EXHIBIT 10
DATED JANUARY, 2005
(1) THE PERSONS NAMED IN SCHEDULE 1
(2) LAKE HOLDINGS LIMITED
(3) INTER-TEL LAKE LIMITED
(4) INTER-TEL, INC.
SHARE PURCHASE AGREEMENT
relating to the entire issued share capital in
Lake Communications Limited
Lake Datacomms Limited
Lake Electronic Technologies Limited
Fernway Limited
Winbay Pty Limited
XXXXXX XXX
Earlsfort Centre
Earlsfort Terrace
Dublin 2
(MAMcL / Docs / Project Lucky / SPA v18)
CONTENTS
CLAUSE PAGE
------ ----
1 DEFINITIONS AND INTERPRETATION......................................... 4
2 SALE AND PURCHASE...................................................... 15
3 CONSIDERATION.......................................................... 15
4 EARN-OUT CONSIDERATION................................................. 15
5 EARN-OUT ACCOUNTS...................................................... 17
6 ACTIONS PENDING COMPLETION............................................. 21
7 COMPLETION............................................................. 25
8 COMPLETION ACCOUNTS.................................................... 27
9 CONDUCT OF BUSINESS POST-COMPLETION.................................... 28
10 POST-COMPLETION OBLIGATIONS & RIGHTS................................... 33
11 WARRANTIES............................................................. 34
12 THE BUYER'S REMEDIES................................................... 36
13 LIMITATIONS ON THE WARRANTORS' LIABILITY............................... 37
14 RETENTION.............................................................. 44
15 WARRANTIES OF THE BUYER AND THE PARENT................................. 45
16 USE OF INTELLECTUAL PROPERTY RIGHTS / INFRINGEMENT CLAIMS.............. 45
17 [FURTHER UNDERTAKINGS BY SELLERS]...................................... 51
18 INDEMNITIES............................................................ 52
19 PENSIONS............................................................... 53
20 GUARANTEE.............................................................. 54
21 ASSIGNMENT............................................................. 55
22 ANNOUNCEMENTS.......................................................... 56
23 CONFIDENTIALITY........................................................ 56
24 COSTS.................................................................. 57
25 FURTHER ASSURANCE...................................................... 58
26 REMEDIES AND WAIVERS................................................... 58
27 SEVERABILITY........................................................... 58
28 JOINT LIABILITY........................................................ 58
29 GENERAL................................................................ 59
30 NOTICES................................................................ 59
31 GOVERNING LAW AND JURISDICTION......................................... 61
32 ENTIRE AGREEMENT....................................................... 62
33 COUNTERPARTS........................................................... 62
SCHEDULE 1
The Warrantors..................................................................
SCHEDULE 2
The Target Group Companies......................................................
SCHEDULE 3
Items for delivery by the Seller at Completion..................................
SCHEDULE 4
Warranties......................................................................
SCHEDULE 5
Property.................................................................
SCHEDULE 6
The Earn-Out Accounts....................................................
SCHEDULE 7
Registered Intellectual Property Rights..................................
SCHEDULE 8
The Lease................................................................
SCHEDULE 9
The Completion Accounts..................................................
SCHEDULE 11
Finance and Operating Leases.............................................
SCHEDULE 12
The Inter-Company Indebtedness...........................................
AGREED FORM DOCUMENTS
1. Tax Deed
2. Disclosure Letter
3. Service Agreements
4. Lease
5. Pre-Completion Reorganisation Documents
6. Escrow Agreement
THIS AGREEMENT is made on January, 2005
BETWEEN:
(1) THE PERSONS NAMED IN SCHEDULE 1 (the "WARRANTORS");
(2) LAKE HOLDINGS LIMITED, a company incorporated in Ireland with registration
number 36890 and having its registered office at Xxxxx Xxxxx, Xxxxxxxxxx
Xxxx, Xxxxxxxx, Xxxxxx 00 (the "SELLER");
(3) INTER-TEL LAKE LIMITED, a company incorporated in Ireland with registered
number 391185 and having its registered office at Xxxxx Xxxxx, Xxxxxxxxxx
Xxxx, Xxxxxxxx, Xxxxxx 00 (the "BUYER"); and
(4) INTER-TEL, INC., a company incorporated under the laws of the state of
Arizona, USA, with its principal place of business at 0000 Xxxxx 00xx
Xxxxxx, Xxxxx, Xxxxxxx 00000 XXX (the "PARENT").
BACKGROUND:
(A) The Seller is either directly or indirectly the legal and beneficial owner
of the Shares, which represent the entire issued share capital of the
Target Group.
(B) The Seller has agreed to sell and the Buyer has agreed to purchase the
Shares on the terms and subject to the conditions of this Agreement.
(C) The Parent has agreed to guarantee the performance of the payment
obligations of the Buyer set out in this Agreement on the terms and
conditions set out in this Agreement. The Warrantors have agreed to
guarantee the performance of and procure the compliance with the
obligations of the Seller set out in this Agreement on the terms and
conditions set out in this Agreement.
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement the following expressions shall have the following
meanings namely:
"1963 ACT" means the Xxxxxxxxx Xxx, 0000;
"1990 ACT" means the Xxxxxxxxx Xxx, 0000;
"1999 ACT" means the Companies (Amendment) Act, 1999;
"1999 NO. 2 ACT" means the Companies (Amendment) (No. 2) Xxx, 0000;
"2001 ACT" means the Company Law Enforcement Xxx 0000;
4
"ACCOUNTING STANDARDS" means accounting principles, standards and
practices generally accepted in Ireland at the date of this
Agreement consistently applied with prior periods;
"ACCOUNTS" means the audited balance sheet as at the Last Accounting
Date and the audited profit and loss account for the period ended on
the Last Accounting Date of each Target Group Company (together with
the related cashflow statements, directors' reports and auditors'
reports) and includes all notes and other documents annexed thereto
in accordance with any legal requirement or otherwise;
"ACCOUNTS RECEIVABLE" means an amount equal to any prepayments made
by the Target Group Companies and the amounts due and payable from
debtors of the Target Group Companies (including the Motorola
Payment) less any reserves or provisions against such amounts and
less any accounts receivable owing for more than ninety (90) days;
"A DIRECTOR" means an A Director of the Buyer or a Target Group
Company as that term is defined in the Articles of Association of
the relevant company;
"AGREED FORM" in relation to any document means that document in the
form agreed and initialled for the purposes of identification by the
Buyer's Solicitors on behalf of the Buyer and the Seller' Solicitors
on behalf of the Seller;
"AGREEMENT" means this agreement and the schedules hereto;
"ANNUALISED EBIT" has the meaning given to the term in Clause
4.7(a);
"ANNUALISED REVENUE AMOUNT" has the meaning given to the term in
Clause 4.7(b);
"BUSINESS" means all of the design, manufacture, sales and service
of the telecommunications business of the Target Group as carried on
by the Target Group at Completion;
"BUSINESS DAY" means a day (other than a Saturday or a Sunday) on
which banks are open for business in Dublin;
"BUSINESS PLAN" means the business plan for the Target Group in the
Agreed Form set out at Schedule 10 of this Agreement;
"BUYER GROUP" means the Buyer, any subsidiary or associated
undertaking of the Buyer, any holding company of the Buyer and any
subsidiary or associated undertaking of such holding company;
"BUYER PAYMENTS" has the meaning given to it in Clause 14.1;
"BUYER'S SOLICITORS" means Xxxxxx Xxx xx Xxxxxxxxx Xxxxxx, Xxxxxxxxx
Xxxxxxx, Xxxxxx 0;
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"CASH" means cash at bank or in hand;
"COMPLETION" means completion of the sale and purchase of the Shares
in accordance with this Agreement;
"COMPLETION ACCOUNTS" means the accounts of the Target Group
prepared in accordance with Schedule 9;
"COMPLETION ACCOUNTS DATE" means the Completion Accounts Date as
determined pursuant to Schedule 9;
"COMPLETION DATE" means the date on which Completion takes place as
determined pursuant to Clause 7;
COMPLETION DISCLOSURE LETTER" means the letter from the Warrantors
to the Buyer in relation to the Warranties to be delivered at
Completion and referred to in Clause 5.5;
"CONDITIONS" means the conditions specified in Clause 5.1;
"CONNECTED PERSON" and "CONNECTED" means a person who would be
connected with another person for the purposes of Section 26 of the
Companies Act, 1990 if that other person was a director of a
company;
"CONFIDENTIAL INFORMATION" means all information not at present in
the public domain used in or otherwise relating to the business,
customers or financial or other affairs of a Target Group Company
including, without limitation, information relating to:
(a) the marketing of any products or services including, without
limitation, customer names and lists and any other details of
customers, sales targets, sales statistics, market share
statistics, prices, market research reports and surveys and
advertising or other promotional materials; and
(b) projects, business development or planning, commercial
relationships and negotiations, which are contemplated or
ongoing, or which are in existence (as the case may be) as at
the Completion Date;
"CONSIDERATION" means the price payable for the Shares, specified in
Clause 3.1;
"CURRENT LIABILITIES" means an amount equal to the sum of amounts
owing to trade creditors and normal operating accruals and Other
Current Liabilities;
"DAIDALOS AGREEMENT" means Contract Number 506997 among Portugal
Telecom Inovacao, SA, Telenor Communication II AS, Telefonica
Investigacion y Desarrollo sa Unipersonal, Eurescom - European
Institute for Research and Strategic Studies in Telecommunications
GMbh, Telecom Italia SPA, Polska Telefonia Cyfrowa SP. Z O.O.,
Telediffusion de France SA, Hellenic Telecommunications Organization
SA, Motorola SAS, Siemens
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Aktiengesellschaft, NEC Europe Limited, Lucent Technologies
Nederland BV, Udcast SA, BMW Forschung und Technik GMbh, SES Astra
SA, Fraunhofer Gesellschaft zur Foerderung der Angewandten Forschung
EV, Deutsches Zentrum Fuer Xxxx und Raumfahrt EV, Institut Eurecom
GIE, Institute for Infocomm Research, Instituto de Telecomunicacoes,
Universitaet Stuttgart, Universidad Xxxxxx XX de Madrid, Zavod za
Varnostne Tehnologije Informacijske Druzbe in Elecktronsko
Poslovanje, Akademia Gorniczo-Hutnicza im Xxxxxxxxxx W Krakowie,
Heriot Watt University, Institute of Communication and Computer
Systems, Agora Systems SA, HW Communications Limited, Communication
Networks Aachen GMbh, France Telecom SA, Eidgenoessische Technische
Hochschule Zuerich, Waterford Institute of Technology, the Seller,
Instytut Technik Telekomunikacyjnych I Informatycznych SP Z OO, UH
Communications AS, China Academy of Telecommunication Research,
Instituto de Engenharia de Sistemas e Computadores do Porto,
Universidade do Porto, Universitet ULM, Technische Universitaet
Braunschweig, Universidad xx Xxxxxx, Xxxxx Xxxxxx Institute,
university of Lancaster, Temagon Technology and Management
Consultancy Services SA and Centro di Ricerca in Matematica Pura ed
Applicata - Consorzio in respect of a project called "Designing
Advanced Interfaces for the Delivery and Administration of Location
independent Optimised personal Services" dated 11th December, 2003;
"DISCLOSURE LETTER" means the letter of today's date from the
Warrantors to the Buyer in relation to the Warranties;
"DOMAIN NAMES" means all trademark, service xxxx, assumed names,
corporate names and other names used by the Target Group on the
internet or in government filing offices;
"EARN-OUT ACCOUNTS" means the accounts of the Target Group prepared
in accordance with Schedule 6;
"EARN-OUT ACCOUNTS DATE" means the Earn-Out Accounts Date as
determined in accordance with Schedule 6;
"EARN-OUT CONSIDERATION" means the sum of the EBIT Consideration and
the Revenue Consideration;
"EARN-OUT DATE" means the date eighteen months after the Completion
Date;
"EARN-OUT PERIOD" means the period commencing on the Completion Date
and ending on the day eighteen (18) months following the Completion
Date;
"EBIT" has the meaning given to the term in Schedule 6;
"EBIT CONSIDERATION" means the sum (if any) payable by the Buyer to
the Seller pursuant to Clause 4.4;
7
"EBIT TARGET" means USD5,733,000 (five million seven hundred and
thirty three thousand US dollars);
"EBITDA" means earnings before interest, tax, depreciation and
amortisation;
"ENCUMBRANCE" means any mortgage, charge, pledge, lien, option,
restriction, right of first refusal, right of pre-emption, third
party right or interest, any other encumbrance or security interest
of any kind, and any other type of preferential arrangement
(including, without limitation, title transfer and retention
arrangements) having a similar effect, other than reservation of
title over stock in trade arising in the ordinary course of
business;
"ENVIRONMENT" has the meaning given to it in paragraph 20 of
Schedule 4;
"ESCROW AGENTS" has the same meaning as in the Escrow Agreement;
"ESCROW AGREEMENT" means the escrow agreement in Agreed Form to be
entered into by, inter alios, the Buyer and the Seller at
Completion;
"ESCROW AMOUNT" means USD6,000,000 (six million US dollars);
"ESCROW FUND" has the same meaning as in the Escrow Agreement;
"EURIBOR" means:
(a) the percentage rate per annum equal to the offered quotation
which appears on the page of the Telerate Screen which
displays an average rate of the Banking Federation of the
European Union for the euro (currently page 248) for three
months at 11.00am (Brussels time) on the quotation date or, if
such page or service ceases to be available, such other page
or other service for the purpose of displaying an average rate
of the Banking Federation of the European Union agreed by the
parties; or
(b) if no quotation for the relevant period is displayed and the
parties have not agreed an alternative service on which a
quotation is displayed, the arithmetic mean (rounded upwards
to four decimal places) of the rates at which each of the
Reference Banks was offering to prime banks in the European
interbank market deposits in the euro of an equivalent amount
for such period at 11.00am (Brussels time) on the quotation
date;
"EURO" or "EUR" means the currency unit of the participating Member
States of the European Union as defined in Recital (2) of Council
Regulation 974/98/EC on the introduction of the euro;
"FERNWAY" means Fernway Limited, particulars of which are set out in
Schedule 2;
8
"INDEBTEDNESS" means the aggregate amount of borrowings of any
nature whatsoever of any Target Group Company (including payments
due under the finance and operating leases listed in Schedule 11),
plus the amount of any bonuses payable to employees related to this
transaction, plus the amount of all non-trading liabilities and all
liabilities outside the ordinary course of business (including,
without limiting the generality of the foregoing, net unfunded
pension obligations or other unfunded commitments to employees);
"INDEMNITIES" means the indemnities set out in Clauses 12, 18 and
19;
"INFORMATION TECHNOLOGY" means all computer systems, communication
systems, software and hardware owned or licensed by or to any Target
Group Company;
"INITIAL CONSIDERATION" means USD17,293,818 (seventeen million two
hundred and ninety-three thousand eight hundred and eighteen US
dollars);
"INTELLECTUAL PROPERTY" means patents (including supplementary
protection certificates), trade marks, service marks, registered
designs, utility models, design rights, topography rights,
copyrights (including copyright in computer programs) database
rights, inventions, Confidential Information, business or trade
names (including the Name), get-up, Domain Names, and all other
intellectual property and neighbouring rights and rights of a
similar or corresponding character (including all associated
goodwill), and all applications for, or for the protection of, any
of the foregoing;
"INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property used,
or required to be used, by a Target Group Company in, or in
connection with, the Business (excluding Know-How);
"INTER-COMPANY INDEBTEDNESS" means the aggregate sum of the total
amounts due and owing by Target Group Companies to the Seller as at
the Completion Date;
"INTEREST RATE" means EURIBOR plus two (2) percent per annum;
"INVENTORY" means an amount equal to the value of the trading stock
or inventory of any Target Group Company, acquired during the twelve
(12) months prior to the Completion Date less any reserves or
provisions against such amount;
"KEY PERSONNEL" means each of Xxxxxxx Xxxxxxxxxx, Caoimhin O'Laoi,
Xxxxxxx X'Xxxxx, Xxxxxx Xxxxx and Xxxxxxx Xxxx;
"KNOW-HOW" means all information, trade secrets and techniques (not
