Initial Consideration payable to the Shareholderspursuant to Section 1.1 shall be reduced on a dollar for dollar basis bysuch shortfall and Parent shall be entitled to withdraw such shortfall from theWarranty Escrow Fund pursuant to a joint written instruction executed by Parentand the Shareholder Agent.  To the extentthat the Final Working Capital is greater than the Preliminary Working CapitalEstimate, the Aggregate Initial Consideration payable to the Shareholderspursuant to Section 1.1 shall be increased on a dollar for dollar basisby an amount equal to difference between the Preliminary Working CapitalEstimate and the Final Working Capital (*provided*that for the purposes of the calculation of such difference, if the FinalWorking Capital is greater than SEK 27 million, such Final Working Capitalshall be deemed to be SEK 27 million) and, within five Business Days after thefinal determination of Final Working Capital, Parent shall pay by wire transferof immediately

 

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available funds in U.S. Dollars the amount ofsuch difference to the Consideration Escrow Agent (as defined below) fordistribution to the Shareholders.

 

(e)           Parent agrees to (i)satisfy any and all expenses set forth on the final Schedule 1.2 onbehalf of the Company or the Shareholders, as the case may be, following theClosing Date and (ii) use the amount of costs allocated to the incentive schemefor employees of the Company set forth on the final Schedule 1.2 forsuch incentive scheme following the Closing Date.

 

1.3           Establishment ofEscrow; Interest and Dividends.

 

(a)           Onthe Closing Date, on behalf of the Shareholders, Purchaser shall deposit into ageneral escrow account established pursuant to Article VII below(the “**Warranty Escrow Fund**”) aportion of the Aggregate Initial Consideration in an amount equal toU.S$4,413,752 in the aggregate, of which U.S$4,007,308 shall be in cash andU.S.$406,444 shall be in Parent Shares from the Share Consideration, or 39,520Parent Shares (such cash and Parent Shares, as from time to time in the WarrantEscrow Fund, the “**Escrow Amount**”).  The Escrow Amount, and any interest earnedthereon shall be maintained in a separate account and disbursed as provided inthe Escrow Agreement attached hereto as **ExhibitB** (the “**Warranty EscrowAgreement**”) and in Article VII of this Agreement.  The portion of the Escrow Amount deposited onbehalf of each Shareholder shall be in proportion to the percentage of theAggregate Initial Consideration ultimately received by each such Shareholder(such respective percentages, the “**ProportionateInterests**”).  For purposes ofdetermining the value of any Parent Shares included in the Warranty EscrowFund, each such share shall be deemed to have a value equal to the AverageClosing Price.

 

(b)           Anyinterest accruing on the Escrow Amount shall be held in the Warranty EscrowFund and available to cover claims for Losses until distributed upontermination of the Warranty Escrow Fund, as provided in Article VII.  Any such interest shall be distributed toParent (to the extent earned or paid with respect to cash in the WarrantyEscrow Fund distributed to Parent to cover Losses pursuant to Article VII)or based on the Proportionate Interests to the Shareholders (to the extentearned or paid with respect to cash ultimately distributed to such Shareholdersupon termination of the Warranty Escrow Fund), such that any interest earned onany cash in the Warranty Escrow Fund generally follows the ultimate recipientof the cash on which such interest was earned.

 

1.4           Distribution ofthe Aggregate Initial Consideration.

 

(a)           Atthe Closing, each Shareholder shall deliver to Purchaser certificates (“**Certificates**”) representing all Shares heldby such Shareholder, duly endorsed in blank. Upon surrender of such Certificates to Purchaser and concurrently withthe deposit of a portion of the Aggregate Initial Consideration into the EscrowFund as provided in Section 1.3, on the Closing Date, Purchaser shall(i) pay by wire transfer of immediately available funds an aggregate ofU.S.$22,708,078, which will be distributed on behalf of the Shareholders to Skandinaviska Enskilda Banken AB (publ.), abank duly incorporated and organized under the laws of Sweden, as theShareholder’s escrow agent (the “**Consideration Escrow Agent**”)and the Shareholders as

 

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set forth on Schedule II and (ii)deliver, or cause to be delivered, to the Consideration Escrow Agent and theShareholders as set forth on Schedule II certificates representing223,947 Parent Shares.  Through thetimely execution of such payment and delivery in accordance with Schedule II,and the payments into the Warranty Escrow Fund pursuant to Section 1.3(a),Purchaser will be deemed to have fulfilled its obligation as regards payment ofAggregate Initial Consideration and the Purchaser and Parent shall have noobligation or liability whatsoever for the allocation of the Aggregate InitialConsideration among the Shareholders.

 

(b)           TheShareholders shall, on or before the Closing Date, enter into an escrowagreement pursuant to which the Consideration Escrow Agent shall keep thedeposited amount in an interest bearing clients’ funds account on behalf of theShareholders, to be paid out only upon either (i) a joint request in writingfrom the Shareholders or (ii) a request in writing from any Shareholder, ifsupported by final judgment or arbitration award binding upon the relevantparties, as set forth in the escrow agreement. The Purchaser and Parent shall have no rights or obligations in relationto such escrow agreement or the Consideration Escrow Agent.

 

(c)           EachShareholder by executing and delivering this Agreement hereby irrevocablyacknowledges and agrees that upon the payment of any Aggregate InitialConsideration to the Consideration Escrow Agent and the Shareholders as setforth on Schedule II, none of Parent, Purchaser, the Company or any oftheir affiliates shall have any further liability or obligation to anyShareholder with respect to such Aggregate Initial Consideration.  Each Shareholder acknowledges and agrees thathe, she or it will not raise any claim regarding any alleged failure of Parentor Purchaser to pay the Aggregate Initial Consideration; provided thatthe Aggregate Initial Consideration has been paid by Purchaser pursuant to Section1.3(a) and Section 1.4(a).  Inthe event that any Shareholder should raise such a claim against Parent orPurchaser, the Shareholders hereby agree, jointly and severally, to indemnifyand hold harmless Parent and Purchaser from such unpermitted claim and topromptly defend Parent and Purchaser against any action for which Parent andPurchaser have been so indemnified and pay all Losses (as defined below) aswell as other reasonable compensation due to such claim raised or actionbrought against Parent or Purchaser.

 

1.5           Lock-Up of Share Consideration.  Each Shareholder receiving ShareConsideration shall execute and deliver to Purchaser and Parent a lock-upagreement in the form attached hereto as **ExhibitC** with respect to all Parent Shares received by suchShareholder.

 

1.6           AdditionalConsideration.

 

(a)           As additionalconsideration for the Shares, with respect to the fiscal year of the Companyending on April 30, 2005, Purchaser shall, subject to the provisions of Section1.6(d), distribute to the Consideration Escrow Agent on the DistributionDate (as defined below) cash and Parent Shares equal to the AdditionalConsideration, if any.  The cash andParent Shares that comprise the Additional Consideration shall be in the sameproportion as the Cash Consideration and Share Consideration pursuant to Section1.1 and the number of Parent Shares comprising Additional Consideration, tobe distributed to the same Shareholders initially receiving ShareConsideration, shall be determined by *dividing*(A) the dollar value of the portion of the Aggregate Consideration to be paidin Parent Shares by (B) the weighted average closing

 

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price of Parent Shares over the fiveconsecutive trading days up to and including the trading day immediatelypreceding the Distribution Date, but in no event less than $9.50.  The cash and Parent Shares comprising theAdditional Consideration shall be allocated to the Shareholders and paid to theConsideration Escrow Agent, the Shareholders and into the Warranty Escrow Fundin the same proportions as provided on Schedule II attached hereto withrespect to the Aggregate Initial Consideration. The Parent Shares that comprise the Additional Considerationshall be paid to the Shareholders for, and be allocated to, the same Shares asthe Share Consideration.  For thepurposes of this Agreement, “**AdditionalConsideration**” shall mean:

 

(i)            anamount expressed in United Stated Dollars equal to (A) U.S.$1.00 (One UnitedStates Dollar) *multiplied by* (B)the number determined by *dividing*(1) the amount, if any, of EBITDA (as defined below) of the Company and itssubsidiaries taken as a whole for the fiscal year ending April 30, 2005 inexcess of SEK 24.4 million by (2) SEK 2.033; provided, that such amountshall in any event be limited to a maximum of U.S.$3,000,000; *plus*

 

(ii)           thelesser of (A) an amount expressed in United States Dollars equal to (1)U.S.$1.00 (One United States Dollar) *multipliedby* (2) the number determined by *dividing*(x) the amount, if any, of EBITDA of the Company and its subsidiaries taken asa whole for the fiscal year ending April 30, 2005 in excess of SEK 24.4 millionby (y) SEK 2.033 or (B) an amount expressed in United States Dollars equal to(1) U.S.$1.00 (One United States Dollar) *multipliedby* (2) the number determined by *dividing*(x) the amount, if any, of Revenues (as defined below) of the Company for thetwelve months ended April 30, 2005 in excess of SEK 84.4 million by (y) SEK7.033; provided, that such amount shall in any event be limited to amaximum of U.S.$3,000,000.

 

(b)           For the purposes of this Agreement(i) “**EBITDA**” shall mean earningsbefore interest, taxes on income, depreciation and amortization as determinedin accordance with U.S. GAAP and (ii) “**Revenues**”shall mean revenues as determined in accordance with U.S. GAAP.

 

(c)           Each of Parent and Purchaser agreesthat, for the period following the Closing through April 30, 2005 (i) it willnot take any action to change or affect the cash funding requirements in the2004/2005 budget attached hereto as Schedule 1.6(c)(ii) and (ii) indetermining EBITDA and Revenues, the Company will be treated as a separatebusiness unit, and any charges or expenses of Parent or Purchaser not relatedto, or reasonably necessary for, the operation of the Company will beexcluded.  In addition, Parent andPurchaser agree to (A) act in good faith in the operation of the business ofthe Company and its subsidiaries after the Closing through April 30, 2005 withrespect to the ability of the Company to maximize EBITDA and grow Revenues and(B) notify the Shareholder Agent of any change to the accounting policies ofthe Company and its subsidiaries during the period until the Statement (asdefined below) has been prepared.

 

(d)           Notwithstanding the foregoing, on theDistribution Date, on behalf of the Shareholders, Purchaser shall deposit intothe Warranty Escrow Fund an amount equal to 15% of the AdditionalConsideration, in cash and Parent Shares on a pro rata basis, which shall beadded

 

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to the Escrow Amount for all purposes under thisAgreement and shall be disbursed as provided in Article VII.

 

(e)           Within 60 days after the end of theCompany’s fiscal year ending April 30, 2005, Parent shall calculate at Parent’sexpense and deliver to the Shareholder Agent a report (the “**Statement**”) which shall include(i) the audited income statement of the Company and its subsidiaries forthe fiscal year ending April 30, 2005, (ii) a calculation of the amount ofAdditional Consideration, if any, resulting therefrom and (iii) a detaileddescription of any special adjustments or extraordinary items that affected theAdditional Consideration calculation, if any. The Statement shall be signed by an executive officer of Parent andshall not be subject to revision or modification, except as providedimmediately below.  The Shareholder Agentshall be entitled to inspect the books and records of the Company and itssubsidiaries upon which the calculations reflected in the Statement were madeand any and all other books and records of the Company and its subsidiarieswhich may be of relevance to the Statement and the determination of the EBITDAand Revenues of the Company and its subsidiaries on a combined basis (the “**Relevant Books and Records**”), by providingwritten notice to Parent of such request within five Business Days (as definedbelow) after the Statement is delivered. If the Shareholder Agent does not deliver such a written request withinsuch five Business Day period, the calculations and facts set forth in theStatement shall be deemed irrevocably approved by the Shareholder Agent andshall be conclusive and binding upon the Shareholder Agent and eachShareholder.  If the Shareholder Agentdoes deliver a written inspection request within five Business Days after theStatement is received by the Shareholder Agent, Purchase shall cause theCompany to provide reasonable access to the Relevant Books and Records duringnormal business hours no later than two Business Days after the ShareholderAgent delivers the written inspection request. The Shareholder Agent shall have a period of five Business Days (asdefined below) after the date access to the Relevant Books and Records is givento review and analyze the same, and within five Business Days after the end ofsuch five Business Day inspection period shall give Parent written noticedescribing in reasonable detail the nature and amount of any purporteddifferences between the amounts and facts reflected in the Statement and thosedetermined in good faith through the Shareholder Agent’s review.  If the Shareholder Agent fails to give properwritten notice to Parent of any purported differences within the requiredperiod, the calculations and facts set forth in the Statement shall be deemedirrevocably and unconditionally approved by the Shareholder Agent and shall beconclusive and binding upon the Shareholder Agent and each Shareholder.  If the Shareholder Agent does provide writtennotice of purported differences within the required period, the ShareholderAgent and an authorized representative of Parent shall promptly seek in goodfaith to resolve any purported differences and agree to the appropriate amountof Additional Consideration payable to the Shareholders.  If the parties are unable to come to a goodfaith resolution within five Business Days after commencing such good faithdiscussions, either Parent or the Shareholder Agent may commence an arbitrationin accordance with Section 9.8 to resolve the issue.  Parent shall be entitled to withhold suchportion of the Additional Consideration subject to the Statement in disputeduring the pendency of any dispute relating thereto and shall be entitled todeposit into the Warranty Escrow Fund an amount equal to 15% of the AdditionalConsideration, as determined by Parent and set forth in the Statement, whichshall be added to the Escrow Amount for all purposes under this Agreement andshall be disbursed as provided in Article VII.  Any Additional Consideration shall be paid by

 

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Parentwithin ten Business Days after the earlier of (i) the date that theShareholder Agent approves, or is deemed to approve, the Statement and(ii) the date that any differences properly asserted by the ShareholderAgent are resolved (whether through good faith discussions, through a legalaction not subject to appeal or other means mutually agreed by the parties)(such date, the “**Distribution Date**”).

 

(f)            Each Shareholder by executing anddelivering this Agreement hereby irrevocably acknowledges and agrees that uponthe final payment of any Additional Consideration to the Consideration EscrowAgent, none of Parent, Purchaser, the Company or any of their affiliates shallhave any further liability or obligation to any Shareholder with respect tosuch Additional Consideration.  Therights of each Shareholder to receive any Additional Consideration are personalto such Shareholder and may not, except for between the Shareholders, be sold,pledged, hypothecated or otherwise transferred (and no participation or otherrights may be granted therein), other than by will or the laws of descent ordistribution or any general pledge or encumbrance of assets of a Shareholders(such as a floating charge) or with the consent of Parent (not to beunreasonably withheld).  Any attemptedsale, pledge, hypothecation or other transfer (and any participation or grantof rights) in violation of this provision shall be null and void abinitio.

 

(g)           From the Closing Date through April30, 2005, Parent shall cause the Company to furnish to the Shareholder Agent,within two Business Days following preparation thereof (and in any event withinthirty calendar days after the end of each fiscal quarter), an unauditedbalance sheet and unaudited income statement as of the end of suchquarter.  The foregoing shall be inaccordance with the books and records of the Company and its subsidiaries andshall fairly present the financial position of the Company and its subsidiariesas of the last day of the period then ended and for the period then ended.

 

1.7           AdjustmentEvents.  If,between the date of this Agreement and the Closing Date, the outstanding ParentShares shall have been changed into or exchanged for a different number ofshares or kind of shares of Parent or another corporation or entity by reasonof any reclassification, split-up, stock dividend or any arrangement,amalgamation or similar statutory procedure (an “**Adjustment Event**”), then the Share Consideration shall bereasonably and equitably adjusted.  Ifthe record date for any such Adjustment Event shall be prior to the ClosingDate, as applicable, but the payment date therefor shall be subsequent to theClosing Date, as applicable, Parent shall take such action as shall be requiredso that on such payment date the applicable Shareholders shall be entitled toreceive such number or kind of shares as such holder would have received as aresult of such event if the record date therefor had been immediately after theClosing Date.

 

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1.8           Closing.

 

(a)           Unlessthis Agreement is earlier terminated pursuant to Section 8.1, theclosing of the transactions contemplated hereby (the “**Closing**”) will take place at the offices ofAdvokatfirman Vinge, Smålandsgatan 20, Stockholm, Sweden as promptly aspracticable following the satisfaction or valid waiver of the conditions setforth in Article VI, unless another place or time is agreed inwriting by Parent and the Shareholder Agent. The date the Closing actually occurs is referred to as the “**Closing Date**.”

 

(b)           Atthe Closing:  (a) Parent andPurchaser shall deliver to the Shareholders the various certificates, instruments anddocuments and take the actions referenced in Section 6.2 and(b) the Shareholders shall deliver or shall cause the Company to deliverto Parent and Purchaser the various certificates, instruments and documents andtake the actions referenced in Section 6.3.

 

# **ARTICLE II**

# ** **

# **REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS**

# ** **

The Shareholders hereby jointly and severally represent and warrant toParent and Purchaser as of the date hereof and as of the Closing Date asfollows in Section 2.1 through Section 2.32.  Each of the representations and warranties inSection 2.1 through Section 2.36 shall be subject to theexceptions and information in the disclosure schedules attached hereto suppliedby the Shareholders to Parent and Purchaser relating to representations andwarranties in specific sections of this Agreement (the “**Company Schedule**”).  Further, the Shareholders have providedParent and the Purchaser with a data room due diligence material (the “**Due Diligence Material**”), solely asreflected in the index set forth as **ExhibitD** attached hereto.  TheShareholders shall not be liable to Parent, Purchaser or the Company or itssubsidiaries and shall not be considered to be in breach of any of therepresentations and warranties in this Section 2.1 through Section2.36 if facts, data, information or circumstances relating to the breach orLoss are reasonably clear and reasonably evident from the wording of a specificdocument included in the Due Diligence Material and such facts, data,information or circumstances in the Due Diligence Material shall apply to any andall representations and warranties in this Agreement to which they may berelevant, whether or not specified or referred to a specific representation orwarranty.  It is specifically stated andagreed that the Shareholders have not made, and Parent and Purchaser have notrelied on, any other express or implied representations or warranties thanthose contained in Article II of this Agreement.  For purposes of this Article II,unless otherwise specified, all references to the Company in this Article IIalso include its direct and indirect subsidiaries.

