EXHIBIT 10.1
SHARE AND ASSET
TRANSFER AGREEMENT
This Share and Asset Transfer Agreement (together with all Annexes hereto, the
"Agreement") is made on 19 October 2001 by and between
(A) Micronet AB, org. no. 556494-3016, a company incorporated under Swedish
law, having its principal office at Soft Center, 372 25 RONNEBY, (the
"Vendor"), and
(B) CellPoint Systems AB, org. no.556551-6373, a company incorporated under
Swedish law, having its principal office at Xxxxxxxxxxxxxx 0, 000 00
XXXXX, (xxx "Purchaser").
RECITALS
WHEREAS
The Micronet Mobile Location Services AB, org. no. 556601-0707, a company
incorporated under Swedish law (the "Company"), having its principal office at
Soft Center, 372 25 RONNEBY has an issued share capital of one-hundred-thousand
(100,000) SEK into one-thousand (1,000) ordinary shares, each share with a
nominal value of 100 SEK per share.
WHEREAS
The Vendor owns forty-two (42) per cent of the shares of the Company;
WHEREAS
The Purchaser owns fifty-eight (58) per cent of the shares of the Company;
WHEREAS
The Vendor owns certain equipment presently used by the Company in its daily
business operations; (the "Assets")
WHEREAS
The Vendor has agreed to sell (i) its stake of forty-two (42) per cent of the
shares in the Company, as well as (ii) the Assets, and the Purchaser has agreed
to purchase the same on the terms and conditions set out in this Agreement;
NOW IT IS THEREFORE HEREBY AGREED AS FOLLOWS
1. DEFINITIONS AND INTERPRETATIONS
1.1 In this Agreement the following terms and expressions shall have the
meanings set forth below:
"Accounts" means the audited accounts for the fiscal year
ending 2001-06-30 and the unaudited accounts
for the period ending 2001-10-31which shall be
provided to Vendor no later than on 5 November
2001 as set out in section 5 below and which
shall form ANNEX 1.1.A;
"Agreement" means this agreement together with all Annexes
hereto;
"Assets" means the machinery and other equipment owned
by Micronet AB and used by the Company in its
business operations as further specified in
ANNEX 1.1.B to be transferred to Purchaser in
accordance with section 2 below;
"Balance Sheet Date" means 31 October 2001
"Company" means Micronet Mobile Location Services AB,
org. no. 556601-0707
"Completion" means the consummation and completion of the
sale and purchase of the Shares and Assets
contemplated by this Agreement in accordance
with the provisions of Section 4 hereof;
"Consideration" means the consideration referred to in Section
3 hereof;
"Intellectual
Property" means patents trade or business names, trade
marks, service marks, domain names, rights in
any designs (registered or unregistered),
copyrights, trade secrets, know how, rights in
computer software, lists of suppliers and
customers, confidential and proprietary
knowledge and information, data base rights
(including any registration or application for
registration of any of the foregoing) and all
rights under licences and consents in relation
to any of the foregoing and all rights or
forms of protection of a similar nature
(registered or unregistered) to any of the
foregoing or having equivalent effect anywhere
in the world;
"Parent Company" means CellPoint Inc., a corporation organized
under the laws of the State of Nevada, USA,
being the parent company of the Purchaser
"Parties" means the Vendor and the Purchaser;
"Purchaser" means CellPoint Systems AB, org. no.
556551-6373
"Shares" means the Vendor's forty-two per cent stake of
the shares in the Company;
"Tax and Taxes" means all taxes of whatever kind, including
without limitation, corporation tax, advance
corporation tax, income tax, capital gains
tax, value added tax, excise duties, customs
and other import duties, inheritance tax,
stamp duty, stamp duty reserve tax, national
insurance or social security contributions,
local authority council taxes and business
rates, foreign taxation and duties, and any
payments whatsoever which the Company may be
or become bound to make to any person as a
result of the operation of any enactment
relating to any taxes or duties and all
penalties charges and interest relating to any
of the foregoing or resulting from a failure
to comply with the provisions of any enactment
relating to taxation;
"Vendor" means Micronet AB, org. no. 556494-3016;
"Vendor' best
knowledge" means the actual knowledge of any of the
representatives of the Vendor, including also
what the named representatives should have
known after due and careful enquiries with any
relevant person(s) involved in the management
or business of the Company.
"Warranties" means the warranties and representations set
out in Section 6.
1.2 The headings of this Agreement are inserted for convenience only and
shall not affect the construction or interpretation of this
Agreement.