publicly known) held in any form (including, without limitation,
paper, electronically stored data, magnetic media, film and
microfilm) including, without limitation, that comprised in or
derived from drawings, data, reports, project reports, formulae,
specifications, testing procedures, test results,
9
component lists, instructions, manuals, brochures, catalogues and
process descriptions, market forecasts, lists and particulars of
customers and suppliers;
"LCL" means Lake Communications Limited, particulars of which are
set out in Schedule 2;
"LDL" means Lake Datacomms Limited, particulars of which are set out
in Schedule 2;
"LAST ACCOUNTING DATE" means 30th September 2003;
"LEASE" means the lease in the Agreed Form between the Seller and
LCL in respect of the Property which is to be entered into at
Completion and which is set out in Schedule 8;
"LET" means Lake Electronic Technologies Limited, particulars of
which are set out in Schedule 2;
"MANAGEMENT ACCOUNTS" means the unaudited profit and loss account
and balance sheet and cashflow statement of each Target Group
Company for the accounting period beginning on the next day
following the Last Accounting Date and ended on 31st December, 2004
and attached to the Disclosure Letter;
"MOTOROLA PAYMENT" means the amount of USD395,000 (three hundred and
ninety-five US dollars) which is due from Motorola to the Target
Group in June, 2005;
"NAME" means "Lake";
"NET ASSET VALUE" means the combined net asset value of the Target
Group Companies on the Completion Date calculated in accordance with
the Schedule 9 being the sum of fixed assets plus Cash plus Accounts
Receivable plus Inventory, less the sum of Current Liabilities and
Indebtedness;
"OTHER CURRENT LIABILITIES" shall include repayable research and
development grants and corporation tax, but shall not include any
deferred acquisition consideration;
"PLANNING ACTS" means the Local Government (Planning & Development)
Acts 1963 to 1999, the Planning & Development Acts 2000 and 2001,
the Building Control Act 1990 and any statutory modification or
re-enactment thereof for the time being in force and any regulations
or orders for the time being made thereunder;
"PRE-COMPLETION REORGANISATION" means the reorganisation of the
companies comprising the Seller Group and the Target Group to be
effected prior to Completion whereby:
(I) The Seller and LCL will enter into the Lease; and
10
(II) The shares in the Target Group Companies held by employees or
former employees of the Target Group or Seller Group (or any
person other than another Target Group Company) will be
transferred to a Target Group Company or redeemed and
cancelled;
"PROPERTY" means the property short particulars of which are set out
in the Property Schedule and includes a part of the property;
"PROPERTY SCHEDULE" means Schedule 5;
"REFERENCE BANKS" means the principal Dublin offices of Allied Irish
Banks, Bank of Ireland and Ulster Bank or such other banks agreed
between the parties from time to time;
"REVENUE AMOUNT" has the meaning given to the term in Schedule 6;
"REVENUE CONSIDERATION" means the sum (if any) payable by the Buyer
to the Seller pursuant to Clause 4.5;
"REVENUE TARGET" means USD56,233,000 (fifty six million, two hundred
and thirty three thousand US dollars);
"SELLER GROUP" means the Seller's Parent, the Seller and any company
wholly or partly, directly or indirectly owned by the Seller's
Parent or the Seller, or any associated undertaking of the Seller or
the Seller's Parent;
"SELLER'S PARENT" means Cadamstown Limited, a company incorporated
in Ireland with registered number 173200, whose registered office is
Xxxxx Xxxxx, Xxxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxx 00;
"SELLER'S SOLICITORS" means Xxxxx Xxxxx & Xxxxxx, 0 Xxxxxxxxxxx
Xxxxxx, Xxxxxx 0;
"SERVICE AGREEMENTS" means the service agreements to be entered into
between LCL and each of the Key Personnel;
"SHARES" means the entire issued share capital of LCL, LDL, Fernway
(to the extent not already owned by LDL), Winbay and LET (to the
extent not already in the direct ownership of LCL) further
particulars of which are set out in Schedule 2 and which are to be
purchased by the Buyer under the terms of this Agreement;
"SUBSIDIARY UNDERTAKING" means a subsidiary undertaking within the
meaning of the European Communities (Companies - Group Accounts)
Regulations 1992;
"TARGET GROUP" means LCL, LDL, Fernway, LET and Winbay and the term
"TARGET GROUP COMPANY" means any one of them;
11
"TARGET GROUP KNOW-HOW" means all information and techniques (not
publicly known) owned by a Target Group Company or used, or required
to be used, by a Target Group Company in, or in connection with, the
Business, held in any form (including, without limitation, paper,
electronically stored data, magnetic media, film and microfilm)
including, without limitation, that comprised in or derived from
drawings, data, reports, project reports, formulae, specifications,
testing procedures, test results, component lists, instructions,
manuals, brochures, catalogues and process descriptions, market
forecasts, lists and particulars of customers and suppliers
(excluding the Intellectual Property Rights in existence);
"TARGET INTER-COMPANY INDEBTEDNESS" means the aggregate sum of
EUR8,153,364 (eight million one hundred and fifty-three thousand
three hundred and sixty-four euro) (the US dollar equivalent of
which is USD10,706,182 (ten million seven hundred and six thousand
one hundred and eighty-two US dollars)) being the total amounts due
and owing by Target Group Companies to the Seller as at 31st
December, 2004, as more particularly set out in Schedule 12;
"TARGET NAV" has the same meaning as in Clause 8.2;
"TAX" and "TAXATION" means all forms of taxation, duties, imposts
and levies, and includes (without limiting the generality of the
foregoing) corporation tax, corporation profits tax, advance
corporation tax ("ACT"), capital gains tax, development land tax,
rates, water rates, capital transfer tax, inheritance tax, gift tax,
capital acquisitions tax, residential property tax, value added tax,
income tax, dividend withholding tax, pay related social insurance,
national insurance contributions, amounts due under the PAYE or PRSI
system, income or other levies, customs and excise duties any other
import or export duties, stamp duty, stamp duty reserve tax,
companies capital duty, tax on turnover or profits, sales tax, and
any other amounts corresponding thereto and all other taxes, rates,
levies, fines, duties or other fiscal impositions of any kind
whatsoever, whether imposed by government, municipal or local
authority or otherwise, or other sums paid in respect of Tax or
Taxation (including in particular but without derogating from the
generality of the foregoing any interest, fine, charge, surcharge or
penalty) whether arising under the laws of Ireland or those of any
other jurisdiction and whether incurred as principal, agent,
trustee, indemnitor or otherwise, and regardless of whether such
taxes, penalties, charges, levies, fines, surcharges and interest
are directly or primarily chargeable against or attributable to any
Target Group Company or any other person, firm or company and
whether or not the Buyer or any Target Group Company is or may be
entitled to claim reimbursement thereof from any other person or
persons;
"TAX AUTHORITY" or "TAXATION AUTHORITY" means the Revenue
Commissioners, and any other local, municipal, governmental, state,
federal or other fiscal authority or body anywhere in the world;
12
"TAX DEED" means the deed of tax covenant in the agreed form between
the Seller, the Buyer and the Target Group Companies;
"TAX WARRANTIES" means the warranties contained in paragraph 6 of
Schedule 4;
"TCA" means Taxes Consolidation Act, 1997;
"TERRITORY" means anywhere in the world where the Target Group's
products are manufactured, purchased or sold at the date of this
Agreement;
"TITLE WARRANTIES" means Warranties 3(a) and 3(b);
"USD" or "DOLLAR" means the U.S. dollar, the currency unit of the
United States of America;
"WARRANTIES" means the warranties contained in Schedule 4 and
"WARRANTY" means any of them;
"WINBAY" means Winbay Pty Limited, particulars of which are set out
in Schedule 2;
"WORKING HOURS" means 8.30am to 5.30pm on a Business Day.
1.2 In this Agreement:
(a) words and expressions which are defined in the Companies Acts
1963 to 2003 (the "COMPANIES ACTS") shall have the same
meanings as are ascribed to them in the Companies Acts;
(b) reference to a Clause, paragraph or Schedule, unless otherwise
specified, is a reference to a clause, paragraph of or
schedule to this Agreement;
(c) reference to writing or similar expressions includes, unless
otherwise specified, transmission by telecopier or comparable
means of communication;
(d) references to a "COMPANY" shall be construed so as to include
any company, corporation or other body corporate, wherever and
however incorporated or established;
(e) references to a "PERSON" shall be construed so as to include
any individual, firm, company, government, state or agency of
a state, local authority or government body or any joint
venture, association or partnership (whether or not having
separate legal personality);
(f) reference to a person includes a reference to that person's
legal personal representatives and successors;
13
(g) a reference to any statute or statutory provision shall be
construed as a reference to (i) the laws of Ireland unless
otherwise specified and (ii) the same as it may have been, or
may from time to time be, amended, modified or re-enacted;
(h) any reference to a "DAY" or a "BUSINESS DAY" shall mean a
period of twenty four (24) hours running from midnight to
midnight;
(i) references to times are to time in Ireland;
(j) references to a "MONTH" shall mean a calendar month;
(k) a reference to any other document referred to in this
Agreement is a reference to that other document as amended,
varied, novated or supplemented at any time;
(l) any phrase introduced by the terms "INCLUDING", "INCLUDE", "IN
PARTICULAR" or other similar expression shall be construed as
illustrative and shall not limit the sense or meaning of the
words preceding those terms; and
(m) references to the singular include the plural and vice versa;
and
(n) references to the masculine include the feminine and vice
versa.
1.3 All headings and titles are inserted for convenience only. They are
to be ignored in the interpretation of this Agreement.
1.4 A reference in Clause 11 and Schedule 4 to the Warrantors'
knowledge, information, belief or awareness is deemed to include the
knowledge, information, belief or awareness of the Warrantors and
the knowledge, information, belief or awareness which the Warrantors
would have had if the Warrantors had made all reasonable enquiries.
1.5 Subject to the provisions of Clause 11.8, where any party to this
Agreement is more than one person then (except in respect of Clauses
2 and 17):
(a) the Warranties, agreements and obligations contained in this
Agreement on the part of such parties shall be construed and
take effect as joint Warranties, agreements and obligations
and the act or default of any one of them shall be deemed to
be the act or default of each of them;
(b) reference to that party shall refer to each of those persons
or any of them as the case may be; and
(c) the benefits contained in this Agreement in favour of such
party shall be construed and take effect as conferred in
favour of all such persons collectively and each of them
separately.
14
1.6 Where any conversion between euro and US dollars is required to be
made pursuant to the provisions of this Agreement (a "CONVERSION
CALCULATION"), the conversion rate to be used for the purposes of
the Conversion Calculation shall be the mean of the euro/US dollar
exchange rates for each of the twenty (20) Business Days immediately
prior to the date on which the Conversion Calculation is made, as
calculated by the Exchange Rate Office of the Central Bank of
Ireland.
2. SALE AND PURCHASE
2.1 The Seller agrees to sell as beneficial owner and the Buyer shall
purchase the Shares free from all Encumbrances together with all
rights of any nature whatsoever now or after the date of this
Agreement attaching or accruing to them.
2.2 The Seller waives and shall procure that there will be waived before
Completion, all rights of pre-emption and other restrictions on
transfer over the Shares conferred on it or any other person under
the articles of association of any Target Group Company or
otherwise.
3. CONSIDERATION
3.1 The aggregate Consideration payable by the Buyer to the Seller for
the Shares is the sum of the Initial Consideration and the Earn-Out
Consideration (if any)
(a) Minus any sums payable by the Warrantors or the Seller to the
Buyer pursuant to Clauses 8 and/or 13.6; and
(b) Plus any sums payable by the Buyer to the Seller.
3.2 On Completion the Buyer shall pay the Initial Consideration to the
Seller.
4. EARN-OUT CONSIDERATION
4.1 Subject to the remaining provisions of this Clause 4, the Earn-Out
Consideration (if any) shall be payable by the Buyer to the Seller
within ten (10) Business Days of the Earn-Out Accounts Date. For the
avoidance of doubt, the payment obligation of the Buyer contained in
this Clause 4.1 shall not be affected by the termination (whether
voluntary or otherwise) of any Warrantor's employment with the
Target Group at any time prior to the end of the Earn-Out Period.
4.2 If, during the Earn-Out Period, the Buyer or any Target Group
Company suffers loss as a result of any breach by any of the
Warrantors of their respective Service Contracts then, to the extent
that any such loss has not already been recovered by the Buyer or
the relevant Target Group Company from the Escrow Fund or reimbursed
by the Warrantor who was in breach of the Service Contract, the
amount of the Earn-Out Consideration (if any)
15
payable to the Seller for the sale of the Shares shall be reduced by
the amount of such loss.
4.3 The Earn-Out Consideration shall not exceed USD17,600,000 (seventeen
million, six hundred thousand US dollars).
4.4 The EBIT Consideration (if any) payable under this Agreement shall
be calculated as follows:
(a) Where Annualised EBIT is less than sixty (60) percent of the
EBIT Target, the EBIT Consideration payable to the Seller
shall be nil.
(b) Where Annualised EBIT is equal to sixty (60) percent of the
EBIT Target, the EBIT Consideration payable to the Seller
shall be an amount equal to USD5,333,000 (five million three
hundred and thirty three thousand US dollars).
(c) Where Annualised EBIT is equal to ninety (90) percent of the
EBIT Target, the EBIT Consideration payable to the Seller
shall be an amount equal to USD10,667,000 (ten million six
hundred and sixty seven thousand US dollars).
(d) Where Annualised EBIT is equal to or greater than one hundred
and ten (110) percent of the EBIT Target, the EBIT
Consideration payable to the Seller shall be an amount equal
to USD11,733,000 (eleven million seven hundred and thirty
three thousand US dollars).
(e) Where Annualised EBIT is greater than sixty (60) percent of
the EBIT Target but less than ninety (90) percent of the EBIT
Target, the EBIT Consideration shall be calculated pro rata by
reference to the amounts payable under Clauses 4.4(b) and
4.4(c).
(f) Where Annualised EBIT is greater than ninety (90) percent of
the EBIT Target but less than one hundred and ten (110)
percent of the EBIT Target, the EBIT Consideration shall be
calculated pro rata by reference to the amounts payable under
Clauses 4.4(c) and 4.4(d).
4.5 No Revenue Consideration shall be payable under this Agreement
unless the Annualised EBIT is equal to or greater than sixty (60)
percent of the EBIT Target.
4.6 Subject to Clause 4.5, the Revenue Consideration (if any) payable
under this Agreement shall be calculated as follows:
(a) Where the Annualised Revenue Amount is less than sixty (60)
percent of the Revenue Target, the Revenue Consideration
payable to the Seller shall be nil.
16
(b) Where the Annualised Revenue Amount is equal to sixty (60)
percent of the Revenue Target, the Revenue Consideration
payable to the Seller shall be an amount equal to USD2,667,000
(two million six hundred and sixty seven thousand US dollars).
(c) Where the Annualised Revenue Amount is equal to ninety (90)
percent of the Revenue Target, the Revenue Consideration
payable to the Seller shall be an amount equal to USD5,333,000
(five million three hundred and thirty three thousand US
dollars).
(d) Where Annualised Revenue is equal to or greater than one
hundred and ten (110) percent of the Revenue Target, the
Revenue Consideration payable to the Seller shall be an amount
equal to USD5,867,000 (five million eight hundred and sixty
seven thousand US dollars).
(e) Where the Annualised Revenue Amount is greater than sixty (60)
percent of the Revenue Target but less than ninety (90)
percent of the Revenue Target, the Revenue Consideration
payable to the Seller shall be calculated pro rata by
reference to the amounts payable under Clauses 4.6(b) and
4.6(c).
(f) Where the Annualised Revenue Amount is greater than ninety
(90) percent of the Revenue Target but less than one hundred
and ten (110) percent of the Revenue Target, the Revenue
Consideration payable to the Seller shall be calculated pro
rata by reference to the amounts payable under Clauses 4.6(c)
and 4.6(d).
