ACQUISITION AGREEMENT
between
GREAT OWL LIMITED
(a company incorporated in accordance with the laws of
the British Virgin Islands under Registration Number 541543)
(collectively "the seller")
and
TRINITY LEARNING CORPORATION
(a company incorporated in accordance with the laws of
the State of Utah in the United States of America under Entity Number
5118314-0142)
("the purchaser")
in respect of
AYRSHIRE TRADING LIMITED
(a company incorporated in accordance with the laws of
the British Virgins Islands under Registration Number 500829)
("the company")
1. INTERPRETATION
In this agreement:
1.1 clause headings are used for convenience only and shall be
ignored in its interpretation;
1.2 unless contrary to, or otherwise indicated by the context, an
expression which denotes:
1.2.1 any gender includes the other genders;
1.2.2 a natural person includes an artificial person and vice
versa; and
1.2.3 the singular includes the plural and vice versa;
1.3 the following expressions bear the meanings assigned to them
below and cognate expressions bear corresponding meanings:
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1.3.1 "this agreement" - this agreement read together with the
appendices hereto;
1.3.2 "business day" - any day other than a Saturday, Sunday or
public holiday in England;
1.3.3 "closing date" 1 September 2003;
1.3.4 "convertible note" the convertible note attached hereto as
Appendix A to be signed by the purchaser contemporaneously
with this agreement;
1.3.5 "E Degree"- E Degree (Proprietary) Limited, a company
incorporated in accordance with the laws of the Republic of
South Africa under Registration Number 2000/005620/07;
1.3.6 "the escrow agent" Xxxx Xxxxx of London, England;
1.3.7 "escrow agreement" the escrow agreement to be concluded by
and between the purchaser, the seller and the escrow agent
within 10 (ten) business days of the signature date
substantially in the form attached hereto as Appendix B and
subject to any reasonable amendments required in writing by
the escrow agent;
1.3.8 "escrow option consideration shares" 300 000 (three
hundred thousand) fully paid shares in the share capital of
the purchaser to be allotted and issued by the purchaser to
the seller at their fair market value which shall be held in
escrow as contemplated in this agreement and the escrow
agreement and which are subject to the downward adjustment
contemplated in 8.4 and/or 11.5;
1.3.9 "exercise date" the date of the exercise of the option
being the date on which the notice referred to in 8.2.2 is
received or deemed to be received by the seller;
1.3.10 "fair market value" means in relation to:
1.3.10.1 11.5, the average of the closing price per share of the
purchaser on the stock exchange reported for the ten
business days immediately preceding the date upon which the
damages are determined, or if the purchaser is not then
listed on the stock exchange, the value per share of the
purchaser as determined by KPMG London Office or their
successor in practice at the relevant time ("KPMG") on the
date upon which the damages are determined;
1.3.10.2 1.3.8, 1.3.11 and 1.3.15, the average of the closing price
per share of the purchaser on the stock exchange reported
for the ten business days immediately preceding the exercise
date, or if the purchaser is not then listed on the stock
exchange, the value per share of the purchaser as determined
by KPMG on the exercise date;
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1.3.10.3 8.4, the average of the closing price per share of the
purchaser on the stock exchange reported for the ten
business days immediately preceding the date of the breach
or if the purchaser is not then listed on the stock
exchange, the value per share of the purchaser as determined
by KPMG on the date of the breach;
1.3.11 "initial option consideration shares" 1 200 000 (one
million two hundred thousand) fully paid shares in the share
capital of the purchaser to be allotted and issued to the
purchaser by the seller at their fair market value in terms
of 8 below;
1.3.12 "the loan" a loan of US$1 000 000.00 (one million United
States Dollars) to be lent and advanced free of interest by
the purchaser to the company;
1.3.13 "initial agreement" the sale of shares agreement concluded
by and between the company and the parties set out in column
1 of Appendix A thereto in respect of Riverbend;
1.3.14 "negotiable form" in respect of share certificates, bearer
form, except where the relevant shares are registered in the
name of a holder in which case the share certificates shall
be accompanied by the relevant share transfer form duly
executed by the holder;
1.3.15 "the option" the option granted by the seller to the
purchaser in terms of 8 of this agreement;
1.3.16 "the option consideration" the purchase consideration for
the option shares namely the initial option consideration
shares and the escrow option consideration shares
constituting 1 500 000 (one million five hundred thousand)
fully paid shares in the share capital of the purchaser to
be allotted and issued by the purchaser to the seller at
their fair the market value in terms of 8 below subject to
the downward adjustment contemplated in 8.4 and/or 11.5;
1.3.17 "the option period" a period of 10 (ten) years from the
day upon which the average of the closing price per share of
the purchaser on the stock exchange reported for 10 (ten)
consecutive business days equals or exceeds US$1.50 (one
United States Dollar and fifty cents) per share;
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1.3.18 "the option shares" 490 (four hundred and ninety) ordinary
shares of a nominal value of US$1.00 (one United States
Dollar) each owned by the seller in the issued share capital
