Exhibit 16.1
(1) NEOMEDIA TECHNOLOGIES, INC.
(2) THE VENDORS
---------------------------------------------------------------------------
SHARE PURCHASE AGREEMENT
---------------------------------------------------------------------------
Xxxxxxxxxxx & Xxxxxxxx
Xxxxxxxxx Xxxxxx LLP
000 Xxxxxx Xxxxxx Xxxxxx XX0X 0XX
Tel: x00 (0)00 0000 0000
Fax: x00 (0)00 0000 0000
Ref: MRL/JEM/6006583.0002
Exhibit 16.1
CONTENTS
Clause Page
1. DEFINITIONS AND INTERPRETATION........................................1
2. SALE OF SHARES........................................................7
3. INITIAL CONSIDERATION.................................................7
4. ESCROW ACCOUNT AND ESCROW SHARES......................................8
5. DEFERRED CONSIDERATION................................................9
6. INDEPENDENT ACCOUNTANTS..............................................12
7. COMPLETION...........................................................13
8. WARRANTIES AND INDEMNITIES...........................................14
9. REGISTRATION OF INITIAL CONSIDERATION SHARES.........................16
10. RULE 144 REPORTING...................................................18
11. POST-COMPLETION OBLIGATIONS OF THE PRIMARY WARRANTORS................18
12. CONFIDENTIAL INFORMATION.............................................20
13. ANNOUNCEMENTS........................................................20
14. COSTS................................................................20
15. NOTICES..............................................................21
16. FURTHER ASSURANCE....................................................22
17. WHOLE AGREEMENT AND VARIATION........................................22
18. WAIVER...............................................................22
19. EFFECT OF TERMINATION................................................23
20. EFFECT OF COMPLETION.................................................23
21. GOVERNING LAW AND JURISDICTION.......................................23
22. ASSIGNMENT...........................................................23
23. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999.........................23
THIS AGREEMENT is made on February 2006
BETWEEN:
(1) THE PERSONS whose names and addresses are set out in column 1 of
Schedule 1 (the "Vendors"); and
(2) NEOMEDIA TECHNOLOGIES, INC. (Incorporated under the laws of the State
of Delaware, USA, Charter No. 2648151) whose registered office is at
0000 Xxxxxx Xxxxxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxx 00000, XXX (the
"Purchaser").
WHEREAS:
(A) The Vendors together are beneficially entitled to all the issued share
capital of the Company.
(B) The Purchaser has agreed to purchase and the Vendors have agreed to
sell the entire issued share capital of the Company on the terms and
conditions set out in this Agreement.
NOW IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement, unless the context requires otherwise:
"Accounting Date" means 30 September 2005;
"Accounts" means the audited financial statements of the Company as at,
and for the accounting year ended on, the Accounting Date (including
the balance sheet, profit and loss account, statement of total
recognised gains and all notes) together with the directors' report and
the auditors' report;
"Act" means the Companies Xxx 0000;
"Associate" has the meaning given to that expression in section 435 of
the Insolvency Xxx 0000;
"Business Day" means a day which is not a Saturday or Sunday or a bank
or public holiday in England or the United States of America;
"CAA" means the Capital Allowances Xxx 0000;
1
"Cash Consideration" means that part of the Initial Consideration
payable in cash in accordance with Clause 3.1(a);
"Company" means Sponge Limited, brief details of which are set out in
Schedule 2;
"Completion" means completion of the sale and purchase of the Shares in
accordance with Clause 7;
"Completion Date" has the meaning given to that expression in Clause
7.1;
"Confidential Information" means all confidential information used in
or otherwise relating to the Company or its business, affairs,
customers/clients or the marketing of any goods or services including
(without limitation) Know-how customer/client names and lists and other
details of customers/clients, sales targets, sales statistics, market
share statistics, market research surveys and reports, information
relating to future business development or planning, future projects,
commercial relationships, information relating to litigation or legal
advice, in each case, in whatever form held;
"Consideration Shares" means shares of $0.01 each in the Purchaser's
common stock;
"Disclosure Letter" means the letter of the same date as this Agreement
from the Primary Warrantors to the Purchaser qualifying the Warranties;
"Encumbrance" includes (without limitation) any mortgage, charge,
pledge, hypothecation, lien and security interest of whatsoever nature
(including, without limitation, any imposed by law) and any proprietary
interest or equity of any person including (without limitation) any
title retention, option or right of pre-emption;
"Escrow Account" means the interest bearing deposit account in the
joint names of the Purchaser's Solicitors and the Vendors' Solicitors
at Lloyds TSB Bank plc, Moorgate Branch, 00 Xxxxxxxx, Xxxxxx XX0X 0XX
or such other account as the Vendors' Solicitors and the Purchaser's
Solicitors designate for the purpose of holding the Escrow Cash;
"Escrow Account Instructions" means the instructions in the agreed form
addressed to the Vendors' Solicitors and the Purchaser's Solicitors
regarding the operation of the Escrow Account;
"Escrow Agreement" means the escrow agreement in the agreed form
relating to the holding of the Escrow Shares;
2
"Escrow Cash" means the sum of (pound)250,000 to be deposited in the
Escrow Account pursuant to Clause 4, or such principal sum as shall
remain in the Escrow Account from time to time and any interest
accruing on such sum while it is deposited in the Escrow Account;
"Escrow Shares" shall have the meaning given to that expression in
Clause 3.1(b);
"Escrow Sum" means the Escrow Cash and the Escrow Shares;
"FA" followed by the number of a calendar year means the Finance Act of
that year;
"full title guarantee" has the meaning given to that expression by the
Law of Property (Miscellaneous Provisions) Xxx 0000;
"holding company" means a holding company within the meaning of
sections 736 and 736A of the Act;
"ICTA" means the Income and Corporation Taxes Xxx 0000;
"Independent Accountants" means such firm of chartered accountants as
may be appointed under Clause 6;
"Initial Consideration" means the consideration payable in respect of
the Shares at Completion pursuant to Clause 3;