4.7 For the purposes of this Clause 4:
(a) "ANNUALISED EBIT" means:
(A/18) x 12
where "A" is EBIT;
(b) "ANNUALISED REVENUE AMOUNT" means:
(B/18) x 12
where "B" is the Revenue Amount; and
(c) the Annualised EBIT and the Annualised Revenue Amount shall be
calculated on the basis of the Earn-Out Accounts, which shall
be prepared and agreed in accordance with the provisions of
Schedule 6.
5. CONDITIONS
5.1 Completion is subject to and conditional upon the following
conditions being satisfied, or in the case of the Conditions in
Clauses 5.1(a) to 5.1(j), waived by the Buyer, on or before the
Completion Date:
17
(a) Such third party consents, approvals, authorisations or
releases (including the consent of Enterprise Ireland and
Ulster Bank) as are necessary for the completion of the sale
and transfer of the Shares being obtained by the Seller and
the Buyer as the case may be.
(b) A letter, in a form reasonably satisfactory to the Buyer,
addressed to each Target Group Company from each of BT,
Commander Australia Limited and TT Electronic Manufacturing
Services Limited confirming its consent to the transaction
contemplated by this Agreement and waiving any rights they may
have to terminate their respective contracts with the Target
Group as a result of such transaction.
(c) An agreement in a form reasonably satisfactory to the Buyer
between Commander Australia Limited, Lake Holdings Limited,
the Buyer and the Target Group Companies novating the existing
contract between Commander Australia Limited and Lake Holdings
Limited for the benefit of the Buyer and the Target Group.
(d) The Warranties being true and correct in all material respects
both on the date of this Agreement and on Completion subject
to the matters disclosed in the Disclosure Letter and the
Completion Disclosure Letter respectively.
(e) There having been no material adverse change in the Target
Group's business, assets or financial condition since the Last
Accounting Date and the Warrantors not being aware of any fact
or circumstance which is likely to cause a material adverse
change to the prospects of the Target Group other than
exchange rate movements between the euro and the US dollar.
(f) Evidence in a form satisfactory to the Buyer that before, or
as soon as practicable, and in any event within ten (10)
Business Days, following Completion, the security registered
in the Companies Registration Office in Dublin, or the
companies registry of any other jurisdiction in which a member
of the Target Group is incorporated or the trademark, patent
or land registry of any jurisdiction world-wide which is
created in favour of Ulster Bank Limited or Ulster Bank
Markets Limited or Ulster Bank Commercial Services Limited or
any other person by any member of the Target Group will be
released;
(g) No temporary restraining order or preliminary or permanent
injunction, judgment, order or decree or any court or
governmental or regulatory authority or competent jurisdiction
prohibiting the sale and purchase of the Shares or the other
transactions contemplated hereby being in effect.
(h) No suit, action or proceeding being pending or threatened
before or by any court or governmental or regulatory authority
(A) seeking to
18
restrain or prohibit the sale and purchase of the Shares or
other transactions contemplated hereby or (B) seeking damages
or other relief in connection with the execution and delivery
of this Agreement or the consummation of the purchase and sale
of the Shares and the other transactions contemplated hereby.
(i) Save as contemplated by Clause 5.1(j), no change having taken
place to the capital structure of any Target Group Company,
including without limitation, any transfer issue, purchase or
redemption of shares or variation in any of the rights
attaching to shares.
(j) The acquisition and/or redemption by the Seller or a Target
Group Company of all of the issued shares in LET and Fernway
not owned by the Seller or a Target Group Company, at no net
cost to the Target Group or the Buyer.
(k) The Target Group having been "de-grouped" from the Seller's
VAT group.
5.2 The Buyer shall be entitled at its discretion to waive compliance in
whole or in part with the Conditions on any terms it decides.
5.3 The Seller and the Warrantors shall use all reasonable endeavours to
achieve satisfaction of each of the Conditions set out in Clauses
5.1(a) to 5.1(j) as soon as possible before the date set for
Completion in Clause 7.1, and the Parent agrees, for the purposes of
the Seller obtaining the consent of Enterprise Ireland ("EI") (as
required by Clause 5.1(a)) and the consent of TT Electronic
Manufacturing Services Limited ("TTEMS") (as required by Clause
5.1(b)), to:
(a) give a letter of comfort to TTEMS in substantially the same
form as the letter of comfort given by the Seller to TTEMS
prior to the date of this Agreement; and
(b) to enter into a guarantee with EI whereby the Parent and/or
the Buyer undertakes to guarantee the payment obligations of
LDL and LCL pursuant to the grants set out in Schedule 1 of a
draft letter dated 10th September, 2004 from EI to Caoimhin
O'Laoi;
(copies of which have been furnished to the Parent prior to the
execution of this Agreement).
5.4 If at any time the Seller or the Warrantors become aware of a fact
or circumstance that appears likely to prevent any of the Conditions
being satisfied, they shall inform the Buyer as soon as practicable,
but in any event no later than two (2) Business Days after the date
on which the Seller or the Warrantors become so aware.
19
5.5 (a) A draft of the Completion Disclosure Letter will be provided
to the Buyer and the Buyer's Solicitors at least five (5)
Business Days prior to the date set for Completion in Clause
7.1.
(b) The Completion Disclosure Letter shall only disclose facts or
circumstances that are exceptions to the Warranties that occur
between the date of this Agreement and Completion.
(c) Having reviewed the facts and circumstances disclosed in the
Completion Disclosure Letter:
(i) if the facts and circumstances disclosed in the
Completion Disclosure Letter disclose breaches of
Warranties with a value equal to or in excess of
USD100,000, the Buyer may, in its sole discretion,
rescind this Agreement; or
(ii) if the facts and circumstances disclosed in the
Completion Disclosure Letter disclose breaches of
Warranties with a value less than USD100,000, the Buyer
shall not rescind this Agreement on the basis of such
disclosures.
(d) Notwithstanding the provisions of Clause 5.5(c) or any other
provision of this Agreement, if facts or circumstances are
disclosed in the Completion Disclosure Letter which constitute
a breach of the Warranties between the date of this Agreement
and Completion, such facts or circumstances shall not qualify
the Warranties in any way and the limitations set out in
Clauses 13.1(a) and 13.1(b) shall not apply to claims for
breach of Warranty arising from matters disclosed in the
Completion Disclosure Letter ("COMPLETION WARRANTY CLAIMS").
If any facts or circumstances that are exceptions to the
Warranties occur between the date of this Agreement and
Completion but are not disclosed in the Completion Disclosure
Letter, then Clauses 13.1(a) and 13.1(b) shall not apply to
claims for breach of Warranty arising from such facts or
circumstances which are made after Completion. However, for
the avoidance of doubt, the provisions of this Clause 5.5(d)
shall not affect the application of Clauses 13.1(a) and
13.1(b) to claims arising after Completion in respect of any
breach of the Warranties which is not based on (i) facts or
circumstances disclosed in the Completion Disclosure Letter or
(ii) facts or circumstances which occurred between the date of
this Agreement and Completion.
5.6 Subject to Clause 5.8, if any of the Conditions have not been
satisfied by 11 am on the date set for Completion in Clause 7.1,
then on that date the Buyer may at its option (but without prejudice
to any other right or remedy it may have) by notice in writing to
the Seller:
(a) waive the Conditions;
20
(b) postpone the date for Completion to a date falling not more
than thirty (30) Business Days after the date set for
Completion in Clause 7.1; or
(c) rescind this Agreement.
5.7 If the Buyer postpones the date for Completion in accordance with
Clause 5.6 then the provisions of this Agreement shall apply as if
the date set for Completion in Clause 7.1 were the date to which
Completion is so postponed.
5.8 The Buyer may only elect to postpone the date for Completion in
accordance with Clause 5.6 on one occasion.
5.9 If the Buyer elects to rescind this Agreement in accordance with
Clauses 5.5 or 5.6 then all rights and obligations of the parties
shall cease to have effect immediately upon rescission except that
rescission shall not affect the accrued rights and obligations of
the parties at the date of rescission provided that the maximum
aggregate liability of any party pursuant to this Clause 5.9 shall
not exceed USD200,000 (two hundred thousand US dollars).
6. ACTIONS PENDING COMPLETION
6.1 The Warrantors and the Seller hereby covenant with and undertake to
the Buyer that neither they nor any Target Group Company shall at
any time prior to Completion without the prior written consent of
the Buyer deliberately do, allow or procure any act or omission
which would (or would be likely to) cause, constitute or result in a
breach of the Warranties or which would cause any of the Warranties
to be untrue, incorrect or misleading. If such an act or omission
shall occur prior to Completion, the Seller and the Warrantors shall
take all necessary steps to remedy (to the extent that it is
possible to do so) the situation resulting or likely to result in a
breach of Warranty.
6.2 The Warrantors and the Seller hereby covenant with and undertake to
the Buyer that no action will be deliberately taken (save as herein
otherwise contemplated or required) by the Warrantors, the Seller or
any Target Group Company which prejudices the continuance for the
benefit of a Target Group Company of any or all contracts,
engagements, business connections and orders subsisting at the date
hereof or hereafter in relation to the Business. If such action
shall be taken, the Seller and the Warrantors shall take all
necessary steps to remedy (to the extent that it is possible to do
so) the situation and prevent the discontinuance of any such
contract, engagement, business connection or order.
6.3 The Warrantors and the Seller hereby covenant with and undertake to
the Buyer that the Buyer and its agents will, upon reasonable
notice, be allowed access to the books and records of each Target
Group Company including, without limitation, the statutory books,
minute books, leases and contracts in the possession or control of a
Target Group Company.
21
6.4 The Warrantors and the Seller hereby covenant with and undertake to
the Buyer that the Warrantors and the Seller shall not, at any time
prior to Completion:
(a) dispose or attempt to dispose of any interest in the Shares or
grant any option over, or mortgage, charge or otherwise
encumber or dispose of any of the Shares; or
(b) enter into discussions with any persons as regards the Shares
or any possible sale of the Business or a material part of the
Business.
6.5 Without prejudice to the foregoing, the Warrantors and the Seller
hereby covenant with and undertake to the Buyer that each Target
Group Company shall not at any time prior to Completion without the
prior written consent of the Buyer:
(a) except as contemplated by Condition 5.1(j), permit or cause to
be proposed any alteration to its share capital (including any
increase thereof) or the rights attaching to its shares;
(b) except as contemplated by Condition 5.1(j), create, allot,
issue, redeem, consolidate, convert or sub-divide any share or
loan capital or grant or agree to grant any options for the
issue of any share or loan capital;
(c) except as contemplated by Condition 5.1(j), subscribe or
otherwise acquire, or dispose of any shares in the capital of
any company;
(d) acquire or dispose of the whole or part of the undertaking of
it or of any other person, firm or company or acquire or
dispose of an asset except in the ordinary course of its
business or assume or incur a liability, obligation or expense
(actual or contingent) except in the ordinary course of its
business;
(e) except as contemplated by Condition 5.1(j), send any notice to
its shareholders or pass any shareholder resolution;
(f) cease or propose to cease to carry on its business or be wound
up or enter into receivership, or any form of management or
administration over its assets;
(g) permit or suffer any of its insurances to lapse or do anything
which would make any policy of insurance void, null or
voidable or might result in an increase in the premium payable
under any policy of insurance or prejudice the ability to
effect equivalent insurance in the future;
(h) apply or permit its directors to apply to petition to the
Court for an examinership or similar order to be made in
respect of it;
22
(i) make any change to its auditors, its bankers or the terms of
the mandate given to such bankers in relation to its
account(s), or its accounting reference date;
(j) except as contemplated by Condition 5.1(j) or by execution of
the Lease, enter into or vary any transaction or arrangement
with, or for the benefit of any of its directors or
shareholders or any other person who is a Connected Person
with any of its directors or shareholders;
(k) borrow monies (other than by way of its agreed overdraft
facility) or accept credit (other than normal trade credit) or
make payments out of or drawings on its bank accounts other
than in accordance with its usual practice prior to the date
of this Agreement or amend the terms of its borrowings or
indebtedness in the nature of borrowing;
(l) make any payment otherwise than on an arm's length basis;
(m) enter into or give or permit or suffer to subsist any
guarantee of or indemnity or contract of suretyship for or
otherwise commit itself in respect of the due payment of money
or the performance of any contract, engagement or obligation
of any other person or body;
(n) propose, pay, declare or make any dividend or propose, declare
or make any other distribution;
(o) enter into any partnership or joint venture;
(p) incur any capital expenditure (including obligations under
hire purchase and leasing arrangements) exceeding in aggregate
EUR100,000 (one hundred thousand euro) or as regards any
single item EUR50,000 (fifty thousand euro);
(q) dispose of any asset of a capital nature with a book or market
value in excess of EUR25,000 (twenty five thousand euro);
(r) provide a gratuitous benefit to an officer or employee (or any
of their dependants) or employ, engage or terminate the
employment or engagement of a person other than a new accounts
manager;
(s) vary or make any binding decisions on the terms of employment
and service of any officer or employee increase or vary the
salary or other benefits of any such officer or employee or
appoint or dismiss any officer or such employee;
(t) create or permit the creation of or suffer to subsist any
Encumbrance over the whole or any part of its assets or redeem
any Encumbrance over any asset of any Target Group Company;
23
(u) make any loan or give any credit (other than normal trade
credit) or acquire any loan capital of any corporate body
(wherever incorporated);
(v) surrender or agree to any material change in the terms of any
substantial agreement to which it is from time to time a
party;
(w) enter into or amend or vary any leasing, hire, hire purchase
or other agreement for payment on deferred terms or any
unusual or onerous contract or any other material or major or
long term contract;
(x) make any change in its business or do any act or thing
(including, for the avoidance of doubt, process accounts
receivable and/or accounts payable) outside the ordinary
course of its business;
(y) conduct any litigation (save for the collection of debts
arising in the ordinary course of business) or settle or
compromise any claim or dispute or waive a right in relation
to litigation or arbitration proceedings;
(z) make a claim under Section 597 of the TCA which affects an
asset owned by any Target Group Company; or
(aa) amend or discontinue (wholly or partly) any of the Pension
Schemes (as defined in paragraph 16(a) of Schedule 4) or
communicate to any member or former member, officer or
employee of any of the Pension Schemes a plan, proposal or an
intention to amend, discontinue (wholly or partly), or
exercise a discretion, in relation to such Pension Scheme.
6.6 The Warrantors and the Seller undertake to the Buyer to co-operate
with the Buyer to:
(a) ensure the efficient continuation of management of the Target
Group after the date of this Agreement; and
(b) prepare for the introduction of the Buyer's Code of Ethics in
readiness for Completion.
6.7 Within two (2) Business Days of the date of this Agreement, the
Seller shall send to the holders of shares in the Target Group
Companies who are employees or former employees of the Target Group
or Seller Group or which are not another Target Group Company (the
"THIRD PARTY SHAREHOLDERS") the Notices of Extraordinary General
Meeting required to initiate the procedure for the redemption and
cancellation of shares held by the Third Party Shareholders.
24
7. COMPLETION
7.1 Completion shall take place at the offices of the Buyer's Solicitors
on 28th February, 2005.
7.2 At Completion the Seller shall deliver or procure to be delivered to
the Buyer those items set out in Schedule 3.
7.3 The Seller shall procure that the directors of each Target Group
Company shall convene and at Completion hold a meeting of board of
directors at which the directors shall (to the extent relevant to
each such company):
(a) vote in favour of the registration of the Buyer and/or its
nominee(s) as member(s) of the company in respect of the
Shares (subject to the production of duly stamped transfers);
(b) revoke all existing mandates for the operation of bank
accounts and issue new mandates giving authority to persons
nominated by the Buyer;
(c) change the registered office of the company to such place as
is nominated by the Buyer;
(d) change the financial year end of the company to 31st December;
(e) appoint such persons as the Buyer may nominate as directors,
secretary and auditors of the company with immediate effect
and approve the resignations of such persons as directors,
secretary and auditors as may be required by the Buyer;
(f) convene an extraordinary general meeting of the company to
consider a resolution to adopt Articles of Association in a
form approved by the Buyer;
(g) approve and authorise the execution by the company of the Tax
Deed; and
(h) approve and authorise the execution by the company of any of
the Service Agreements (if any) to which it is a party.