 

2.1           Organization andQualification; Subsidiaries, Interests and Joint Ventures.  Except as set forth on Section 2.1 ofthe Company Schedule, the Company and each of its subsidiaries (as set forth inSection 2.1 of the Company Schedule) is a corporation dulyorganized and validly existing under the laws of its jurisdiction ofincorporation.  Each of the Company andits subsidiaries has the corporate power to own its properties and to carry onits business as now being conducted and as currently proposed to beconducted.  Each of the Company and its

 

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subsidiaries is duly qualified to do business and is in good standingin each jurisdiction in which it is required to be so qualified.  Section 2.1 of the CompanySchedule sets forth each jurisdiction in which the Company or any subsidiary isqualified, registered, licensed or admitted to do business and separately listseach other jurisdiction in which the Company or any subsidiary owns, uses,licenses or leases material assets or properties or conducts business, hasemployees or engages independent contractors. The Shareholders have delivered to Parent true and correct copies of thearticlesof association, shareholders’ registers or other organizational andgoverning documents, as applicable, of the Company and each of itssubsidiaries, each as amended to date and currently in effect which areattached to Section 2.1 of the Company Schedule.  Neither the Company nor any of itssubsidiaries is in violation of any of the provisions of its articles of association or equivalentorganizational and governing documents. The Company does not directly or indirectly own any equity or similarinterest and is not a participant in any corporation, partnership, jointventure or other entity, other than the subsidiaries listed on Section 2.1of the Company Schedule.

 

2.2           Company CapitalStructure.

 

(a)           Authorized and Outstanding CapitalStock.  The issued and outstandingcapital stock of the Company consists of 166,084 shares.  Other than the Shares set forth above, theCompany has no other class or series of capital stock or other equity or votingsecurities (or rights to acquire the same) issued or outstanding, and,other than the Shares described above, the Company has no other class or seriesof capital stock or other equity or voting securities authorized.  Section 2.2(a) of the Company Schedulelists each respective holder of Shares, including the number of shares held byeach such holder and the residence of the holder as listed in the Company’srecords.

 

(b)           Status of Outstanding CapitalStock.  All outstanding shares of thecapital stock of the Company and each of its subsidiaries are duly authorized,validly issued, fully paid and non-assessable, were not issued in violation ofany preemptive or similar rights, and were issued in accordance with allapplicable securities laws.  Except asset forth in Section 2.2(b) of the Company Schedule, all outstandingshares of the capital stock of the Company and each of its subsidiaries arefree and clear of all liens, charges, claims, security interests or otherencumbrances of any sort (“**Liens**”),other than restrictions on transfer imposed by applicable securities law, andare not subject to preemptive rights or rights of first refusal created bystatute, the articlesof association or equivalent organizational and governing documents ofthe Company or any subsidiary or any agreement to which the Company or anysubsidiary is a party or by which the Company or any subsidiary or theirrespective assets or properties are or may be bound.  The Company and its subsidiaries are not, andto the best knowledge of Pär-JörgenPärson, Kristofer Arwin, Magnus Wiberg, Martin Alexanderson and MattiasBerg, which shall include the actual knowledge of such individuals, theknowledge of such individuals after due inquiry regarding the applicable factsand circumstances (“**Shareholders’ Knowledge**”),none of the Shareholders or such subsidiaries’ Shareholders are, a party to anyoral or written agreement, arrangement or other commitment that directly orindirectly grants or creates any right of negotiation, right of first refusal,right of first or last offer or similar arrangement in connection with the transactionscontemplated hereby, other than the Shareholders’ Agreement of the Companydated May 2001, as amended (the “**Shareholders’Agreement**”).  Neither theCompany nor any subsidiary is a party to any

 

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arrangement,agreement or instrument pursuant to which the Company or such subsidiary mayelect to satisfy its obligations by issuing capital stock or other securities.

 

(c)           No Derivative Securities or Rights.  Except as set forth in Section 2.2(c)of the Company Schedule, there are no outstanding oral or written options,warrants, puts, calls, preemptive rights, rights of first or last refusal,rights of negotiation, commitments, transactions, arrangements, understandingsor agreements of any character to which the Company or any subsidiary is aparty or by which the Company or any subsidiary is bound obligating the Companyor such subsidiary to issue, deliver, sell, purchase, repurchase or redeem, orcause to be issued, delivered, sold, purchased, repurchased or redeemed, anyshares of Company capital stock or other securities or stock or othersecurities of any subsidiary or obligating the Company to grant, extend,accelerate the vesting of, change the price of, otherwise amend or enter intoany such option, warrant, put, call, right, commitment, transaction,arrangement, understandings or agreement. No subsidiary of the Company has any options or similar rights toacquire capital stock or other securities authorized, issued or outstanding,nor has any such subsidiary entered into any agreement, arrangement orimplemented any stock incentive, stock option or other plan or arrangementpursuant to which such subsidiary may or is obligated to issue any such optionsor other securities.

 

(d)           No Outstanding Debt Securities.  Neither the Company nor any of itssubsidiaries has any authorized or issued debt securities outstanding.

 

(e)           Employee Bonus Arrangements.  Except as set forth in Section 2.2(e)of the Company Schedule, neither the Company nor any of its subsidiaries hasany oral or written arrangements, agreements or understandings pursuant towhich the Company, any subsidiary, or any successor thereto or acquiror thereofis or may become obligated to make any compensatory, bonus, severance or otherpayments to past or current employees, consultants, agents or representativesof the Company or any subsidiary as a result of this Agreement or any of thetransactions contemplated hereby.

 

2.3           Subsidiaries.  The Company is the owner of all outstandingshares of capital stock of each of its subsidiaries and all such shares ownedby the Company (a) are duly authorized, validly issued, fully paid andnon-assessable and (b) are owned by the Company free and clear of allLiens or rights of others.  There are nooutstanding subscriptions, options, warrants, puts, calls, rights, exchangeableor exercisable or convertible securities or other commitments, transactions,arrangements, understandings or agreements of any character relating to theissued or unissued capital stock or other securities of any such subsidiary, orotherwise obligating the Company or any such subsidiary to issue, transfer,sell, purchase, repurchase, redeem or otherwise acquire any such securities.

 

2.4           Authority.

 

(a)           The Company has full corporate powerand authority to execute and deliver the Employment Agreements (collectively,the “**Ancillary Agreements**”), toobserve and perform its obligations thereunder and to consummate thetransactions contemplated thereby.  The execution and delivery of theAncillary Agreements by the Company, the

 

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observance andperformance of the Company’s obligations thereunder and the consummation of thetransactions contemplated thereby have been duly and validly authorized by allnecessary corporate action on the part of the Company, and no further or otheraction of the Company or its Board of Directors is required with respect to theforegoing.  The Company’s Board ofDirectors has unanimously approved each Ancillary Agreement and thetransactions contemplated thereby.  EachAncillary Agreement, upon its execution and delivery thereof, will be dulyand validly executed and delivered by the Company, and each will constitute a legal,valid and binding obligation of the Company, enforceable against the Company inaccordance with its respective terms, except as enforceability may be limitedby principles of public policy and subject to the laws of general applicationrelating to bankruptcy, insolvency and the relief of debtors and rules of lawgoverning specific performance, injunctive relief or other equitable remedies.

 

(b)           The execution and delivery of theAncillary Agreements by the Company does not, and the consummation of thetransactions contemplated by this Agreement and by the Ancillary Agreementswill not, conflict with, or result in any violation of, or default under (withor without notice or lapse of time, or both), or give rise to a right oftermination, cancellation or acceleration of any obligation or loss of anybenefit under (any such event or consequence, a “**Conflict**”):

 

(i)            anyprovision of the articles of association or equivalent organizational andgoverning documents of the Company; or

 

(ii)           anymortgage, indenture, lease, contract or other agreement or instrument (ineach case, subject to the Company obtaining all Requisite Consents (as definedin Section 2.12 below) relating to such agreements andinstruments), permit, concession, franchise, license, judgment, order, decree,statute, law, ordinance, rule or regulation applicable to the Company or itsproperties or assets.

 

(c)           No consent, waiver, approval, orderor authorization of, or registration, declaration or filing with, any court,administrative agency or commission or other federal, state, county, local orforeign governmental authority, instrumentality, agency or commission (“**Governmental Entity**”) or any thirdparty is required by or with respect to the Company in connection with theexecution and delivery of the Ancillary Agreements or the consummation of thetransactions contemplated by this Agreement or the Ancillary Agreements.

 

2.5           Company FinancialStatements; Working Capital Calculations.  Section 2.5 of the CompanySchedule sets forth (i) an audited consolidated balance sheet of theCompany as of April 30, 2004, and the related audited consolidated incomestatement of the Company for its fiscal year ended April 30, 2004, accompaniedby the auditors report thereon and (ii) the unaudited consolidated balancesheet of the Company as of June 30, 2004 (the “**Current Balance Sheet**”) and the related unauditedconsolidated income statement for the two-month period then ended(collectively, the “**Company Financials**”).  The Company Financials (a) are inaccordance with the books and records of the person to which they relate(b) are complete and correct in all material respects and (c) havebeen prepared in accordance with accounting principles generally accepted inSweden (“**Swedish GAAP**”)consistently applied for the periods presented, except as to the unauditedCompany Financials, for the omission of notes thereto and

 

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normal year-end audit adjustments, which will not be materialindividually or in the aggregate.  TheCompany Financials present fairly the financial condition and operating resultsof the Company as of the dates and during the periods indicated therein,subject to normal year-end adjustments, which will not be material in amount orsignificance in the aggregate.  ThePreliminary Working Capital Estimate is true, complete and correct andaccurately reflects the amount of any Working Capital reflected therein.

 

2.6           No UndisclosedLiabilities. Except as set forth in Section 2.6 of the Company Schedule, theCompany does not have any liability, indebtedness, obligation, expense, claim,deficiency, guaranty or endorsement of any type, in excess of $5,000individually or $50,000 in the aggregate, whether accrued, absolute,contingent, matured, unmatured or other, required to be reflected in financialstatements in accordance with Swedish GAAP, that are not clearlydisclosed, in reasonable detail, in the Current Balance Sheet.

 

2.7           No Changes.  Except as set forth in Section 2.7 ofthe Company Schedule, since April 30, 2004, the Company has conducted itsbusiness in the ordinary course and consistent with past practices and therehas not been, occurred or arisen:

 

(a)           any change, event or condition(whether or not covered by insurance) that has resulted in, or couldreasonably be expected to result in, a Company Material Adverse Effect (asdefined below);

 

(b)           any acquisition, sale, lease, licenseor transfer of any material asset, property or right of the Company;

 

(c)           any capital expenditure or commitmentby the Company, in excess of $10,000 individually or $100,000 in the aggregate;

 

(d)           any destruction of, damage to or lossof any material assets or properties (whether or not covered byinsurance) or business or customer of the Company;

 

(e)           any change in the Company’saccounting methods or practices (including any change in depreciation oramortization policies or rates) or any restatement of financial statementsor revaluation by the Company of any of its assets, properties or rights;

 

(f)            any declaration, setting aside, orpayment of a dividend or other distribution with respect to the securities ofthe Company, or any direct or indirect redemption, purchase or otheracquisition by the Company of any of its capital stock or other securities;

 

(g)           the execution and delivery of anymaterial contract by the Company, or any amendment or termination of, orviolation or default under, any material contract, agreement, arrangement orlicense to which the Company is a party or by which the Company or its assetsor properties are or may be bound;

 

(h)           any amendment or change to thearticles of association or equivalent organizational or governing documents ofthe Company;

 

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(i)            any increase in or modification ofthe compensation or benefits payable or to become payable by the Company to anyof its respective directors, employees, consultants or advisors, or anydeclaration, payment or commitment or obligation to pay any bonus or otheradditional salary or compensation (including equity) to any such person,except for annual salary increases in the ordinary course of business;

 

(j)            any labor trouble or claim ofwrongful discharge or other unlawful labor practice or action;

 

(k)           any change of any Tax (as defined in Section 2.8below) election or settlement or compromise of any material state, localor foreign Tax liability;

 

(l)            any loan by the Company to anyperson or entity (other than in the normal course of business), any loan by theCompany to any Shareholders or officer or director of the Company or the incurrenceby the Company of any indebtedness, the guarantee by Company of anyindebtedness, issuance or sale of any debt securities of the Company or anyagreement to guarantee or act as a surety with respect to any paymentobligations or debt securities of any other party;

 

(m)          any waiver or release of any right orclaim of or in favor of the Company, including any write-off or othercompromise of any account receivable of, or debt owed to, the Company, otherthan in the normal course of business;

 

(n)           any commencement or notice or, to theShareholders’ Knowledge, any threat of the commencement of any lawsuit orproceeding against or investigation of the Company or its business or affairs;

 

(o)           any notice of any claim of ownershipby a third party of the Company Intellectual Property (as defined in Section 2.11below) or any allegations that the Company is infringing or has infringedupon any third party’s Intellectual Property Rights;

 

(p)           any issuance or sale by the Companyof any shares of capital stock or any other securities; or

 

(q)           any negotiation or agreement by theCompany to do any of the foregoing (other than negotiations with Parent,Purchaser and their representatives regarding the transactions contemplated bythis Agreement).

 

For purposes of this Agreement, “**Company Material Adverse Effect**” means anyevent, change, effect, occurrence or state of facts that, individually or inthe aggregate, has or could reasonably be expected to result in a materiallyadverse effect on the business, assets, liabilities, capitalization, condition(financial or other) or results of operations of the Company and itssubsidiaries, taken as a whole.

 

2.8           Tax and OtherReturns and Reports.

 

(a)           Definitions.  For purposes of this Agreement:

 

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(i)            “**Tax**” (including “**Taxes**”) meansincome taxes, duties, VAT, charges and withholding taxes and any othertaxes imposed by any tax authority, including penalties and interest relatingto such taxes; and

 

(ii)           “**Tax Return**” means any return, declaration, report,statement, information statement and other document required to be filed withrespect to Taxes, including any claims for refunds of Taxes and any amendmentsor supplements of any of the foregoing.

 

(b)           Except as set forth in Section2.8(b) of the Company Schedule:

 

(i)            TheCompany and its subsidiaries have properly filed with the appropriate taxauthorities all Tax Returns they are required to have filed for all tax periodsending prior to the Closing Date.  AllTax Returns filed by the Company and its subsidiaries are true, correct andcomplete and all information required for a correct assessment of Taxes hasbeen provided.  The Company and itssubsidiaries are not in arrears with payment of any Taxes due to any Taxauthority.

 

(ii)           TheCompany and its subsidiaries have timely paid all Taxes that have become due orpayable (whether or not shown on a Tax Return) and have adequatelyreserved in the Company Financials in accordance with Swedish GAAP for allTaxes (whether or not shown on any Tax Return) that have accrued but arenot yet due or payable as of the date hereof. The Company and its subsidiaries have no present or contingent liabilityfor Taxes, other than Taxes reflected on the Company Financials or incurred inthe ordinary course of business since the date of the Current Balance Sheet inamounts consistent with prior years adjusted to reflect changes in operatingresults of the Company and its subsidiaries.  The Company and its subsidiaries will not beliable for any additional Tax pertaining to the period before the AccountsDate.

 

(iii)          Noclaim for assessment or collection of Taxes is presently being asserted againstthe Company or any of its subsidiaries, there is no presently pending audit,examination, refund claim, litigation, proceeding, proposed adjustment ormatter in controversy with respect to any Taxes of or with respect to theCompany or any of its subsidiaries, and, to the Shareholders’ Knowledge, nosuch action or proceeding is being contemplated.  Section 2.8(b)(iii) of theCompany Schedule sets forth all claims for Taxes that have been assertedagainst the Company or any of its subsidiaries with respect to any periodcommencing on or after January 1, 1999.

 

(iv)          Neitherthe Company nor any of its subsidiaries has agreed to or is required to makeany adjustment by reason of a change in accounting method, and to theShareholders’ Knowledge, the Swedish taxing authority (or any similar state,local, or foreign taxing authority) has not proposed any such adjustment or achange in any accounting method used by the Company or any of itssubsidiaries.  The Company and itssubsidiaries use the accrual method of accounting for income tax purposes.  Neither the Company nor any of itssubsidiaries has taken any action inconsistent with its practices in prioryears that would have the effect of deferring a liability for Taxes from aperiod prior to the Closing Date to a period following the Closing Date.

 

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(v)           All transactions and agreementsentered into by the Company or any of its subsidiaries with any other companyin the group or the Shareholders are made on terms and conditions which do notin any way deviate from what would have been agreed between independent parties(on an arm’s length basis), other than, for the avoidance of doubt, intragroupprofit contributions within free reserves (Sw. Koncernbidrag).  All losses for tax purposes incurred by theCompany or any of the subsidiaries are available to the Company or thesubsidiary, as such entity is owned immediately prior to the Closing, whichincurred such loss to be carried forward and have not been challenged by therelevant tax authorities.  Neither theCompany nor any of the subsidiaries is or has been subject to any taxationoutside its respective country of fiscal residence.  Neither the Company nor and any of itssubsidiaries has been involved in any transactions which could be considered astax evasion.

 

(vi)          Thereare no Tax Liens on any assets of the Company or any of its subsidiaries, otherthan Liens for Taxes not yet due and payable.

 

(vii)         TheCompany does not have any liability for Taxes of another person or entity as aresult of (A) transferee liability, being a member of an affiliated,consolidated, combined or unitary group for any period or otherwise throughoperation of law or (B) any tax sharing, tax indemnity or tax allocationagreement or any other express or implied agreement to indemnify any otherperson or entity.

 

2.9           Restrictions onBusiness Activities.  Except as set forth in Section 2.9 ofthe Company Schedule, there is no agreement (non-compete or otherwise),commitment, judgment, injunction, order or decree to which the Company is aparty or otherwise binding upon the Company which has or reasonably could beexpected to have the effect of materially prohibiting or impairing any businesspractice or activities of the Company or any subsidiary, any lease, licenses oracquisition of any assets or property (tangible or intangible) by theCompany or any subsidiary or the conduct of the business as conducted andproposed to be conducted by the Company or any subsidiary.