"Intellectual Property" means all patents, trade marks, rights in
design, trade or business names, copyright (including (without
limitation) rights in computer software) and topography rights (whether
or not any of these is or are registered and including (without
limitation) applications for registration) and all rights throughout
the world of a similar nature or with similar effect to any of these;
"Intellectual Property Rights" means all Intellectual Property owned,
used or enjoyed by the Company;
"ITA" means the Inheritance Tax Xxx 0000;
"Know-how" means the body of knowledge, technical experience, expertise
and skills, technical processes, secret processes, formulae and
technical information held by the Company and relating to the Company's
business;
"Lease" means the lease dated 27 May 2005 and made between Xxxxxx
Xxxxxxxx (Property) Limited (1) and the Company (2);
3
"Leasehold Property" means the land and buildings referred to in
Schedule 3;
"Letter of Intent" means the letter of intent dated 13 October 2005 and
made between the Purchaser and Xxxxxxxxx Xxxxx on behalf of the
Vendors;
"Management Accounts" means the monthly management accounts of the
Company for the period from the Accounting Date to 30 November 2005;
"Net Profits" means the pre-tax profit of the Company calculated using
the same accounting principles as have been used in the Accounts for
the two year period ending on the second anniversary of the Completion
Date, as adjusted and ascertained in accordance with the provisions of
Schedule 7 and subject always to clauses 5.5 and 5.7;
"Planning Acts" means all legislation for the time being in force
relating to Town and Country Planning;
"Primary Warranties" means the representations, warranties and
undertakings set out in Part 1 of Schedule 5 and "Primary Warranty" has
the corresponding meaning;
"Primary Warrantors" means Xxxxxxxxx Xxxxx and Xxxxxx Xxxxxx;
"Profit and Loss Account" means the profit and loss account to be
prepared in accordance with Schedule 7;
"Purchaser's Solicitors" means Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx
LLP of 000 Xxxxxx Xxxxxx, Xxxxxx XX0X 0XX;
"Secondary Warranties" means the representations, warranties and
undertakings set out in Part 2 of Schedule 5 and "Secondary Warranty"
has the corresponding meaning;
"Secondary Warrantors" means the Vendors excluding the Primary
Warrantors;
"Service Agreements" means the agreements in the agreed form to be
entered into on Completion between Xxxxxxxxx Xxxxx and Xxxxxx Xxxxxx
and the Company;
"Shares" means 423 fully paid ordinary shares of (pound)1 each and
61,000 preference shares of (pound)1 each in the capital of the Company
comprising the whole of the issued share capital of the Company;
4
"subsidiary" means a subsidiary within the meaning of sections 736 and
736A of the Act;
"Tax" or "Taxation" has the meaning given to that expression in clause
1 of the Tax Deed;
"Tax Authority" has the meaning given to that expression in clause 1 of
the Tax Deed;
"Tax Deed" means the deed in the agreed form to be entered into on
Completion between the Vendors and the Purchaser;
"Taxation Statute" means any statute, statutory instrument, enactment,
law, bye law, regulation or legislative provision providing for or
imposing any charge, assessment or levy to Taxation including, for the
avoidance of doubt, any directives and regulations adopted by the
Council of the European Union;
"Tax Warranties" means the Warranties set out in paragraphs 21 and 22
of Schedule 5;
"TCGA" means the Taxation of Chargeable Gains Xxx 0000;
"TMA" means the Taxes Management Xxx 0000;
"this Transaction" means the transactions the subject of this
Agreement;
"VAT" means the tax as constituted by the VATA and any other tax
imposed in addition or in substitution for it at the rate from time to
time imposed;
"VATA" means the Value Added Tax Xxx 0000;
"Vendors' Solicitors" means Xxxxxx Xxxxxxxx & Xxxxxx of 00 Xxxxxxxxx
Xxxxxx, Xxxx, Xxxxxx X0X 0XX;
"Volume Weighted Average Price" means, with respect to a particular
stock, the price calculated by adding together the total purchase price
for each trade in such stock (multiplying the number of shares traded
by the last sale price of such stock on the exchange on which it
trades) in any given trading day and then dividing by the total shares
traded for the day;
"Warranties" means the Primary Warranties and the Secondary Warranties;
and
5
"Warranty Claim" means a bona fide claim by the Purchaser or any person
deriving title from it for any breach or alleged breach of any of the
Warranties.
1.2 In this Agreement, unless the context requires otherwise:
(a) references to Clauses, Recitals and Schedules are references to
clauses and recitals of and schedules to this Agreement and
references within a sub-clause to "this Clause" shall refer to
the whole Clause and not merely to the sub-clause in which it
appears;
(b) the Recitals and Schedules form part of and are incorporated in
this Agreement;
(c) headings are included for ease of reference only and shall not
affect the interpretation of this Agreement;
(d) the singular shall include the plural and vice versa and
references to any gender shall include references to the other
genders;
(e) the expression "person" shall mean any natural person,
partnership, joint venture, corporation (wherever incorporated),
trust, firm, association, government, governmental (or
supra-governmental) agency, authority or department, or any other
entity, whether acting in an individual, fiduciary or other
capacity;
(f) any reference to a time of day is to London time;
(g) any reference to a party shall mean any party to this Agreement;
(h) any reference to the parties shall include their respective
successors in title, permitted assigns and personal
representatives;
(i) any reference to a document as being "in the agreed form" means
that document in a form agreed between the Vendors and the
Purchaser such agreement being signified by the signature or
initialling of a draft for the purposes of identification by or
on behalf of each of the Vendors and the Purchaser;
(j) where any statement is qualified by the expression "so far as the
Vendors are aware" or any similar expression that statement shall
be treated as including an additional statement that it has been
made after due and careful enquiry;
6
(k) any reference to any statute or statutory provision shall include
that statute or statutory provision as from time to time amended,
modified, replaced or re-enacted (whether before or after the
date of this Agreement) and any order, regulation, instrument,
bye-law or other subordinate legislation made under it; and
(l) any reference to $ in this agreement is to $U.S. Dollars.