7.4 The Warrantors and the Seller shall procure at Completion:
(a) the payment of all monies owing to each Target Group Company
(whether then due for payment or not) by the Seller or the
Warrantors or any director of any Target Group Company or by
any of them or any Connected Person;
(b) the release of any and all guarantees or indemnities or
security given by any Target Group Company for or on behalf of
the Seller or the
25
Warrantors or for or on behalf of any director of any Target
Group Company or for or on behalf of any of them or any
Connected Person.
7.5 The Seller and the Warrantors shall procure at Completion that:
(a) any Intellectual Property or Know-How owned, used or held by
the Warrantors or the Seller Group is assigned or otherwise
transferred to one of the Target Group Companies;
(b) the rights and claims (if any) of the Warrantors and any
member of the Seller Group in connection with past
infringements of the Intellectual Property Rights or any
inventions or discoveries described therein shall be assigned
to one of the Target Group Companies; and
(c) that an amount equal to the Escrow Amount is paid to the
Escrow Agents who shall deal with the same in accordance with
terms of the Escrow Agreement.
7.6 The Seller and the Warrantors shall, and shall procure that any
member of the Seller Group shall:
(a) assign and/or deliver to a Target Group Company any asset
whatever (including bank balances, agencies or appointments)
in their name or in the name of a company or companies
controlled by them which asset is related to the Business of
any Target Group Company carried on at Completion;
(b) irrevocably waive any claims against any Target Group Company
its agents, or employees which they may have outstanding at
Completion.
7.7 At Completion, each of the parties thereto shall enter into the Tax
Deed.
7.8 At Completion the Buyer shall deliver to the Seller's Solicitors
(whose receipt shall be an absolute discharge therefor):
(a) the Consideration referred to in Clause 3.2 by way of wire
transfer for same day value to a bank account nominated by the
Seller's Solicitors; and
(b) the Tax Deed duly executed by the Buyer.
7.9 The Buyer shall not be obliged to complete this Agreement unless:
(a) the Seller complies fully with all its obligations under
Clauses 6 and 7; and
(b) the purchase of all of the Shares is completed in accordance
with the provisions of this Agreement on the Completion Date
(but if the Buyer exercises its option pursuant to Clause
7.10(a), completion of the
26
purchase of some of the Shares does not affect the Buyer's
rights in connection with the others).
7.10 If Completion does not take place on the date set for Completion in
Clause 7.1 because the Seller fails to comply with any of its
obligations under this Clause 7, the Buyer may by notice to the
Seller:
(a) proceed to Completion to the extent reasonably practicable;
(b) postpone Completion to a date not more than thirty (30)
Business Days after the date set for Completion in Clause 7.1;
or
(c) terminate this Agreement.
7.11 If the Buyer postpones Completion to another date in accordance with
Clause 7.10(a), the provisions of this Agreement apply as if that
other date is the date set for Completion in Clause 7.1.
7.12 If the Buyer terminates the Agreement pursuant to Clause 7.10(c),
each party's further rights and obligations cease immediately on
termination, but termination does not affect a party's accrued
rights and obligations at the date of termination.
7.13 Prior to registration of stock transfer forms in respect of the
Shares in the register of shareholders of each relevant Target Group
Company and after Completion, the Seller shall co-operate in any
manner required by the Buyer for the convening, holding at short
notice and conduct of general meetings of each Target Group Company,
shall execute on a timely basis all proxy forms, appointments of
representatives, documents of consent to short notice and such like
that the Buyer may require, and shall generally act in all respects
as the nominee and at the direction of the Buyer in respect of the
Shares sold by it and all rights and interests attaching thereto and
shall issue letters of direction to the registered holders of any of
the Shares who hold such shares as its nominee requiring them to act
on the instructions of the Buyer for the aforesaid purposes.
7.14 The Seller and the Buyer shall, within five (5) Business Days of
Completion, give to each Target Group Company such notice as is
required by Section 53 of the Companies Act, 1990.
8. COMPLETION ACCOUNTS
8.1 The Completion Accounts shall be prepared and agreed in accordance
with the provisions of Schedule 9.
8.2 If the Completion Accounts show (i) a Net Asset Value for the Target
Group less than EUR997,090 (nine hundred and ninety-seven thousand
and ninety euro) (the "TARGET NAV") and/or (ii) any Indebtedness
(other than the finance and operating leases set out in Schedule 11)
and/or (iii) the Inter-Company
28
Indebtedness is greater than the Target Inter-Company Indebtedness,
the Initial Consideration shall be reduced on a dollar for dollar
basis by an amount equal to (i) the amount by which the Net Asset
Value shown in the Completion Accounts is less than the Target NAV
and (ii) an amount equal to the amount of the Indebtedness (other
than the finance and operating leases set out in Schedule 11) shown
in the Completion Accounts and (iii) the amount by which the
Inter-Company Indebtedness exceeds the Target Inter-Company
Indebtedness (the "INITIAL CONSIDERATION REDUCTION").
8.3 The Initial Consideration Reduction (if any) shall be paid to the
Buyer by the Seller as soon as practicable following, and in any
event within five (5) Business Days of, the Completion Accounts
Date. Any amount payable to the Buyer under this Clause 8 shall, to
the extent payment by the Seller is not made in accordance with the
terms of this Clause, be set-off against any other monies owing or
which may become owing by the Buyer or the Target Group Companies to
the Seller, including, without limitation to the generality of the
foregoing and to Clause 14, the Earn-Out Consideration.
8.4 If the Target Group has not received the Motorola Payment in full by
the date falling one hundred and twenty (120) days after the last
Business Day of June, 2005 (the "PAYMENT DATE"), then the Seller
shall pay to the Buyer as soon as practicable following, and in any
event within five (5) Business Days of, the Payment Date an amount
equal to the difference between the amount of the Motorola Payment
and the amount (if any) received by the Target Group in respect of
the Motorola Payment (the "SELLER PAYMENT"). If, after the Seller
Payment has been made in full to the Buyer, Motorola pays an amount
to the Target Group in respect of the Motorola Payment, then the
Buyer shall pay an amount equal to such amount received from
Motorola to the Seller within five (5) Business Days of receipt by
the Buyer of such payment from Motorola.
9. CONDUCT OF BUSINESS POST-COMPLETION
9.1 From the Completion Date all financial statements, records and
reports of the Target Group shall be prepared in accordance with the
accounting principles, standards and practices generally accepted in
the United States of America from time to time ("US GAAP"). For the
avoidance of doubt, nothing in this Clause 9.1 shall require the
Completion Accounts or the Earn-Out Accounts to be prepared in
accordance with US GAAP. Where any statutory or regulatory provision
requires financial statements or returns to be prepared in
accordance with the accounting principles, standards and practices
generally accepted in Ireland from time to time ("IRISH GAAP"), the
Target Group Companies shall take the necessary steps to allow such
statements or returns to be prepared in accordance with Irish GAAP.
9.2 Subject to the remaining provisions of this Clause 9, the Buyer
hereby undertakes with the Seller that neither it nor any member of
the Buyer Group nor any Target Group Company shall, for as long as
the Target Group achieves the following cumulative EBITDA figures
(i) for the quarter ending 31st December, 2004, break-even (ii) for
the quarter ending
28
31st March 2005, USD981,000 (nine hundred and eighty one thousand US
dollars) (iii) for the quarter ending 30th June, 2005, USD2,038,000
(two million and thirty eight thousand US dollars) and (iv) for the
quarter ending 30th September, 2005, USD3,466,000 (three million
four hundred and sixty six thousand US dollars), without the prior
written consent of the Seller, at any time between the Completion
Date and the Earn-Out Date:
(a) cause or require any Target Group Company to sell or otherwise
dispose of any substantial or material part of its undertaking
or assets which will result in a material adverse change in
the nature of the Business of the Target Group during the
Earn-Out Period;
(b) cause the costs of the Target Group to be reduced to a level
which is not consistent with maintaining the levels of growth
in revenue achieved by the Target Group in the two (2) years
prior to Completion;
(c) cease to use the name used by the Target Group or a Target
Group Company at Completion in the carrying on of the Business
(save that reference may be made to the Buyer Group and any of
its trade names/brands in connection with such name used by
the Target Group);
(d) cause the costs of the Target Group to be increased to a level
which is beyond that contemplated by the Business Plan and
which is not reasonably required in order to maintain the
levels of growth in revenue achieved by the Target Group in
the two (2) years prior to Completion;
(e) require the transfer of any of the Intellectual Property
Rights by any Target Group Company to the Buyer Group or a
third party but, for the avoidance of doubt, this shall not
prevent any company in the Buyer Group from using such
Intellectual Property Rights in its business or products;
(f) without good cause procure a restructuring of the Business or
any part thereof or cause the Business or any part thereof to
be terminated or wound down where the likely effect of such
action would reduce the earning capacity of the Target Group;
(g) subject and without prejudice to Clause 9.7, knowingly
interfere with or do anything calculated to impair or
materially adversely affect the relationship of any Target
Group Company with customers of the Target Group;
(h) require any member of the Target Group to enter into any
transaction with any member of the Buyer Group or any party
whatsoever which is not on arm's length terms;
29
(i) remove or appoint any directors of the Target Group Companies,
other than any A Directors; or
(j) breach the terms of the Service Agreements.
9.3 Any member of the Buyer Group may allocate any of its overheads or
costs to any Target Group Company but such allocation shall not be
used to reduce the amount of the Earn-Out Consideration payable to
the Seller pursuant to this Agreement if it has a net negative
effect on EBIT or the Revenue Amount of the Target Group during the
Earn-Out Period unless:
(i) the allocation is in an area where the existing
overheads and costs of the relevant Target Group Company
have been reduced by changes effected as a result of the
Buyer acquiring the Target Group (for example, and
without prejudice to the generality of the foregoing,
where a pre-Completion contract for a service is
terminated and the Buyer instead allocates a reasonable
portion of the cost of obtaining a replacement service
for the Buyer Group and the Target Group as a whole to
the relevant Target Group Company); or
(ii) the allocation is of a direct cost directly and only
attributable to the operation of the Target Group
Companies (in which case the allocation shall not exceed
the amount of the direct cost so allocated) but,
notwithstanding the generality of the foregoing
provisions of this Clause 9.3(ii), members of the Buyer
Group shall not allocate administrative or support costs
to the Target Group Companies but may allocate third
party legal, accounting and network communications costs
directly attributable to the Target Group Companies to
any Target Group Company.
9.4 If the Seller seeks to withhold or delay its consent for the
purposes of Clause 9.2 and has reasonably demonstrated to the Buyer
that the course of action or omission proposed is likely to have a
material adverse effect on the ability of the Target Group to
achieve the EBIT Target and the Revenue Target, then the Buyer may
nevertheless proceed with the proposed action or omission provided
that the direct negative financial effect of only the particular act
or omission in question shall be disregarded when determining
whether the EBIT Target and the Revenue Target have been achieved.
9.5 The Warrantors will procure (insofar as possible) that, without the
prior written consent of the Buyer, they will not act, and will not
cause any Target Group Company to act, outside the ordinary course
of business at any time between the Completion Date and the Earn-Out
Date, or, without prejudice to the generality of the foregoing, to:
30
(a) Materially change the accounting practices, standards or
principles used in the preparation of any financial statements
or accounts (whether audited or unaudited) of any Target Group
Company;
(b) Materially change the pricing or discounting policies of any
Target Group Company in relation to the Business provided
that, for the avoidance of doubt, the Buyer acknowledges and
accepts that its prior consent shall not be required:
(i) with respect to the roll out by the Target Group of its
new SIGMA product (should this occur during the Earn-Out
Period) aimed at the high-volume low-margin end of the
Business, in respect of which product the Target Group
shall be entitled to lower its profit margin in
comparison to those currently achieved on other products
sold by the Business;
(ii) with respect to the grant of discounts by the Target
Group under its existing contract with BT for the supply
of certain products in South Africa (further details of
which are set out in the Disclosure Letter), provided
that such discounts are not in excess of what is
reasonable and necessary to safeguard the Target Group's
position under such contract;
(c) Do or omit to do anything which will cause or is likely to
cause Enterprise Ireland or the European Community to make a
claim against the Buyer or any Target Group Company for
repayment of any amounts paid by Enterprise Ireland or
Forbairt, or the European Community respectively, to any
Target Group Company or member of the Seller Group;
(d) Delay capital expenditure or other expenditure which would be
prudent in connection with the Business, its long-term
development or the assets of the Target Group until after the
Earn-Out Date; or
(e) Materially change the principles and policies underlying the
compensation, incentive and bonus payments to employees and
officers of any Target Group Company.
9.6 Subject to the provisions of Clause 9.7, each party to this
Agreement hereby covenants with and undertakes to the other parties
to use his or its skills and all reasonable endeavours to promote
the Business and the interests of the Target Group.
9.7 The Warrantors and the Seller hereby acknowledge that:
(a) products and services designed, manufactured, sold,
distributed or serviced by the Buyer Group do, at the date of
this Agreement, and will, during the Earn-Out Period and
thereafter, compete with products and services designed,
manufactured, sold, distributed or serviced by
31
the Target Group in the United States of America and elsewhere
and that the Seller shall have no claim against the Buyer or
the Buyer Group in connection with or arising out of such
competition or the sales, marketing or purchasing policies of
any member of the Buyer Group, or any transactions between the
Buyer Group and any customer or prospective customer of the
Target Group, whether in relation to the preparation of the
Earn-Out Accounts, the payment of the Earn-Out Consideration,
the terms of this Agreement or otherwise; and
(b) this Agreement does not constitute a warranty, representation,
undertaking, obligation or arrangement on the part of the
Buyer or any member of the Buyer Group that it or they will
buy, distribute or service any products designed,
manufactured, sold, distributed or serviced by the Target
Group at any time after the date of this Agreement, and
nothing in this Agreement shall require the Buyer or any
member of the Buyer Group to do so.
9.8 If any dispute, controversy or difference arises between the Seller
and the Buyer as to the matters set out in this Clause 9:
(a) the Seller and the Buyer shall attempt in good faith to agree
the matter which is the subject of the dispute, controversy or
difference within twenty (20) Business Days of the dispute,
controversy or difference arising (the "DISPUTE DATE");
(b) if agreement is not reached within twenty (20) Business Days
of the Dispute Date, the Buyer and the Seller shall procure
that the matter is referred for arbitration to an arbitrator
agreed between the parties or, in default of agreement within
twenty five (25) Business Days of the Dispute Date, to an
arbitrator nominated by the Chairman for the time being of the
Bar Council of Ireland on the written application of either
party. The arbitrator shall be a Senior Counsel specialising
in Chancery Law, of not less than seven years experience as a
Senior Counsel. The arbitration shall be conducted in
accordance with the provisions of the Arbitration Acts, 1954
to 1998.
(c) Where any dispute, controversy or difference is referred to an
arbitrator pursuant to this Clause 9, the arbitrator shall
determine the issue between the parties and may, in doing so,
determine that an appropriate amount is added to or deducted
from the Annualised EBIT or the Annualised Revenue Amount.
(d) The arbitrator shall set a limited time period and establish
procedures designed to reduce the cost and time for discovery
while allowing the parties an opportunity, adequate in the
sole judgment of the arbitrator, to discover relevant
information from the opposing parties about the subject matter
of the dispute. The arbitrator shall rule upon motions to
compel or limit discovery and shall have the authority to
impose sanctions, including legal fees and costs, to the
extent as a court of
32
competent law or equity, should the arbitrator determine that
discovery was sought without substantial justification or that
discovery was refused or objected to without substantial
justification.
(e) The decision of the arbitrator as to the resolution of any
dispute, controversy or difference and to the allocation of
the arbitrator's costs and expenses shall be binding and
conclusive upon the parties to this Agreement. Such decision
shall be written and shall be supported by written findings of
fact and conclusions which shall set forth the award,
judgment, decree or order awarded by the arbitrator.
(f) Judgment upon any award rendered by the arbitrator may be
entered in any court having jurisdiction. Any such arbitration
shall be held in Dublin and shall be governed by Irish law.
