STOCKHOLDER
AGREEMENT
This Stockholder Agreement (this
“ Agreement ”) is dated as of December 10,
2008, by and among SCM Microsystems, Inc., a Delaware corporation
(“ Parent ”), the persons signing under the
heading “Management Stockholders” on the signature page
hereto (each a “ Management Stockholder ”) and
the persons signing under the heading “Other
Stockholders” on the signature page hereto (each an “
Other Stockholder ” and together with the Management
Stockholders, each a “ Stockholder ”).
WHEREAS, Parent, Hirsch Electronics
Corporation, a California corporation (the “ Company
”), and certain other parties thereto have entered into that
certain Agreement and Plan of Merger dated as of December 10,
2008 (the “ Merger Agreement ”), pursuant to
which, among other things, through a two-step merger the Company
will become a wholly-owned subsidiary of Parent and be transformed
into a new Delaware limited liability company (the “
Merger ”).
WHEREAS, the Stockholder currently is
the holder of shares of the common stock, no par value per share,
of the Company, which shares at the Effective Time (as defined in
the Merger Agreement) will be converted into cash, shares of the
common stock, par value $0.001 per share, of Parent (“
Parent Common Stock ”) and warrants to purchase shares
of Parent Common Stock pursuant to the terms of the Merger
Agreement.
WHEREAS, as an inducement for and a
condition to Parent agreeing to enter into the Merger Agreement and
in consideration of the transactions contemplated by the Merger
Agreement, concurrently with the execution of the Merger Agreement,
each of the Stockholders has agreed to enter into this
Agreement.
NOW, THEREFORE, in consideration of
the foregoing and the mutual premises, representations, warranties,
covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions .
Capitalized terms used and not otherwise defined herein but which
are defined in the Merger Agreement shall have the meanings
ascribed to them in the Merger Agreement, unless the context
clearly indicates otherwise. The following terms, as used herein,
have the following meanings:
“ Acquisition
Transaction ” means any merger, reorganization,
recapitalization, consolidation, share exchange, business
combination or other similar transaction involving Parent or any of
its Subsidiaries.
“ Affiliate ”
means, with respect to any Person, any other Person that directly,
or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such first
Person.
“ Beneficial Owner
” has the meaning set forth in Rule 13d-3 under the
Exchange Act, and derivative terms such as “Beneficially
Own,” “Beneficially Owned,” and
“Beneficially Ownership” shall be given corresponding
meanings.
“ Business Day ”
means any day that is not a Saturday, a Sunday or other day on
which banks are required or authorized by Law to be closed in the
states of New York, California, or the country of Germany.
“ control ,”
including the terms “ controlled by ” and
“ under common control with ,” means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities, as trustee or executor,
as general partner or managing member, by contract or otherwise,
including the ownership, directly or indirectly, of securities
having the power to elect a majority of the board of directors or
similar body governing the affairs of such Person
“ DGCL ” means
the Delaware General Corporation Law.
“ Director ”
means a member of Parent Board.
“ Exchange Act ”
means the Securities Exchange Act of 1934, as amended.
“ Group ” means a
group within the meaning of Section 13(d)(3) of the Exchange
Act.
“ Parent Board ”
means the board of directors of Parent.
“ Person ” means
an individual, corporation, partnership, limited liability company,
limited liability partnership, syndicate, person, trust,
association, organization or other entity, including any
governmental entity, and including any successor, by merger or
otherwise, of any of the foregoing.
“ Shares ” means
(i) any shares of Parent Common Stock and any other securities
of Parent, including, options, warrants (including the New Acquiror
Warrants) and rights, and any other securities that are
convertible, exercisable or exchangeable for shares of Parent
Common Stock (including shares of the capital stock of the Company
that will be converted into securities of Parent as a result of the
Merger), in each case, that are Beneficially Owned by a Stockholder
as of immediately after the Effective Time and (ii) any shares
of Parent Common Stock or other securities of Parent that are or
become Beneficially Owned or acquired by a Stockholder or any of
its Affiliates in any capacity or form after the Effective Time and
prior to the termination of this Agreement, whether upon the
exercise of options, warrants (including the New Acquiror Warrants)
or rights, the conversion or exchange of convertible or
exchangeable securities, or by means of purchase, dividend,
distribution, split-up, recapitalization, merger, reorganization,
consolidation, combination, exchange of shares or the like, gift,
bequest, inheritance or as a successor in interest in any capacity
or otherwise.