2. SALE OF SHARES
2.1 Subject to the terms of this Agreement, each of the Vendors shall sell
with full title guarantee and, notwithstanding any limitation otherwise
implied by the Law of Property (Miscellaneous Provisions) Xxx 0000,
free from all Encumbrances the number of Shares set opposite that
Vendor's name in Columns 2 and 3 of Schedule 1 and the Purchaser shall
purchase the Shares from the respective Vendors together with all
rights attaching to them at the date of Completion (including the right
to receive all dividends and distributions declared, paid or made after
that date).
2.2 Each of the Vendors waives any rights they may have under the articles
of association of the Company or otherwise to have any of the Shares
offered to him for purchase prior to or in consequence of the sale or
transfer of the Shares to the Purchaser or its nominees under this
Agreement.
3. INITIAL CONSIDERATION
3.1 The Initial Consideration, which shall be apportioned between the
Vendors as shown in Column 4 of Schedule 1, shall be satisfied:
(a) as to the sum of (pound)3,450,000 in cash (the "Cash
Consideration") of which (pound)250,000 shall be paid into the
Escrow Account; and
(b) as to (pound)6,550,000 by the issue of 29,696,745 Consideration
Shares (the "Initial Consideration Shares"), of which 3,400,390
Initial Consideration Shares, shall be placed in escrow on the
terms of the Escrow Agreement (the "Escrow Shares").
3.2 In the event that the average Volume Weighted Average Price (the
"Liquidity Price") of the Purchaser's common stock as measured over the
10 trading days immediately before the earlier of the date upon which
the Vendors are first able to sell the Consideration Shares under Rule
144 of the U.S. Securities Act of 1933 as amended (the "Securities
Act") and the date on which the U.S. Securities and Exchange Commission
(the "SEC") declares the Vendors registration statement (as referred to
in Clause 9) effective (such earlier date being referred to hereinafter
as the "Liquidity Date") (provided, however, that if the Purchaser's
common stock is not being quoted on the US OTC bulletin board or a US
automated quotation system on the Liquidity Date, the Liquidity Date
shall be the Business Day immediately following the 10th trading day
after quotes for the Purchaser's common stock have recommenced) is less
than $0.384 (the "Closing Price"), the Purchaser shall on the third
calendar day following the Liquidity Date (or if such day is not a
Business Day, the next Business Day thereafter, the "Top-Up Payment
Day") pay to the Vendors in cash, directly an amount (the "Top-Up
Amount") equal to the number of Consideration Shares multiplied by the
amount by which the Closing Price exceeds the Liquidity Price (and such
payment shall be made in US Dollars).
7
4. ESCROW ACCOUNT AND ESCROW SHARES
4.1 The Escrow Account shall be operated, and the Escrow Cash and interest
accruing on it shall be applied, in accordance with this clause.
4.2 The Escrow Shares shall be held in accordance with this Clause and the
terms of the Escrow Agreement.
4.3 Any amount due to the Purchaser in respect of a Warranty Claim or under
the Tax Deed and which relates to any Primary Warrantor shall, on
becoming due, be paid to the Purchaser on the following basis, 25 per
cent. of any such amount due from the Escrow Cash held in the Escrow
Account and 75 per cent. of any such amount due from the Escrow Shares
subject to the Escrow Agreement, to the extent of the Escrow Sum.
4.4 Subject to all such amounts having been paid to the Purchaser, the
Escrow Sum shall be released to the Primary Warrantors on the first
anniversary of the Completion Date (the "Release Date"), unless a
Warranty Claim or a claim under the Tax Deed is outstanding at the
Release Date. If such a claim is outstanding:
(a) a sum equal to the amount of the claim (or all such claims, if
more than one) shall be retained as to 25 per cent. of such claim
or claims from the Escrow Cash held in the Escrow Account and as
to 75 per cent. of such claim or claims in Escrow Shares subject
to the Escrow Agreement;
(b) the balance (if any) of the Escrow Sum shall be released to the
Primary Warrantors on the Release Date; and
(c) any sum so retained in the Escrow Account and any Escrow Shares
held after the Release Date in respect of any such claim shall be
released to the Primary Warrantors or the Purchaser, as
appropriate, as soon as practicable after that claim is settled.
8
4.5 For the purposes of this clause, a claim shall be regarded as settled
if:
(a) the claim is withdrawn; or
(b) the Primary Warrantors and the Purchaser so agree in writing; or
(c) a competent court has awarded judgment in respect of the claim
and, where relevant, the period for lodging an appeal has expired
without an appeal having been lodged.
4.6 Any interest which accrues on the Escrow Cash while in the Escrow
Account shall follow the principal amount and shall be paid to the
Primary Warrantors or the Purchaser (as the case may be) at the same
time as payment of the corresponding principal.