10. POST-COMPLETION OBLIGATIONS & RIGHTS
10.1 The Seller will procure that, as soon as practicable after
Completion (and in any event within thirty (30) days), the name of
any company in the Seller Group which uses the Name is changed to a
name that does not include the Name and is not confusingly similar
thereto.
10.2 The Seller will procure that, as soon as practicable after
Completion (and in any event within thirty (30) days), the
registered address of any company in the Seller Group which is Xxxxx
Xxxxx, Xxxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxx 00 is changed to another
registered address.
10.3 The Seller acknowledges and agrees that the Buyer may, at its sole
discretion, make an election under 338(g) of the Internal Revenue
Code of the United States of America with respect to the acquisition
of the Shares.
10.4 Following Completion, the Seller shall use its best endeavours to
procure that LCL is substituted for the Seller as a party to the
Daidalos Agreement and a recipient of grants thereunder on
substantially the same terms as those to which the Seller is
currently subject. If such substitution is not completed by the date
which is nine months following the Completion Date (the
"SUBSTITUTION DATE"), the Seller shall pay to the Buyer on the
Substitution Date the sum of EUR477,250 (four hundred and seventy
seven thousand and two hundred and fifty euro).
10.5 Following Completion, if any of the Warrantors or the Seller becomes
aware of any third party claim (including, for the avoidance of
doubt, any claim by any Tax Authority) which is likely to result in
a claim under the terms of this Agreement and/or the Tax Deed, that
Warrantor or the Seller (as the case may be) shall provide an A
Director of the Buyer with written details of such claim as soon as
practicable (and for the purposes of this Clause 10.5, sending the
relevant details by email shall constitute "written details"), but
in any event no later than five (5) Business Days after the date on
which the Warrantor or the Seller (as the case may be) becomes so
aware.
33
10.6 THE ICI GUARANTEE
(a) Following Completion, the Parent hereby agrees to guarantee
the repayment by the Target Group Companies of the
Inter-Company Indebtedness to the Seller in accordance with
the terms and conditions of the Inter-Company Indebtedness
(the "ICI GUARANTEE").
(b) The ICI Guarantee shall be a continuing guarantee and shall
continue in full force and effect until the Inter-Company
Indebtedness has been paid, discharged or satisfied in full
and notwithstanding any insolvency of the Seller or any change
in the status of the Seller.
(c) The Parent shall not be exonerated or discharged nor shall its
liability be affected by any forbearance, whether as to
payment, time, performance or otherwise howsoever or by any
other indulgence being given to the relevant Target Group
Companies or by the variation of the terms of this Agreement
or by any act, thing, omission or means whatsoever which, but
for this provision, might operate to exonerate or discharge
the Parent from their obligations under the ICI Guarantee.
For the avoidance of doubt, the parties hereby agree and acknowledge
that the ICI Guarantee shall only be effective following Completion.
In the event that Completion does not occur, the ICI Guarantee and
this Clause 10.6 shall be of no effect.
11. WARRANTIES
11.1 The Warrantors hereby warrant to the Buyer in relation to each
Target Group Company on the terms of Schedule 4 only Immediately
before the time of Completion, the Warrantors shall be deemed to
warrant to the Buyer on the terms of Schedule 4 only by reference to
the facts existing at the Completion Date. For this purpose only,
where in a Warranty there is an express or implied reference to the
"date of this Agreement" that reference is to be construed as a
reference to the "date of Completion".
11.2 The Warrantors acknowledge that the Buyer is entering into this
Agreement in reliance upon each of the Warranties.
11.3 The Warranties are qualified by the facts and circumstances fairly
disclosed in the Disclosure Letter. The Warranties given at
Completion are qualified by the facts and circumstances fairly
disclosed in the Completion Disclosure Letter. Claims may be made by
the Buyer under the Warranties whether or not the Buyer knew or
could have discovered (whether by any investigation made by it or on
its behalf into the affairs of each Target Group Company or
otherwise) prior to signing this Agreement that any of the
Warranties have not been complied with or carried out or are
otherwise untrue or misleading. The Warrantors may invoke the
Buyer's actual knowledge (but not the Buyer's constructive
knowledge) of a fact or circumstance which might make a
34
Warranty untrue, inaccurate, incomplete or misleading as a defence
to a claim for breach of Clause 11.1.
11.4 The Warrantors agree with the Buyer that the Warrantors shall waive
and not enforce any right which the Warrantors may have in respect
of any misrepresentation, inaccuracy, neglect or omission in or from
any information or advice supplied or given by any Target Group
Company or any officer, employee or adviser of or to any Target
Group Company for the purpose of assisting the Warrantors to give
any of the Warranties or to prepare the Disclosure Letter or the
Completion Disclosure Letter.
11.5 Each of the Warranties shall be construed separately and
independently and (except where the Agreement expressly provides
otherwise) shall not be limited or restricted by reference to or
inference from another Warranty.
11.6 Between the execution of this Agreement and Completion, the
Warrantors shall notify the Buyer forthwith if they become aware of
a fact or circumstance which constitutes a breach of Clause 6 or
Clause 11.1 or has caused, or will or is likely to cause, a breach
of Warranty.
11.7 The rights and remedies of the Buyer in respect of a breach of any
of the Warranties shall not be affected by the sale and purchase of
the Shares.
11.8 Subject to Clause 13.1(c), the liability of the Warrantors for
breach of any Warranty shall be joint.
11.9 All sums payable by the Warrantors to the Buyer pursuant to this
Clause 11 shall be paid free and clear of deductions and/or
withholdings save only as may be required by law.
11.10 If any deductions and/or withholdings are required by law to be made
from any sums payable from the Warrantors to the Buyer pursuant to
this Clause 11 then, subject to Clause 11.8, the Warrantors shall
pay to the Buyer such sums as will, after the deductions and/or
withholdings are made, leave the Buyer with the same amount as it
would have been entitled to receive if no such deductions and/or
withholdings had been required to be made. If the Buyer receives any
refund in respect of any deduction and/or withholdings in respect of
which the Warrantors have paid a sum to the Buyer pursuant to this
Clause 11.10, the Buyer shall immediately refund to the Warrantors,
an amount equal to the amount of the refund actually received by the
Buyer.
11.11 If any sum payable by the Warrantors to the Buyer pursuant to this
Clause 11 shall be subject to a liability to Tax in the hands of the
Buyer, the Warrantors shall be under the same obligation to make an
increased payment in relation to that liability to Tax as if the
liability were a deduction or withholding required by law. If the
Buyer receives any refund in respect of any deduction and/or
withholdings in respect of which the Warrantors have paid a sum to
the Buyer pursuant to this Clause 11.10, the Buyer shall immediately
refund to the Warrantors, an amount equal to the amount of the
refund actually received by
35
the Buyer, unless the sum originally paid by the Warrantors was in respect
of an item included or referred to in the balance sheet of any Target
Group Company.
11.12 If the Buyer notifies a claim for breach of any Warranty pursuant to
Clause 13.3 and the Warrantors do not dispute that claim, then the
Warrantors shall pay to the Buyer any amount required to be paid
pursuant to this Clause 11 as cleared funds or, at the option of the
Buyer, discharge directly the underlying liability, within twenty
(20) Business Days of receipt of notice of the subject matter or, if
later, on the day before the due date for settlement or discharge of
the liability the subject matter of the claim.
12. THE BUYER'S REMEDIES
12.1 If, on or before the date set for Completion in Clause 7.1, the
Buyer considers that the Seller or the Warrantors are in material
breach of any provision of this Agreement (a "PRE-COMPLETION
BREACH"), the Buyer may by notice to the Seller and the Warrantors
elect to proceed to Completion or terminate this Agreement.
12.2 If the Buyer terminates this Agreement pursuant to Clause 12.1:
(a) the Seller and the Warrantors shall indemnify the Buyer
against all its costs relating to the negotiation,
preparation, execution or termination of this Agreement or the
satisfaction of a condition set out in Clause 5.1; and
(b) each party's further rights and obligations cease immediately
on termination, but termination does not affect a party's
accrued rights and obligations at the date of termination;
provided that the maximum aggregate liability of any party pursuant
to this Clause 12.2 shall not exceed USD200,000 (two hundred
thousand US dollars).
12.3 If the Buyer proceeds to Completion pursuant to Clause 12.1 and:
(a) the value of an asset of a Target Group Company is or becomes
less than the value would have been had the Pre-Completion
Breach not occurred; or
(b) a Target Group Company is subject to or incurs a liability or
an increase in a liability which it would not have been
subject to or would not have incurred had the Pre-Completion
Breach not occurred,
the Seller and the Warrantors shall pay the Buyer on demand (at the
Buyer's option), unless the amount payable in respect of the
Pre-Completion Breach is disputed by the Seller or the Warrantors,
an amount equal to either:
36
(c) the reduction in the value of the asset or, as the case may
be, the liability or increased liability; or
(d) the reduction caused in the value of the Shares.
12.4 The Seller and the Warrantors shall indemnify the Buyer against each
reasonable cost which the Buyer may incur whether before or after
the start of an action in connection with:
(a) the enforcement by the Buyer of any settlement of a claim
against the Seller or the Warrantors in respect of a
Pre-Completion Breach or alleged Pre-Completion Breach; and
(b) the enforcement of any judgment given in legal proceedings
against the Seller or the Warrantors in respect of a
Pre-Completion Breach or alleged Pre-Completion Breach in
which judgment is given for the Buyer.
12.5 Without prejudice to any other right or remedy of the Buyer under
this Agreement or otherwise all sums payable by the Seller or the
Warrantors, under this Agreement shall bear interest at the Interest
Rate from the date of claim until the date of payment (before as
well as after judgment).
13. LIMITATIONS ON THE WARRANTORS' LIABILITY
13.1 The liability of the Warrantors shall be limited in accordance with
the following provisions of this Clause 13:
(a) no liability shall attach to the Warrantors for beach of any
Warranty (other than the Title Warranties) if the loss
sustained in respect of such breach or the amount of such
claim is less than EUR38,500 (thirty-eight thousand five
hundred euro).
(b) No liability shall attach to the Warrantors for breach of any
Warranty (other than the Title Warranties) unless the
aggregate amount of all liabilities under the Warranties shall
have exceeded the total sum of EUR225,000 (two hundred and
twenty-five thousand euro) whereupon the Warrantors shall be
liable for the entire amount of such liabilities and not
merely the excess.
(c) The aggregate liability of the Warrantors under this Agreement
in respect of all or any claims shall be subject to an overall
maximum liability of an amount equal to the Consideration
(being the Initial Consideration and the Earn-Out
Consideration paid by the Buyer to the Seller) and the
Inter-Company Indebtedness (together the "PAYMENTS"), but the
maximum aggregate liability of each of the Warrantors under
the Warranties in respect of all or any claims shall not
exceed the percentage of the Payments set out opposite their
names below:
37
Xxxxxxx Xxxxxxxxxx 42.74%
Caoimhin O'Laoi 42.74%
Xxxxxxx X'Xxxxx 10.68%
Xxxxxxx Xxxx 3.84%
13.2 Notwithstanding any other provision of this Agreement, no limitation
of any kind whatsoever shall apply in respect of any claim made
hereunder against the Warrantors:
(a) if such claim arises or is delayed as a result of any
fraudulent act or fraudulent omission or fraudulent
misrepresentation of the Warrantors, or if such claim arises
from deliberate misstatement, deliberate misconduct or
deliberate concealment by the Warrantors;
(b) to the extent that the claim relates to title to the Shares;
(c) to the extent that the claim relates to any criminal or
statutory fine or penalty; or
(d) pursuant to Warranty 5(b)(xviii) (Payments to directors or any
of the Warrantors).
13.3 A claim against the Warrantors under the Warranties shall be barred
unless written notice thereof shall have been given to the
Warrantors:
(a) in the case of a claim under the Tax Warranties before the
seventh anniversary of the Completion Date provided that such
period of seven years shall be reduced with respect to claims
relating to Tax which arise in Ireland to five (5) years from
Completion on the date which is specified in the Finance Xxx
0000 (Commencement of Section 17) Order 2003 (Statutory
Instrument 508 of 2003) being the date on which the amending
provisions of Section 17(1)(g) of the Finance Xxx 0000 are due
to come into operation (except in the case of fraud which
causes the Revenue Commissioners to re-open assessments in
respect of the period up to Completion, in which case the
limitation in respect of a claim against the Warrantors shall
be extended to twenty years after the end of the accounting
period of the Target Group Company next following Completion);
(b) in the case of a claim under paragraph 20 of Schedule 4
(Environment) before the date which is four (4) years and nine
(9) months after the Completion Date; or
(c) in the case of any other claim under the Warranties in
Schedule 4 before the second anniversary of the Completion
Date.
38
A claim which is validly made within the required period aforesaid
shall, unless previously settled or withdrawn, be deemed to have
been waived or withdrawn in the event that legal proceedings in
respect thereof are not issued and served on any Warrantor within
one (1) year of written notice of the relevant claim first being
given as aforesaid.
13.4 Where the Warrantors are liable in respect of a breach of the
Warranties and a provision has been made for the matter giving rise
to the claim in the Accounts or the Completion Accounts, the
liability of the Warrantors shall be reduced by an amount equal to
the amount of the provision.
13.5 The Warrantors shall not be liable for any claim for breach of
Warranty:
(a) if and to the extent that the loss occasioned by any breach
has already been recovered (for the avoidance of doubt there
being deducted from such recovery any loss, liability or
expense thereof) under any of the other Warranties or the Tax
Deed or the Indemnities;
(b) if and to the extent that the loss to which the claim relates
would not have occurred but for any voluntary act, omission or
transaction of the Buyer or the Buyer Group or on its behalf
(and for this purpose an act, omission or transaction of the
Buyer or any Target Group Company shall only be deemed to be
voluntary if it was sanctioned in writing by an A Director
and, for the purposes of this Clause 13.5(b), an email shall
constitute "in writing") carried out on or occurring after
Completion otherwise than in the ordinary course of business,
and except:
(i) where an A Director of the Buyer could not reasonably be
expected to know that such act, omission or transaction
would give rise to a claim;
(ii) pursuant to a legally binding commitment or arrangement
entered into prior to Completion; and
(iii) where the voluntary act, omission or transaction is
required to comply with law or the requirements of any
regulatory authority For the avoidance of doubt, a
disclosure to the Revenue Commissioners under Sections
1086 or 955 TCA or a "qualifying disclosure", as defined
in the Guide for Revenue Auditors, will not constitute a
voluntary act for this purpose;
(c) to the extent that it arises or is increased (to the extent
only of such increase) as a result of an increase on rates of
Taxation after the date of this Agreement with retrospective
effect or such breach or claim occurs as a result of any
legislation enacted and made in force after the date of this
Agreement with retrospective effect;
39
(d) to the extent that the loss occasioned by any breach has
already been recovered (for the avoidance of doubt there being
deducted from such recovery any loss, liability or expense
incurring in making such recovery) under any of the other
Warranties, any other provision of this Agreement or under the
Tax Deed;
(e) to the extent that the Buyer or a Target Group Company or any
member of the Buyer Group receives any credit or makes
recovery of a financial amount which reduces the liability of
the Buyer or of the Target Group Company or the member of the
Buyer Group in respect of the claim as a result of the
particular circumstances giving rise to the claim;
(f) to the extent that such claim would not have arisen but for a
cessation of trading or alteration in the nature of the
Business after Completion;
(g) to the extent that the matter is fairly disclosed in the
Disclosure Letter or the Completion Disclosure Letter;
(h) to the extent that the matter arises from the entry into of
this Agreement or any document contemplated thereby;
(i) to the extent that a defence of a third party claim giving
rise to a Warranty claim is materially adversely affected by
loss or destruction of records of the Target Group after
Completion by or at the direction of an A Director of the
Buyer;
(j) to the extent that the loss giving rise to such claim
(i) is admitted as recoverable by an insurer, but is not
paid or recovered because of a written request by an A
Director of the Buyer or an A Director of a Target Group
Company made to the insurers (for example with a view to
the amount payable being offset against premiums or with
a view not to trigger an increase in insurance
premiums); or
(ii) has been recovered by the Buyer or a member of the Buyer
Group or any Target Group Company from any third party
or under any policy of insurance; or
(iii) could have been recovered if after Completion there had
been maintained the insurance cover in place at the time
of Completion, but such cover was not maintained as a
result of a written request by an A Director of the
Buyer or an A Director of a Target Group Company made to
the insurers;
provided that:
40
(A) the existence of such a policy of insurance shall not
preclude the making by the Buyer of its claim or
recovery from the Warrantors pending such admission (as
in (i)), recovery (as in (ii)) or an agreement or
determination that the loss could have been recovered
(as in (iii));
(B) in the event of such admission, recovery, agreement or
determination, the Warrantors shall be entitled to
recover from the Buyer such amount as it is agreed or
determined constitutes the amount by which the Buyer's
loss is reduced by reason of such admission, recovery,
agreement or determination;
(k) to the extent that the loss in respect of which the claim is
made arises from or is increased by any matter, act, omission,
or circumstance, which would not have occurred but for a
failure or omission by a Target Group Company to make any
claim, election, surrender or disclaimer or give any notice or
consent to do any other things after Completion the making or
doing of which is taken into account in computing the
provision for Taxation in the Accounts, provided the
Warrantors shall have identified and notified an A Director of
the relevant Target Group Company of such claims, elections,
surrenders or disclaimers. in writing in a timely fashion
explaining the consequences of failing to make such claims,
elections, surrenders or disclaimers;
(l) to the extent that the loss giving rise to the claim arises as
a result primarily of any change in the accounting policy or
practice or in the financial year end of a Target Group
Company after Completion otherwise than where such a change is
necessary to comply with generally accepted accounting
standards or to correct an error in existence prior to
Completion. For the avoidance of doubt, compliance with US
GAAP by the Target Group after Completion shall not give rise
to a claim for breach of Warranty.