2. SALE AND PURCHASE
2.1 Subject to the terms of this Agreement the Vendor shall sell and
transfer the Shares and the Assets with full title guarantee to the
Purchaser and the Purchaser shall purchase and acquire the Shares
and the Assets from the Vendor.
2.2 The Shares and the Assets shall be sold free from all liens or
encumbrances and as regards the Shares together with (a) all accrued
benefits and rights attaching thereto including but not limited to
accumulated but not distributed profits and (b) all dividends or
distributions declared paid or made after the Balance Sheet Date.
3. CONSIDERATION
3.1 Subject to Sections 7 and 8 below, the Consideration for the Shares
and the Assets shall be
one-hundred-seven-thousand-one-hundred-forty-two (107,142)
restricted shares in the Parent Company as well as
fifty-three-thousand-five-hundred-seventy-one (53,571) warrants
calculated as follows. The parties agree that as of the date hereof,
such shares in the Parent Company presently corresponds to a total
value of SEK approximately one-million-five-hundred-thousand
(1,500,000), but there is no assurance of the future value of such
shares after the date hereof.
The Consideration has been calculated on the basis of a share price
of SEK fourteen (14) per share. The number of warrants forming part
of the Consideration has been calculated on the basis of 0.5
(one-half) Warrant per share. The Warrants exercise price shall be
USD 2.50 (two dollars fifty cents) per Warrant and may be exercised
directly and up to a maximum of twenty-four (24) months after
Completion.
Vendor acknowledges and agrees that the shares being issued
hereunder as part of the purchase price and upon exercise of the
warrants have not been registered under the United States Securities
Act of 1933 as amended, and accordingly, are "restricted
securities", and may not be resold or transferred except upon a
registration under such Act or an exemption therefrom. Parent
Company will use its best efforts to file a registration statement
for the shares included in the Consideration, including the shares
underlying the Warrants with the Securities Exchange Commission on
Form S-3 Registration Statement by 31 October 2001 provided that
this Agreement is duly executed by authorized representatives of
both parties no later than 26 October 2001. In the event that this
Agreement is so executed at a later time, the Parent Company will
use its best efforts to file such registration statement at the
earliest possible time thereafter as may be determined by the Parent
Company.
4. COMPLETION
4.1 DATE AND PLACE OF COMPLETION
Completion shall take place on at the offices of Advokatfirma Xxxxx
Xxxxxxx Horten, Xxxxxxxxxxxxxx 00, 000 00 XXXXXXXXX, Xxxxxx, on 1
November 2001, at 10.30 am ("Completion").
The delivery of the Shares to Purchaser shall occur as follows.
Subject to and simultaneous with Purchaser's settlement of its debt
to the Company pursuant to section 9.1 below, Vendor shall fulfill
its obligation pursuant to sub-section 4.2 (A)(1) below. The parties
shall jointly and in good faith agree on the date and procedure of
delivery of the Shares to Purchaser as well as final settlement of
Purchaser's debt as set out in section 9.1
4.2 VENDOR' OBLIGATION
Save for Vendor's obligations as set forth under (A) (1) in this
subsection 4.2, which obligation shall be fulfilled as set out in
section 4.1 second paragraph, on Completion the Vendor shall:
(A) deliver to the Purchaser:
(1) duly executed transfers of the Shares by the registered
holders thereof in favour of the Purchaser or its
nominees together with the relative share certificates;
(2) such waivers or consents as the Purchaser may require to
enable the Purchaser or its nominees to be registered as
holders of the Shares; and
(3) powers of attorney in an agreed form;
(B) deliver to the Purchaser as agent for the Company:
(1) all the statutory and other books (duly written up to
date) of the Company and its certificate of
incorporation, any certificates of incorporation on
change of name and common seal; and
(2) the title deeds to the Properties other than in respect
to those Properties which are disclosed in this
Agreement as being charged and the title deeds as being
held by the chargee;
(C) act so as to procure a board meeting of the Company to be held
at which there shall be:
(1) passed a resolution to register the transfer of the
Shares and to register, in the register of shareholders,
the Purchaser (or its nominees) as the holder(s) of the
Shares concerned;
(2) appointed as directors and/or secretary such persons as
the Purchaser may nominate;
(3) revoked all existing authorities to banks and new
authorities shall be given to such banks on such terms
as the Purchaser may direct; and
(4) changed the situation of the registered office and
(subject to the Companies Acts) the accounting reference
date, each as the Purchaser may direct;
(D) act so as to procure the discharge of all guarantees and like
obligations given by the Company in respect of the obligations
of any of the Company's staff or other person belonging to the
Company's management;
(E) procure that the Assets are duly delivered to the Company's
premises, no later than on Completion and release the Company
from any attaching obligations on the Assets;
4.3 On Completion the Vendor shall where applicable repay all
inter-company loans or other monies owing to the Company.