4.7 Each of the Primary Warrantors and the Purchaser shall:
(a) on Completion give the Vendors' Solicitors and the Purchaser's
Solicitors joint instructions regarding the operation of the
Escrow Account in the agreed form; and
(b) after Completion promptly give or join in giving all such
instructions as are necessary to procure the operation of the
Escrow Account in accordance with the provisions of this clause
and the instructions referred to in Clause 4.7(a).
4.8 Nothing in this clause limits any rights or remedies available to the
Purchaser to recover any amount due to it in respect of a Warranty
Claim or otherwise under this Agreement or under the Tax Deed.
4.9 To the extent that the Escrow Sum is insufficient to satisfy in full
any amount due to the Purchaser in respect of the Primary Warranties,
the excess shall be paid by the Primary Warrantors.
5. DEFERRED CONSIDERATION
5.1 As further consideration for the sale of the Shares, the Purchaser
shall, subject to the terms of this Agreement, pay to the Vendors a sum
(the "Deferred Consideration"), which shall be apportioned between the
Vendors as shown in Column 5 of Schedule 1, calculated according to the
Net Profits as follows:
(a) if the Net Profits are equal to or exceed (pound)1,300,000, a sum
equal to (pound)2,500,000 plus (pound)1 for each (pound)500,000
of Net Profits over (pound)1,300,000;
9
(b) if the Net Profits are less than (pound)1,300,000, no Deferred
Consideration shall be paid.
5.2 The Net Profits shall be ascertained in accordance with the provisions
of Schedule 7 and subject always to clauses 5.5 and 5.7.
5.3 Within 10 Business Days of the Net Profits being so ascertained, the
Purchaser shall satisfy the Deferred Consideration by the issue of a
number of shares of $0.01 each in the Purchaser's common stock equal to
(pound)2,500,000 divided by the average Volume Weighted Average Price
of the Purchaser's common stock for the 10 days preceding the second
anniversary of Completion. The exchange rate to be used when
calculating the relevant number of shares shall be the spot rate
published in the Financial Times on the last Business Day prior to the
second anniversary of Completion.
5.4 The Vendors and the Purchaser hereby acknowledge, undertake and declare
that, having regard to the interests of the Primary Warrantors
throughout the period commencing on Completion and ending on the second
anniversary of the Completion Date (the "Agreed Period") the objective
of the Company is to maximise its profitability consistent with sound
commercial and financial management and to promote the orderly and
profitable development of its business.
5.5 The Purchaser agrees and undertakes that throughout the Agreed Period,
unless otherwise agreed with the Primary Warrantors in writing, it
will:
(a) not require the Company to enter into any artificial or other
transaction not being in the normal or prudent course of business
as conducted at the date hereof the purpose or principal purpose
of which is to reduce the net profits of the Company;
(b) save in so far as the Purchaser proposes to utilise the same in
order to satisfy payment of the Deferred Consideration or any
part thereof, not cause to be distributed by way of dividend or
otherwise withdrawn from the Company, any of the profits or
reserves of the Company;
(c) use all reasonable endeavours to ensure that the Company
continues to trade save where any cessation of trade becomes
necessary for reasons of insolvency;
(d) make no disposal of the whole or any material part of the assets
or business of the Company;
(e) not permit trading or any form of inter-company charging or
lending or borrowing between the Company on the one hand and the
Purchaser or any other company on the other, save on a commercial
basis and on arm's length terms;
10
(f) make no disposal of the beneficial ownership of the whole of the
issued share capital (directly or indirectly) of the Company;
(g) not seek to move or relocate any of the existing employees or the
Company;
(h) provide the Primary Warrantors with such regular financial and
other information concerning the Company as they may reasonably
request, having regard to their interests under this Agreement in
so far as the same at any time no longer becomes available to
them in their capacities as directors of the Company,
if, in relation to paragraphs 5.5(a), 5.5(b), 5.5(d), 5.5(e), 5.5(f)
and 5.5(g), any such thing would have a material adverse effect on the
Net Profits.
5.6 The Primary Warrantors shall treat as strictly confidential all such
information as is supplied to them under sub-clause 5.5(h) above and
shall not disclose the same or allow the same to be disclosed to any
other person except to their respective professional advisers and save
to the extent that the same is already in the public domain.
5.7 The Purchaser may procure the Company to do any of the above things
notwithstanding that they have or may have an adverse effect on the Net
Profits if, before it does so, it confirms in writing to the Primary
Warrantors that, for the purposes of calculating the Net Profits, an
appropriate allowance or adjustment will be made in respect of the
thing in question, so that the Vendors' entitlement to the Deferred
Consideration is not adversely affected by that thing. Any such
allowance or adjustment shall be identified and quantified by the
Purchaser in the draft Profit and Loss Account and shall be agreed or
determined as provided in Schedule 7 (including by reference to the
Independent Accountants if necessary).
5.8 In the event of a Sale of the Purchaser during the Agreed Period, the
Deferred Consideration will become payable in full to the Vendors in
accordance with Clause 5.9 irrespective of the level of Net Profits at
the date of Sale. For the purposes of this Clause 5.8, a "Sale" means
(i) the acquisition by any person of 50 per cent or more of the issued
common stock of the Purchaser or (ii) the acquisition by any person of
the whole or substantially the whole of the business and undertaking of
the Purchaser.
5.9 In the event the Deferred Consideration becomes payable pursuant to
Clause 5.8, the Deferred Consideration shall be apportioned between the
Vendors as shown in Column 5 of Schedule 1 and shall be payable within
10 Business Days of the Sale. The Purchaser shall satisfy the Deferred
Consideration at its absolute discretion either by (i) the issue of a
number of shares of $0.01 each in the Purchaser's common stock equal to
(pound)2,500,000 divided by the average Volume Weighted Average Price
of the Purchaser's common stock for the 10 days preceding the Sale or
(ii) in cash. The exchange rate to be used when calculating the
relevant number of shares shall be the spot rate published in the
Financial Times on the last Business Day prior to the Sale.