13.6 Any payment by the Warrantors to the Buyer pursuant to the
Warranties or any other provision of this Agreement or the Tax Deed,
or deducted by the Buyer from the Earn-Out Consideration in
accordance with the terms of this Agreement shall be deemed to be a
reduction of the consideration payable hereunder.
13.7 Nothing herein or in the Warranties, shall or shall be deemed to
relieve the Buyer of any common law duty to mitigate any loss or
damage incurred by it.
13.8 The Buyer shall not be entitled to rescind this Agreement after
Completion.
13.9 For the avoidance of doubt, except as otherwise explicitly stated in
this Agreement, no provision of this Agreement or the Disclosure
Letter or the Completion Disclosure Letter shall operate to reduce,
exempt or extinguish the liability of the Seller pursuant to the
Indemnities.
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13.10 THIRD PARTY CLAIMS
(a) Where the Buyer and/or any Target Group Company are at any
time entitled to recover from some other person (including
without limitation any insurance company) (a "THIRD PARTY
CLAIM") any amount in respect of any matter giving rise to a
claim for breach of Warranty or pursuant to the Indemnities,
the Buyer shall not be obliged to pursue (or to procure that
the relevant Target Group Company pursues) any Third Party
Claim before making a claim for breach of Warranty or under
the Indemnities (a "BUYER CLAIM") in respect thereof. If the
Buyer elects, in its sole and absolute discretion, to pursue
the Buyer Claim instead of the Third Party Claim then,
forthwith after the Buyer has received all damages, expenses
and other amounts to which it is entitled pursuant to the
settlement or determination of the Buyer Claim from the Escrow
Fund or the Warrantors as the case may be, the Buyer shall
assign its rights (or procure that the relevant Target Group
Company assigns its rights) in respect of the relevant Third
Party Claim to the Warrantors, on the condition that the
Warrantors shall not make any admission of liability,
agreement, settlement or compromise in connection with any
counter-claim relating to a Third Party Claim assigned to the
Warrantors pursuant to this Clause 13.10(a) without the prior
written consent of the Buyer, such consent not to be
unreasonably withheld or delayed.
(b) If the Warrantors make any payment by way of damages for
breach of any of the Warranties or pursuant to the Indemnities
and after the making of the relevant payment, any Target Group
Company or the Buyer recovers from a third party a sum which
would have reduced the liability of the Warrantors in respect
of such breach the Buyer shall, once it or the relevant Target
Group Company has received such sum, forthwith repay to the
Warrantors so much of the recovered amount from the third
party (less the cost of recovery, interest or liability to
Taxation) as does not exceed the sum paid by the Warrantors to
the Buyer or the relevant Target Group Company.
(c) If any claim is made against the Buyer or any Target Group
Company by a third party which will result in a Buyer Claim
(after taking into account the limitations contained in this
Agreement) (a "THIRD PARTY CLAIM") the Buyer shall procure
that it and/or each Target Group Company shall, as
appropriate, and subject always to the Buyer and each Target
Group Company first being indemnified and secured to their
reasonable satisfaction against any liabilities and expenses
which they thereby incur:
(i) not make any admission of liability, agreement,
settlement or compromise or otherwise take any action in
relation thereto without the prior written consent of
the Warrantors, such consent not to be unreasonably
withheld or delayed;
42
(ii) take such reasonable steps as the Warrantors may request
in writing to avoid, resist, appeal, compromise, defend,
mitigate or otherwise deal with the Third Party Claim
unless matters of corporate or management policy or a
conflict of interest make it advisable for the Buyer or
the relevant Target Group Company to retain control of
defending the Third Party Claim and provided that (i)
any request or instruction from the Warrantors shall be
given to the Buyer or the relevant Target Group Company
in a proper, timely and reasonable fashion, and (ii) the
Warrantors shall not request the Buyer or any Target
Group Company to take any steps which would restrict or
impair the current or prospective business activities of
the Buyer or any Target Group Company or materially
prejudice the Buyer or any Target Group Company.
(d) For the purposes of this Clause 13.10(d), a "TAX CLAIM" is any
claim made against the Buyer or any Target Group Company by a
third party which will result in claim under the Tax Deed
(after taking into account the limitations contained in the
Tax Deed).
For the purposes of Clause 13.10(c) and this Clause 13.10(d)
the parties agree that, should the Warrantors propose to
conclude a Third Party Claim or a Tax Claim by making a
payment (the amount of which has been agreed by the relevant
third party or determined by a court) directly to the relevant
third party then the Buyer shall not object to that payment
being made directly to such third party provided that:
(A) there is no net negative financial effect on the
Buyer; and
(B) the Warrantors obtain an acknowledgement from the
third party that such payment is in full and final
settlement of the relevant Third Party Claim or
Tax Claim so as to permit (pursuant to the
relevant generally accepted accounting principles)
the reversal of any accrual in respect of such
Third Party Claim or Tax Claim in the accounts of
any Target Group Company.
In such circumstances, then:
(I) no accrual shall be made in the Earn-Out Accounts
in respect of the matter giving rise to such Third
Party Claim or Tax Claim;
(II) where the Earn-Out Accounts contain an accrual,
such accrual shall be reversed or there shall be
deemed to be included therein a receivable equal
to the accrual; and
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(III) the Seller shall be entitled to payment of
Earn-Out Consideration by reference to Earn-Out
Accounts without such accrual. If a payment has
already been made by reference to Earn-Out
Accounts containing such accrual, the relevant
balancing payment will be made by the Sellers
within ten (10) Business Days of receipt of such
recovery.
14. RETENTION
14.1 Subject to Clause 14.5, if at the time that the Earn-Out
Consideration becomes due and payable to the Seller under Clause 4,
or any other amount is due and payable to the Seller or the
Warrantors from the Buyer (and for this purpose rent due and payable
to the Seller from LCL pursuant to the Lease shall be treated as an
amount due and payable to the Seller from the Buyer) or the Escrow
Fund at any time ("BUYER PAYMENTS"), notice of a claim (the "CLAIM")
has been given to the Warrantors under the Warranties in this
Agreement or under the Tax Deed or any other amount is owed by the
Seller or the Warrantors to the Buyer, the Buyer shall be entitled
to serve notice on the Seller or the Warrantors (the "RETENTION
NOTICE") which notice shall give details of the amount claimed by
the Buyer in the Claim or of its intention to retain the amount
specified in the Retention Notice from the Earn-Out Consideration or
the Buyer Payments. The amount specified to be retained (the
"RETAINED AMOUNT") shall be an amount equal to the amount of the
Claim specified in the Retention Notice and shall be dealt with in
accordance with Clause 14.2.
14.2 The Retained Amount shall be placed in a bank deposit account to be
established in a bank nominated by the Buyer and in the joint names
of the Buyer's Solicitors and the Seller's Solicitors (collectively
the "JOINT ACCOUNT HOLDERS"). The Joint Account Holders are hereby
irrevocably authorised and instructed to deal with the Retained
Amount in accordance with the remaining provisions of this Clause
14.
14.3 The parties agree that if legal proceedings have not been instituted
against the Seller or the Warrantors as the case may be in respect
of the Claim before the service of the Retention Notice and the
Claim is not settled or agreed between the parties within thirty
(30) Business Days of the service of the Retention Notice, the
Buyer, the Warrantors and the Seller shall procure that the Claim is
referred for arbitration to an arbitrator agreed between the parties
or, in default of agreement, within ten (10) Business Days of one
party suggesting the name of an arbitrator to the other, to an
arbitrator nominated by the Chairman for the time being of the Bar
Council of Ireland on the written application of either party. The
arbitrator shall be a Senior Counsel specialising in Chancery Law,
of not less than seven years experience as a Senior Counsel. The
arbitration shall be conducted in accordance with the provisions of
the Arbitration Acts, 1954 to 1998.
44
14.4 Upon the determination or settlement of the Claim, the Joint Account
Holders shall pay the Retention Amount in whole or in part to the
person who it is determined or agreed is entitled thereto, together
with interest accrued thereon in the bank deposit account referred
to in Clause 14.2.
14.5 The decision whether to serve a Retention Notice pursuant to this
Clause 14 or to make a claim for reimbursement from the Escrow Fund
shall be at the sole discretion of the Buyer, provided that the
Buyer shall not be entitled to recover twice in respect of the same
Claim.
15. WARRANTIES OF THE BUYER AND THE PARENT
In consideration for the Seller entering into this Agreement, each of the
Buyer and the Parent warrants to the Seller as follows:
15.1 That it is duly incorporated and validly existing under the law of
its country of incorporation;
15.2 That it has full corporate power and authority to enter into this
Agreement, the documents in the Agreed Form and the Disclosure
Letter and Completion Disclosure Letter (collectively the
"TRANSACTION DOCUMENTS") and to complete the transactions
contemplated thereby (the "TRANSACTIONS"). The execution and
delivery of the Transaction Documents by the Buyer or the Parent (as
the case may be) and its completion of the Transactions contemplated
therein does not conflict with:
(a) Any judgment or court order by which the Buyer or the Parent
is bound; or
(b) Any provision of the constitutional documents of the Buyer or
the Parent.
16. USE OF INTELLECTUAL PROPERTY RIGHTS / INFRINGEMENT CLAIMS
16.1 The Seller and the Warrantors shall not, and shall procure that no
company controlled by them, will, either alone or jointly, with,
through or as manager, adviser, consultant or agent for any person,
directly or indirectly use in connection with any business which
competes, directly or indirectly, with any part or all of the
Business, any of the Target Group Know-How, Intellectual Property
Rights, in particular a name including the Name, OfficeLink or
Sigma, or use anything which is intended or is likely to be confused
with such names or any of the Intellectual Property Rights or Target
Group Know-How.
16.2 In the event that any time prior to the third anniversary of the
Completion Date (the "THIRD ANNIVERSARY"), any third party makes a
claim or suit or threatens any claim or suit (hereinafter referred
to as the "DATE OF CLAIM") in respect of an alleged infringement of
its intellectual property rights arising out of the processes,
methods, products or services used in the manufacture of the
45
products supplied by a Target Group Company prior to the Date of
Claim (an "INFRINGEMENT CLAIM"), then subject to:
(a) the Infringement Claim not being based on a matter fairly
disclosed in the Disclosure Letter or the Completion
Disclosure Letter;
(b) the Infringement Claim not being the subject of a claim for
breach of Warranty; and
(c) the Buyer having retained or recovered monies equal to the
full amount of the Infringement Claim pursuant to Clause 14
(Retention) or the Escrow Agreement,
the Buyer shall procure that it and/or each Target Group Company
shall:
(i) not make any admission of liability, agreement,
settlement or compromise or otherwise take any action
without the prior written consent of a majority of the
Warrantors (such consent not to be unreasonably withheld
or delayed);
(ii) consult in good faith with the Warrantors to determine
who shall be best placed, having regard to the nature of
the Infringement Claim, the best interests of the
Business and any prospective business activities of the
Target Group, and the achievement by the Warrantors of
the payment of Earn-Out Consideration (to the extent
relevant at the Date of Claim), to defend such
Infringement Claim.
Once a party is chosen to defend an Infringement Claim, it
shall take all reasonable steps as the other party may
reasonably request in a proper and timely fashion to avoid,
resist, appeal, compromise, defend, mitigate or otherwise deal
with the Infringement Claim.
16.3 Where the defence of an Infringement Claim has been delegated to a
party:
(a) that party shall keep the other party fully and promptly
informed of any matters relevant to such defence and shall
take account of all reasonable requirements of the other party
in relation to such defence; and
(b) that party shall not make any settlement or compromise of the
Infringement Claim or agree to any matter in the conduct of
such defence which may affect the amount of liability in
connection with such Infringement Claim, without the prior
consent of the other party, which consent shall not be
unreasonably withheld or delayed.
16.4 For the purposes of Clause 16.3, the following provisions shall
apply:
46
(a) Where the Warrantors have conduct of the defence of an
Infringement Claim, the Warrantors shall indemnify and secure
the Buyer and any Target Group Company to its reasonable
satisfaction in respect of all costs, charges and expenses
reasonably and properly incurred by the Buyer or any Target
Group Company in connection with such Infringement Claim
provided that the amount recoverable by the Buyer pursuant to
such indemnification or security shall not exceed the amount
of the Buyer Payments due and payable after the date on which
the indemnity or security is called in. In the event that the
Infringement Claim is not settled or compromised before the
Third Anniversary, the provisions of Clause 16.7 shall apply.
(b) Where the Buyer has conduct of the defence of an Infringement
Claim, it shall, unless the prior written consent of a
majority of the Warrantors is given or a majority of the
Warrantors specifically request otherwise in writing (in which
case the provisions of subparagraph (ii) below shall apply):
(i) where the Infringement Claim is brought within the
jurisdiction of the courts of the United States, use its
in-house counsel (the "IN-HOUSE COUNSEL") to conduct
such defence insofar as the In-House Counsel is
competent on the matter of the Infringement Claim and is
legally capable to defend the Infringement Claim;
(ii) where the Infringement Claim is brought outside the
jurisdiction of the courts of the United States, or
where the Warrantors specifically request that In-House
Counsel not be used, or where In-House Counsel is not
competent on the matter of the Infringement Claim or is
not legally capable to defend the Infringement Claim,
only engage external lawyers ("EXTERNAL LAWYERS") after
agreement is reached with a majority of the Warrantors
regarding same. In such circumstances each party agrees
to act in good faith and in a reasonable manner in
agreeing to the appointment of such External Lawyers.
16.5 For the purposes of Clause 16.4(b), the Buyer, on the six (6) month
anniversary of the Date of Claim and on each subsequent six (6)
month anniversary until the Third Anniversary, shall notify the
Warrantors of the "Buyer's Costs" (insofar as practicable giving a
detailed breakdown of same) incurred in the six (6) months since the
Date of Claim (a "NOTIFICATION") or the date of the previous
Notification in defending the Infringement Claim. For the purposes
of this Clause 16.5, the "BUYER'S COSTS" shall mean:
(a) any court costs incurred in the relevant six (6) month period,
being costs directly associated with any applications required
to be made to
47
court in connection with the Infringement Claim during the
relevant six (6) month period, but excluding In-House and
External Counsel fees;
(b) where the Infringement Claim is settled or compromised or
finally determined by a court of competent jurisdiction within
the relevant six (6) month period, awarded or negotiated
damages (but which shall for the purposes of Clauses 16.2 to
16.7 (inclusive) in either case be limited to such portion of
those awarded or negotiated damages as consists of damages
suffered in respect of direct losses incurred by the claimant
up to the Date of Claim only) or awarded or negotiated
royalties representing royalties (which for the avoidance of
doubt shall be limited to royalties payable on the relevant
products of the Target Group sold prior to the Date of Claim);
and
(c) in the case of External Counsel, their reasonable legal fees
but no other costs.