4.4 The Vendor acknowledges and agrees that:
(1) the Consideration has not been registered under the United
States Securities Act of 1933 as amended and including the rules and
regulations thereunder as in effect from time to time (the
Securities Act); and accordingly the Consideration is "restricted
securities";
(2) the certificates evidencing the Consideration shall bear a
legend to the effect that such shares are "restricted securities";
(3) the Consideration may not be resold except pursuant to a
registration statement filed with the United States Securities and
Exchange Commission under the Securities Act or pursuant to an
exemption from such registration; and
(4) the Vendor is acquiring the Consideration to be issued to it for
its own account and not with a view to the distribution thereof.
5. CONDITIONS PRECEDENT
5.1 The obligation of the Purchaser to complete the transactions
contemplated by this Agreement shall be subject to the following.
(I) the approval of the board of directors of the Parent Company;
and
(II) that the agreement is in full satisfaction and compliance with
the terms and conditions of the financing agreement entered into
between the Parent Company and Castle Creek Technology Partners LLC.
In the event that the conditions set out in (I) and / or (II) above
have not been fulfilled or are not satisfied, the Purchaser shall at
its own discretion and without any obligation to the Vendor be
entitled to withdraw from this Agreement.
5.2 The obligation of the Purchaser to complete the transactions
contemplated by this Agreement shall be moreover subject to the
following.
(A) that Annex 1.1 (A) is delivered to Purchaser no later than on 5
November 2001;
(B) that the Company's equity (Sw: "eget kapital") is not below an
amount of SEK 618.838;and
(C) that the profits and losses of the Company shown by the Accounts
are not below the forecasted profits and losses of the Company,
which for the period ending 31 October 2001 corresponds to SEK
249.502.
In the event that the equity and/or profits and losses of the
Company shown by the Accounts are below the forecasted profits and
loss of the Company by more than ten per cent (10%) the Purchaser
shall at its own discretion and without any obligation to the Vendor
be entitled to withdraw from this Agreement. In the event the
parties cannot agree on (i) whether there exists a deviation (to the
detriment of the Purchaser) between the Accounts and the forecasted
profits and losses of the Company, and/or (ii) whether the equity is
below the stipulated amount in (B) above, the parties hereby agree
that the Purchaser's interpretation shall prevail.
5.3 The Purchaser shall be entitled to waive the fulfillment of any of
the conditions set forth in this section 5 above without prejudice
to any right or remedy of the Purchaser in respect of the
representations and warranties set out in section 6 not being true
and correct.
5.4 .
6. WARRANTIES AND REPRESENTATIONS BY THE VENDOR
Prior to the date hereof, the Purchaser has not conducted an
accounting and business due diligence with respect to the Company
and relies therefor upon the warranties and representations provided
by the Vendor below.
In line with the aforesaid and what is further stated in this
Agreement, the Vendor warrants and represents to the Purchaser that
the following is true and correct as at the
date of this Agreement and Completion.
6.1 EXISTENCE AND CORPORATE AUTHORITY
The Company is duly organised and validly existing under the laws of
Sweden and has full corporate power and all necessary licences,
permits and authorisations to carry on its business as now conducted
and to own, lease and operate the assets and properties used in
connection therewith.
The Purchaser acknowledges however that no board members for the
Company have been registered with the Patent and Registrations
Office (PRV) as required by law and that PRV has indicated that in
the event that no application is submitted as regards the board, the
Company may be subject to liquidations proceedings, ANNEX 6.1.
6.2 SHARES
6.2.1 The Shares constitute forty-two (42) per cent of the entire issued
capital of the Company and are legally and validly issued and fully
paid.
6.2.2 There are no (i) debt instruments convertible into shares, (ii) debt
instruments with a right or option to subscribe for new shares,
(iii) participating debt instruments issued by the Company or (iv)
other agreements regarding liens, pledges, encumbrances, pre-emption
rights, purchase rights or other rights to shares or such
instruments as referred to above in the Company or to the Shares.
6.2.3 The Vendor lawfully owns and has good and marketable title to the
Shares. The Shares are free and clear of all encumbrances and there
exists no agreement to create any encumbrance over any such Shares.