“ Subsidiary ”
means, with respect to any Person, any other Person controlled by
such first Person, directly or indirectly, through one or more
intermediaries. All references in this Agreement to the
Subsidiaries of a Person shall be deemed to include all direct and
indirect Subsidiaries of such Person.
“ Transfer ”
means (i) offer for sale, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect
to, or consent to the offer for sale, sale, transfer, tender,
pledge, encumbrance, assignment or other disposition of, any
security or any interest therein; (ii) grant any proxies or
powers of attorney with respect to any security or deposit any
security into a voting trust or enter into a voting agreement with
respect to any security.
2. Effective Date . This
Agreement shall automatically and immediately become effective at,
and not before, the Effective Time, as such term is defined in the
Merger Agreement. Notwithstanding any other provision of this
Agreement, if the Merger Agreement is terminated, this Agreement
shall not become effective, shall have no force or effect, and
shall be null and void.
3. Representations and
Warranties of the Stockholder . Each Stockholder represents and
warrants to Parent that:
a. Ownership of Shares
. Stockholder will be as of the Effective Time the sole record and
Beneficial Owner of the number of Shares listed on
Schedule 3.1(a) opposite such Stockholder’s name
and such Shares constitute all of the shares of capital stock or
other voting securities of Parent held (or that will be held) of
record or Beneficially Owned by such Stockholder as of the date
hereof, subject to update pursuant to the last sentence of this
Section 3.1(a). Stockholder has sole voting power and sole power of
disposition, sole power of conversion, sole power to demand
appraisal rights and sole power to agree to all of the matters set
forth in this Agreement, in each case with respect to all of the
Shares with no limitations, qualifications or restrictions on such
rights, subject to applicable securities laws, and the terms of
this Agreement. Stockholder will promptly provide written notice to
Parent in the event the Stockholder acquires Beneficial Ownership
of any additional Shares after the date hereof and a description
thereof, and Schedule 3.1(a) shall be updated to
reflect such acquisitions, and the representations made in this
Section 3.1(a) shall apply to such updated Schedule as
of the date of any such acquisition.
b. Authorization; Binding
Agreement . Stockholder has the legal capacity, power and
authority to enter into and perform all of Shareholder’s
obligations under this Agreement. The execution, delivery and
performance of this Agreement by Stockholder has been duly
authorized by all necessary action. This Agreement has been duly
and validly executed and delivered by Stockholder and constitutes a
valid and binding agreement of Shareholder, enforceable against
Stockholder in accordance with its terms, subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect relating to creditors’ rights
generally or to general principles of equity.
c. No Conflict . The
execution, delivery and performance of this Agreement by the
Stockholder does not and will not violate, conflict with, result in
a breach of, or constitute a default (or an event that, without the
giving of notice or the lapse of time, or both, would constitute a
default) under (a) formation documents, if any, of the
Stockholder, (b) any applicable law, rule, regulation,
judgment, injunction, order or decree binding upon the Stockholder
or any of its assets or properties, except for any such violations
which would be immaterial to Parent or the Stockholder, or
(c) any agreement or other instrument binding upon such
Stockholder.