11
6. INDEPENDENT ACCOUNTANTS
6.1 If and whenever any item in dispute relating to the calculation of Net
Profits falls to be referred, in accordance with the relevant provision
of this Agreement, to Independent Accountants, it shall be referred to
such firm of chartered accountants;
(a) as the Vendors and the Purchaser may agree in writing within five
Business Days after the expiry of the period allowed by the
relevant provision of this agreement for the Vendors and the
Purchaser to reach agreement over the relevant item in dispute;
or
(b) failing such agreement, as shall be appointed for this purpose on
the application of the Vendors and the Purchaser by the President
of the Institute of Chartered Accountants in England and Wales.
6.2 The Independent Accountants shall act on the following basis:
(a) the Independent Accountants shall act as experts and not as
arbitrators;
(b) the item or items in dispute shall be notified to the Independent
Accountants in writing by the Vendors and/or the Purchaser within
10 Business Days of the Independent Accountants' appointment;
(c) their terms of reference shall be as set out in Schedule 7;
(d) the Independent Accountants shall decide the procedure to be
followed in the determination;
(e) the Vendors and the Purchaser shall each provide (and to the
extent they are reasonably able, shall procure that their
respective accountants, and the Purchaser shall procure that the
Company shall, provide) the Independent Accountants promptly with
all information which they reasonably require and the Independent
Accountants shall be entitled (to the extent they consider it
appropriate) to base their opinion on such information and on the
accounting and other records of the Company;
12
(f) the determination of the Independent Accountants shall (in the
absence of manifest error) be final and binding on the parties;
and
(g) the costs of the determination, including fees and expenses of
the Independent Accountants, shall be borne equally as between
the Vendors on the one hand and the Purchaser on the other.
7. COMPLETION
7.1 Completion shall take place at the offices of the Purchaser's
Solicitors immediately after the signature of this Agreement (the
"Completion Date").
7.2 At Completion the Vendors shall comply with Schedule 4.
7.3 At Completion the Purchaser:
(a) shall pay (pound)1,495,116 of the Cash Consideration to the
Vendors' Solicitors in respect of all payments due to the Vendors
(excluding the Primary Warrantors) under this Agreement;
(b) shall pay (pound)1,704,884 of the Cash Consideration to the
Vendors' Solicitors in respect of a proportion of the payment due
to the Primary Warrantors under this Agreement;
(c) shall pay (pound)250,000, being the balance of the Cash
Consideration payable to the Primary Warrantors, into the Escrow
Account;
(d) shall deliver to the Vendors a copy of the Tax Deed duly executed
by or on behalf of the Purchaser;
(e) undertakes to deliver share certificates evidencing the Initial
Consideration Shares, excluding the share certificates evidencing
the Escrow Shares, to the Vendors as soon as possible following
Completion; and
(f) shall deliver to the Vendors' Solicitors and the Purchaser's
Solicitors the Escrow Account Instructions, duly executed by or
on behalf of the Purchaser.
7.4 The Vendors' Solicitors are irrevocably authorised to receive payments
of the Cash Consideration and the Purchaser shall not be concerned to
see to the application of any payments made by the Purchaser under
Clause 7.3. The receipt of the Vendors' Solicitors shall be an absolute
discharge to the Purchaser for the Cash Consideration.
13
7.5 If all the provisions of Schedule 4 are not complied with in full on
Completion the Purchaser may:
(a) defer Completion to a date not more than 28 days after the date
specified in Clause 7.1 in which event the provisions of this
Clause 7.5 shall apply to Completion as so deferred; or
(b) proceed to Completion as far as practicable without prejudice to
its rights under this Agreement or otherwise;
(c) terminate this Agreement and Clause 19 shall apply.
7.6 The Purchaser shall not be obliged to complete the purchase of any of
the Shares unless the purchase of all the Shares is completed at the
same time in accordance with this Agreement.
8. WARRANTIES AND INDEMNITIES
8.1 The Primary Warrantors represent, warrant and undertake to the
Purchaser in the terms of the Warranties now and (as if any express or
implied reference to the time of this Agreement were a reference to
each such time) at all times up to and at Completion or at any later
time which may be specified in Schedule 5.
8.2 The Secondary Warrantors represent, warrant and undertake to the
Purchaser in the terms of the Secondary Warranties now and (as if any
express or implied reference to the time of this Agreement were a
reference to each such time) at all times up to and at Completion or at
any later time which may be specified in Schedule 5.
8.3 The Primary Warrantors and the Secondary Warrantors acknowledge:
(a) that the Warranties are given by the Primary Warrantors and the
Secondary Warrantors with the intention of inducing the Purchaser
to enter into this Agreement and that the Purchaser is entering
into this Agreement in reliance upon the Warranties; and
(b) that in reliance upon the Warranties the Purchaser is intending
to make financial commitments in relation to the Company.
8.4 The Warranties are given subject to matters fully and fairly disclosed
in the Disclosure Letter.
14
8.5 Each of the Warranties is separate and independent and, save as
expressly otherwise provided in this Agreement, shall not be limited by
reference to any other Warranty or by anything in this Agreement or the
Tax Deed.
8.6 The Vendors shall not make any claim or demand or exercise any other
right or remedy which the Vendors may have against the Company or any
of the employees of the Company in connection with this Transaction
(including the provision of information contained or reflected in the
Disclosure Letter), save if and in so far as the Purchaser may in its
absolute discretion otherwise agree in writing and any recovery made by
any of the Vendors consequent on any breach of this Clause 8.6 shall be
held on trust for the Purchaser.