6.3 RECORDS
6.3.1 Those copies of the memorandum and articles of association and
extracts from the relevant trade registers which are enclosed as
ANNEX 6.3, are true, accurate, up to date and complete and reflect
the present status of the Company.
6.3.2 No constitutional documentation of the Company required by
applicable law (such as, but not limited to, shareholders'
registers, memorandum and articles of association, minutes of the
board of directors' meetings and general meetings, permits and
licences) is missing, and no registrations or applications (and
applicable fees), relating to any constitutional documentation of
the Company are pending or outstanding.
6.4 ACCOUNTS
6.4.1 The Accounts have been prepared in accordance with law, generally
accepted accounting principles in Sweden and the books and records
of the Company and give a true and fair view of the financial
position and results of the operations of the Company as at the
Balance Sheet Date. For the avoidance of doubt the Vendor guarantees
that there shall be no deviation between the Accounts and the
forecasted profits and losses of the Company as set out in section 5
above to the detriment of the Purchaser of an amount
corresponding to more than ten (10) per cent. In the event of such
deviation, the Vendor shall compensate the Purchaser as set out
hereunder.
6.4.2 Adequate provision or reserve has in accordance with law and
generally accepted accounting principles been made in the Accounts
for all liabilities and obligations, all bad and doubtful debts, all
capital and burdensome commitments, including but not limited to all
Taxation and deferred Taxation liable to be assessed on the Company
on or before the date hereof.
6.4.3 All accounts receivable reflected in the Accounts have been included
therein in accordance with generally accepted accounting principles
in Sweden and are (other than receivables collected since the
Balance Sheet Date) valid and fully collectable for the full amount
thereof. All receivables of the Company accrued after the Balance
Sheet Date and not collected as of Completion are valid and fully
collectable for their full amount. Any exceptions to the foregoing
are set out in ANNEX 6.4.
6.4.4 The Company has good and marketable title to all assets included in
the Accounts and all assets are free and clear from mortgages,
pledges, liens or other encumbrances, except as disclosed in the
Accounts.
6.4.5 The profits and losses of the Company shown by the Accounts have not
in any material respect been affected by any unusual, exceptional,
extraordinary or non-recurring item or by any other matter, which
has rendered such profits or losses unusually high or low.
6.5 ABSENCE OF CERTAIN CHANGES OR EVENTS
6.5.1 There has not occurred or arisen since the Balance Sheet Date and
will not until Completion occur or arise with respect to the
Company;
(A) any material adverse change in the financial condition or in
the assets or operations of the business or any event which
singly or in the aggregate could result in any such material
adverse change; or
(B) any obligations, commitments or liabilities, contingent or
otherwise, whether for Taxes or otherwise, except obligations,
commitments and liabilities arising in the ordinary course of
business; or
(C) any amendments to or termination of, or any agreement to amend
or terminate, any of the customer agreements listed in ANNEX
6.5; or
(D) any sale, assignment, transfer, pledge, lease or other
disposal of any individual asset; or
(E) any increase in the rates of remuneration or compensation
(including bonuses) payable or to become payable to any
officer, employee or consultant; or
(F) any other transaction other than in the ordinary course of
business;
and the Company has not agreed or arranged to do any of the
foregoing.
6.5.2 Up to the Balance Sheet Date and up to Completion;
(A) the business of the Company has been conducted in the ordinary
course of business with a view to maintaining the business as
a going concern;
(B) no contract or commitment has been entered into by or on
behalf of the Company extending beyond the Completion, except
normal commitments for the purchase of material or supplies,
and contracts not involving materials or supplies made in the
ordinary course of business;
(C) the Company has not borrowed any additional funds from banks
or other external sources other than as required in the
ordinary course of business.
6.6 DIVIDENDS
No dividends or other similar distributions have been declared, made
or paid by the Company. The Company has not distributed any property
or provided any loan, security or guarantee in conflict with the
provisions of any applicable laws.
6.7 ASSETS AND ASSETS BELONGING TO THE COMPANY
(A) ASSETS
The Vendor lawfully owns and has good and marketable title to the
Assets. The Assets are free and clear of all encumbrances and there
exists no agreement to create any encumbrance over any such Assets.