 

2.10         Title toProperties; Absence of Liens and Encumbrances; Condition of Equipment.

 

(a)           The Company owns no real property,nor has it ever owned any real property since its inception.  Section 2.10(a) of the CompanySchedule sets forth a list of all real property currently leased by theCompany, the name of the lessor, the date of the lease and each amendment theretoand, with respect to any current lease, the aggregate annual rental and/orother fees payable under any such lease. All such current real property leases are in full force and effect, arevalid and effective in accordance with their respective terms and there are noexisting defaults or events of default (or events which with notice or lapse oftime, or both, would constitute a default) thereunder.

 

(b)           The Company has good and valid titleto, or, in the case of leased properties and assets, valid leasehold interestsin, all of its tangible properties and assets, real, personal and mixed, usedor held for use in its business.  Allsuch owned properties and assets are free and clear of any Liens, except asreflected in the Company Financials and except for Liens for Taxes not yet dueand payable and such imperfections of title and encumbrances, if any,

 

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which are notmaterial in character, amount or extent, and which do not materially detractfrom the value, or materially interfere with the present use, of the propertysubject thereto or affected thereby.  Allsuch leased assets and properties are free and clear of any Liens which wouldinterfere with, restrict or prohibit the valid use of such leased assets orproperties in accordance with the leases related thereto and for the purposesfor which the Company initially leased, and currently uses and proposes to use,such leased assets and properties.  Afterthe Closing Date, the Company will be entitled to the continued possession anduse of the personal property leased by the Company, for the terms specified insuch leases and for the purposes consistent with the past practices of theCompany.

 

(c)           All equipment (the “**Equipment**”) owned or leased by theCompany, taken as a whole, (i) is adequate for the conduct of the businessof the Company as currently conducted, (ii) is regularly and properlymaintained in accordance with the manufacturer’s recommendations and anylessor’s guidelines, (iii) is in good operating condition, subject only tonormal wear and tear for the age and usage of such respective Equipment, and(iv) complies with all applicable laws and regulations relating to suchEquipment and the use thereof by the Company.

 

2.11         Intellectual Property.

 

(a)           Definitions.  For purposes of this Agreement, the followingterms have the following respective meanings:

 

(i)            “**Intellectual Property Rights**” means any andall of the following and any and all rights in, arising out of, or associatedtherewith: (A) all United States, Swedish, EU and foreign issued patentsand utility models and applications therefor and all reissues, divisionals,re-examinations, renewals, extensions, provisionals, and continuations thereof,and all equivalent or similar rights anywhere in the world in inventions anddiscoveries including invention disclosures (“**Patents**”);(B) all trade secrets and other rights in know-how and confidential orproprietary information (“**Trade Secrets**”);(C) all copyrights, published or unpublished, copyright registrations andapplications therefor and all other rights corresponding thereto throughout theworld (“**Copyrights**”); (D) allindustrial designs and any registrations and applications therefor throughoutthe world; (E) all rights in World Wide Web addresses and domain names andapplications and registrations therefor; all trade names, logos, symbols,registered and unregistered trademarks and service marks throughout the world(“**Trademarks**”); (F) publicity rights and any other proprietary, intellectual or industrialproprietary rights of any kind or nature that do not compromise or are notprotected by the Patents, Trade Secrets, Copyrights or Trademarks; and(G) any similar, corresponding or equivalent rights to any of theforegoing anywhere in the world.

 

(ii)           “**Company Intellectual Property**” means anyand all Intellectual Property Rights owned by the Company or which theCompany has the right to use pursuant to written license, sublicense, agreementor permission or used in the operation or conduct of the business of theCompany as currently conducted.

 

(b)           Section 2.11(b) of theCompany Schedule contains a complete and accurate list (by name and versionnumber) of all products, software, service offerings, technical

 

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data or technologydesigned, manufactured or sold by the Company that have been sold, licensed outor distributed since incorporation (collectively, “**Company Products**”).

 

(c)           Section 2.11(c) of theCompany Schedule lists: (i) all Company Intellectual Property, identifyingfor each, if applicable, (A) the application or registration number,(B) the filing or registration date, (C) the owner of record andwhether owned exclusively by the Company, and (D) the status of theapplication or registration; (ii) any prior or current proceedings oractions before any court, tribunal (including the Swedish Patent and TrademarkOffice (the “**PTO**”) orequivalent authority anywhere in the world) related to any of the CompanyIntellectual Property; and (iii) any actions existing as of the ClosingDate that must be taken by the Company in the next one hundred eighty(180) days or within one hundred eighty (180) days after the ClosingDate, including the payment of any registration, maintenance or renewal fees orthe filing of any responses to PTO office actions, documents, affidavits ofuse, incontestability filings, applications or certificates for the purposes ofobtaining, maintaining, perfecting, preserving or renewing any CompanyIntellectual Property.

 

(d)           The Company has not knowinglymisrepresented, or knowingly failed to disclose, any facts or circumstances inany application for any Company Intellectual Property that would constitutefraud or a misrepresentation with respect to such application or that wouldotherwise affect the validity or enforceability of any Company IntellectualProperty.

 

(e)           Except as set forth on Section2.11(e) of the Company Schedule, all Company Intellectual Property is fullytransferable, assignable or licensable, as applicable without condition orrestriction and without payment of any kind to any third party.

 

(f)            Except as set forth on Section2.11(f) of the Company Schedule, the Company has not received any notice orclaim, whether written or oral, challenging or questioning the Company’sownership in any Company Intellectual Property or suggesting that any thirdparty has any claim of legal or beneficial ownership with respect thereto nor,to the Shareholders’ Knowledge, is there a reasonable basis for any such claim.  Neither the Company’s use of the CompanyIntellectual Property nor the production and sale of the Company Productsinfringes upon the Intellectual Property Rights of others.

 

(g)           Except as set forth on Section2.11(g) of the Company Schedule, and other than with respect to licensesgranted by the Company, all Intellectual Property Rights owned by the Companyare owned free and clear of all Liens.

 

(h)           Except as set forth on Section2.11(h) of the Company Schedule, and other than in connection with theterms of use for users of the Company’s website, the Company has not pledged orgranted any license or other right in or to any Company Intellectual Propertyto any third party, other than pursuant to any license agreement disclosed in Section 2.11(l)of the Company Schedule.

 

(i)            Except as set forth on Section2.11(i) of the Company Schedule, the Company Intellectual Propertyconstitutes all Intellectual Property Rights used in or necessary in theoperation or conduct of the Company’s business as currently conducted by theCompany,

 

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including thedesign, development, promotion, sale, license, manufacture, import, export, useor distribution of any and all Company Products.

 

(j)            Except as set forth on Section2.11(j) of the Company Schedule, the Company has not received any notice orclaim, whether written or oral, from any third party claiming that theoperation of the business of Company as currently conducted or proposed to beconducted or that any Company Product infringes, misappropriates, violates,dilutes or constitutes the unauthorized use of any valid or enforceable rightof any third party, including any Intellectual Property Right of any thirdparty, nor, to the Shareholders’ Knowledge, is there a reasonable basis for anysuch claim of infringement or any claim that the Company does not own any ofthe Company Intellectual Property free and clear of all Liens, other thanlicenses granted by the Company.

 

(k)           Except as set forth on Section2.11(k) of the Company Schedule, no Company Intellectual Property orCompany Product has been or is subject to any actual or threatened litigation,proceeding (including any proceeding in the PTO or any corresponding foreignoffice or agency) or outstanding decree, order, judgment, settlementagreement or stipulation that restricts in any manner the Company’s use,transfer or licensing thereof or that may affect the validity, use orenforceability thereof.

 

(l)            Section 2.11(l) of theCompany Schedule lists all contracts, licenses and agreements to which theCompany is a party with respect to the Company Intellectual Property, otherthan contracts with clients of the Company regarding their use of, orpublishing on, the Company’s website. The Company is not in material breach of, nor has the Company failed toperform under, any of the contracts, licenses or agreements on Section2.11(l) of the Company Schedule and, to the Shareholders’ Knowledge, nothird party to any such contract, license or agreement is in breach thereof orhas failed to perform thereunder.  To theShareholders’ Knowledge, there is no outstanding or threatened dispute ordisagreement with respect to any contract, license or agreement listed on Section2.11(l) of the Company Schedule.

 

(m)          Except as set forth in Section2.11(m) of the Company Schedule, to the Shareholders’ Knowledge, no thirdparty is infringing, misappropriating, diluting or violating any CompanyIntellectual Property and no such claims have been brought against any thirdparty by the Company.

 

(n)           Except as set forth on Section2.11(n) of the Company Schedule, the Company has taken all steps that arereasonably required to protect: (i) the Company’s rights in all CompanyIntellectual Property; and (ii) all Intellectual Property Rights of othersas to which the Company has an express obligation or duty to protect thesame.  There has been no disclosure bythe Company of any Trade Secrets or confidential information of the Companywithout: (x) designating such information as confidential; and(y) taking whatever steps are required to ensure that such Trade Secretsor confidential information are subject to the confidentiality undertakings setforth in the applicable non-disclosure agreement.

 

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(o)           Except as set forth on Section2.11(o) of the Company Schedule, the Company has obtained all exportlicenses, permits or approvals necessary or appropriate for the marketing,license and distribution of the Company Products in its current markets.

 

(p)           Except as set forth in Section2.11(p) of the Company Schedule: The Company has taken reasonable measuresto ensure that the Company Products do not contain any viruses, Trojan horses,worms or other software routines or hardware components designed to permitunauthorized access, to disable, erase or otherwise harm software, hardware ordata.  None of the Company Products is,in whole or in part, subject to the provision of any open source or quasi-opensource license agreement.

 

(q)           Each Company Product conforms in allmaterial respects to the specifications, documentation, press releases or otherinformation provided to customers or potential customers of the Company onwhich such customers or potential customers relied or would reasonably be expectedto rely upon when licensing or otherwise acquiring such Company Products.

 

2.12         Agreements,Contracts and Commitments.

 

(a)           Section 2.12(a)of the Company Schedule sets forth all contracts specified in clauses (i)through (xvii) below (collectively, the “**MaterialContracts**”).  Except as setforth in Section 2.12(a) of the Company Schedule, the Company doesnot have, is not a party to nor is it bound by:

 

(i)            anycollective bargaining agreements;

 

(ii)           anyagreements or arrangements that contain any severance pay;

 

(iii)          anybonus, pension or retirement plans;

 

(iv)          anyemployment or consulting agreement;

 

(v)           anyagreement or plan (including, any stock option plan, stock appreciation rightsplan or stock purchase plan) any of the benefits of which will beincreased, or the vesting of benefits of which will be accelerated, by theoccurrence of any of the transactions contemplated by this Agreement or theAncillary Agreements or the value of any of the benefits of which will becalculated on the basis of any of the transactions contemplated hereby orthereby;

 

(vi)          anyperformance bond;

 

(vii)         anylease of real or personal property involving future payments in excess of$40,000 not cancelable by the Company without penalty of less than $40,000;

 

(viii)        anyagreement of indemnification, guaranty or suretyship in an amount greater than$40,000;

 

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(ix)           anyagreement, contract or commitment containing any covenant limiting the freedomof the Company to engage in any line of business or to compete with any person;

 

(x)            anyagreement, contract or commitment relating to capital expenditures in excess of$40,000;

 

(xi)           anyagreement, arrangement, right, contract or commitment relating to the futuredisposition or acquisition of assets, properties or any interest in anybusiness enterprise;

 

(xii)          anymortgage, indenture, loan or credit agreement, security agreement or otheragreement or instrument relating to the borrowing of money or extension ofcredit, other than Company credit cards with a credit limit of less than$10,000;

 

(xiii)         anypurchase order or contract for the purchase of raw materials or the provisionof services involving $10,000 or more, other than purchases in the ordinarycourse of business;

 

(xiv)        anyconstruction contracts;

 

(xv)         anydistribution, joint marketing, licensing or development agreement;

 

(xvi)        anyinsurance policies;

 

(xvii)       anyother agreement, contract or commitment that involves or could result inaggregate payments to or by the Company of $25,000 or more and is notcancelable by the Company without penalty within thirty (30) days.

 

(b)           TheCompany has not materially breached, violated or defaulted under, or receivednotice that it has materially breached, violated or defaulted under, any of theterms or conditions of any Material Contract. Except as set forth in Section 2.12(b) of the Company Schedule,each Material Contract is in full force and effect and is not subject to anymaterial breach, default or violation thereunder by the Company or, to theShareholders’ Knowledge, by any party obligated to the Company pursuantthereto.  The Company has obtained, orwill obtain prior to the Closing Date, all necessary consents, waivers andapprovals of parties to any Material Contracts as are required to obtainin connection with the transactions contemplated hereby and by the AncillaryAgreements (the “**Requisite Consents**”).

 

2.13         Interested PartyTransactions. Except as set forth in Section 2.13 of the Company Schedule:  No officer, director, employee or anyShareholder (nor any ancestor, sibling, descendant or spouse of any of suchpersons, or any trust, partnership or corporation in which any of such personshas a direct or indirect interest), has any direct or indirect interest in: (a) anyentity which furnished or sold, or furnishes or sells, services or productsthat the Company furnishes or sells, or proposes to furnish or sell,(b) any entity that purchases from or sells or furnishes any goods orservices to the Company, or (c) any Material Contract; provided,

 

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however, that ownership of no more than onepercent (1%) of the outstanding voting stock of a publicly traded corporationshall not be deemed an “interest in any entity” for purposes of this Section 2.13.  The Company is not indebted to any officer,director, employee or Shareholder (except for amounts due pursuant to writtenemployment agreements and reimbursement of immaterial business expenses), andno such person is indebted to the Company.

 

2.14         CompanyAuthorizations. Section 2.14 of the Company Schedule lists each consent,license, permit, approval, grant or other authorization issued to the Companyby a Governmental Entity (a) pursuant to which the Company currently operatesor holds any interest in any of its assets or properties or (b) which isrequired for the operation of its business (including the design, development,manufacture, sale, promotion, export, import, distribution or provision of theCompany Products) or the holding of any such interest (collectively, “**Company Authorizations**”).  All Company Authorizations are in full forceand effect and constitute all Company Authorizations required to permit theCompany to operate or conduct the Company’s business substantially as currentlyconducted or to hold any interest in the Company’s assets or properties.  The Company has complied with all terms andconditions of the Company Authorizations, and the same will not be subject tosuspension, modification, revocation or non-renewal as a result of thisAgreement, any Ancillary Agreement, or the transactions contemplated hereby orthereby.  The Company has taken adequateand sufficient measures to ensure that its employees, consultants, agents andrepresentatives have complied with the requirements of all CompanyAuthorizations and the Company is not aware of any past or current violation ofany Company Authorization.

 

2.15         Litigation.  Except as set forth in Section 2.15 ofthe Company Schedule, there is no action, suit, claim, proceeding, arbitrationor investigation of any nature pending, or, to the Shareholders’ Knowledge,threatened, by, against or involving the Company, its assets or properties orany of its officers, directors, employees or agents in their capacity as such,nor, to the Shareholders’ Knowledge, is there any basis therefor.  No Governmental Entity or third party has atany time challenged or questioned the legal right of the Company to design,develop, promote, sale, license, manufacture, import, export, use, distributeor provide any Company Products, nor, to the Shareholders’ Knowledge, is thereany basis therefor.

 

2.16         Accounts Receivable.

 

(a)           Section 2.16(a) of theCompany Schedule sets forth a list of all accounts receivable of the Company (“**Accounts Receivable**”), along with a rangeof days elapsed since invoice and the Shareholders’ reasonable assessment(after consultation with the management of the Company and its subsidiaries) ofthe collectability of any delinquent Accounts Receivable.

 

(b)           Except as set forth in Section2.16(b) of the Company Schedule, all Accounts Receivable of the Companyarose in the ordinary course of business, are carried at values determined inaccordance with Swedish GAAP consistently applied and are collectible in theirfull amount in accordance with their payment terms.  No person has given the Company notice of anydisputes regarding, and no person has any Lien on, any of such AccountsReceivable and no request or agreement for material deduction or discount hasbeen made with

 

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respect to any ofsuch Accounts Receivable, nor in each case is there any reasonable basistherefor.

 

2.17         Records.  The shareholders’ register and minutes from shareholders’ meetings and boardmeetings of the Company made available to Parent and Purchaser are theonly such records of Company and contain a reasonably accurate summary of alldecisions taken at meetings of directors (or committees thereof) andformal meetings of the shareholders of the Company and include copies of allboard and shareholder actions by written consent since the Company’s inception.

 

2.18         EnvironmentalMatters.

 

(a)           HazardousMaterial.  No underground storagetanks and no amount of Hazardous Materials are present, either as a result ofthe Company’s use or occupation of any real property or, to the Shareholders’Knowledge, as a result of any actions of any third party or otherwise, in eachcase in, on or under any property, including the land and the improvements, groundwater and surface water thereof, that the Company has at any time owned,operated, occupied or leased.  Forpurposes of this Agreement, “**HazardousMaterial**” means any substance that has been designated by anyGovernmental Entity or by applicable federal, state, foreign or local law to bea pollutant or contaminant or infectious or radioactive, toxic, hazardous orotherwise a danger to health or the environment, including, PCBs, asbestos,petroleum, urea-formaldehyde, methylene chloride and all substanceslisted as hazardous substances pursuant to applicable laws.

 

(b)           Hazardous Materials Activities.  The Company has not transported, stored,used, manufactured, disposed of, released or exposed its employees or others toHazardous Materials in violation of any law in effect on or before the ClosingDate, nor has the Company disposed of, transported, sold, or manufactured anyproduct containing a Hazardous Material (collectively, “**Hazardous Materials Activities**”) inviolation of any rule, regulation, treaty or statute promulgated by anyGovernmental Entity in effect prior to or as of the date hereof to prohibit,regulate or control Hazardous Materials or any Hazardous Material Activity.

 

(c)           Permits.  The Company currently holds all environmentalapprovals, permits, licenses, clearances and consents (“**Environmental Permits**”) necessary forthe conduct of the Company’s Hazardous Material Activities and other businessesof Company as such activities and businesses are currently beingconducted.  All such EnvironmentalPermits are currently are in full force, and effect and the Company hasreceived no notice that it is in violation thereof (or that there are anyinvestigations or inquiries pending with respect thereto) or that any suchEnvironmental Permits might be terminated or not renewed upon their scheduledexpiration.