4. Standstill . From and
after the date of this Agreement until the third (3rd) anniversary
of the Closing Date (the “ Standstill Period ”),
each Stockholder agrees that it shall not, and shall cause its
Affiliates not to, except within the terms of a specific written
consent from Parent, (i) propose or disclose an intent to
propose, or enter into or agree to enter into, singly or with any
other Person or directly or indirectly, or encourage others to
propose or enter into, any Acquisition Transaction or any other
form of restructuring, merger, tender offer, recapitalization or
similar transaction with respect to Parent or any of its
Subsidiaries, (ii) acquire, or offer, propose or agree to acquire,
by purchase or otherwise, record or Beneficial Ownership of any
securities of Parent or any of its Subsidiaries, if, as a result
thereof, such Stockholder, together with its Affiliates and any
members of a Group in which such Stockholder is a member, would, in
the aggregate, Beneficially Own shares of Parent Common Stock
representing more than 10% of the total then outstanding shares of
Parent Common Stock; provided, however, that for purposes of this
Section 4 , the Stockholders shall not be deemed a
Group based solely upon being parties to this Agreement and
performing their obligations hereunder, (iii) make, encourage
or in any way participate in, any solicitation of proxies with
respect to any voting securities of Parent or any of its
Subsidiaries (including by the execution of action by written
consent), encourage or become a participant in any election contest
with respect to Parent or any of its Subsidiaries, seek to
encourage or influence any Person with respect to any such voting
securities or demand a copy of the list of the stockholders or
other books and records of Parent or any of its Subsidiaries,
(iv) participate in or encourage the formation of any
partnership, syndicate or other group which owns or seeks or offers
to acquire Beneficial Ownership of any such voting securities or
which seeks to affect control of Parent or any of its Subsidiaries
or has the purpose of circumventing any provision of this
Agreement, or (v) otherwise act, alone or in concert with
others (including by providing financing for another Person), to
seek or to offer to control or influence, in any manner, the
management, the Board or policies of Parent or any of its
Subsidiaries. For the avoidance of doubt, the restrictions on the
acquisition of additional securities set forth in this
Section 4.1 shall not (A) apply to participation
by the Stockholder in issuances of securities pursuant to the
granting or exercise of employee stock options or other stock
incentives pursuant to Parent’s stock incentive plans,
(B) restrict the ability of any member of the Parent Board of
Directors who is affiliated with any Stockholder from performing
his or her duties as a director of Parent and acting in his or her
capacity as a director of Parent, including without limitation,
carrying out his or her fiduciary duties to the stockholders of
Parent, or (C) apply to the exercise of any Acquiror Warrants
held by Stockholder.
5. Lock-Up; Transfers
.
a. Each of the parties set
forth on Schedule 5(a) attached hereto (each, a “
Locked-Up Party ”) hereby agrees that, without the
prior written consent of Parent, he, she or it shall not from and
after the date of this Agreement until the second (2nd) anniversary
of the Closing Date (the “ Lock-Up Period ”),
directly or indirectly Transfer any Shares received by such
Locked-Up Party pursuant to the Merger, and shall not
(i) offer, pledge, sell or contract to sell any option or
contract to purchase any of such Shares; (ii) contract to
purchase or purchase any option or contract to sell any of such
Shares; (iii) grant any option, right or warrant for the sale
of any of such Shares; (iv) lend or otherwise dispose of (or
enter into any transaction or device designed to, or that could be
expected to, result in the disposition by any person at any time in
the future of) any of such Shares or securities convertible into or
exercisable or exchangeable for Shares; or (v) enter into a
swap or other derivatives transaction or agreement that transfers,
in whole or in part (directly or indirectly), the economic
consequences of ownership of any shares of such Shares, whether any
such swap or transaction described in clauses (i) through
(v) is to be settled by delivery of shares Parent Common Stock
or other securities, in cash or otherwise, or (vi) announce
his, her or its intention to do any of the foregoing (any of the
transactions described in clauses (i) through (vi), a “
Common Stock Transaction ”); provided , that,
subject to any other applicable restrictions, (i) after the
one (1) year anniversary of the Closing Date, such Locked-Up
Party may enter into a Common Stock Transaction with respect to up
to 33.3% of the Shares received by such Locked-Up Party pursuant to
the Merger, (ii) after the eighteen (18) month
anniversary of Closing Date, such Locked-Up Party may enter into a
Common Stock Transaction with respect