The Assets are (and shall be on Completion) in good working order
(ordinary wear and tear excepted) and fit for their intended purpose
and use in the Company's daily operations and fully maintained and
serviced on a timely basis;
Any applicable taxes to be paid or arising out of the transfer of
the Assets shall be to the account of the Vendor;
(B) ASSETS BELONGING TO THE COMPANY
The Company owns, leases or is otherwise entitled to use, all assets
necessary for it to carry on its business as presently conducted,
and such assets are in good operating condition, ordinary wear and
tear excepted, fully maintained and serviced on a timely basis. All
assets referred to under this section 6.7 (B), including but not
limited to assets that have been written-off (Sw: "avskrivna
inventarier") are listed in ANNEX 6.7.
6.8 AGREEMENTS
6.8.1 All material contracts to which the Company is a party have been
supplied to the Purchaser and are found in ANNEX 6.8 hereto and;
(A) each contract is valid and binding in accordance with its
written terms;
(B) except as set out in ANNEX 6.8.1 hereto, no contract contains
any break or other termination clauses or penalties (or a
right to negotiate the terms thereof) in the event of a change
of the shareholding or control of the Company;
(C) the Company is not in breach of or default of any contract
and, to the Vendor's best knowledge, as of the date of this
Agreement none of the counter-parties is in breach of or
default of any contract;
(D) the Company has not terminated or amended any contract and as
of the date of this Agreement none of the counter-parties has
terminated or amended any contract;
(E) to the Vendor' best knowledge as of the date of this
Agreement, no party intends to terminate or amend any
contract; and
(F) there are no material verbal agreements entered into by the
Company.
6.8.2 All agreements and contracts in the Company have been entered into
on customary terms and at arm's length.
6.8.3 The Company is not bound by any agreement that limits the freedom of
the Company to compete in any line of business, compete with any
person or to transact business with any person.
6.9 INTELLECTUAL PROPERTY
6.9.1 All Intellectual Property which is used in and is necessary for the
business is owned by or licensed or otherwise made available to the
Company (indicating ownership or license rights) and is not subject
to any encumbrance or licensed to a third party.
6.9.2 Neither the Vendor nor the Company has given any notice of any
infringement by any third party of any Intellectual Property owned
by or licensed to the Company.
6.9.3 There has not been presented to the Vendor or the Company any claim,
whether for infringement, damages or otherwise, made by any third
party which relates to the use of Intellectual Property by the
Company and no such claim is threatened.
6.10 EMPLOYMENT AND PENSION AGREEMENTS
6.10.1 The names, titles, age, length of service and current annual
remuneration of all employees of the Company, including without
limitation bonuses, benefits in kind, compensation programs, stock
option and similar rights and pension benefits are listed in ANNEX
6.10 hereto. Except as set forth therein, the Company has not as of
the date of this Agreement received notice of termination from any
employee. The Company is not liable to make any payment to any
present or former director, officer or employee by way of damages or
compensation for loss of office or employment or for redundancy or
unfair or wrongful dismissal or any sum in respect of any breach of
any employment contract or any breach of any statutory duty.
6.10.2 The Company is not under any present of future liability to pay to
or in respect of any employee or former employee or the spouse or
dependants of any employee of former employee or any other person
who is or has been in any manner connected with the Company any
pension, superannuation allowance, death benefit, retirement
gratuity, or like benefit or to contribute to any pension or life
assurance scheme, medical insurance scheme, permanent health scheme,
and the Company has not made any such payments or contributions on a
voluntary basis nor is it proposing to do so.
6.10.3 The Company has, with respect to employment, complied with all
applicable laws, regulations, practices, terms and conditions of
employment, pension, wages and hours. There is as of the date of
this Agreement no pending or, to Vendor' best knowledge, threatened
litigation, proceeding or dispute relating to employment or pension
matters in respect to the Company and there have been no employee
disputes or proceedings with respect to non-compliance with
employment regulations during the past five years.
6.11 COMPLIANCE WITH LAW
6.11.1 To the Vendor's best knowledge the Company and its Directors,
officers and employees have in relation to the business and assets
of the Company complied at all times with all applicable laws
(including data protection laws), regulations, permissions, consents
and codes of practice, whether of Sweden or elsewhere.
6.11.2 All necessary licenses, consents, permits and authorizations have
been obtained by the Company to enable it to carry on its business
in the places and in the manner in which such business is conducted
and all such licenses, consents, permits and authorizations are
valid and have been complied with in all respects.
6.12 LITIGATION AND DISPUTES
6.12.1 There is no claim, suit, administrative, arbitration or other legal
proceeding (including but not limited to tax proceedings) pending or
threatened against the Company, its business, properties or assets,
and there is no such claim, suit or proceeding pending or threatened
by the Company against any other person.