 

(d)           Environmental Liabilities.  No material action, proceeding, revocationproceeding, amendment procedure, writ, injunction, investigation or claim ispending, or, to the Shareholders’ Knowledge, threatened concerning anyEnvironmental Permit, Hazardous Material or any Hazardous Materials Activity ofor relating to the Company.  The Companyis not aware of any fact or circumstance which could involve the Company in anymaterial environmental

 

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litigation orinvestigation or impose upon the Company any material environmental liability,whether for its actual activities, as a potentially responsible party, orotherwise.

 

(e)           Capital Expenditures.  The Company is not aware of any capitalexpenditures which are required or recommended for it to comply with anyapplicable Environmental Laws.

 

2.19         Brokers’ andFinders’ Fees; Third Party Expenses.  Except as set forth in Section 2.19of the Company Schedule, neither the Company nor the Shareholders haveincurred, nor will it incur, directly or indirectly, any liability forbrokerage or finders’ fees or agents’ commissions or any similar charges inconnection with this Agreement, any Ancillary Agreement or any transactioncontemplated hereby or thereby.  Section 2.19of the Company Schedule sets forth a reasonable estimate of all Third PartyExpenses (as defined in Section 8.3) expected to be incurredby the Company in connection with negotiating and effectuating the terms andconditions of this Agreement and the Ancillary Agreements and the consummationof the transactions contemplated hereby and thereby, the actual amounts ofwhich (regardless of the estimated amounts in Section 2.19 of theCompany Schedule) shall be included as liabilities of the Company incalculating any Working Capital.

 

2.20         Employee BenefitPlans.

 

(a)           Definitions.  For purposes of this Agreement, the followingterms have the respective meanings set forth below:

 

(i)            “**Company Employee Plan**” means any plan,program, policy or practice providing for compensation, severance, terminationpay, deferred compensation, performance awards, stock or stock-relatedawards, fringe benefits or other employee benefits or remuneration of any kind,whether written or unwritten, funded or unfunded, which is or has beenmaintained, contributed to, or required to be contributed to, by the Company orany of its subsidiaries for the benefit of any Employee (as defined below);

 

(ii)           “**Employee**” means any current, former, orretired employee, officer, consultant or director of the Company or any of itssubsidiaries;

 

(iii)          “**Employee Agreement**” means each management,employment, severance, consulting, relocation, repatriation, expatriation,visa, work permit or other agreement, contract or understanding between theCompany or any of its subsidiaries and any Employee.

 

(b)           Employee Plans and EmployeeAgreements.

 

(i)            Section 2.20(b)(i)of the Company Schedule contains an accurate and complete list of each CompanyEmployee Plan and each Employee Agreement. Neither the Company nor any of its subsidiaries has any plan orcommitment, whether legally binding or not, to establish any new CompanyEmployee Plan or Employee Agreement, to modify any Company Employee Plan or EmployeeAgreement (except to the extent required by law or to conform any such CompanyEmployee Plan or Employee Agreement to the requirements of any applicable

 

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law, in each case as previously disclosed toParent in writing, or as required by this Agreement), or to adopt or enter intoany Company Employee Plan or Employee Agreement.

 

(ii)           Section 2.20(b)(ii)of the Company Schedule sets forth, individually and by category, the name ofeach officer, employee and consultant, together with such person’s position orfunction, annual base salary or wage and any incentive, severance or bonusarrangements with respect to such person. Entering into this Agreement and the Ancillary Agreements and completingthe transactions contemplated hereby and thereby will not result in any paymentor increased payment becoming due from the Company to any current or formerofficer, director, or employee of, or consultant to, the Company, and, to theShareholders’ Knowledge, no employee or consultant of the Company has made anythreat, or otherwise revealed an intent, to terminate such employee’s orconsultant’s relationship with the Company for any reason, including because ofthe consummation of the transactions contemplated by this Agreement or theAncillary Agreements.  The Company is nota party to any agreement for the provision of labor from any outsideagency.  Since the Company’s date ofincorporation, there have been no claims by employees of such outside agencies,if any, with regard to employees assigned to work for the Company.

 

(iii)          Exceptas set forth in Section 2.20(b)(iii) of the Company Schedule, since theCompany’s date of incorporation, there have been no federal or state claimsbased on sex, sexual or other harassment, age, disability, race or otherdiscrimination or common law claims, including claims of wrongful termination,by any employees of the Company or by any of the employees performing work forthe Company but provided by an outside employment agency, and there are nofacts or circumstances known to the Company that could reasonably be expectedto give rise to such complaint or claim. The Company (A) has at all times complied with all Applicable Laws(as defined in Section 2.21) related to employment,(B) has not received any notice of any claim that it has not complied inany material respect with any Applicable Law relating to employment, includingany provisions thereof relating to wages, hours, collective bargaining, thepayment of Social Security and similar taxes, equal employment opportunity,employment discrimination, employee safety, and (C) has not received anynotice of any claim that it is liable for any arrearages of wages or any taxesor penalties for failure to comply with any of the foregoing.

 

(iv)          TheCompany has no written policies and/or employee handbooks or manuals exceptthose for which true and correct copies have been provided to Parent.

 

(c)           Documents.  Except as set forth in Section 2.20(c)of the Company Schedule, the Company has provided to Parent correct andcomplete copies of the following items, all of which are listed in Section 2.20(c)of the Company Schedule:

 

(i)            alldocuments embodying or relating to each Company Employee Plan and each EmployeeAgreement, including all amendments thereto and written interpretations thereofand all related trust documents, administrative service agreements, groupannuity contracts, group insurance contracts and policies pertaining tofiduciary liability insurance covering the fiduciaries for each CompanyEmployee Plan;

 

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(ii)           themost recent annual actuarial valuations, if any, prepared for each CompanyEmployee Plan;

 

(iii)          ifthe Company Employee Plan is funded, the most recent annual and periodicaccounting of Company Employee Plan assets;

 

(iv)          allSwedish and applicable foreign tax authority determination, opinion,notification and advisory letters and rulings relating to Company EmployeePlans and copies of all applications and correspondence to or from the Swedishor any foreign Tax authority with respect to any Company Employee Plan;

 

(v)           allcommunications material to any Employee or Employees relating to any CompanyEmployee Plan and any proposed Company Employee Plans, in each case, relatingto any amendments, terminations, establishments, increases or decreases inbenefits, acceleration of payments or vesting schedules or other events whichwould result in any material liability to the Company or the SurvivingCorporation; and

 

(vi)          allcorrespondence to or from any Governmental Entity (to the extent not alreadyprovided under clause (iv) above) relating to any Company Employee Plan.

 

(d)           Employee Plan Compliance.

 

(i)            TheCompany and its subsidiaries (A) have performed in all material respectsall obligations required to be performed by them under each Company EmployeePlan, (B) are not in default or violation of any Company Employee Plan,and (C) to the Shareholders’ Knowledge, there is no default or violationby any other party to any Company Employee Plan;

 

(ii)           EachCompany Employee Plan has been established and maintained in all materialrespects in accordance with its terms and in compliance with all ApplicableLaws;

 

(iii)          Thereare no actions, suits or claims pending, or, to the Shareholders’ Knowledge,threatened or reasonably anticipated (other than routine claims forbenefits) against any Company Employee Plan or against the assets of anyCompany Employee Plan;

 

(iv)          Thereare no audits, inquiries or proceedings pending or, to the Shareholders’Knowledge, threatened by any Tax authority, or any other Governmental Entitywith respect to any Company Employee Plan;

 

(v)           TheCompany and each of its subsidiaries have timely made all contributions andother payments required by and due under the terms of each Company EmployeePlan.

 

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(e)           Past Acquisitions.  Neither the Company nor any of itssubsidiaries is currently obligated to provide an Employee with anycompensation or benefits pursuant to an agreement (*e.g.,*an acquisition agreement) with a former employerof such Employee.

 

(f)            Effect of Transaction.

 

(i)            Exceptas set forth in Section 2.20(f)(i) of the Company Schedule, theexecution of this Agreement and the Ancillary Agreements and the consummationof the transactions contemplated hereby and thereby will not (either alone orupon the occurrence of any additional or subsequent events) constitute anevent under any Company Employee Plan, Employee Agreement, trust or loan thatwill or may result in any payment (whether of severance pay or otherwise),acceleration, forgiveness of indebtedness, vesting, distribution, increase inbenefits, obligation to fund benefits or other change in benefits with respectto any Employee.  The execution of thisAgreement and the Ancillary Agreements and the consummation of the transactionscontemplated hereby and thereby will not entitle any Employee of the Company orany of its subsidiaries to terminate or shorten his or her employment.

 

(ii)           Withrespect to any insurance policy which provides, or has provided, funding forbenefits under any Company Employee Plan, (A) there is and will be noliability of the Company, Parent, Purchaser or any of their respectivesubsidiaries in the nature of a retroactive or retrospective rate adjustment,loss sharing arrangement, or actual or contingent liability as of orimmediately after the Closing Date, nor would there be any such liability ifsuch insurance policy were terminated as of the Closing Date, and (B) noinsurance company issuing any such policy is in receivership, conservatorship,bankruptcy, liquidation, or similar proceeding, and, to the Shareholders’Knowledge, no such proceedings with respect to any insurer are imminent.

 

(g)           Employment Matters.  Except as set forth in Section 2.20(g)of the Company Schedule, the Company (i) is in compliance in all materialrespects with all Applicable Laws respecting employment, employment practices,terms and conditions of employment and wages and hours, in each case, withrespect to its Employees and independent contractors; (ii) has withheldand reported all amounts required by law or by agreement to be withheld andreported from the wages, salaries and other payments to Employees;(iii) is not liable for any arrears of wages or any Taxes or any penaltyfor failure to comply with any of the foregoing; (iv) is not liable forany payment to any trust or other fund with respect to other benefits forEmployees; and (v) is not liable to make any outstanding payments to anyEmployee by way of damages or compensation for loss of office or employment orfor redundancy or unfair or wrongful dismissal. Neither the Company nor any of its subsidiaries has direct or indirectliability with respect to any misclassification of any person as an independentcontractor rather than as an employee, or with respect to any employee leasedfrom another employer.

 

(k)           Labor.  No work stoppage or labor strike against theCompany or any of its subsidiaries is pending, threatened or reasonablyanticipated.  The Company is not involvedin or, to the Shareholders’ Knowledge, threatened with, any labor dispute,grievance, or litigation relating to labor, safety or discrimination mattersinvolving any Employee, including charges of unfair labor practices ordiscrimination complaints, which, if adversely determined, would,

 

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individually or inthe aggregate, result in material liability to Company.  The Company is not currently, nor has it beenin the past, a party to, or bound by, any collective bargaining agreement orunion contract with respect to its Employees and no collective bargainingagreement or union contract is being negotiated by the Company.  Section 2.20(k) of the Company Scheduleincludes a list of all employees who have been terminated by the Company, andthe general reason for termination, since inception.

 

2.21         Compliance with Laws.  Except as set forth in Section 2.21 ofthe Company Schedule:  The Company hasmaterially complied with, is not in material violation of, and has not receivedany notices of violation with respect to, any applicable federal, state orlocal statute, law, ordinance, rule or regulation, domestic or foreign (“**Applicable Laws**”) in the jurisdictions wherethe Company and its subsidiaries are organized. The Company has not received any communication during the past threeyears from any Governmental Entity or other person that alleges that it is orwas not in compliance with any Applicable Law, nor is the Company aware of anyreasonable basis for such claim.  TheCompany has taken adequate and sufficient measures to ensure that its agentshave complied with all Applicable Laws with respect to the design, development,promotion, sale, license, manufacture, import, export, use, distribution orprovision of the Company Products, and the Company is not aware of anyviolation since inception by any of its current or former agents of suchApplicable Laws.

 

2.22         Warranties;Indemnities.

 

There are no material warranty or indemnity claims pending orthreatened against the Company.  Section 2.22of the Company Schedule sets forth:

 

(a)           a list of all forms of writtenwarranties, guarantees and written warranty policies of the Company in respectof any of the Company Products which are currently in effect (the “**Warranty Obligations**”), and the duration ofeach such Warranty Obligation; and

 

(b)           each of the Warranty Obligationswhich is subject to any dispute or, to the Shareholders’ Knowledge, anythreatened dispute.

 

True and correct copies of all forms ofWarranty Obligations have been delivered to Parent prior to the execution ofthis Agreement.  There have not been anymaterial deviations from the Warranty Obligations, and salespersons, employeesand agents of the Company are not authorized to undertake obligations to anycustomer or other person in excess of or materially different from suchWarranty Obligations.  The CompanyFinancials reflect adequate and appropriate reserves for all WarrantyObligations in accordance with Swedish GAAP. All products manufactured, designed, licensed, leased, rented or sold bythe Company are and were free from material defects in construction and designand satisfy in all material respects the written requirements therefor setforth in any and all contracts, agreements, purchase orders, WarrantyObligations or other specifications or agreements related thereto.

 

2.23         SoftwareDevelopment Agreements.  The Company has not violated, is not inviolation of, nor will this Agreement, any Ancillary Agreement, the observanceand performance of the terms hereof or thereof or the consummation of thetransactions contemplated hereby or

 

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thereby cause any violation of, any terms or provisions of anyagreement under which the Company has or had an obligation to develop, supplyor distribute software to or for any third party, excluding end-userlicenses for object code executed in the ordinary course of business, nor isthe Company nor would Company be under any circumstances, under any obligationto deliver source code or any confidential or proprietary information to anythird party.

 

2.24         RepresentationsComplete. None of the representations or warranties made by the Shareholders(taken together with the Company Schedule), and none of the statements of, byor regarding the Company made in any schedule or certificate furnished by theShareholders or the Company pursuant to this Agreement or any AncillaryAgreement contains or will contain any untrue statement of a material fact, oromit to state any material fact necessary in order to make the statementscontained herein or therein (to the extent such statements are of, by orregarding the Company or the Shareholders) not misleading.

 

2.25         Insurance.  All insurance policies of the Company arelisted on Section 2.12(xvi) of the Company Schedule.  There is no material claim pending under anysuch policies as to which coverage has been questioned, denied or disputed bythe underwriters of or obligors on such policies.  All premiums due and payable under all suchpolicies have been timely paid and the Company is otherwise in compliance withthe terms of such policies.  To the Shareholders’Knowledge, there is no threatened termination of, or material premium increasewith respect to, any of such policies, and there is no threat that anyunderwriter or carrier would not renew each such policy on substantiallycomparable terms as currently in effect.

 

2.26         Certain BusinessPractices. Neither the Company, nor, to the Shareholders’ Knowledge, any agent,employee or other person associated with or acting on behalf of the Companyhas, directly or indirectly, used any corporate funds for unlawfulcontributions, gifts, entertainment or other unlawful expenses relating topolitical activity, made any unlawful payment to foreign or domestic governmentofficials or employees or to foreign or domestic political parties or campaignsfrom corporate funds, violated any provision of the Swedish Criminal Act (*Sw. Brottsbalken*), or any similar foreignlaw, or made any bribe, rebate, payoff, influence payment, kickback or othersimilar unlawful payment.

 

2.27         Complete Copies ofMaterials. The Company has delivered or made available true and complete copies ofeach document that has been requested by Parent or its counsel in connectionwith Parent’s legal, accounting and business review of the Company.

 

2.28         Customers andSuppliers.  Except as set forth in Section 2.28 ofthe Company Schedule, no customer which individually accounted for more than 1%of the Company’s consolidated gross revenues during the 12-month periodpreceding the date hereof, and no supplier of the Company has canceled orotherwise terminated, or made any written threat to the Company to cancel orotherwise terminate its relationship with the Company, or has decreasedmaterially its services or supplies to the Company, in the case of any suchsupplier, or its usage of the services or products of the Company, in the caseof such customer and, to the Shareholders’ Knowledge, no such supplier orcustomer intends to cancel or otherwise terminate its relationship with theCompany or to decrease materially its services or supplies to the Company orits usage of the services or products of the Company, as the case may be.

 

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2.29         Export Control Laws.  The Company has conducted its exporttransactions at all times in strict compliance with applicable provisions ofall export control laws and regulations and similar foreign laws.  Without limiting the foregoing, the Companyrepresents and warrants that:

 

(a)           the Company has obtained all exportlicenses and other approvals required for its exports of products, software andtechnologies;

 

(b)           the Company is in compliance with theterms of all applicable export licenses or other approvals;

 

(c)           There are no pending or, to theShareholders’ Knowledge, threatened, claims against the Company with respect tosuch export licenses or other approvals; and

 

(d)           To the Shareholders’ Knowledge, thereare no actions, conditions or circumstances pertaining to the Company’s exporttransactions that may give rise to any future claims.

 

2.30         Banks andBrokerage Accounts.  Section 2.30 of the CompanySchedule sets forth:

 

(a)           atrue and complete list of the names and locations of all banks, trustcompanies, securities brokers and other financial institutions at which theCompany has an account or safety deposit box or maintains a banking, custodial,trading or other similar relationship;

 

(b)           atrue and complete list and description of each such account, safety deposit boxand relationship, indicating in each case the account number, the names of therespective officers, employees, agents or other similar representatives of theCompany having signatory power with respect thereto and the current balances insuch accounts or safety deposit boxes; and

 

(c)           alist of each debenture, note, and other evidence of indebtedness, stock,security (including rights to purchase and derivative securities or rights),interests in joint ventures and general and limited partnerships, mortgageloans and other investment or portfolio assets owned of record or beneficiallyby the Company, the legal name of the record and beneficial owner thereof, thelocation of the certificates, if any, therefor, the maturity date, if any, andany stock or bond powers or other authority for transfer granted with respectthereto.

 

2.31         Takeover Statutes.  No “fair price,” “moratorium,” “control shareacquisition,” or other or similar anti-takeover statutes or regulations enactedor promulgated under Swedish law is applicable with respect to the Company inconnection with the transaction contemplated by this Agreement or the AncillaryAgreements.