8.7 The Disclosure Letter does not affect the construction of this
Agreement (without prejudice to its qualification of the Warranties)
and does not vary the terms of this Agreement (except if and in so far
as the Disclosure Letter may expressly so state). Nothing in the
Disclosure Letter shall exclude or limit any liability or obligation of
the Vendors except liability under this Clause.
8.8 The provisions of Schedule 6 shall apply to limit the liability of the
Vendors in respect of claims under the Warranties.
8.9 No limitation placed upon the liability of the Vendors by this Clause
(whether as to amount, time or otherwise) shall apply in relation to
any claim by the Purchaser which (or the delay in discovery of the
subject matter of the claim or that it is claimable under this Clause)
is the consequence of fraud or fraudulent misrepresentation or wilful
non-disclosure by the Vendors or any person who shall have been
involved on behalf of the Vendors in this Transaction (including the
provision of information contained or reflected in the Disclosure
Letter).
8.10 The Primary Warrantors shall indemnify the Purchaser and the Company
(and for this purpose the Purchaser is acting as agent for the Company)
and keep them fully indemnified against all claims, demands, actions,
proceedings, losses, costs, expenses and liabilities suffered by the
Purchaser or the Company as a result or arising from:
(a) any claims made by ION Equity in connection with any commission,
or any other fees, costs or expenses, payable to ION Equity by
the Company or the Vendors in connection with the acquisition of
the Shares by the Purchaser; or
(b) any failure by the Company to comply with the Welfare Reform and
Pensions Xxx 0000 and all regulations made under it (including
the Stakeholder Pension Scheme Regulations 2000 (as amended)) at
any time prior to Completion.
15
9. REGISTRATION OF INITIAL CONSIDERATION SHARES
9.1 The Company agrees to, as soon as possible following the effectiveness
of its current S-3 and S-4 registration statements filed with the SEC,
file a registration statement under the Securities Act that will
include the Initial Consideration Shares issued to the Vendors pursuant
to this Agreement (such Initial Consideration Shares are also referred
to herein as "Registrable Securities") and use its best efforts to
cause to be registered under the Securities Act all Registrable
Securities as soon as practicable.
9.2 Whenever required under this Clause to use its best efforts to effect
the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective and to
remain effective until the distribution of such Registrable
Securities is completed;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
with such registration statement as may be necessary to keep such
registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement;
(c) furnish to the Vendors such numbers of copies of the prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as
they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them;
(d) use its best efforts to register and qualify the securities
covered by such registration statement under such other
securities or blue sky laws of such United States jurisdictions
as shall be reasonably requested or appropriate for the
distribution of the securities covered by the registration
statement, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in
any such states or jurisdictions where, but for the requirements
of this paragraph (d), it would not be obligated to be so
qualified;
(e) provide a transfer agent for the Initial Consideration Shares;
16
(f) if the Purchaser's common stock is not then listed on a national
securities exchange, use its best efforts to facilitate the
listing of the said common stock on a national securities
exchange;
(g) immediately notify the Vendors, at any time when a prospectus
relating to a registration statement covering the Registrable
Securities is required to be delivered under the Securities Act,
of the happening of any event of which the Purchaser has
knowledge as a result of which the prospectus contained in such
registration statement includes any untrue statement of a
material fact or omits to make the statements therein not
misleading in light of the circumstances then existing, and at
the request of the Vendors promptly prepare and furnish to the
Vendors a reasonable number of copies of an amended or
supplemental prospectus as may be necessary so that, as
thereafter delivered to the Vendors, such prospectus shall not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements contained therein not misleading in light of the
circumstances then existing;
(h) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC;
(i) enter into such customary agreements and take such other actions
as sellers of Registrable Securities shall reasonably request in
order to expedite or facilitate the disposition of such
Registrable Securities;
(j) use every reasonable effort to prevent the issuance of any stop
order suspending the effectiveness of such registration statement
or of any order preventing or suspending the use of any
preliminary prospectus and, if any such order is issued, to
notify the Vendors of said issuance of such order, and to obtain
the lifting thereof at the earliest reasonable time; and
(k) keep the Vendors and the Vendors' Solicitors reasonably informed
about the Company's progress effecting such registration,
including delivery to such counsel of copies of all
correspondence (electronic or otherwise) with the SEC with
respect to such registration.
9.3 All expenses (excluding any underwriters' discounts and commissions)
incurred in connection with a registration pursuant to Clause 9,
including, without limitation, any additional registration and
qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company, and the fees and
disbursements of one counsel for the selling shareholders, shall be
borne by the Company.
17
10. RULE 144 REPORTING
With a view to making available to the Vendors the benefits of certain
rules and regulations of the Commission that may at any time permit the
sale of the Registrable Securities to the public without registration
or pursuant to registration on Form S-3, the Company shall use its best
efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Exchange Act; and
(c) furnish to the Vendors, so long as they own any Registrable
Securities, upon request (i) a written statement as to the
Company's compliance with the reporting requirements of Rule 144
and of the Exchange Act, or that it qualifies as a registrant
whose securities may be resold pursuant to Form S-3, (ii) a copy
of the Company's most recent annual or quarterly report, and
(iii) such other reports and documents so filed by the Company as
the Vendors may reasonably request in availing itself of any rule
or regulation of the SEC which permits it to sell any such
securities without registration or pursuant to such form.