6.12.2 There is as of the date of this Agreement no material dispute with
any government or any agency or body on behalf of such government or
any other authority in relation to the Company, which has not
already been rectified.
6.13 TAXES
6.13.1 The Company has submitted to the appropriate Tax authority all Tax
returns, reports and information with respect to which such
obligations arose prior to Completion. The Company has thereby
provided, in a truthful and correct manner, all information that is
required in order for the appropriate Tax authority to be able to
calculate Taxes in a correct manner. No such filings contain any
material misstatements or omit any statement of any material fact.
The Company has timely paid to the appropriate authority Taxes due
and payable. The Company is not in default in respect of Taxes for
any taxable year or part thereof and prior to the contract date, the
Company has not executed any transaction which resulted, or may
result, in deferred Taxation. Any exceptions to the foregoing are
set out in ANNEX 6.13.
6.13.2 The Company has not requested, has not been given or has not been
granted by any Tax authority a waiver or comparable consent or
extension of any statue of limitations governing the time of the
assessment or collection with respect to any Taxes or Tax returns.
6.13.3 The Company has complied in all respects with all applicable laws
relating to the withholding of Taxes (including withholding of
employment Taxes) and has within the time and manner prescribed by
law, withheld and paid over to the proper authority all amounts
required to be withheld and paid over under all applicable laws. Any
exceptions to the foregoing are set out in ANNEX 6.13.
6.13.4 The Company is not a party to, is not bound of, or has no obligation
under any tax sharing agreement, tax indemnification agreement or
similar contract or arrangement, and the Company has no potential
liability or obligation to any person as a result of, or pursuant
to, any such agreement, contract or arrangement. The Company has no
liability for the Taxes of another person by contract or otherwise.
6.13.5 The Company has made no private expense payments on behalf of the
directors and their associates and there are no loans between the
company and its directors. No power of attorney which is currently
in force has been granted the directors and their associates with
respect to any matter relating to Taxes.
6.13.6 All losses carried forward of the Company are correctly calculated
and capable of utilisation.
6.13.7 The Company has not participated in any transaction that may be
regarded as a Tax evasion (or Tax fraud) and there is currently no
pending audit within the Company regarding Taxes, or any legal
proceedings concerning Taxes which involve the Company. Nor are
there any concluded audits or legal proceedings against the Company
that might result in any Taxes.
6.14 INSURANCE
The insurance coverage of the Company is adequate, covering its
assets against such losses and risks as are generally maintained for
comparable businesses and properties and valid policies for such
insurance are now and will until Completion be outstanding and duly
in force. The Company has not done or omitted to do or suffered
anything which might render any policies of insurance taken out void
or, to the Vendor's best knowledge, the premium payable liable to
increase.
6.15 OTHER MATTERS
The Vendor and/or the Company has not withheld any information,
which at the date hereof could be considered to be of material
importance to the Purchaser in its evaluation of the Company. Unless
otherwise provided herein, all of the information set forth in this
Agreement or otherwise provided by the Vendor and/or the Company
and/or any written information provided by any of their advisors to
the Purchaser or its advisors is to the best of the Vendor' best
knowledge true and accurate.
7. COVENANTS OF THE VENDOR
7.1 ESCROW
The Vendor agrees that of the Consideration, a total number of
sixteen-thousand-seventy-one (16,071) shares shall be placed in
escrow with Advokatfirma Xxxxx Xxxxxxx Xxxxxx (the "escrow agent")
for a period of three months after Completion pending determination
of any indemnification obligations of the Vendor as set out in this
Agreement. The shares in escrow may be released as set out in
section 8.3 below.
7.2 NON-COMPETITION
The Vendor agrees that, for a period of two (2) years following
Completion, it shall not directly commence any business or acquire
an interest in any business which is competitive with the business
of the Company and / or the business of the Purchaser as conducted
for the two (2) years preceding the Completion date, including but
not limited to the direct or indirect recruitment of any of the
Company's or the Purchaser's staff, notwithstanding that such
person(s) terminates its employment with the Company or the
Purchaser after Completion and enters into new employment with a
third party. The Vendor further agrees that it shall procure that
the persons listed in ANNEX 7.2, representing the owners of the
Vendor and for the period that the Vendor is bound by this section,
shall not directly commence any business or acquire an interest in
any business which is competitive with the business of the Company
and / or the business of the Purchaser as conducted for the two (2)
years preceding the Completion date, including but not limited to
the direct or indirect recruitment of any of the Company's or
Purchaser's staff, notwithstanding that such person(s) terminates
its employment with the Company or the Purchaser after Completion
and enters into new employment with a third party.