 

2.32         Internal Controls.  The Company maintains a system of internal accounting controls sufficient toprovide reasonable assurances regarding the reliability of financial reportingand the preparation of financial statements in accordance with SwedishGAAP.  The Company

 

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(a) maintainsdisclosure controls and procedures to ensure that material information relatingto the Company and its subsidiaries is made known to the management of theCompany by others within those entities and (b) has disclosed, based onits most recent evaluation prior to the date hereof, to the Company’s Board ofDirectors (i) any significant deficiencies in the operation of internalcontrols which could adversely affect in any material respect the Company’sability to record, process, summarize and report financial data and(ii) any fraud, whether or not material, that involves management or otheremployees who have a significant role in the Company’s internal controls.

 

Each of the Shareholders hereby severally for himself, herself oritself (as provided in Section 7.2(a)(ii)) represent and warrant toParent and Purchaser as of the date hereof and as of the Closing Date asfollows in Section 2.33 through Section 2.36:

 

2.33         Due Authorization of Shareholders.

 

(a)           Each of the Shareholders has allrequisite power and authority to execute and deliver this Agreement and anyAncillary Agreements to which he, she or it is or will be a party, to observeand perform his, her or its obligations hereunder and thereunder and to consummatethe transactions contemplated hereby and thereby.  This Agreement hasbeen (and each Ancillary Agreement upon the execution and delivery thereof willbe) duly and validly executed and delivered by each of the Shareholders,and each constitutes (or will constitute upon execution and delivery) alegal, valid and binding obligation of each Shareholder, enforceable againsteach Shareholder in accordance with its respective terms, except asenforceability may be limited by principles of public policy and subject to thelaws of general application relating to bankruptcy, insolvency and the reliefof debtors and rules of law governing specific performance, injunctive reliefor other equitable remedies.

 

(b)           The execution and delivery of thisAgreement and the Ancillary Agreements by each Shareholder does not, and theconsummation of the transactions contemplated hereby and thereby will not,result in a Conflict with:

 

(i)            anyprovision of the organizational and governing documents of such Shareholder, asapplicable; or

 

(ii)           anymortgage, indenture, lease, contract or other agreement or instrument,permit, concession, franchise, license, judgment, order, decree, statute, law,ordinance, rule or regulation applicable to such Shareholder or his, her or itsproperties or assets.

 

(d)           No consent, waiver, approval, orderor authorization of, or registration, declaration or filing with, anyGovernmental Entity or any third party is required by or with respect to anShareholder in connection with the execution and delivery of this Agreement orany Ancillary Agreement or the consummation of the transactions contemplatedhereby or thereby.

 

2.34         Titleto Shares.  As ofthe date hereof, each Shareholder is the registered and sole beneficial ownerof the Shares held by such Shareholder, with good and marketable title thereto,free and clear of any and all liens, security interests, pledges, mortgages,charges, limitation,

 

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claims,restrictions, rights of first refusal, rights of first offer, rights of firstnegotiation or other encumbrance of any kind or nature whatsoever.  Effective upon the Closing, each Shareholderwill be the registered and sole beneficial owner of the Shares held by suchShareholder, with good and marketable title thereto, free and clear of any andall liens, security interests, pledges, mortgages, charges, limitation, claims,restrictions, rights of first refusal, rights of first offer, rights of firstnegotiation or other encumbrance of any kind or nature whatsoever.  Upon consummation of the purchase of theShares from each Shareholder, Purchaser will acquire from such Shareholder goodand marketable title to the Shares held by such Shareholder, free and clear ofany and all liens, security interests, pledges, mortgages, charges, limitation,claims, restrictions, rights of first refusal, rights of first offer, rights offirst negotiation or other encumbrance of any kind or nature whatsoever.

 

2.35         LitigationRegarding Shareholders.  There is no action, suit, claim, proceeding,arbitration or investigation of any nature pending, or to the Shareholders’Knowledge, threatened, by, against or involving such Shareholder thatchallenges or seeks to prevent, enjoin, alter or materially delay thetransactions contemplated by this Agreement, nor, to the Shareholders’Knowledge, is there any basis therefor.

 

2.36.        RepresentationsRegarding Parent Shares.  Each of theShareholders receiving Parent Shares, severally, but not jointly, herebyrepresent and warrant to Parent as follows:

 

(a)           Investigation; Economic Risk.  Such Shareholder acknowledges that he, she orit has had an opportunity to discuss the business, affairs and currentprospects of Parent with its officers. Such Shareholder further acknowledges having had access to informationabout Parent that he, she or it has requested. Such Shareholder acknowledges that he is able to fend for himself in thetransactions contemplated by this Agreement and has the ability to bear theeconomic risks of holding Parent Shares pursuant to this Agreement.

 

(b)           Purchase for Own Account.  The Parent Shares to be acquired by suchShareholder hereunder will be acquired for such Shareholder’s own account, notas a nominee or agent, and not with a view to or in connection with the sale ordistribution of any part thereof, except for such transfers made under aneffective registration statement or such other transfer as may be in compliancewith applicable securities laws.

 

(c)           Non-U.S. Person.  Such Shareholder is not a “U.S. person” assuch term is defined in Rule 902 of Regulation S promulgated under theSecurities Act of 1933, as amended (the “**Act**”).

 

(d)           Restrictive Legends.  It is understood by such Shareholder thateach certificate representing Parent Shares and any other securities issued inrespect of the Parent Shares upon any stock split, stock dividend,recapitalization, merger or similar event shall be stamped or otherwiseimprinted with a legend substantially in the following form:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF

 

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ANY STATES OR FOREIGN JURISDICTIONS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY ANDRESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THATCERTAIN LOCK-UP AGREEMENT BY AND BETWEEN THE HOLDER HEREOF AND VALUECLICK,INC., THE ACT AND APPLICABLE STATE OR FOREIGN SECURITIES LAWS, PURSUANT TOREGISTRATION OR EXEMPTION THEREFROM.

 

(e)           Removal ofRestrictive Legend.  The legends setforth above shall be removed by Parent upon request to do so from the holderthereof within ten “**Business Days**”(which, for the purposes of this Agreement, shall mean any day when banks areopen for general banking business in Sweden) from any certificate evidencingParent Shares, (i) with respect to the legend regarding the Act, upon thetransfer of such Parent Shares pursuant to an opinion of counsel, as reasonablyrequested by Parent, that such Parent Shares may be transferred in relianceupon an exemption from the Act and other applicable securities laws and (ii)with respect to the Lock-Up Agreement, upon the transfer of such Parent Sharessubsequent to the expiration of the restricted period provided in the Lock-UpAgreement.

 

# **ARTICLE III**

# ** **

# **REPRESENTATIONS AND WARRANTIES OF PARENT**

# **AND PURCHASER**

# ** **

Parent and Purchaser hereby jointly and severally represent and warrantto the Shareholders as follows:

 

3.1           Organization,Standing and Power.  Parent is a corporation duly organized,validly existing and in good standing under the laws of the State ofDelaware.  Purchaser is a corporationduly organized, validly existing and in good standing under the laws ofSweden.  Each of Parent and Purchaser hasthe corporate power to own its properties and to carry on its business as nowconducted and is duly qualified to do business and is in good standing in itsjurisdiction of incorporation and in each jurisdiction in which it is requiredto be so qualified.  Parent is not inviolation of any provisions of its Certificate of Incorporation or bylaws.  Purchaser is not in violation of anyprovisions of its articles ofassociation or other organizational and governing documents.

 

3.2           Authority.

 

(a)           Parentand Purchaser have all requisite corporate power and authority to enter intothis Agreement and any Ancillary Agreements to which Parent and Purchaser areparties, to perform their respective obligations hereunder and thereunder andto consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreementand the Ancillary Agreements and the consummation of the transactionscontemplated hereby and thereby have been duly authorized by all necessarycorporate action on the part of Parent and Purchaser and no further action ofeither Parent or Purchaser or its respective Board of Directors

 

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is required with respect to the foregoing.  Parent’s and Purchaser’s respective Board ofDirectors have unanimously approved this Agreement and each Ancillary Agreementand the transactions contemplated hereby and thereby.  This Agreement and each Ancillary Agreementhave been duly executed and delivered by Parent and Purchaser, as applicable,and constitute the valid and binding obligations of Parent and Purchaser, asapplicable, enforceable against such respective parties in accordance withtheir terms, except as such enforceability may be limited by principles ofpublic policy and subject to the laws of general application relating tobankruptcy, insolvency and the relief of debtors and rules of law governingspecific performance, injunctive relief or other equitable remedies.

 

(b)           No vote of the stockholders of Parentor Purchaser is required to approve this Agreement and the transactionscontemplated hereby under the provisions of applicable law.

 

(c)           No consent, waiver, approval, orderor authorization of, or registration, declaration or filing with, any court,administrative agency or commission or other federal, state, county, local orforeign governmental authority, instrumentality, agency or commission orany third party is required by or with respect to Parent and the Purchaser inconnection with the execution and delivery of this Agreement or any AncillaryAgreement or the consummation of the transactions contemplated hereby orthereby.

 

3.3           No Conflicts.  Except for filings, notices, permits,authorizations, consents and approvals as may be required under, and otherapplicable requirements of, federal, state securities or blue sky laws, theexecution and delivery by Parent and Purchaser of this Agreement and theAncillary Agreements to which Parent and Purchaser are parties do not, and theobservance and performance by such parties of their respective obligationsunder this Agreement and the Ancillary Agreements to which they are a party andthe consummation of the transactions contemplated hereby and thereby do not andwill not:

 

(a)           conflict with or result in aviolation or breach of any of the terms, conditions or provisions of theCertificate of Incorporation or Bylaws of Parent or the articles of association orother organizational and governing documents of Purchaser; or

 

(b)           conflict with or result in a materialviolation or breach of, or constitute an event of default under, any mortgage,indenture, lease, contract or other agreement or instrument, permit,concession, franchise, license, judgment, order, decree, statute, law,ordinance, rule or regulation applicable to Parent, Purchaser or theirrespective properties or assets; or

 

(c)           requireParent or Purchaser to obtain any consent, approval or action of, or make anyfiling with or give any notice to any person.

 

3.4           SEC Reports;Financial Statements.  Parent has filed all required forms, reportsand documents with the SEC since January 1, 2001 (“**Parent SEC Reports**”), each of which complied at the time offiling in all material respects with all applicable requirements of the Act andthe Securities Exchange Act of 1934, as amended (the “**Exchange Act**”), as applicable, in each caseas in effect on the dates such forms reports and documents were filed.  None of the Parent SEC Reports contained whenfiled any untrue statement of a material fact or omitted to

 

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state a material fact required to be stated or incorporated byreference therein or necessary in order to make the statements therein in lightof the circumstances under which they were made not misleading**,**except to the extent superseded by aParent SEC Report filed subsequently and prior to the date hereof.  The audited consolidated financial statementsof Parent included in the Parent SEC Reports fairly present in conformity in allmaterial respects with U.S. GAAP applied on a consistent basis (except as maybe indicated in the notes thereto) the consolidated financial position ofParent****and its consolidatedsubsidiaries as of the dates thereof and their consolidated results ofoperations and changes in financial position for the periods then ended.

 

3.5.          No Prior Activities.  Except for obligations incurred in connectionwith its incorporation or organization or the negotiation and consummation ofthis Agreement and the transactions contemplated hereby, Purchaser has neitherincurred any obligation or liability nor engaged in any business or activity ofany type or kind or entered into any agreement or arrangement with any person.

 

3.6           Brokers’ andFinders’ Fees.  Neither Parent nor Purchaser has incurred, norwill they incur, directly or indirectly, any liability for brokerage orfinders’ fees or agents’ commissions or any similar charges in connection withthis Agreement, any Ancillary Agreement or any transaction contemplated herebyor thereby.

 

# **ARTICLE IV**

# ** **

# **CONDUCT PRIOR TO THE CLOSING**

# ** **

4.1           Conduct ofBusiness of the Company.  During the period from the date of thisAgreement and continuing until the earlier of the termination of this Agreementpursuant to Section 8.1 and the Closing Date, the Shareholdersagree to cause the Company to:

 

(a)           carryon its business in the usual, regular and ordinary course in substantially thesame manner as heretofore conducted;

 

(b)           timelypay its debts and Taxes and to timely file all Tax Returns when due;

 

(c)           payor perform all other obligations when due; and

 

(d)           useall reasonable efforts consistent with past practice and policies to preserveintact the Company’s current business organizations, keep available theservices of its current officers and key employees and preserve its relationshipswith customers, suppliers, distributors, licensors, licensees and others havingbusiness dealings with it;

 

all with the goal of preserving unimpairedthe Company’s goodwill and ongoing businesses through the Closing Date.  The Company and the Shareholders shallpromptly notify Parent of any event or occurrence or emergency not in theordinary course of business of the Company, and any material event involvingthe Company.

 

4.2           Negative Covenants.  During the period from the date hereof andcontinuing until the earlier of the termination of this Agreement pursuant to Section8.1 and the Closing Date, the

 

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Shareholders shall not, and shall cause the Company and itssubsidiaries not to, without the prior written consent of Parent or asexpressly contemplated by this Agreement:

 

(a)           enter into anycommitment or transaction not in the ordinary course of business, or anycommitment or transaction of the type described in Section 2.7hereof;

 

(b)           sell, transfer,license, abandon, let lapse, disclose, misuse, misappropriate, diminish,destroy or otherwise dispose of or encumber the Company Intellectual Propertyin any manner (other than pursuant to end user licenses in the ordinarycourse of business) or assert orthreaten to assert any rights with respect to the Company Intellectual Propertyagainst any third party;

 

(c)           acquire or agree toacquire any business or any corporation, partnership, association or otherbusiness organization or division thereof by merging or consolidating with, orby purchasing a substantial portion of the assets of any such person, or by anyother manner;

 

(d)           incur anyindebtedness for borrowed money or guarantee or agree to act as a surety forany indebtedness;

 

(e)           grant or amend anyexisting agreement to provide severance or termination pay, or provide suchpay, to any director or officer or to any other employee, consultant orcontractor, except payments made pursuant to standard written agreementsoutstanding on the date hereof and as disclosed in the Company Schedule;

 

(f)            adopt any newseverance, termination, indemnification or other policies, agreements orarrangements, the benefits of which are contingent upon the occurrence of atransaction involving the Company;

 

(g)           revalue any Companyassets or properties, including writing down the value of inventory or writingoff notes or accounts receivable, other than in the ordinary course ofbusiness;

 

(h)           make or change anymaterial election in respect of Taxes, file an amended Tax Return or claim forrefund of Taxes, adopt or change any accounting method in respect of Taxes,enter into any agreement with respect to Taxes with any Governmental Entity,settle any claim or assessment in respect of Taxes, or consent to any extensionor waiver of the limitation period applicable to any claim or assessment inrespect of Taxes;

 

(i)            enter into anystrategic alliance or joint marketing arrangement or agreement; or

 

(j)            take, or agree totake, any of the actions described above, or any other action that could causea Company Material Adverse Effect or would prevent the Company from performingor cause the Company not to perform its covenants or obligations hereunder orunder any Ancillary Agreement.

 

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4.3           No Solicitation.  Until the earlier of the termination of thisAgreement pursuant to Section 8.1 and the Closing Date, the Shareholderswill not, nor will any of the Shareholders permit the Company or any of theCompany’s officers, directors, agents, representatives or affiliates (any ofthe foregoing, a “**Company Representative**”)to, directly or indirectly, take any of the following actions with any partyother than Parent and its designees:

 

(a)           solicit,initiate, entertain or encourage any proposals or offers from, or conductdiscussions with or engage in negotiations with, any person relating to anypossible acquisition of the Company or any of its subsidiaries (whether by wayof merger, purchase of assets or capital stock or otherwise), any portion ofthe Company’s or its subsidiaries’ capital stock or assets or any equityinterest in the Company or any of its subsidiaries;

 

(b)           provideinformation with respect to the Company or its business to any person otherthan Parent and its designees, or otherwise cooperate with, facilitate orencourage any effort or attempt by any such person with regard to any possibleacquisition of the Company or any of its subsidiaries (whether by way ofmerger, purchase of capital stock, purchase of assets or otherwise), anyportion of the Company’s or its subsidiaries’ capital stock or assets or anyequity interest in the Company or any of its subsidiaries;

 

(c)           enterinto any agreement or understanding with any person other than Parent and itsdesignees, providing for the acquisition of the Company or any of itssubsidiaries (whether by way of merger, purchase of capital stock, purchase ofassets or otherwise), any portion of the Company’s or its subsidiaries’ capitalstock or assets or any equity interest in the Company or any of itssubsidiaries; or

 

(d)           makeor authorize any statement, recommendation or solicitation in support of anypossible acquisition of the Company or any of its subsidiaries (whether by wayof merger, purchase of capital stock, purchase of assets or otherwise), anyportion of the Company’s or its subsidiaries’ capital stock or assets or anyequity interest in the Company or any of its subsidiaries by any person otherthan Parent and its designees.

 

The Shareholders shall, and shall cause theCompany to, immediately cease and cause to be terminated any such contacts,negotiations or activities with third parties relating to any such transactionor proposed transaction.  In addition tothe foregoing, if the Company or any of the Shareholder receives any offer orproposal relating to any such transaction or proposed transaction at any timeprior to the earlier of the Closing Date or the termination of this Agreement,the Shareholders shall, and shall cause the Company to, immediately notifyParent thereof, including information as to the identity of the offeror(s)making any such offer or proposal and the specific terms of such offer orproposal, as the case may be, and such other information related thereto asParent may request.

 

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# **ARTICLE V**

 

# **ADDITIONAL AGREEMENTS**

 

5.1                           Accessto Information; Cooperation.

 

(a)           GeneralAccess.  The Shareholders shall causethe Company to cooperate with and afford Parent and its accountants, counseland other representatives reasonable access during normal business hours duringthe period prior to the Closing Date to (a) all of the Company’sproperties, books, contracts, commitments and records and (b) all otherinformation concerning the business, properties and personnel of Company asParent reasonably may request in conducting its business, accounting and legalreview and investigation of the Company. The Shareholders shall cause the Company to provide to Parent and itsaccountants, counsel and other representatives copies of internal financialstatements and any related work papers and supporting documentation promptlyupon request.  No information orknowledge obtained in any investigation pursuant to this Section 5.1or otherwise shall affect or be deemed to modify any representation or warrantycontained herein or in any Ancillary Agreement or the conditions to theobligations of the parties to consummate the transactions contemplated herebyand thereby.  In addition, the Shareholdersshall cause the Company and its appropriate officers and other personnel to,execute and deliver such documents and instruments as may be requested byParent or required by third party accountants and auditors in connection withthe matters contemplated by this subparagraph (a).