If the Warrantors do not dispute the amount of the Buyer's Costs
within fifteen (15) Business Days of the date of the Notification,
the Warrantors shall be deemed to have accepted the amount of the
Buyer's Costs set out in the Notification. In the event that the
Warrantors dispute the amount of the Buyer's Costs, they shall
notify the Buyer in writing within the said fifteen (15) Business
Days. In the event that the Buyer and the Seller cannot agree on an
amount in respect of the Buyer's Costs within a further ten (10)
Business Days from the date of the Warrantors' response, the matter
shall be referred to arbitration on the application of either party.
In the event that the matter is referred to arbitration, the
provisions of Clause 9.8(b) to 9.8(f) (inclusive) shall apply
mutatis mutandis to such arbitration.
16.6 Where the Buyer's Costs have been agreed or are deemed to be
accepted by the Warrantors or are determined by arbitration ("AGREED
BUYER'S COSTS"), the Buyer shall be entitled to withhold from any
Buyer Payments due and payable to the Seller after the date on which
such agreement is reached or deemed to be accepted or determined by
arbitration, an amount equal to the Agreed Buyer's Costs and for the
avoidance of doubt any Buyer Payments falling due for payment prior
to the date on which the Buyer's Costs have been agreed or deemed to
be accepted or are determined by arbitration, shall be paid without
any withholding pursuant to this Clause 16.6.
16.7 If the Infringement Claim has not been settled or compromised before
the Third Anniversary, the following provisions shall apply:
(a) Where the Warrantors have conduct of the defence of the
Infringement Claim pursuant to Clause 16.4(a), the Buyer shall
assume full responsibility for the further conduct of the
defence of the Infringement Claim on the Third Anniversary,
and shall procure the release of the Warrantors from any
indemnity or security provided pursuant to Clause 16.4(a),
subject to the discharge by the Warrantors
48
of any outstanding costs reasonably and properly incurred by
the Buyer pursuant to Clause 16.4(a).
(b) As and from the Third Anniversary, but subject to Clause
16.7(e) below, the Warrantors shall have no further liability
howsoever arising in respect of any Infringement Claim, and
accordingly the Buyer shall indemnify and keep the Warrantors
indemnified against any and all loss, damages, claims and
expenses reasonably and properly incurred which the Warrantors
may incur in respect of any Infringement Claim.
(c) On the Third Anniversary or as soon as reasonably practicable
thereafter and in any event within twenty (20) Business Days
of the Third Anniversary, the Buyer and the Warrantors shall
seek to determine the level of gross sales of the product(s)
which is/are the subject of any Infringement Claims (the
"PRODUCT") in the jurisdiction(s) in which the breach which is
the subject of the Infringement Claims has allegedly occurred
(the "RELEVANT JURISDICTION") during the twelve (12) months
prior to the Date of Claim (the "RELEVANT PERIOD") (the "GROSS
SALES"). The value of the Gross Sales shall be extracted from
the audited accounts and all relevant working papers for the
Relevant Period. In the event that the Buyer and the
Warrantors cannot agree the amount of Gross Sales within said
twenty (20) Business Days, the matter shall be referred to the
Target Group's auditors, whose decision shall be binding save
in the case of manifest error. For the purposes of allowing
the parties or the auditors, as the case may be, to determine
the Gross Sales, the Buyer and the Warrantors undertake to
each other to procure (in so far as is within their respective
powers of procurement) that all relevant information is shared
with the auditors to allow the level of Gross Sales to be
properly determined.
(d) Where the Gross Sales have been agreed or determined by the
auditors, they shall then constitute the "AGREED GROSS Sales".
An amount equal to two per cent (2%) of the Agreed Gross Sales
("GROSS SALES DEDUCTION"), being a rate of royalty fee which
might be negotiated as part of any settlement or compromise of
or decision on any Infringement Claim ("ROYALTY RATE"), shall
be retained in the Escrow Fund (notwithstanding any provisions
in the Escrow Agreement relating to the termination of the
Escrow Fund on the Third Anniversary) and dealt with in
accordance with the remainder of this Clause 16.7.
(e) Subject to Clause 16.7(f), if all Infringement Claims have
been ultimately settled or compromised or determined by a
court or other competent body, then if such settlement,
compromise or determination included an amount of royalty
payments based on a royalty rate lower than the Royalty Rate
(the "ACTUAL ROYALTY RATE"), the Buyer shall refund to the
Warrantors within five (5) Business Days of the
49
settlement, compromise or determination of the last such
Infringement Claim an amount equal to:
A - (B x C) in respect of each Infringement Claim pursuant to
which a payment based on an Actual Royalty Rate was made
Less any licence fees, third party claims or third party costs
or damages paid by the Buyer pursuant to the settlement,
compromise or determination of any Infringement Claim
Where:
A = Gross Sales Deduction
B = Agreed Gross Sales
C = Actual Royalty Rate
For the avoidance of doubt:
(i) if the Actual Royalty Rate is greater than two per cent
(2%), the Buyer shall be solely liable in respect of all
amounts payable in respect of the Infringement Claim in
excess of the amount of the Gross Sales Deduction;
(ii) the aggregate liability of the Buyer to make any refund
to the Warrantors pursuant to this Clause 16.7(e) shall
be limited to the amount of the Gross Sales Deduction,
and if the Gross Sales Deduction is paid out by the
Buyer pursuant to the settlement, compromise or
determination of an Infringement Claim in accordance
with the terms of this Clause 16, then the Buyer shall
have no liability to make any refund to the Warrantors
pursuant to this Clause 16.7(e); and
(iii) if no royalty payments are required to be paid to the
claimant as part of such settlement, compromise or
determination, then the Buyer shall pay to the
Warrantors within five (5) Business Days of such
settlement, compromise or determination an amount equal
to the Gross Sales Deduction less any licence fees,
third party claims or third party costs or damages paid
by the Buyer pursuant to the settlement, compromise or
determination of any Infringement Claim.
(f) On the eighth anniversary of Completion (the "EIGHTH
ANNIVERSARY"), notwithstanding that any remaining Infringement
Claims have not been settled, compromised or determined by a
court or other competent body, the Buyer shall refund to the
Warrantors within five (5) Business Days of the Eighth
Anniversary an amount equal to the Gross Sales Deduction less
any costs or expenses of the Buyer incurred, or amounts
50
owing from the Warrantors to the Buyer, pursuant to the
provisions of Clauses 16.2 to 16.7 (inclusive).
17. FURTHER UNDERTAKINGS BY SELLER AND WARRANTORS
17.1 The Seller and the Warrantors shall not and shall procure that no
body corporate controlled by them (or which is currently controlled
by them but ceases to be controlled by them during the currency of
the restrictions in this Clause 17, or which comes under the control
of any or all of them during the currency of the restrictions in
this Clause 17) will, either alone or jointly with, through or as
manager, adviser, consultant or agent for any person, directly or
indirectly:
(a) for a period of two (2) years from the Completion Date carry
on, or be engaged, concerned or interested in, or assist, any
business competing, directly or indirectly, with any part or
all of the Business in the Territory.
(b) for a period of two (2) years from the Completion Date in
competition with any part or all of the Business either seek
to procure orders from, or do business with, or procure
directly or indirectly any other person to seek to procure
orders from or do business with, any person who has been a
customer of any Target Group Company in any part or all of the
Business at any time during the previous twelve (12) months
period;
(c) for a period of two (2) years from the Completion Date engage,
employ, solicit, or contact with a view to the engagement or
employment by any person, any employee, officer or manager of
any Target Group Company;
(d) do or say anything which is harmful to the reputation of any
Target Group Company or which may lead any person to cease to
deal with any Target Group Company in connection with any part
or all of the Business on substantially equivalent terms to
those previously offered or at all;
(e) for a period of two (2) years from the Completion Date seek to
contract with or engage, in such a way as to adversely affect
the business of any Target Group Company as carried on at the
date of this Agreement, any person or entity who has been
contracted with or engaged to manufacture, assemble, supply or
deliver products, goods, materials or services to any Target
Group Company at any time during the previous twelve (12)
months period;
with the intent that each of the foregoing provisions of this Clause
17.1 shall constitute an entirely separate and independent
restriction on the Seller and each of the Warrantors.
51
17.2 It is agreed between the parties that, whilst the restrictions set
out in Clause 17.1 are considered fair and reasonable, if it should
be found that any of the restrictions be void or unenforceable as
going beyond what is fair and reasonable in all the circumstances
and if by deleting part of the wording or substituting a shorter
period of time or different geographical limit or a more restricted
range of activities for any of the periods of time, geographical
limits or ranges of activities set out in Clause 17.1 it would not
be void or unenforceable then there shall be substituted such next
less extensive period or limit or activity or such deletions shall
be made as shall render Clause 17.1 valid and enforceable.
18. INDEMNITIES
18.1 The Warrantors hereby agree to indemnify and hold harmless and keep
the Buyer indemnified for a period of four (4) years and nine (9)
months from the Completion Date against all costs, claims, actions,
proceedings, demands, losses, awards, penalties, fines, liabilities
(including without limitation, any liability to Taxation) and
expenses (including, without limitation, reasonable legal and other
professional fees) which the Buyer or any Target Group Company may
incur in relation to or arising out of or in connection with the
Pre-Completion Reorganisation or any repayment of the Inter-Company
Indebtedness.
18.2 The Warrantors hereby agree to indemnify and hold harmless and keep
the Buyer indemnified for a period of three (3) years from the
Completion Date against all costs, claims, actions, proceedings,
demands, losses, awards, penalties, fines, liabilities (including
without limitation, any liability to Taxation) and expenses
(including, without limitation, reasonable legal and other
professional fees) which the Buyer or any Target Group Company may
incur in relation to or arising out of or in connection with the
employment of Xxxx Xxxxxx by the Target Group prior to Completion
including, but not limited to, any claim in relation to commission
payments and/or any claim in respect of performance related matters.
18.3 The Warrantors hereby agree to indemnify and hold harmless and keep
the Buyer indemnified for a period of three (3) years from the
Completion Date against all costs, claims, actions, proceedings,
demands, losses, awards, penalties, fines, liabilities (including
without limitation, any liability to Taxation) and expenses
(including, without limitation, reasonable legal and other
professional fees) which the Buyer or any Target Group Company may
incur in relation to or arising out of or in connection with any
redundancies implemented by the Seller or any Target Group Company
prior to Completion.
18.4 The Warrantors hereby agree to indemnify and hold harmless and keep
the Buyer indemnified for a period of three (3) years from the
Completion Date against all costs, claims, actions, proceedings,
demands, losses, awards, penalties, fines, liabilities (including
without limitation, any liability to Taxation) and expenses
(including, without limitation, reasonable legal and
52
other professional fees) which the Buyer or any Target Group Company
may incur in relation to or arising out of or in connection with the
claims made by Xxxxx Xxxxxxxxx, Xxxxxxxxx Xxxxx and Xxxx Xxxxxx
against any Target Group Company prior to Completion and which are
not recovered by the Buyer or any Target Group Company from the
pre-Completion insurer of the Target Group Companies.
19. PENSIONS
19.1 For the purposes of this Clause only, "DEFINED BENEFIT SCHEME" means
a pension scheme under which the amount of some or all of the
retirement benefits payable to or in respect of a member of the
scheme is calculated in accordance with a pre-determined formula
which takes account of the service of the member to retirement,
death or withdrawal and the remuneration of the member averaged over
his service at or close to his retirement, death or withdrawal
within the meaning of Section 2 of the Pensions Act and includes in
particular the Discontinued Schemes as defined in paragraph 16 of
Schedule 4 hereto.
19.2 The Warrantors and the Seller hereby agree to indemnify and hold
harmless and keep the Buyer indemnified for a period of five (5)
years commencing on 20th March, 2003 against all costs, claims,
debts, charges, actions, proceedings, demands, losses, awards,
penalties, fines, liabilities (including without limitation, any
liability to taxation) and expenses (including, without limitation,
legal and other professional fees, and fines under the provisions of
the Pensions Acts 1990-2004 and expenses relating to compliance with
a direction of the Pensions Ombudsman) which either the Buyer or
Seller Group may incur suffer or have brought against it, (a
"PENSION CLAIM") in relation to any such Defined Benefit Scheme or
its administration or operation including but not limited to any
Pension Claim arising from or related directly or indirectly to:
(a) the Seller Group not paying the required amount of employer
contributions in accordance with the Defined Benefit Scheme
trust deed and rules;
(b) any trustee failing to collect the required amount of employer
contributions due to any such Defined Benefit Scheme in
accordance with the Defined Benefit Scheme trust deed and
rules and/or arrange the timely investment of employer
contributions;
(c) the administration, implementation, trusteeship, management or
supervision of the winding up, of any Defined Benefit Scheme;
(d) the transfer of members or their entitlements to another
scheme; or
(e) any breach by the Seller Group whether as a trustee or on its
own behalf, or by any of the trustees (current or former) of a
Defined Benefit Scheme, of the Pensions Acts 1990-2004 and any
regulations
53
made thereunder and all other laws or regulations applicable
to an Occupational Pension Scheme as defined in the Pensions
Acts 1990 - 2004 or of any obligation to any current or former
employee of Seller Group (or the spouse, dependant or personal
representative of such individual) under any such Defined
Benefit Scheme prior to the Completion Date.
19.3 The Warrantors and the Seller further agree to indemnify and hold
harmless and keep the Buyer indemnified for a period of five (5)
years commencing on 20th March, 2003 against any obligation which
may arise for the Buyer to indemnify each and any and every trustee
and former trustee of any Defined Benefit Scheme.
20. GUARANTEE
20.1 THE WARRANTORS' GUARANTEE
(a) In consideration of the Buyer entering into this Agreement,
the Warrantors hereby unconditionally guarantee to the Buyer
the due and punctual performance and observance by the Seller
of all its obligations hereunder and the punctual discharge by
the Seller of its liabilities to the Buyer contained in or
arising under this Agreement (the "WARRANTORS' GUARANTEE").
(b) The Warrantors' Guarantee shall be a continuing guarantee and
shall continue in full force and effect until all liabilities
or purported liabilities of the Seller arising hereunder, and
all monies owing or payable or purported to be owing or
payable by the Seller under this Agreement (as amended by
agreement between the parties hereto from time to time) or
arising from any termination of this Agreement shall have been
paid, discharged or satisfied in full and notwithstanding any
insolvency of the Seller or any change in the status of the
Seller. For the avoidance of doubt, the obligations of the
Warrantors pursuant to this Clause 20.1 shall not be affected
by the liquidation of the Seller (whether by its members or
creditors) or the Seller being struck off the register of
companies maintained by the Registrar of Companies.
(c) The Warrantors shall not be exonerated or discharged nor shall
their liability be affected by any forbearance, whether as to
payment, time, performance or otherwise howsoever or by any
other indulgence being given to the Seller or by the variation
of the terms of this Agreement or by any act, thing, omission
or means whatsoever which, but for this provision, might
operate to exonerate or discharge the Warrantors from their
obligations under the Warrantors' Guarantee.
20.2 THE PARENT'S GUARANTEE
(a) In consideration of the Seller entering into this Agreement,
the Parent hereby unconditionally guarantees to the Seller the
due and punctual
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performance by the Buyer of all of its payment obligations
hereunder (the "PARENT'S GUARANTEE").
(b) The Parent's Guarantee shall be a continuing guarantee and
shall continue in full force and effect until all monies owing
or payable or purported to be owing or payable by the Buyer
under this Agreement (as amended by agreement between the
parties hereto from time to time) or arising from any
termination of this Agreement shall have been paid, discharged
or satisfied in full and notwithstanding any insolvency of the
Buyer or any change in the status of the Buyer.