11. POST-COMPLETION OBLIGATIONS OF THE PRIMARY WARRANTORS
11.1 The Primary Warrantors shall at all times after Completion indemnify
the Purchaser and the Company (and for this purpose the Purchaser is
acting as agent of the Company) and keep each of them fully indemnified
against all claims, demands, actions, proceedings, damages, losses,
costs, expenses and liabilities suffered or incurred by the Purchaser
or the Company under or in connection with any guarantee or indemnity
given by the Company on or before Completion in respect of the
obligations of any other person provided that this Clause will not
apply to any guarantee or indemnity which is disclosed in the
Disclosure Letter and which the Purchaser has expressly agreed in
writing shall continue to subsist after Completion.
11.2 Each of the Primary Warrantors warrants and undertakes to the Purchaser
and the Company (and for this purpose the Purchaser is acting as agent
of the Company):
(a) not for a period of 12 months from the Completion Date to be,
directly or indirectly (whether as a shareholder, partner,
consultant, employee, agent or principal or in any other
capacity), engaged, concerned or interested in any business or
company carrying on business within the United Kingdom that
supplies the technology, knowledge and skills to empower
advertising agencies, media groups and content providers to
deliver mobile services, specifically through the development of
a mobile applications platform and/or mobile software solutions
and content, in the UK as well as internationally, including but
not limited to any business which provides premium and
non-premium mobile solutions in the key areas of web-based tools
which enable deployment of a range of SMS entertainment and
mobile marketing applications, provided that the Primary
Warrantors may be interested in up to five per cent of the
securities in any company carrying on such a business; and (which
is a separate and severable covenant);
18
(b) not for a period of 12 months from the Completion Date for
himself or for or through any other person to employ or engage or
seek to entice away from the employment or engagement of the
Company any person who was at any time during the 6 months before
the Completion Date employed or engaged by the Company; and
(which is a separate and severable covenant);
(c) not for a period of 12 months from the Completion Date for
himself or for or through any other person to canvass or solicit
or seek to canvass or solicit any person who shall have been at
any time during the 6 months before the Completion Date a
customer or client of the Company in order to offer them goods or
services which compete with those supplied by the Company prior
to the Completion Date; and (which is a separate and severable
covenant);
(d) not at any time after the Completion Date to use or hold himself
out as using any of the trading or operating names of the Company
or any colourable imitation or derivation of them; and (which is
a separate and severable covenant)
(e) save in relation to any ongoing employment with the Company, not
at any time after the Completion Date to represent himself or
permit himself to be held out as being in any way connected with
or interested in the Company.
11.3 Each of the Vendors acknowledges and agrees that the duration, extent
and application of the restrictions in Clauses 11.2(a), (b), (c), (d)
and (e) are no greater than is reasonable and necessary for the
protection of the interests of the Purchaser.
11.4 In this Clause, references to a person being "interested" in securities
of a company includes all interests which that person would be required
to notify to that company if he was a director of that company and the
company was a company incorporated in England and Wales.
19
12. CONFIDENTIAL INFORMATION
12.1 The Vendors shall not, whether before or after Completion, use or
disclose any Confidential Information and the Primary Warrantors shall
use their reasonable endeavours to ensure that no other employee of the
Company shall do so.
12.2 Clause 12.1 does not apply to:
(a) the use of the Confidential Information by any of the Vendors in
the ordinary course of the business of the Company at any time
prior to Completion;
(b) the disclosure of any Confidential Information which has entered
the public domain otherwise than by reason of a breach of Clause
12.1;
(c) the disclosure of Confidential Information to a director, officer
or employee of the Purchaser or the Company whose function
requires him to have the Confidential Information; or
(d) the disclosure of Confidential Information required to be
disclosed by law or other regulatory authority.
12.3 The Vendors agree that they will at any time and from time to time
after Completion give or disclose to the Purchaser on the Purchaser's
request all Confidential Information which is within their possession
or knowledge.
13. ANNOUNCEMENTS
13.1 Subject to Clause 13.2 and the provisions of any applicable law, no
announcement shall be made by any party before or after Completion in
relation to any of the transactions provided for in this Agreement
without the prior written consent of the other parties.
13.2 If the Purchaser is required by a stock exchange or other applicable
regulatory body to make any announcement regarding any of the
transactions provided for in this Agreement the Purchaser shall use all
reasonable endeavours to first consult with the Primary Warrantors as
to the contents of such announcements if consultation is reasonably
practicable.
14. COSTS
14.1 The Purchaser shall pay all stamp duty on this Agreement.
20
14.2 Except as otherwise provided in this Agreement, the parties shall pay
their own costs in connection with this Agreement.
14.3 The Purchaser shall be responsible for (pound)7,085 of the costs
incurred by the Company in ensuring that clause 2 of the Letter of
Intent is complied with.
15. NOTICES
15.1 Any notice or other communication to be given under or in relation to
this Agreement ("notice") shall be in writing and may be given by
leaving it at or sending it by Royal Mail Airsure post for
communications from the UK and its UK equivalent for communications to
the UK or facsimile transmission to the address or facsimile number and
marked for the attention of the person, in each case, set out in Clause
15.2 (or as otherwise notified from time to time by notice given in
accordance with this Clause). Any notice so given shall be deemed to
have been received:
(a) in the case of delivery by hand, at the time of delivery;
(b) in the case of post, 5 Business Days from the time of posting;
and
(c) in the case of facsimile transmission, at the time of despatch,
provided that if a notice is, or would (but for this proviso) be deemed
to be, received on a day that is not a Business Day or after 4.30 pm on
a Business Day, it shall instead be deemed to be received at 10.00 am
on the Business Day next following that day.