The foregoing restriction however shall not prohibit the Vendor or
any of the persons listed in Annex 7.2 above from (i) investing in
securities of any entity solely for investment purposes and without
participating in the business thereof provided such securities are
traded on a stock exchange approved by relevant governmental
authorities in Sweden or in the USA; (ii) investing in venture
capital funds that have interests in a business that is competitive
with the Company, solely for investment purposes AND so long as the
Vendor or person is not a controlling person or manager of such
entity and Vendor does not directly or indirectly own 5 % or more of
any class of securities or similar of such competitive entity /
business.
7.3 If the Vendor fails to comply with the provisions of section 7.2
then the Vendor shall in respect of every breach thereof pay to the
Purchaser an agreed compensation in the amount of SEK fifty thousand
(50,000) per breach. In case the damage caused by any such breach is
greater than the aforesaid compensation, then the Purchaser shall be
entitled to claim damages from the Vendor in respect of any such
excess amount. The payment by the Vendor of agreed compensation
and/or damages does not make any breach of this Agreement
permissible.
8. INDEMNIFICATION
8.1 INDEMNIFICATION
8.1.1 The Vendor hereby agrees to indemnify the Purchaser against, and to
hold the Purchaser harmless from, any and all damage, loss,
liability and expense (including, without limitation, reasonable
expenses of investigation and reasonable attorney's fees and
expenses in connection with any action, suit or proceeding) incurred
or suffered by the Purchaser (collectively referred to as "Loss")
arising out of any breach of any of the Warranties, covenants or
agreements made or to be performed by the Vendor pursuant to this
Agreement.
8.1.2 For the avoidance of doubt and without restricting the right of the
Purchaser or the ability of the Purchaser to claim damages on any
basis in the event that any of the Warranties is broken or proves to
by untrue or misleading, the Vendor covenants to pay on demand to
the Purchaser:
(A) forty-two per cent (42%) of the amount which would be needed
to put the Company into the position which would have existed
if the Warranty had not been broken and had been true and not
misleading (provided that the breach is not due to gross
negligence of willful misconduct from the Vendor, in which
case the Vendor shall indemnify the Purchaser against one
hundred per cent (100%) of the whole Loss); and
(B) all costs and expenses incurred by the Purchase or the Company
directly or indirectly as a result of such breach.
For the avoidance of doubt, the Vendor hereby confirms that damages
due to any breach of sections 4, 6.2, and / or 7.2 shall be fully
paid by the Vendor, i.e. without the restriction in this sub-section
8.1.2 (A) above being applicable.
8.2 CLAIM
No claims shall be brought by the Purchaser against the Vendor
(unless it is a claim for breach of Sections 6.1 and 6.2 above) in
respect of any Loss, unless notice in writing of any such claim,
accompanied by reasonable particulars thereof specifying the nature
of the breach and, so far as practicable, the amount claimed in
respect thereof, has been given to the Vendor within one year from
Completion. Notwithstanding the above, a claim relating to Tax
Warranties may be made until the expiration of a three month period
after a final judgement with respect to such liability has been
rendered by a court or other tax authority of competent
jurisdiction.
8.3 SHARES IN ESCROW
Where no claim has been made by Purchaser pursuant to the terms and
conditions of this Agreement and provided that a period of three
months shall have elapsed since Completion, shares placed in escrow
pursuant to section 7.1 above shall be released to the Vendor.
Where Purchaser has made a claim however against the Vendor pursuant
to the terms and conditions of this Agreement, and even where a
period of three months shall have elapsed since Completion, the
shares placed in escrow shall remain, without prejudice to any other
rights of Purchaser, in escrow and shall continue to constitute
security for any
amount that Vendor is obligated to pay to the Purchaser as
indemnification of the Vendor's breach of its obligations in
accordance with this Agreement. The Vendor accepts that the escrow
agent may only release the shares to the Vendor subject to written
notice from Purchaser stating that the escrow agent is permitted to
release such shares to the Vendor or where the escrow agent is
otherwise directed to do so pursuant to a court order. The Vendor
agrees that it shall make no claims against the escrow agent.
9. OTHER COVENANTS MADE BY EACH PARTY
9.1 OUTSTANDING DEBT TO VENDOR
Subsequent to Completion, the Purchaser undertakes to procure that
it shall settle its outstanding debt to the Company of an amount of
SEK 2.657.533 no later than by 30 November 2001 and shall procure
that the Company shall repay its debt to Vendor of the same amount.