 

(b)           InformationTechnology Access.  To facilitateprompt integration of the Company’s information technology (“**IT**”) inventory (e.g., voice and datanetwork services and software and hardware, licenses, financial/accountingsoftware, IT budgets, etc.) with Parent’s IT following the Closing, theShareholders shall cause the Company to provide Parent and its agents,employees and representatives reasonable access, at any time during normalbusiness hours from the date hereof through the Closing Date, to the Company’sIT inventory and the Company’s personnel responsible for such IT inventory.

 

5.2           Confidentiality.  Each of the parties hereto hereby agrees tokeep confidential all information or knowledge obtained in any investigation oractivities pursuant to Section 5.1, or pursuant to or in connectionwith the negotiation and execution of this Agreement, the Ancillary Agreementsor the effectuation of the transactions contemplated hereby or thereby (“**Confidential Information**”); provided,however, that the foregoing obligation shall not apply to information orknowledge which (a) a party can demonstrate was already lawfully in itspossession prior to the disclosure thereof by the other party, (b) isgenerally known to the public and did not become so known through any violationof law by the party with the information or knowledge, (c) became known tothe public through no fault of such party, (d) is later lawfully acquiredby such party from other sources, (e) is required to be disclosed pursuantto Section 5.6 or by order of court or government agency withsubpoena powers (provided, that such party shall first give the other partyprior notice of such order and a reasonable opportunity to object to suchcompelled disclosure or take other available action to protect the confidentialityof the otherwise Confidential Information) or (f) is developedindependently by either party without reference to, or specific knowledge of,the other parties’ Confidential Information.

 

5.3           Public Disclosure.  Unless otherwise required by law or otherrules or provisions binding on a party (including stock exchange rules andrequirements), no disclosure (whether or not in response to an inquiry) of thesubject matter of this Agreement shall be made by a party or any of itsdirectors, officers, Shareholders, employees, agents, consultants, advisors orother representatives without the prior written consent of the other partieshereto.  The parties

 

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acknowledge and agree that it is their mutual intent to issue a jointpress release announcing the transaction and to that end will in good faithagree to mutually acceptable text for such press release.  Thereafter, to the extent that a party issuesa press release with respect to the execution of this Agreement or thetransactions contemplated hereby, such party shall provide the other parties areasonable opportunity to review such release in advance, but such otherparties shall have no approval rights with respect to the scope or substance ofsuch subsequent releases to the extent the matters included are factuallyaccurate and do not disclose any Confidential Information.

 

5.4           Consents.  The Shareholders shall cause the Company toobtain all requisite consents, waivers and approvals under any of the MaterialContracts as may be required in connection with the transaction contemplatedhereby or by the Ancillary Agreements so as to preserve all rights of, andbenefits to, the Company thereunder at all times prior to the Closingand to ensure that after the Closing the Company at all times retains allrights and benefits previously available to the Company prior to the ClosingDate.

 

5.5           Reasonable Efforts.  Subject to the terms and conditions providedin this Agreement, each of the parties hereto shall use its reasonable bestefforts to take promptly, or cause to be taken, all actions, and to dopromptly, or cause to be done, all things necessary, proper or advisable underApplicable Law to consummate the transactions contemplated hereby, to obtain allnecessary waivers, consents and approvals, to effect all necessaryregistrations and filings and to remove any injunctions or other legal or otherimpediments or delays, in order to consummate the transactions contemplated bythis Agreement or the Ancillary Agreements and secure to the parties hereto thebenefits contemplated hereby and thereby.

 

5.6           Notification ofCertain Matters. During the period from the date hereof through the Closing Date, theShareholders shall give prompt notice to Parent of the occurrence or non-occurrenceof any event, the occurrence or non-occurrence of which is reasonablylikely to cause any representation or warranty of the Shareholders contained inthis Agreement to be untrue or inaccurate at or prior to the Closing Date orany failure of the Company or the Shareholders to comply with or satisfy anycovenant, condition or agreement to be complied with or satisfied by theCompany or the Shareholders hereunder. During the period from the date hereof through the Closing Date, Parentshall give prompt notice to the Shareholder Agent of the occurrence or non-occurrenceof any event, the occurrence or non-occurrence of which is reasonablylikely to cause any representation or warranty of Parent contained in thisAgreement to be untrue or inaccurate at or prior to the Closing Date or anyfailure of the Parent to comply with or satisfy any covenant, condition oragreement to be complied with or satisfied by it hereunder.  Notwithstanding the foregoing, the deliveryof any notice pursuant to this Section 5.6 shall not act as awaiver of or limit or otherwise affect any remedies available to the partyreceiving such notice by virtue of the events or circumstances referenced insuch notice.

 

5.7.          Release.  Fromand after the Closing Date, each Shareholder finally and forever releasesPurchaser, Parent and the Company, and their respective successors, assigns,officers, directors, agents, servants, employees and all Affiliates andsubsidiaries, past and present, of Purchaser, Parent and the Company (the “**Releasees**”) from each and every agreement,commitment, indebtedness, obligation and claim of every nature and kindwhatsoever, known or

 

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unknown, suspected or unsuspected (each, a “**Claim**” and collectively, the “**Claims**”) that(A) such Shareholder may have had in the past, may have as of the date hereofor, to the extent arising from or in connection with any act, omission or stateof facts taken or existing on or prior to the date hereof, may have after thedate hereof against any of the Releasees and (B) has arisen or arises directlyout of, or relates directly to, such Shareholder’s interest as a shareholder,director, officer and/or employee of the Company, except (1) such Claims as arecontemplated by this Agreement, (2) Claims for indemnification that suchShareholder may have under the Company’s articles of associate or equivalentorganizational or governing documents or (3) Claims arising out of or inconnection with the employment relationships between the Key Employees and theCompany (such Claims being the “**ReleasedClaims**”).  Each Shareholder acknowledges his, her or itsunderstanding that the facts in respect of which this release is given mayhereafter be determined to be other than or different from the facts now knownor believed by such Shareholder, and such Shareholder hereby accepts andassumes the risks of the facts being different and agrees that this releaseshall be and remain, in all respects, effective and not subject to terminationor rescission by reason of any such difference in facts.  The parties hereto intend that the provisionsregarding the Released Claims be construed as broadly as possible, andincorporate herein similar federal, national, state, foreign or other laws, allof which, with respect to the Released Claims, are similarly waived by eachShareholder.

 

5.8           DirectorDischarge. Parent and the Purchaser shall cause the Company and its subsidiaries(provided that the (at such time appointed) auditors do not disapprove (Swavstyrker)) to take a decision to grant discharge or otherwise cause thedischarge of the members of the board of directors of the Company and itssubsidiaries that are and that have been in office prior to the Closing Datefrom their personal liability for the period prior to the Closing Date on thenext annual general meeting in the Company and the subsidiaries. Parent and thePurchaser hereby waive the right to claim any amount of indemnification fromsuch members of the board of directors of the Company and the Subsidiaries withrespect to any acts or omissions of such individuals prior to the ClosingDate  (provided that the (at such timeappointed) auditors have not disapproved (Sw avstyrkt) discharge of thepersonal liability in accordance with the aforesaid).

 

5.9           Preemptive Rights.  Each Shareholder hereby waives any and allpreemptive rights, rights of first refusal or other rights to acquire Shares ofthe Company pursuant to the Shareholders’ Agreement, the articles ofassociation of the Company, Swedish law or otherwise.

 

# **ARTICLE VI**

# ** **

# **CONDITIONS TO THE CLOSING**

# ** **

6.1           Conditions toObligations of Each Party.  The respective obligations of each party tothis Agreement to effect the transactions contemplated hereby and by theAncillary Agreements shall be subject to the satisfaction or mutual waiver ofthe following conditions at or prior to the Closing:

 

(a)           No Restraints;Illegality.  No temporary restrainingorder, preliminary or permanent injunction or other order issued by any GovernmentalEntity or other legal restraint or

 

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prohibition preventing the consummation of the transactionscontemplated hereby or in the Ancillary Agreements shall be in effect, norshall there be any pending proceeding brought by any Governmental Entityseeking any of the foregoing, nor any action taken, or any statute, rule,regulation or order enacted, entered, enforced or deemed applicable to thetransactions contemplated hereby or in the Ancillary Agreements, which makesthe consummation of any such transaction illegal.

 

(b)           No Order.  No Governmental Entity shall have enacted,issued, promulgated, enforced or entered any statute, rule, regulation,executive order, decree, injunction or other order (whether temporary,preliminary or permanent) which is in effect and which has the effect of makingthe transaction contemplated hereby or in the Ancillary Agreements illegal orotherwise taken any action to prohibit consummation of such transactions.

 

6.2           AdditionalConditions to Obligation of the Shareholders.  The obligations of the Shareholders toconsummate the transactions contemplated hereby and by the Ancillary Agreementsshall be subject to the satisfaction or waiver of each of the followingconditions at or prior to the Closing (all of which are for the benefit of theShareholders and may only be waived by the Shareholders in writing if notsatisfied):

 

(a)           Representations,Warranties and Covenants.  Therepresentations and warranties of Parent and Purchaser in this Agreement shallbe true and correct in accordance with their terms as of the Closing, exceptfor changes contemplated by this Agreement and except for those representationsand warranties which address matters only as of a particular date or time(which shall remain true and correct as of such particular date or time), andeach of Parent and Purchaser shall have observed, performed and complied with,in all material respects, all covenants, obligations and conditions of thisAgreement required to be observed, performed and complied with by Parent andPurchaser at or prior to the Closing Date.

 

6.3           AdditionalConditions to the Obligations of Parent and Purchaser.  The obligations of Parent and Purchaser toconsummate the transactions contemplated hereby and by the Ancillary Agreementsshall be subject to the satisfaction or waiver of each of the followingconditions at or prior to the Closing (all of which are for the benefit ofParent and Purchaser and may only be waived by Parent in writing if notsatisfied):

 

(a)           Representations,Warranties and Covenants.  Therepresentations and warranties of the Shareholders in this Agreement shall betrue and correct in accordance with their terms as of the Closing, except forchanges contemplated by this Agreement and except for those representations andwarranties which address matters only as of a particular date (which shallremain true and correct as of such particular date), and the Shareholders shallhave observed, performed and complied with, in all material respects, allcovenants, obligations and conditions in this Agreement required to beobserved, performed and complied with by the Company and the Shareholders at orprior to the Closing.

 

(b)           No CompanyMaterial Adverse Effect.  There shallnot have occurred any Company Material Adverse Effect since the date ofexecution of this Agreement.

 

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(c)           EmploymentAgreements.  The Shareholders shallhave delivered to Parent an executed Employment Agreement, in the form attachedas **Exhibit A**, fromeach of Kristofer Arwin, Martin Alexanderson and Magnus Wiberg (the “**Key Employees**”).

 

(d)           Governmental andThird Party Consents.  Any and allconsents, waivers, and approvals required to be obtained by the Company, Parentand Purchaser from any Governmental Entities or other persons prior to or as aresult of the consummation of the transactions contemplated hereby or by theAncillary Agreements shall have been obtained (including those required underany Material Contracts as specified in Section 5.4 and the RequisiteConsents).

 

(e)           Delivery ofCertificates and Shareholders’ Register. Shareholders holding 100% of the outstanding Shares shall have deliveredoriginal Certificates representing all Shares, duly endorsed in blank, anupdated shareholders’ register of the Company’s share pursuant to whichPurchaser has been entered as owner of the Shares and such other documents andinstruments as may be reasonably requested by Parent.

 

(f)            No Injunctionsor Restraints on Conduct of Business by Parent.  No temporary restraining order, preliminaryor permanent injunction or other order issued by any Governmental Entity orother legal or regulatory restraint or provision challenging Parent’s proposedacquisition of Company, or limiting or restricting Parent’s conduct or theoperation of the business of Company (or Parent’s business following theClosing) shall be in effect, nor shall there be any pending or threatenedproceeding brought by any person or any Governmental Entity seeking any of theforegoing.

 

(g)           ResignationLetters.  Parent shall have receivedresignation letters from all members of the Board of Directors of the Companyand each of the subsidiaries nominated by the Shareholders, which letters willinclude a statement that no such board member has any claims whatsoever againstthe Company or its subsidiaries, as applicable.

 

(h)           Audit Report.  Parent shall have received an audit reportfor the Company for the period ended April 30, 2004, duly executed by the auditorsof the Company and the directors of the Company.

 

# **ARTICLE VII**

 

# **SURVIVAL OF REPRESENTATIONS AND WARRANTIES;**

# **INDEMNIFICATION AND ESCROW**

# ** **

7.1           Survival ofRepresentations and Warranties.  All representations and warranties in thisAgreement or in any instrument delivered pursuant to this Agreement shallsurvive the Closing and continue until the one –year****anniversary of the Closing Date; provided, however,that the representations and warranties contained in Section 2.34 shallsurvive until the five-year anniversary of the Closing Date.  Nothing in this Section 7.1 shalleffect the provisions regarding the termination and distribution of theWarranty Escrow Fund in Section 7.2(d). No claim under this Agreement may be brought by Parent or Purchaseragainst a Shareholder unless the

 

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Shareholder Agent shall have received from Parent or Purchaser writtennotice containing such details as may be reasonably available to Parent orPurchaser as to the nature and the estimated amount of the claim within threemonths of such party becoming aware of the Losses.

 

7.2           Indemnity andEscrow Arrangements.

 

(a)           Indemnification.

 

(i)            EachShareholder hereby agrees to jointly and severally indemnify and hold harmlessParent and its affiliates, by way of a reduction of the Purchase Price or therepayment of a portion of the Purchase Price, as the case may be, from andagainst any and all claims, losses, costs, expenses, liabilities, judgments,fines, awards, penalties, sanctions or other damages, including any settlementcosts, reasonable attorneys’ fees, and interest at a rate of 3% annually on anycash disbursements made by Parent or its affiliates in connection with any ofthe foregoing (any and all such amounts, collectively, “**Losses**”) which Parent or any of itsaffiliates suffers or incurs by reason, directly or indirectly, of:

 

(A)          anyinaccuracy in or breach by the Shareholders of any representation, warranty,covenant or agreement of the Shareholders contained herein or in any AncillaryAgreement or any document or instrument delivered pursuant hereto or thereto(other than with respect to the several representations and warranties of eachShareholder provided in Section 2.33 through Section 2.36);

 

(B)           anymisrepresentation by the Shareholders made in or pursuant to this Agreement(other than with respect to the several representations and warranties of eachShareholder provided in Section 2.33 through Section 2.36);

 

(C)           anyinaccuracy in the calculation, or the actual amount, of the Working Capital;

 

(D)          anycosts of enforcing this Agreement and any rights and remedies available toParent hereunder or at law;

 

(E)           anyPre-Closing Taxes (as defined in Section 7.2(l));

 

(F)           anyclaims made by a Shareholder in violation of Section 1.4(c).

 

(ii)           Inaddition, each Shareholder, hereby agrees to severally, but not jointly,indemnify and hold harmless Parent and its affiliates from and against any andall Losses which Parent or any of its affiliates suffers or incurs byreason, directly or indirectly, of (A) any inaccuracy in or breach by suchShareholder of any representation, warranty, covenant or agreement of suchShareholder contained in Section 2.33 through Section 2.36 and(B) any misrepresentation by such Shareholder made in or pursuant to Section2.33 through Section 2.36.

 

(iii)          Forpurposes of this Article VII “**Losses**”also shall include a reasonable amount of legal fees and costs to be advancedto Parent in connection with defending

 

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againstactions or claims by third parties.  Suchlegal costs and expenses are expressly authorized to be advanced to Parentreasonably in advance of Parent actually incurring such Losses; provided,however, that Parent shall promptly refund to the Escrow Fund or theShareholders, as applicable, any amounts so advanced and not subsequentlyapplied for such purposes.

 

(b)           Warranty Escrow Fund.  At the Closing, without any act of anyShareholder and on behalf of the Shareholders, Purchaser will deposit theEscrow Amount into an escrow account with Skandinaviska Enskilda Banken AB (publ.), a bank duly incorporatedand organized under the laws of Sweden, as escrow agent (the “**Warranty Escrow Agent**”), such deposit toestablish and constitute the Warranty Escrow Fund.  The Warranty Escrow Fund shall be governed bythe terms set forth in this Section 7.2 and by the Warranty EscrowAgreement and shall be maintained at the Shareholders’ joint and several costand expense.  The Warranty Escrow Amountshall be deposited into an interest bearing account and any interest earnedthereon shall be added to the Warranty Escrow Fund and available to coverLosses of Parent and its affiliates hereunder or to be paid to the Shareholdersor Consideration Escrow Agent, as the case may be.  Any such interest earned on the cash in theWarranty Escrow Fund shall be applied first to pay any fees, costs and expensesof the Warranty Escrow Agent and maintaining and disbursing the Warranty EscrowFund and otherwise will be treated for all tax purposes as income of the partyor parties to whom such cash ultimately is distributed (subject tosubparagraph (d) below).

 

(c)           Recourse to theEscrow Fund; Limitations.

 

(i)            Parent, on behalfof itself and its affiliates, shall be entitled to withdraw cash from theEscrow Amount (and any interest thereon) to compensate Parent and itsaffiliates for any Losses which Parent or any of its affiliates suffers orincurs, as provided above. Notwithstanding this Article VII or anything to the contraryherein, nothing in this Agreement shall limit or waive the liability of theShareholders for any Losses or damages incurred or sustained by Parent if thetransactions contemplated hereby do not close, and, in such event, the initialestablishment and availability of the Warranty Escrow Fund provided hereinshall not in any way limit or act as a waiver of any other rights or remediesavailable to Parent and its affiliates hereunder or at law or in equity, all ofwhich are cumulative and not exclusive.  Parent may not receive any amounts from theWarranty Escrow Fund unless and until Parent delivers an Officer’s Certificate(as defined in subparagraph (e) below) to the Warranty Escrow Agentidentifying the nature and amount of Losses being asserted, as described insubparagraph (e) below.