15.2 The addresses and facsimile numbers of the parties for the purposes of
Clause 15.1 are as follows:
Vendors:
Address: 00 Xxxxxxxxx Xxxx, Xxxxxx X0X 0XX
Fax: 000 0000 0000
For the attention of: Xxxx Xxxxx
With a copy to: Xxxxxx Xxxx Xxxx, 00 Xxxxxxxxx Xxxx, Xxxxxx XX0 00X
Purchaser:
Address: 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxx 00000, XXX
Fax: 000 000 000 0000
For the attention of: Xxxxxxx X. Xxxxxx, President & CEO.
15.3 In proving service it shall be sufficient to prove that (as the case
may be):
21
(a) the envelope containing the notice was properly addressed and
delivered to the appropriate address; or
(b) the envelope containing the notice was posted by a letter sent in
accordance with clause 15.1 above; or
(c) the facsimile transmission was made and acknowledgment was
obtained in person or by telephone of the receipt by the
addressee of a legible copy of the notice.
15.4 Any party may change its address or other details for notices under
this Clause to another address or other details in by giving written
notice to the other parties.
16. FURTHER ASSURANCE
The Vendors shall do or procure to be done all such further acts and
things, and execute or procure the execution of all such other
documents, as the Purchaser may from time to time reasonably require,
whether on or after Completion, for the purpose of giving to the
Purchaser the full benefit of all of the provisions of this Agreement.
17. WHOLE AGREEMENT AND VARIATION
This Agreement (together with any documents referred to in it)
constitutes the whole agreement between the parties and, no
modification, variation or amendment of this Agreement shall be
effective unless such modification, variation or amendment is in
writing and has been signed by or on behalf of all the parties. This
Agreement supersedes and wholly replaces the Letter of Intent.
18. WAIVER
18.1 No waiver of any breach of or default under this Agreement shall be
effective unless such waiver is in writing and has been signed by the
party against which it is asserted.
18.2 No failure or delay by the Purchaser in exercising any right, power or
remedy under this Agreement shall constitute a waiver of the right,
power or remedy and no single or partial exercise by the Purchaser of
any right, power or remedy under this Agreement or otherwise shall
prevent any further exercise of the right, power or remedy or the
exercise of any other right, power or remedy.
18.3 The rights, powers and remedies of the Purchaser under this Agreement
are cumulative and not exclusive of any rights, powers or remedies
provided by law.
22
18.4 The Purchaser may release or compromise the liability of any of the
Vendors without affecting the liability of the other Vendors.
19. EFFECT OF TERMINATION
This Clause and Clauses 12, 13, 14, 15 and 21 shall continue to have
effect notwithstanding the termination or rescission of this Agreement
and any rights or obligations of the parties in respect of any breach
of this Agreement accruing prior to, on or as a result of such
termination or rescission shall continue to subsist notwithstanding
such termination or rescission.
20. EFFECT OF COMPLETION
The provisions of this Agreement, so far as they are capable of having
effect after Completion, shall remain in full force and effect
notwithstanding Completion.
21. GOVERNING LAW AND JURISDICTION
21.1 This Agreement shall be governed by and construed in accordance with
English law other than clauses 9 and 10 which shall be construed in
accordance with the relevant U.S. Federal laws.
21.2 Each of the parties submits to the non-exclusive jurisdiction of the
courts of England.
22. ASSIGNMENT
22.1 Except as provided in Clause 22.2, none of the parties shall, without
the prior written consent of the others, be entitled to assign the
benefit of, or any right or interest in or under or arising from, this
Agreement.
22.2 The benefit of, or any right or interest in or under or arising from,
this Agreement may be assigned by the Purchaser to any subsidiary from
time to time of the Purchaser or to any other person to whom the
Purchaser may transfer the Shares.
23. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
A person who is not a party to this Agreement shall have no right under
the Contracts (Rights of Third Parties) Xxx 0000 to enforce any term of
this Agreement but this shall not affect any right or remedy of a third
party which exists or is available apart from that Act.
SIGNED by or on behalf of the parties.
23
SIGNED by XXXXX XXXXX /s/ XXXXXXXXX XXXXX as Attorney
for XXXXX XXXXX
SIGNED by XXXXXX XXXXXX XXXXX /s/ XXXXXXXXX XXXXX as Attorney
for XXXXXX XXXXXX XXXXX
SIGNED by XXXXXX XXXX /s/ XXXXXXXXX XXXXX as Attorney
for XXXXXX XXXX
SIGNED by XXXXXXXX XXXXX /s/ XXXXXXXXX XXXXX as Attorney
for XXXXXXXX XXXXX
SIGNED by XXXX XXXXXXX /s/ XXXXXXXXX XXXXX as Attorney
for XXXX XXXXXXX
SIGNED by XXXXXXX XXXX /s/ XXXXXXXXX XXXXX as Attorney
for XXXXXXX XXXX
SIGNED by XXXXXXX XXXXXXXX /s/ XXXXXXXXX XXXXX as Attorney
for XXXXXXX XXXXXXXX
SIGNED by XXXXXXX XXXXX /s/ XXXXXXXXX XXXXX as Attorney
for XXXXXXX XXXXX
SIGNED by XXXXXXXXX XXXXX /s/ XXXXXXXXX XXXXX
SIGNED by XXXXXX XXXXXX /s/ XXXXXX XXXXXX
SIGNED by XXXXXX XXXX XXXX /s/ XXXXXXXXX XXXXX as Attorney
for XXXXXX XXXX XXXX
SIGNED by XXXXXX XXXXXXXX /s/ XXXXXXXXX XXXXX as Attorney
for XXXXXX XXXXXXXX
SIGNED by XXXXXXX X XXXXXX
for and on behalf of
NEOMEDIA TECHNOLOGIES, INC. /s/ XXXXXXX X. XXXXXX