Purchaser's payment of shall be made to the Company's account with
Svenska Handelsbanken, account no.: 6743 398 215 588 and Company's
payment shall be made Vendor's account with Svenska Handelsbanken,
account no.: 6743 135 127 092.
The Purchaser may at its own discretion, without obligation to the
Company and/or Vendor, settle amount set out in the preceding
paragraph or portions thereof (as may be decided by Purchaser) above
before 30 November 2001, in the event the Purchaser may at its own
discretion determine that such measure may prevent the Company
and/or the Vendor from becoming insolvent or from entering into a
similar situation.
9.2 SUB-LEASE AGREEMENT
The Vendor hereby confirms that as per 31 January 2002, the
sub-lease agreement presently in force between the Vendor and
Company concerning office premises located at Soft Center, 372 25
Ronneby shall be terminated and the Vendor confirms that after that
date the Company shall have no further obligations in relation to
the Vendor as regards such sub-lease agreement save for rentals
concerning the months of October, November, December 2001 and
January 2002. The Vendor confirms that the rent as set out in the
sub-lease agreement between the Vendor and the Company for said
premises has been amended as follows:
(i) for the month of October 2001, the rent shall correspond to 100
% (one-hundred per cent) of the rent paid by Vendor to its landlord;
and (ii) for the months of November 2001 - January 2002, the rent
shall correspond to 75 % (seventy-five per cent) of the rent paid by
Vendor to its landlord.
The Vendor confirms that its landlord has approved that the Vendor
may sub-lease the said premises to the Company and that the landlord
has approved that such sub-lease may be transferred to Purchaser
where required by the Purchaser.
Unless otherwise agreed in writing, the Purchaser shall procure that
the Company shall quit the premises no later than on 31 January
2002.
The Purchaser undertakes to support the Vendor in renegotiating its
lease agreement regarding said premises with the Vendor's landlord
in a manner as the Purchaser in its sole discretion deems
appropriate. For the avoidance of doubt, this undertaking does not
create any obligation whatsoever for the Purchaser for which the
Purchaser may be held liable.
9.3 RECRUITMENT
The Vendor undertakes to make its best effort to support the
Purchaser in its endeavours to recruit key personnel from the
Vendor. The persons that may be recruited for employment with the
Purchaser or with Purchaser's affiliated company are specified in
ANNEX 9.3. In the event that personnel is recruited by Purchaser
from the Vendor, the Purchaser undertakes to assume relevant
vacation debts of the Vendor in relation to such person where
applicable and in a manner as may be appropriate.
10. CONFIDENTIALITY
The Parties undertake not to disclose any information, whether
written or oral, including, without limitation, financial
information, trade secrets, client lists and other proprietary
business information, relating to the business or the Company which
information is not known to the general public, unless (i) required
to do so by law or stock exchange regulations, or (ii) such
disclosure has been consented to by the Purchaser.
11. PUBLICATION
The Parties shall mutually determine the date and the method of any
publication of the Purchaser's acquisition hereunder, except as may
be required by law or stock exchange regulations. If one of the
Parties is obliged under law or such regulations to publish
information about this Agreement or any part thereof, the other
Party shall be informed thereof in connection with any such
publication.
12. AMENDMENTS
This Agreement may only be amended by an instrument in writing duly
executed by the Parties. No change, termination or modification of
any of the provisions of this Agreement shall be binding on the
Parties unless made in writing.
13. NOTICES
All notices, requests and other communications to the Parties
hereunder shall be in the English language and deemed to be valid
and effective if sent in writing to the addresses of the Parties
stated in the preamble to this Agreement or to other addresses
supplied at a later date.
14. GOVERNING LAW AND ARBITRATION
14.1 This Agreement shall in all respects be governed by and construed in
accordance with the laws of Sweden.
14.2 Any dispute, controversy or claim arising out of or in connection
with this Agreement or from agreements resulting therefrom, or the
breach, termination or invalidity hereof or thereof, shall be
exclusively settled by arbitration in accordance with the Rules of
the Arbitration Institute of the Stockholm Chamber of Commerce. The
arbitral tribunal shall be composed of three (3) arbitrators and the
place of arbitration shall be Stockholm, Sweden. The arbitration
proceedings shall be conducted in the English language.
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IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be signed in
two (2) original copies by their respective duly authorised officers as of the
date first above written.
/s/ XXXXXX XXXX /s/ XXXX XXXXXX
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MICRONET AB CELLPOINT SYSTEMS AB