 

(ii)           Except in the caseof (A) indemnification under Sections 7.2(a)(i)(C), (E) or (F)or Section 7.2(a)(ii), (B) Losses arising out of or in connection with abreach of the representations in Sections 2.1, 2.2, 2.4and 2.19 and (C) as provided in clause (iv) below, no Shareholder shallhave any obligation to indemnify Parent under Section 7.2(a) unless and until the aggregate of all Losses suffered by Parent and itsaffiliates hereunder exceeds $300,000, whereupon the Shareholders shall beliable to indemnify Parent and its affiliates for the amount of all Lossesincurred by Parent and its affiliates.

 

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(iii)          Except in the caseof (A) indemnification under Section 7.2(a)(i)(F) or Section7.2(a)(ii) and (B) as provided in clause (iv) below, Parent’s sole andexclusive recourse for Losses recoverable pursuant to this Article VIIshall be the Escrow Amount (and any interest thereon).

 

(iv)          The liability foreach Shareholder with respect to any Losses shall be limited to suchShareholder’s Proportionate Interest of such Losses, whether paid from theWarranty Escrow Fund or otherwise, and Parent shall not be entitled to recoverLosses from any Shareholder in excess of the portion of the Purchase Priceultimately received by such Shareholder. Nothing herein shall limit any Shareholder’s obligations toParent or Purchaser, as the case may be, for Losses incurred by Parent orPurchaser, as the case may be, resulting solely from fraud, intentionalmisrepresentation or actual concealment (collectively Sw. svek or bedrägeri) asdescribed in clause 30 of the Swedish Contracts Act (Sw. Avtalslagen) or in Ch.9 § 1 of the Swedish Criminal Code (Sw. Brottsbalken) committed by such Shareholder.

 

(v)           Noclaim shall be brought by Parent, Purchaser or the Company or its subsidiariesagainst a Shareholder, nor shall a Shareholder be liable to Parent, Purchaseror the Company or its subsidiaries, as the case may be, for a claim (A) to theextent that Parent had “knowledge” of the breach underlying such claim; provided,that, for the purposes of this Section 7.2(c)(v)(A), Parent shall bedeemed to have “knowledge” only of those items expressly and specifically setforth on the Company Schedule and with respect to the Due Diligence Material asset forth in the preamble to Article II; providedfurtherthat this clause (A) shall not apply with respect to Sections 7.2(a)(i)(C),(E) or (F), (B) related to any Loss that occurs as a result ofany legislation that takes effect retrospectively or any legislation not ineffect as of the Closing Date, (C) related to any consequential, indirect,special or incidental damages or loss of profits, (D) to the extent a specificreserve has been provided with respect to such on the Financials Statements andthe Losses in connection with such claim have not been first applied againstsuch reserve or (E) related to any Losses suffered by Parent or the Purchaserthat are not in connection with Sections 2.33 through 2.36 orresulting from third party claims directed toward Parent or the Purchaser.  In addition, no Shareholder shall be liableto Parent, Purchaser or the Company or its subsidiaries, as the case may be,for Losses for which funds are recovered pursuant to insurance policies of theCompany in effect and fully paid for as of the Closing Date.

 

(d)           Termination and Distribution ofWarrantyEscrow Fund.  TheWarranty Escrow Fund shall terminate on the one –year****anniversary of the Closing; provided, however, that such portion of the WarrantyEscrow Fund, which in the reasonable judgment of Parent is necessary to coverany unsatisfied or disputed Losses specified in any Officer’s Certificatedelivered to the Warranty Escrow Agent at or prior to termination of the WarrantyEscrow Fund shall remain in the Warranty Escrow Fund (and the Warranty EscrowFund shall remain in existence) until all such claims have been satisfiedor resolved.  As soon after the scheduledexpiration of the Warranty Escrow Fund as all claims for Losses have beensatisfied or resolved, the Warranty Escrow Agent shall deliver the remainingportion of the Warranty Escrow Fund to the Shareholders in accordance withtheir respective Proportionate Interests therein; *provided* that, in the event that Losses with respect to theindemnification under Section 7.2(a)(ii) are recovered by Parent or itsaffiliates from the Escrow Amount, such amounts shall be credited solelyagainst amounts, if any, otherwise payable from the Escrow Amount to theShareholder

 

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severally liable for such Losses.  Parent and its affiliates shall have noobligations or responsibilities with respect to taxable income earned on cashamounts in the Warrant Escrow Fund, and any Taxes with respect to such incomeshall be the sole responsibility of the Shareholders.

 

(e)           Claims Upon Warranty Escrow Fund.  With respect to any claims made by Parentagainst the Warranty Escrow, Parent shall act reasonably and in goodfaith.  In order to make a claim forLosses pursuant to this Article VII, Parent shall deliver toWarranty Escrow Agent and Shareholder Agent a certificate signed by anyauthorized officer of Parent (an “**Officer’sCertificate**”): (i) stating that Parent has paid, suffered orproperly accrued or reasonably anticipates that it will pay, suffer or accrueLosses; (ii) specifying in reasonable detail the individual items ofLosses included in the amount so stated, the date each such item was paid,suffered or accrued, or the basis for such anticipated Losses; (iii) thenature of the Losses to which such item is related; and (iv) the amount ofLosses Parent seeks from the Warranty Escrow Fund; provided, however, that thesources of recovery specified by Parent as provided in clause (iv) shallnot be irrevocable, and Parent may seek recovery from different sources ordifferent amounts by a written supplemental notice to the Warranty Escrow Agentand Shareholder Agent.  Parent shall notbe estopped by any estimate it may make of the amount of any anticipated oractual Losses claimed in any Officer’s Certificate, or the bases therefor, andParent may submit amendments to any Officer’s Certificate, or additionalOfficer’s Certificates, in the event that actual or anticipated Losses, or thebases therefor, subsequently change or are determined to be different thanrepresented in an Officer’s Certificate previously delivered.  Immediately upon receipt of such Officer’sCertificate, the Warranty Escrow Agent shall set aside an amount in theWarranty Escrow Fund equal to the aggregate amount of Losses claimed from theWarranty Escrow Fund in the Officer’s Certificate.  The Warranty Escrow Agent shall notdistribute any amounts to Parent ( other than amounts advanced to Parent forlegal costs and expenses pursuant to Section 7.2(a)(iii) above) outof the Warranty Escrow Fund for fifteen Business Days after the date of theOfficer’s Certificate, unless Shareholder Agent authorizes the Warranty EscrowAgent to make such distribution.

 

(f)            Objections to Claims.  The Warranty Escrow Agent shall distribute toParent from the Warranty Escrow Fund the full amount of actual Losses claimedin the Officer’s Certificate immediately after the fifteen Business Day waitingperiod specified in Section 7.2(e) expires (or at such earlier dateas the Shareholder Agent may authorize), unless prior to such time theShareholder Agent delivers a good faith, written objection to the claim made inthe Officer’s Certificate (a “**Notice ofDispute**”) to the Warranty Escrow Agent with a copy toParent.  The Notice of Dispute mustinclude a reasonably detailed description of the basis of the objection, aswell as the amount of Losses, if any, which the Shareholder Agent is notdisputing.  Any undisputed Lossesimmediately shall be paid by the Warranty Escrow Agent.  If the Shareholder Agent does not timelydeliver a Notice of Dispute (or such Notice of Dispute does not reasonablydescribe the basis of the objection), the Shareholder Agent shall be deemed tohave irrevocably approved and consented to the payment of all Losses specifiedin the Officer’s Certificate (including any anticipated Losses, which will bedeemed irrevocably by Shareholder Agent approved and shall be paid by theWarranty Escrow Agent or otherwise paid promptly upon their actualincurrence).  The Warranty Escrow Agentand Parent shall be entitled to rely on and act in accordance with any writtenor deemed approval and consent of the Shareholder Agent

 

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in immediately distributingthe amount of any actual Losses claimed in a specific Officer’s Certificate(and in subsequently distributing amounts to cover any anticipated Losses uponoccurrence), even if the Shareholder Agent subsequently objects to or disputesthe nature or amount of Losses.  At suchtime as the Escrow Fund has been depleted, all Shareholders automatically shallcease to have any claim on any portion of the Escrow Fund.

 

(g)           Resolution of Conflicts.

 

(i)            Ifthe Shareholder Agent timely and properly delivers a Notice of Dispute, theShareholder Agent and Parent shall attempt in good faith to agree upon therights and responsibilities of the respective parties with respect to suchLosses, unless the amount of such Losses relates to third party claims that arethe subject of an ongoing proceeding before a court, arbitrator or GovernmentalEntity and remain to be definitively determined (in which case, Parent shall beentitled to periodically make a claim for any Losses associated with suchproceeding (including an advance of legal fees and settlement costs), inaddition to seeking recovery for the aggregate amount of actual Losses oncedetermined, less any amounts previously paid during the pendency of theproceeding).  If the Shareholder Agentand Parent should agree as a result of their good faith efforts as to theappropriate amount and treatment of such Losses, a memorandum setting forthsuch agreement shall be prepared and signed by both parties and shall befurnished to the Warranty Escrow Agent (to the extent the Losses are to be paidfrom the Warranty Escrow Fund).  TheWarranty Escrow Agent shall be entitled to rely on and act in accordance withany such memorandum and promptly shall distribute to Parent the specifiedamounts from the Warranty Escrow Fund (to the extent paid therefrom) tothe extent consistent with the terms thereof.

 

(ii)           Ifno agreement can be reached after good faith negotiation, either Parent or theShareholder Agent may initiate a proceeding pursuant to Section 9.8hereto to seek enforcement of its rights or resolution of the dispute underthis Section 7.2.  TheWarranty Escrow Agent and Parent shall be entitled to act in accordance withany resulting arbitration award and make or withhold payments out of theWarranty Escrow Fund, as applicable, in accordance with any final arbitrationaward rendered pursuant to Section 9.8 hereto.

 

(h)           Appointment of Shareholder Agent;Power of Attorney.

 

(i)            Immediatelyupon the execution of this Agreement and without further act of anyShareholder, Spark Investors AB shall be appointed as the agent and attorney-in-fact(such person, and any successor or replacement thereof as provided below, the “**Shareholder Agent**”) for eachShareholder, with Andrew B. Caruthers as the contact individual at Spark InvestorsAB.  The Shareholder Agent shall beauthorized, for and on behalf of all such Shareholders, to give and receivenotices and communications, to authorize the distribution to Parent of moniesfrom the Escrow Fund in satisfaction of claims for Losses by Parent, to objectto such distributions, to agree to, negotiate, enter into settlements andcompromises of, and demand arbitration and comply with orders of courts andawards of arbitrators with respect to such claims, and to take all otheractions necessary or appropriate in the judgment of the Shareholder Agent toaccomplish the foregoing.  Such agencymay be changed by the holders of a majority of the Proportionate Interests fromtime to time upon not less than thirty (30) days

 

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prior written notice to the Parent certifyingthat the Shareholder Agent has been removed by the requisite vote or consent ofsuch Shareholders, specifying the percentage of all Proportionate Interests sovoted or consenting and specifying the substitute Shareholder Agent appointedby such Shareholders.  No bond shall berequired of the Shareholder Agent, and the Shareholder Agent shall not receiveany compensation for its services. Notices or communications to or from the Shareholder Agent shallconstitute notice to or from each of the Shareholders.

 

(ii)           TheShareholder Agent has a duty to act in good faith at all times, but shall nothave any other duties or obligations towards Parent, Purchaser or the Companyand its subsidiaries.  The Shareholdersagree to jointly and severally indemnify the Shareholder Agent and hold theShareholder Agent harmless against any Losses incurred by the Shareholder Agent(including reasonable fees and expenses of any legal counsel retained by theShareholder Agent) arising out of or in connection with the acceptance oradministration of the Shareholder Agent’s duties hereunder, unless such Lossesdirectly result from the gross negligence, willful misconduct or bad faith ofthe Shareholder Agent.  Subject andsubordinate in every respect to the prior right of Parent to make claims forLosses, Shareholder Agent shall have the right to recover from the Escrow Fundprior to any distribution to the Shareholders any reasonable fees, costs andexpenses reasonably paid or incurred by the Shareholder Agent in acting as theShareholder Agent hereunder; provided, however, that the Shareholder Agent may notrecover any such amounts until the first anniversary of the Closing Date andonly then to the extent that there are no claims for Losses asserted by Parentthat remain unsatisfied or are pending resolution.

 

(i)            Actions of the Shareholder Agent.  Any decision, act, consent or instruction ofthe Shareholder Agent shall constitute a decision of all Shareholders and shallbe final, binding and conclusive upon each of such Shareholders.  The Escrow Agent and Parent may rely upon anydecision, act, consent or instruction of the Shareholder Agent as being thedecision, act, consent or instruction of each and every such Shareholder.  The Escrow Agent, the Company and Parenthereby are relieved from any liability to any person for any acts done by themin accordance with such decision, act, consent or instruction of the ShareholderAgent.

 

(j)            Third-Party Claims.  If Parent becomes aware of any third-partyclaim which Parent believes may result in a claim for Losses against the EscrowFund, Parent shall promptly notify the Shareholder Agent of such claim, and theShareholder Agent shall be entitled, at its sole cost and expense withoutreimbursement from the Escrow Fund, to participate in any defense of suchclaim.  Parent shall reasonably consultwith the Shareholder Agent prior to the settlement of any such claim anddiscuss with the Shareholder Agent in good faith any input regarding the claimand potential settlement the Shareholder Agent may have prior to any settlement(in each case, to the extent the terms thereof are not subject to aconfidentiality agreement with the claimant). After such consultation (or in the event that Parent is prohibited fromconsulting or the Shareholder Agent elects not to consult with Parent), Parentshall have the right to settle any such claim, even if the terms thereof areinconsistent with those proposed or advocated by the Shareholder Agent, so longas Parent makes such settlement reasonably and in good faith.  The settlement of any such third party claimshall be determinative of the amount of any claim for Losses against the EscrowFund.  If the Shareholder Agent consentsto the general economic terms of such settlement (such consent not to beunreasonably delayed, conditioned or

 

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withheld) orelected not to consult with Parent with respect to any such settlement, noShareholder shall have any power or authority to object under any provision ofthis Article VII to the settlement or the amount of any claim forLosses by Parent against the Escrow Fund or otherwise with respect to suchsettlement to the extent the amount of Losses claimed are consistent with theterms of such settlement.

 

(k)           Warranty Escrow Agent’s Duties.

 

(i)            TheWarranty Escrow Agent shall hold and safeguard the Warranty Escrow Fund duringits existence, shall treat such fund as a trust fund in accordance with theterms of this Agreement, and shall hold, make distributions from and dispose ofthe Warranty Escrow Fund only in accordance with the terms hereof.  The Warranty Escrow Agent shall be obligatedonly for the performance of such duties as are specifically set forth herein,and as set forth in any additional written escrow instructions which theWarranty Escrow Agent may receive after the date of this Agreement which aresigned by an officer of Parent and the Shareholder Agent, and may rely andshall be protected in relying or refraining from acting on any instrumentreasonably believed by the Warranty Escrow Agent to be genuine and to have beensigned or presented by the proper party or parties.

 

(ii)           TheWarranty Escrow Agent hereby is expressly authorized to disregard any and allwarnings given by any of the parties hereto or by any other person, exceptingonly joint orders by Parent and Shareholder Agent and orders or process ofarbitration tribunals, courts of law or Governmental Entities, and hereby is expresslyauthorized to comply with and obey orders, judgments or decrees of anyarbitration tribunals or Governmental Entities with respect to the WarrantyEscrow Fund or the Warranty Escrow Agent’s duties.  In case the Warranty Escrow Agent obeys orcomplies in good faith with any such order, judgment or decree of anyarbitration tribunal, court of law or Governmental Entity, the Warranty EscrowAgent shall not be liable to any of the parties hereto or to any other personby reason of such good faith compliance, notwithstanding any such order,judgment or decree being subsequently reversed, modified, annulled, set aside,vacated or found to have been entered without jurisdiction or proper authority.

 

(iii)          TheWarranty Escrow Agent shall not be liable in any respect on account of theidentity, authority or rights of the parties executing or delivering orpurporting to execute or deliver this Agreement or any documents or papersdeposited or called for hereunder.

 

(iv)          TheWarranty Escrow Agent shall not be liable for the expiration of any rightsunder any statute of limitations with respect to this Agreement or anydocuments deposited with the Warranty Escrow Agent.

 

(v)           Ifany dispute or controversy arises between the parties to this Agreement withrespect to the matters set forth in this Section 7.2 ̧ the WarrantyEscrow Agent shall not be required to determine or decide the dispute orcontroversy or to take any action regarding the same.  The Warranty Escrow Agent may in such eventhold all documents and cash in the Warranty Escrow Fund and may wait for thesettlement of any such dispute or controversy through appropriate final legalproceedings.  The Warranty Escrow Agentis authorized to deposit

 

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with the clerk or other authorized agent ofthe court all documents and cash amounts involved in the dispute or controversyat issue.  Upon making such deposit withthe court, the Warranty Escrow Agent shall be fully released and discharged ofand from any obligations with respect to the documents, cash or other mattersdeposited which are subject or relate to the dispute or controversy.

 

(l)            For purposes of this Agreement:

 

(i)            Indetermining whether there has been a breach of or inaccuracy of arepresentation in Section 2.8, the effect of any disclosure in theCompany Schedule with respect to any or all such representations shall bedisregarded; and

 

(ii)           “**Pre-Closing Taxes**” and Losses relating orwith respect thereto shall mean (A) all Taxes for which the Company couldbe held liable that are due with respect to periods ending on or prior to theClosing Date, (B) all Taxes of the Company that are due with respect toperiods (“**Straddle Periods**”) thatinclude but do not end on the Closing Date to the extent attributable to theportion of the Straddle Period ending at the close of business on the ClosingDate, (C) all fees, costs, penalties, and other expenses incurred inpreparing and filing all Tax Returns with respect to any taxable periodbeginning prior to the Closing Date, and (D) other Losses incurred withrespect to amounts described in clauses (A) through (C) of thissentence.  Taxes attributable to theportion of the Straddle Period ending at the close of business on the ClosingDate shall be determined by assuming that the Straddle Period consisted of twotaxable years or periods, one which ended at the close of business on theClosing Date and the other which began at the beginning of the day followingthe Closing Date, and items of income, gain, deduction, loss or credit, andstate and local apportionment factors of the Company for the Straddle Periodshall be allocated to the period ending on the close of business on the ClosingDate on a “closing of the books basis” by assuming that the books of theCompany were closed at the close of business on the Closing Date.  However, (x) exemptions, allowances ordeductions that are calculated on an annual basis, such as the deduction fordepreciation and (y) periodic taxes such real and personal property taxesshall be apportioned ratably between such periods on a daily basis.