(c) The Parent shall not be exonerated nor discharged nor shall
its liability be affected by any forbearance, whether as to
payment, time, performance or otherwise howsoever or by any
other indulgence being given to the Buyer or by the variation
of the terms of this Agreement or by any act, thing, omission
or means whatsoever which, but for this provision, might
operate to exonerate or discharge the Parent from its
obligations under the Parent's Guarantee.
21. ASSIGNMENT
21.1 The Buyer may:
(a) at any time assign all or any part of the benefit of, or its
rights or benefits under, this Agreement to any member of the
Buyer Group; and
(b) at any time after the end of the Earn-Out Period, assign all
or any part of the benefit of, or its rights or benefits
under, this Agreement to any person.
21.2 The Seller and the Warrantors shall not assign all or any part of
the benefit of, or their rights or benefits under, this Agreement
without the prior written consent of the Buyer, other than as
permitted by Clause 21.4.
21.3 The Buyer may disclose to a proposed assignee information in its
possession relating to the provisions of this Agreement and the
other party which it is necessary to disclose for the purposes of
the proposed assignment, notwithstanding the provisions of Clause 23
(Confidentiality).
21.4 In consideration of the Warrantors guaranteeing the obligations of
the Seller to the Buyer pursuant to Clause 20.1(a) hereof, the Buyer
irrevocably consents, in the event of a members' voluntary
liquidation of the Seller following the Completion Date and as part
of such liquidation process, to any distribution, assignment,
novation or disposal (howsoever arising) of all the Seller's rights,
title, obligations and interests under this Agreement generally to
the Warrantors or to a Seller Group Company. The Buyer shall, at the
request of the Warrantors but subject to it being indemnified in
respect of its reasonable costs, execute any documentation in a form
reasonably satisfactory to the
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Buyer that may be reasonably required of it in order to give effect
to such consent.
22. ANNOUNCEMENTS
22.1 No announcement concerning the transaction contemplated by this
Agreement or any ancillary matter shall be made by either party
without the prior written consent of the other, such consent not to
be unreasonably withheld or delayed. This restriction does not apply
in the circumstances described in Clause 22.2.
22.2 Following Completion, either party may, after notice to the other
party, make an announcement concerning the transaction contemplated
by this Agreement or any ancillary matter if required by:
(a) law; or
(b) any securities exchange or regulatory or governmental body to
which that party is subject, wherever situated, including
(amongst other bodies) the Irish Stock Exchange, the Irish
Takeover Panel or the Irish Competition Authority, whether or
not the requirement has the force of law.
23. CONFIDENTIALITY
23.1 Each party shall treat as confidential all information obtained as a
result of entering into or performing this Agreement which relates
to:
(a) the provisions of this Agreement;
(b) the negotiations relating to this Agreement;
(c) the subject matter of this Agreement; or
(d) the other party.
This Clause shall not apply in the circumstances described in Clause
23.2.
23.2 Either party may disclose information which would otherwise be
confidential:
(a) if and to the extent required by law or for the purpose of any
judicial inquiry or proceedings;
(b) if and to the extent required by existing contractual
obligations;
(c) if and to the extent required by any securities exchange or
regulatory or governmental body to which that party is
subject, wherever situated, including (amongst other bodies)
the Irish Stock Exchange or the Panel, whether or not the
requirement for information has the force of law;
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(d) if and to the extent required to vest the full benefit of this
Agreement in that party;
(e) to its professional advisers, auditors and bankers;
(f) if and to the extent the other party has given prior written
consent to the disclosure; or
(g) if and to the extent the information has come into the public
domain through no fault of that party.
23.3 Any information to be disclosed pursuant to Clauses 23.2(a) to
23.2(g) shall be disclosed only after notice to the other party.
23.4 Notwithstanding the generality of the foregoing provisions of this
Clause 23, the Seller and the Warrantors shall not and shall procure
that no body corporate controlled by them shall, at any time after
the date of this Agreement, make use of or disclose for their own
benefit or for or on behalf of or to any other person any
Confidential Information which may be within or may come to their
knowledge.
23.5 The Seller and the Warrantors shall and shall procure that any body
corporate controlled by them, will use all reasonable endeavours to
prevent the disclosure of any Confidential Information.
23.6 Clause 23.4 shall not apply to:
(a) disclosure of any Confidential Information to officers or
employees of the Buyer or any Target Group Company whose
province it is to know about the Confidential Information;
(b) disclosure of any Confidential Information required by law or
by a recognised stock exchange;
(c) disclosure of any Confidential Information to any professional
adviser, auditor or banker for the purpose of advising the
Seller or the Warrantors and on terms that this Clause 23
shall apply to any use or disclosure by the professional
adviser, auditor or banker;
(d) any Confidential Information which comes into the public
domain otherwise than by breach of this Clause 23 by the
Seller or the Warrantors.
24. COSTS
Except as otherwise provided in this Agreement, each party shall pay its
own costs and expenses in relation to the negotiation, preparation,
execution and implementation of this Agreement and all other agreements
forming part of the sale and purchase of the Shares contemplated by this
Agreement. In addition, the Warrantors shall pay all the costs and
expenses of the Warrantors and/or the Seller Group and/or the Target
57
Group Companies arising out of or in connection with the Pre-Completion
Reorganisation.
25. FURTHER ASSURANCE
25.1 Each of the Warrantors and the Seller shall, from time to time on
request and at his own expense, do or procure the doing of all acts
and/or the execution of all documents in a form satisfactory to the
Buyer which the Buyer may consider necessary for giving full effect
to this Agreement and securing to the Buyer the full benefit of the
rights, powers and remedies conferred upon the Buyer in or by this
Agreement.
25.2 Each of the Warrantors and the Seller irrevocably appoints the Buyer
as his/its attorney to sign, execute and deliver on his/its behalf
all deeds and documents and to do all acts and things necessary for
giving full effect to this Agreement and securing to the full
benefit of the rights, powers and remedies conferred upon the Buyer
in or by this Agreement.
26. REMEDIES AND WAIVERS
26.1 No delay or omission by any party to this Agreement in exercising
any right, power or remedy provided by law or under this Agreement
shall:
(a) affect that right, power or remedy; or
(b) operate as a waiver of it.
26.2 The exercise or partial exercise of any right, power or remedy
provided by law or under this Agreement shall not preclude any other
or further exercise of it or the exercise of any other right, power
or remedy.
26.3 The rights, powers and remedies provided in this Agreement are
cumulative and not exclusive of any rights, powers and remedies
provided by law.
27. SEVERABILITY
If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction,
that shall not affect or impair:
27.1 the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
27.2 the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this Agreement.
28. JOINT LIABILITY
28.1 The obligations of the Warrantors under this Agreement are joint and
are subject to the provisions of Clause 13.1(c).
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28.2 If any liability of one or some but not all of the Warrantors is, or
becomes, illegal, invalid or unenforceable in any respect, that
shall not affect or impair the liabilities of the other Warrantors
under this Agreement.
28.3 Subject to Clause 13.1(c), where any liability of one or some but
not all of the Warrantors arising out of an obligation which is
joint is released (in whole or in party) whether by deed, by accord
and satisfaction or otherwise, the other Warrantors shall continue
to be jointly liable on that obligation.
28.4 Any notice given by the Buyer or the Parent to any one or more of
the Warrantors shall be deemed to be a notice given to all the
Warrantors, and any notice received by the Buyer or the Parent from
any of the Warrantors shall be deemed to be a notice given jointly
by all of the Warrantors.
28.5 Wherever in this Agreement provision is made for the payment by the
Buyer to the Warrantors payment by the Buyer to the Seller's
Solicitors or any one of the Warrantors shall constitute discharge
by the Buyer of its obligation to make such payment and the Buyer
shall not be obliged to see to the application of the monies paid as
between the relevant Warrantors.
29. GENERAL
29.1 No variation of this Agreement shall be valid unless it is in
writing and signed by or on behalf of each of the parties.
29.2 This Agreement shall enure to the benefit of and be binding upon the
personal representatives and estate or successors and assigns (as
the case may be) of the parties.
30. NOTICES
30.1 Subject to Clause 30.2, any notice or other communication under this
Agreement shall only be effective if it is in writing.
30.2 Communication by electronic mail shall not be effective under this
Agreement.
30.3 Any notice or other communication given or made under this Agreement
shall be addressed as provided in Clause 30.5 and, if so addressed,
shall, in the absence of earlier receipt, be deemed to have been
duly given or made as follows:
(a) if sent by personal delivery, on delivery at the address of
the relevant party;
(b) if sent by pre-paid post, two clear Business Days after the
date of posting;
(c) if sent by facsimile, on the Business Day after having been
transmitted.
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30.4 Any notice or other communication given or made, or deemed to have
been given or made, outside Working Hours will be deemed not to have
been given or made until the start of the next period of Working
Hours.
30.5 The relevant notice details are:
THE WARRANTORS: As set out in Schedule 1
THE BUYER: General Counsel
Inter-Tel Incorporated
0000 Xx. 00xx Xx.
Xxxxx
Xxxxxxx 00000
Facsimile Number: 000 000 0000
With a copy to: Chief Financial Officer
Inter-Tel Incorporated
0000 Xx. 00xx Xx.
Xxxxx
Xxxxxxx 00000
Facsimile Number: 000 000 0000
THE SELLER: The Company Secretary
Lake Holdings Limited
x/x XXXX, 0 Xxxxxx Xxxxx, Xxxxxx 0
THE PARENT: General Counsel
Inter-Tel Incorporated
0000 Xx. 00xx Xx.
Xxxxx
Xxxxxxx 00000
Facsimile Number: 000 000 0000
With a copy to: Chief Financial Officer
Inter-Tel Incorporated
0000 Xx. 00xx Xx.
Xxxxx
Xxxxxxx 00000
Facsimile Number: 000 000 0000
30.6 A party may notify the other parties of a change to its notice
details. That notification shall only be effective on:
(a) any effective date specified in the notification; or
(b) if no effective date is specified or the effective date
specified is less than five (5) clear Business Days after the
date when notice is received, the date falling five (5) clear
Business Days after the notification has been received.
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30.7 The provisions of this Clause shall not apply in relation to the
service of Service Documents (as defined in Clause 31.5).
31. GOVERNING LAW AND JURISDICTION
31.1 This Agreement is governed by, and shall be construed in accordance
with the laws of Ireland.
31.2 Subject to Clause 31.3, each of the parties to this Agreement
irrevocably agrees that the courts of Ireland are to have exclusive
jurisdiction to settle any dispute arising out of or in connection
with this Agreement and, for such purposes, irrevocably submits to
the exclusive jurisdiction of such courts. Any proceeding, suit or
action arising out of or in connection with this Agreement (the
"PROCEEDINGS") shall, subject to Clause 31.3, therefore be brought
in the courts of Ireland.
31.3 In the event that any of the Warrantors cease to reside in Ireland
or any significant assets belonging to any of the Warrantors are
transferred outside the jurisdiction of Ireland following
Completion, notwithstanding the provisions of Clause 31.2 the Buyer
shall be entitled to bring Proceedings in any jurisdiction(s) where
a Warrantor resides or any significant assets belonging to a
Warrantor are located at the date of issue of the Proceedings. The
taking of Proceedings in any one or more jurisdictions referred to
in Clause 31.2 or this Clause 31.3 shall not preclude the taking of
Proceedings in any of those jurisdictions (whether concurrently or
not) if and to the extent permitted by applicable law.
31.4 Each of the parties to this Agreement irrevocably waives any
objection to Proceedings in the courts referred to in Clauses 31.2
and 31.3 on the grounds of venue or on the grounds of forum non
conveniens.
31.5 "SERVICE DOCUMENT" means a writ, summons, order, judgment or other
document relating to or issued in connection with any Proceedings.
31.6 The Buyer and the Parent irrevocably appoint Xxxx Xxxxxxx of Xxxxxx
Xxx, Xxxxxxxxx Xxxxxx, Xxxxxxxxx Xxxxxxx, Xxxxxx 0 to be its agent
for the service of process in Ireland. The Buyer and the Parent
agree that any Service Document may be effectively served on them in
connection with Proceedings in Ireland by service on their agent.
31.7 Any Service Document shall be deemed to have been duly served if
marked for the attention of Xxxx Xxxxxxx, Xxxxxx Xxx at Xxxxxxxxx
Xxxxxx, Xxxxxxxxx Xxxxxxx, Xxxxxx 0 or such other address within
Ireland as may be notified and:
(a) left at the specified address; or
(b) sent to the specified address by pre-paid post.
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In the case of (a) the Service Document shall be deemed to have been
duly served when it is left. In the case of (b) the Service Document
shall be deemed to have been duly served three (3) clear Business
Days after the date of posting.
31.8 If the agent at any time ceases for any reason to act as such, the
Buyer and the Parent shall appoint a replacement agent having an
address for service in Ireland and shall notify the Seller of the
name and address of the replacement agent. Failing such appointment
and notification, the Seller shall be entitled by notice to the
Buyer and the Parent to appoint a replacement agent to act on the
Buyer's and the Parent's behalf. The provisions of this Clause
applying to service on an agent apply equally to service on a
replacement agent.
31.9 A copy of any Service Document served on an agent shall be sent by
post to the Buyer and/or the Parent (as the case may be).
32. ENTIRE AGREEMENT
32.1 For the purposes of this Clause, "PRE-CONTRACTUAL STATEMENT" means a
Draft agreement, undertaking, representation, warranty, promise,
assurance or arrangement of any nature whatsoever, whether or not in
writing, relating to this Agreement made or given by a party to this
Agreement or any other person at any time prior to the date of this
Agreement.
32.2 This Agreement and the Disclosure Letter together with, on the
Completion Date, the Completion Disclosure Letter constitute the
whole and only agreement between the parties relating to the sale
and purchase of the Shares as contemplated by this Agreement and,
save in respect of fraud, the parties hereto shall have no claim
other than a claim for breach of contract in respect of the
Warranties set out herein.
32.3 Except to the extent repeated in this Agreement, this Agreement
supersedes and extinguishes any Pre-contractual Statement.
32.4 Each party acknowledges that in entering into this Agreement it is
not relying upon any Pre-contractual Statement which is not set out
in this Agreement.
32.5 Subject to Clause 32.2, no party shall have any right of action
against any other party to this Agreement arising out of or in
connection with any Pre-contractual Statement (except in the case of
fraud) except to the extent repeated in this Agreement.
33. COUNTERPARTS
33.1 This Agreement may be executed in any number of counterparts, and by
the parties on separate counterparts, but shall not be effective
until each party has executed at least one counterpart.
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33.2 Each counterpart shall constitute an original of this Agreement, but
all the counterparts shall together constitute but one and the same
instrument.
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Signed, sealed and delivered by _______________________________
XXXXXXX XXXXXXXXXX
in the presence of:
Signature of witness: ______________________________
Name: ______________________________
Address: ______________________________
______________________________
Occupation: ______________________________
Signed, sealed and delivered by _______________________________
CAOIMHIN O'LAOI
in the presence of:
Signature of witness: ______________________________
Name: ______________________________
Address: ______________________________
______________________________
Occupation: ______________________________
Signed, sealed and delivered by _______________________________
XXXXXXX X'XXXXX
in the presence of:
Signature of witness: ______________________________
Name: ______________________________
Address: ______________________________
______________________________
Occupation: ______________________________
Signed, sealed and delivered by _______________________________
XXXXXXX XXXX
in the presence of:
Signature of witness: ______________________________
Name: ______________________________
Address: ______________________________
______________________________
Occupation: ______________________________
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Signed by _______________________________
for and on behalf of
INTER-TEL LAKE LIMITED
in the presence of:
Signature of witness: ______________________________
Name: ______________________________
Address: ______________________________
______________________________
Occupation: ______________________________
Signed by _______________________________
for and on behalf of
LAKE HOLDINGS LIMITED
in the presence of:
Signature of witness: ______________________________
Name: ______________________________
Address: ______________________________
______________________________
Occupation: ______________________________
Signed by _______________________________
for and on behalf of
INTER-TEL INC
in the presence of:
Signature of witness: ______________________________
Name: ______________________________
Address: ______________________________
______________________________
Occupation: ______________________________
65