 

# **ARTICLE VIII**

# ** **

# **TERMINATION, EXPENSES, AMENDMENT AND WAIVER**

# ** **

8.1           Termination.  Except as provided in Section 8.2below, this Agreement may be terminated and the transactions contemplatedhereby abandoned at any time prior to the Closing:

 

(a)           by mutual consent ofthe Shareholder Agent and Parent.

 

(b)           by Parent:

 

(i)            ifParent is not then in material breach of its obligations under this Agreementand there has been a material breach of any representation, warranty, covenantor agreement contained in this Agreement on the part of the Shareholders; or

 

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(ii)           ifthere shall be any action taken, or any statute, rule, regulation or orderenacted, promulgated or issued or deemed applicable to the transactionscontemplated hereby by any Governmental Entity, which would:  (A) prohibit Parent’s ownership oroperation of all or any portion of the business, assets or properties of theCompany or (B) compel Parent to dispose of or hold separate all or anyportion of the business, assets or properties of Parent or the Company as aresult of or after the Closing.

 

(c)           by Parent or theShareholders if:

 

(i)            theClosing has not occurred by September 30, 2004;

 

(ii)           thereshall be a final nonappealable order of a federal or state court in effectpreventing consummation of the transactions contemplated hereby; or

 

(iii)          thereshall be any statute, rule, regulation or order enacted, promulgated or issuedor deemed applicable to the transactions contemplated hereby by anyGovernmental Entity that would prohibit the transactions contemplated hereby ormake consummation of such transactions illegal; or

 

(d)           by the Shareholdersif the Company and the Shareholders are not then in material breach of theirobligations under this Agreement and there has been a material breach of anyrepresentation, warranty, covenant or agreement contained in this Agreement onthe part of the Parent or Purchaser.

 

Where action is taken to terminate this Agreement pursuant to this Section 8.1,it shall be sufficient for such action to be authorized by the Board ofDirectors (as applicable) of the party taking such action.  Notwithstanding anything in this Section 8.1to the contrary, neither Parent nor the Shareholders may terminate thisAgreement if such party is in material breach of its obligations hereunder andthe Closing does not occur as a direct or indirect result of such materialbreach.

 

8.2           Effect of Termination.  If this Agreement is terminated pursuant tothis Section 8.1, this Agreement shall forthwith become void andthere shall be no liability or obligation on the part of Parent, Purchaser, theCompany, their respective officers, directors or stockholders or theShareholders; provided, however, that each party shall remainliable for any breaches of this Agreement prior to its termination; provided,further, that the provisions of Sections 5.2, 5.3, 8.2,8.3 and Article IX of this Agreement and the definitions ofany defined terms used in such provisions shall remain in full force and effectand survive any termination of this Agreement.

 

8.3           Fees and Expenses.  Except as expressly provided otherwise hereinin Section 1.6, whether or not the Closing occurs, all fees and expensesincurred in connection with transactions contemplated hereby including alllegal, accounting, financial advisory (including all fees payable to Eagle OneCapital Limited, an advisor of the Company), consulting and all other fees andexpenses of third parties (“**Third PartyExpenses**”) incurred by a party in connection with the negotiationand effectuation of the terms and conditions of this Agreement and the

 

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transactions contemplated hereby, shall be the obligation of therespective party incurring such fees and expenses.

 

8.4           Amendment.  Except as otherwise required by ApplicableLaw, this Agreement may be amended by the parties hereto at any time pursuantto a written instrument executed by the Company, Parent, Purchaser and theShareholder Agent.

 

8.5           Extension; Waiver.  At any time prior to the Closing Date, Parentand Purchaser, on the one hand, and the Shareholders, on the other, may, to theextent legally allowed, (a) extend the time for the performance of any ofthe obligations of the other parties hereto, (b) waive any inaccuracies inthe representations and warranties made to such party contained herein or inany document delivered pursuant hereto and (c) waive compliance with anyof the covenants, agreements or conditions for the benefit of such partycontained herein.  Any agreement on thepart of a party hereto to any such extension or waiver shall be valid only ifin writing and signed by an authorized agent of such party.

 

**ARTICLE IX**

 

**GENERAL PROVISIONS**

 

9.1           Notices.  All notices and other communicationshereunder shall be in writing and deemed given if delivered personally or bycommercial delivery service, or mailed by registered or certified mail (returnreceipt requested) or sent via facsimile (with acknowledgment of completetransmission) to the parties at the following addresses (or at such otheraddress as a party from time to time may specify by like notice):

 

(a)           if to Parent or Purchaser, to:

 

ValueClick, Inc.4353 Park Terrace DriveWestlake Village, CA 91361Attention:  Samuel J. Paisley, ChiefFinancial OfficerFacsimile No.: (818) 575-4508

 

with a copy (which shall not constitute notice) to Parent’scounsel:

 

Gibson Dunn & Crutcher LLP333 South Grand AvenueLos Angeles, California 90071-3197Attention: Bradford P. Weirick, Esq.Facsimile No.: (213) 229-6765

 

and

 

Advokatfirman Vinge KBP.O. Box 1703111 87 Stockholm, Sweden

 

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Attention: Fredrik von BaumgartenFacsimile No.: 46 8 614 3190

 

(b)           if to the Shareholders, to theaddresses set for on the signature pages hereto:

 

with a copy (which shall not constitute notice) to the Company’scounsel:

 

Wistrand AdvokatbyraWorld Trade Center, Klarabergsviadukten 70, D:6Box 70393107 24 Stockholm, Sweden

Attention:  Jesper Grünbaum                  Niklas Larsson

Facsimile No.:  46 8 50 73 00 00

 

(c)                                  if to ShareholderAgent, to:

 

Spark Investors ABc/o Andrew B. Caruthers, New Media Sparks plc33 Glasshouse Street

London W1B5DG EnglandFacsimile No.:  44 207 851 7770

 

(d)           if to the Escrow Agent, to:

 

the address specified in writing by the Escrow Agent upon appointmentand provided to the parties hereto.

 

with copies to:

 

the Company’s counsel and Parent’s counsel at the addresses above.

 

9.2           Interpretation.  Unless the context clearly indicatesotherwise, (a) words of any gender include each other gender,(b) words using the singular number include the plural, and vice versa,(c) the terms “hereof,” “herein,” “hereby,” and derivate or similar wordsrefer to this Agreement as a whole and not to any particular Article,Section or subsection, (d) the words “include,” “includes” and“including” when used herein shall be deemed in each case to be followed by thewords “without limitation” and (e) references to “person” include anyindividual, corporation, limited or general partnership, association,proprietorship, limited liability company, joint venture, trust, other businessorganization or Governmental Entity.  Thetable of contents and headings contained in this Agreement are for referencepurposes only and shall not affect in any way the meaning or interpretation ofthis Agreement.

 

9.3           Counterparts.  This Agreement may be executed by facsimilesignature and in two or more counterparts, each of which shall constitute anoriginal, but all of which, when taken together, shall constitute but oneinstrument.  This Agreement shall becomeeffective when one or more counterparts have been signed by each party heretoand delivered to the other parties.

 

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9.4           Entire Agreement;Assignment. This Agreement, the schedules and exhibits hereto, and the documents andinstruments and other agreements among the parties hereto referenced herein:(a) constitute the entire agreement among the parties with respect to therespective subject matters hereof and thereof and supersede in their entiretyany prior or contemporaneous oral or written discussions, negotiations,agreements or understandings between or among the parties with respect to suchsubject matter (other than the Mutual Non-Disclosure Agreement dated May 13,2004 executed by the Company, Parent and certain of the Shareholders, whichshall continue in accordance with the terms thereof); (b) are not intendedto and shall not confer upon any other person (including, those persons listedon any exhibits or schedules attached hereto or any Shareholders of theCompany) any rights or remedies hereunder; and (c) may not beassigned by operation of law or otherwise without the prior written consent ofeach other party hereto, and any purported assignment in violation of thisrequirement shall be null and void abinitio.  Subject to the preceding sentence, thisAgreement shall be binding on and inure to the benefit of, and is enforceableby, the respective parties hereto and their respective successors, permittedassigns, heirs, executors and administrators.

 

9.5           Severability.  If any provision of this Agreement or theapplication thereof becomes or is declared by a court of competent jurisdictionto be illegal, void or unenforceable, the remainder of this Agreement willcontinue in full force and effect and the application of such provision toother persons or circumstances will be interpreted so as reasonably to effectthe express intent of the parties hereto. The parties further agree that any such void or unenforceable provisionof this Agreement shall be deemed replaced with a valid and enforceableprovision that will achieve, to the extent possible, the economic, business andother purposes of such void or unenforceable provision.

 

9.6           Remedies;Exercise of Rights.  The remedy provided in Section 7.2(a)in case of a breach of this Agreement by the Shareholders shall be exclusiveand hence it is specifically agreed that no remedy whatsoever under the Sale ofGoods Act (Sw Köplagen (1990:931)) or under any other statute, law or legalprinciple, including, without limitation, the right to rescind this Agreementor the Ancillary Agreements or the transactions contemplated hereby or thereby,shall be available to Parent or Purchaser, except (a) nothing herein shall limit any Shareholder’s obligations to Parent orPurchaser, as the case may be, for Losses incurred by Parent or Purchaser, asthe case may be, resulting solely from fraud, intentional misrepresentation oractual concealment (collectively Sw. svek or bedrägeri) as described in clause30 of the Swedish Contracts Act (Sw. Avtalslagen) or in Ch. 9 § 1 of theSwedish Criminal Code (Sw. Brottsbalken) committed by such Shareholder and (b)as provided in Section 9.9. No failure or delay by any party in exercising any right, power orprivilege hereunder shall operate as a waiver thereof nor shall any single orpartial exercise thereof (or failure to exercise) preclude any other,further or fuller exercise thereof or the exercise of any other right, power orprivilege.

 

9.7           Governing Law.  This Agreement shall be governed by andconstrued in accordance with the laws of Sweden, without giving effect to itsconflicts or choice of law principles.

 

9.8           Jurisdiction andVenue; Attorney’s Fees.  Any dispute, controversy or claim arising outof, or in connection with, this Agreement, or the breach, termination orinvalidity of

 

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the Agreement, shall be settled by arbitration in accordance with theRules of the Arbitration Institute of the Stockholm Chamber of Commerce andeach party hereto hereby unconditionally and irrevocably submits and consentsto the exclusive jurisdiction of the arbitration tribunal appointed inaccordance therewith.  The place ofarbitration shall be Stockholm, Sweden. The language to be used in the arbitralproceedings shall be English.  Theparties undertake and agree that all arbitral proceedings conducted withreference to this arbitration clause will be kept strictly confidential.  This confidentiality undertaking shall coverall information disclosed in the course of such arbitral proceedings, as wellas any decision or award that is made or declared during the proceedings.Information covered by this confidentiality undertaking may not, in any form,be disclosed to a third party without the written consent of the otherparty.  This notwithstanding, a partyshall not be prevented from disclosing such information in order to safeguardin the best possible way his rights vis-à-vis the other party in connectionwith the dispute, or if such a right exists pursuant to statute, regulation, adecision by an authority, a stock exchange contract or similar.  In addition to any recovery to which a partymay be entitled hereunder, the prevailing party in any arbitration hereundershall be entitled to reasonable attorney’s fees and costs incurred inconnection with such arbitration as determined by the arbitrators.

 

9.9           **SpecificPerformance.****  The parties acknowledge and agreethat any failure of any party to perform its agreements and obligationshereunder or contemplated hereby prior to the Closing Date will causeirreparable injury to the other parties, for which damages, even if available,will not provide an adequate remedy. Accordingly, each party hereby consents to the issuance of injunctiverelief by any court of competent jurisdiction to compel performance of suchparty’s obligations prior to the Closing Date and to the granting by any courtof the remedy of specific performance of its obligations hereunder prior to theClosing Date.**

 

9.10         Rules of Construction.  The parties have participated jointly in thenegotiation and drafting of this Agreement and each Ancillary Agreement.  In the event an ambiguity or question ofintent or interpretation arises, this Agreement and the applicable AncillaryAgreements shall be construed as if drafted jointly by the parties and nopresumption or burden of proof shall arise favoring or disfavoring any party byvirtue of the authorship of any provisions hereof or thereof.  Accordingly, each party understands andagrees that the common law principles of construing ambiguities against thedrafter shall have no application to this Agreement or any AncillaryAgreement.  Each party heretoacknowledges and agrees that such party has had a full and complete opportunityto review this Agreement and each Ancillary Agreement, to make suggestions orchanges to their terms and to seek independent legal and other advice inconnection herewith and therewith.

 

9.11         Parent Guarantee.  In its capacity as the owner and solestockholder of Purchaser, Parent hereby unconditionally and irrevocablyguarantees as for its own obligations and debt (Sw proprieborgen; såsom föregen skuld) all obligations of Purchaser under this Agreement and the AncillaryAgreements and the payment of all sums, of whatever nature, payable now or inthe future hereunder by Purchaser.

 

[signature page follows]

 

55

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as ofthe date first written above.

 
|                   |   | **VALUECLICK, INC.**       |
|------------------------|--------|----------------------------|
| **SHAREHOLDER AGENT**  |   |                       |
|                   |   | By:                        |   |
| **SPARK INVESTORS AB** |   | Name:                      |   |
|                   |   | Title:                     |   |
| By:                    |   |                       |   |
| Name:                  |   |                       |   |
| Title:                 |   |                       |   |
|                   |   |                       |   |
| Address:               |   |                       |   |
|                   |   |                       |
|                   |   |                       |
|                   |   |                       |
|                   |   |                       |
|                   |   | **PRICERUNNER HOLDING AB** |
|                   |   | ** **                 |
|                   |   |                       |
|                   |   | By:                        |   |
|                   |   | Name:                      |   |
|                   |   | Title:                     |   |
|                        |        |                            |  |  |  |  |  |  |  |

 

----

 
| **SHAREHOLDERS:**            | ** ** | ** **             |
|------------------------------|------------|------------------------|
| ** **                   | ** ** | ** **             |
| ** **                   | ** ** | ** **             |
| **KRISTOFER ARWIN**          |       | **MAGNUS WIBERG**      |
|                         |       |                   |
|                         |       |                   |
|                         |       |                   |
| Address:                     |       |                   | Address: |   |
|                         |       |                   |
|                         |       |                   |
|                         |       |                   |   |   |
|                         |       |                   |   |   |
| **MARTIN ALEXANDERSON**      |       | **SPARK INVESTORS AB** |
| ** **                   |       | ** **             |
|                         |       |                   |
| Address:                     |       |                   | By: |   |
|                         |       | Name:                  |   |
|                         |       | Title:                 |   |
|                         |       |                   |   |
|                         |       | Address:               |   |
|                         |       |                   |
|                         |       |                   |
|                         |       |                   |
|                         |       |                   |
| **NORTHZONE VENTURES IV KS** |       | **TDC A/S**            |
| ** **                   |       | ** **             |
|                         |       |                   |
| By:                          |       |                   | By: |   |
| Name:                        |       |                   | Name: |   |
| Title:                       |       |                   | Title: |   |
|                         |       |                   |   |
| Address:                     |       |                   | Address: |   |
|                         |       |                   |
|                         |       |                   |
|                              |            |                        |  |  |  |  |  |  |  |  |  |  |  |

 

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| **3I GROUP PLC**                          |   | **NEGOCIATEUR SARL** |
|-------------------------------------------|--------|----------------------|
|                                      |   |                 |
|                                      |   |                 |
| By:                                       |   |                 | By: |   |
| Name:                                     |   |                 | Name: |   |
| Title:                                    |   |                 | Title: |   |
|                                      |   |                 |   |   |
| Address:                                  |   |                 | Address: |   |
|                                      |   |                 |
|                                      |   |                 |
|                                      |   |                 |
|                                      |   |                 |   |
| **PÄR-JÖRGEN PÄRSSON**     |   | **DANIEL SHISHOO**   |
| ** **                                |   | ** **           |
|                                      |   |                 |
| By:                                       |   |                 | Address: |   |
| Name:                                     |   |                 |   |
| Title:                                    |   |                 |   |
|                                      |   |                 |   |
| Address:                                  |   |                 |   |
|                                      |   |                 |
|                                      |   |                 |
|                                      |   |                 |   |
|                                      |   |                 |   |
| **PAVILLION LIFE INSURANCE COMPANY LTD.** |   | **KRISTER NILSSON**  |
| ** **                                |   | ** **           |
|                                      |   |                 |
| By:                                       |   |                 | Address: |   |
| Name:                                     |   |                 |   |
| Title:                                    |   |                 |   |
|                                      |   |                 |   |
| Address:                                  |   |                 |   |
|                                      |   |                 |   |
|                                      |   |                 |
|                                      |   |                 |
|                                      |   |                 |
| **TIM TODREAS**                           |   | **MATTIAS LOFSTROM** |
| ** **                                |   | ** **           |
|                                      |   |                 |
| Address:                                  |   |                 | Address: |   |
|                                      |   |                 |   |   |
|                                      |   |                 |
|                                           |        |                      |  |  |  |  |  |  |  |  |  |  |  |

 

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| **CARL MAGNUS HOLFVE** |   | **CREDIT SUISSE LIFE AND PENSIONS (BERMUDA)  LTD** |
|------------------------|--------|----------------------------------------------------|
| ** **             |   | ** **                                         |
|                   |   |                                               |
|                   |   |                                               | By: |   |
| Address:               |   |                                               | Name: |   |
|                   |   | Title:                                             |   |
|                   |   |                                               |   |
|                   |   | Address:                                           |   |
|                   |   |                                               |
|                   |   |                                               |
|                        |        |                                                    |  |  |  |  |  |

 

----