of the company and which constitute 49% (forty nine per
centum) of the entire issued share capital of the company;
1.3.19 "parties" - collectively the seller and the purchaser;
1.3.20 "the purchase consideration" - the purchase consideration of
the sale shares, namely the convertible note, to be
discharged in accordance with the provisions of 6;
1.3.21 "RiverBend" RiverBend Group Holdings (Proprietary)
Limited, a company incorporated in accordance with the laws
of the Republic of South Africa under Registration Number
1998/016713/07);
1.3.22 "sale shares" - the 510 (five hundred and ten) ordinary
shares of a nominal value of US$1.00 (one United States
Dollar) each owned by the seller in the issued share capital
of the company which constitute 51% (fifty one per centum)
of the entire issued share capital of the company;
1.3.23 "secondary stock"- the shares referred to in section 1(j) of
the convertible note;
1.3.24 "signature date" - the date on which this agreement is
signed by the party hereto which signs it last in time;
1.3.25 "stock exchange"- a primary stock exchange that is subject
to financial requirements for listing such as the NASDAQ
Small Cap, AMEX, NASDAQ National, or the NYSE but excluding
secondary exchanges such as OTC BB;
1.3.26 "subsidiary" in relation to the company ("holding
company") is another company in which the holding company:
1.3.26.1 holds a majority of voting rights; or
1.3.26.2 is a member and has the right to appoint or remove a
majority of such company's board of directors; or
1.3.26.3 is a member and controls alone or with other
shareholders or members the majority of such company's
voting rights;
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1.4 if any provision in a definition is a substantive provision
conferring rights or imposing obligations on any party,
notwithstanding that it is only in the definition clause, effect
shall be given to it as if it were a substantive provision in the
body of this agreement;
1.5 where figures are referred to in numerals and in words, if there
is any conflict between the two, the words shall prevail;
1.6 when any number of days is prescribed in this agreement, same
shall be reckoned exclusively of the first and inclusively of the
last day unless the last day falls on a Saturday, Sunday or
public holiday in England, in which case the last day shall be
the next succeeding business day;
1.7 the rule of construction, that this agreement shall be
interpreted against the party responsible for the drafting and/or
preparation hereof, shall not apply;
1.8 schedules, appendices or annexures to this agreement shall be
deemed to be incorporated in and form part of this agreement; and
1.9 expressions defined in this agreement shall bear the same
meanings in schedules, appendices or annexures to this agreement
to the extent to which they do not themselves contain their own
definitions.
2. PREAMBLE
It is recorded and agreed that:
2.1 the parties shall amend the Definitive Agreement concluded by and
between the seller and the purchaser in respect of the company
and signed on 10 June 2003 ("the Original Agreement") and
consolidate those amendments required to be effected to the
Original Agreement to ensure that it complies with the Laws of
England into one document, being this agreement, which
substitutes and replaces the Original Agreement;
2.2 the seller is agreeable to selling the sale shares to the
purchaser upon the terms and conditions contained in this
agreement; and
the parties wish to record their agreement in writing.
3. COUNTERPARTS
This agreement may be signed by the parties in any number of separate
counterparts, including facsimile counterparts, each of which when
signed and delivered shall be an original, but all counterparts shall
together constitute one and the same instrument.
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4. SUSPENSIVE CONDITIONS
4.1 This agreement is subject to the fulfillment of the following
suspensive conditions on or before 21 August 2003:
4.1.1 the company owning at least 95% (ninety five per centum) of
the issued ordinary share capital of RiverBend; and
4.1.2 the purchaser receiving, in a form reasonably satisfactory
to the purchaser and seller, an opinion from its legal
counsel that this agreement and the transactions
contemplated hereby comply with the laws of England and any
other jurisdictions that purchaser reasonably deems
necessary.
4.2 The seller shall use its best endeavours to procure the timeous
fulfillment of the suspensive condition contained in 4.1.1 and
the purchaser shall use its best endeavours to procure the
timeous fulfilment of the suspensive condition contained in
4.3 If any suspensive condition is not fulfilled for any reason
whatsoever by 21 August 2003, then:
4.3.1 this whole agreement (other than 1, 3, this 4, 9, 12 to 16
(both inclusive) and 22, by which the parties shall remain
bound) shall be of no force or effect;
4.3.2 without prejudice to 22 below, the parties shall be entitled
to be restored as near as possible to the positions in which
they would have been had this agreement not been entered
into; and
4.3.3 neither party shall have any claim against the other in
terms of this agreement except for such claims (if any) as
may arise from a breach of this 4 or from any other
provision of this agreement by which the parties remain
bound.
5. SALE OF SALE SHARES
Notwithstanding the signature date, the seller sells to the purchaser
which purchases the sale shares with full title guarantee, free from
any encumbrances and with all rights attaching to them with effect to
and from the closing date, on which date all risk in and benefits
attaching to the sale shares shall be regarded as having passed to the
purchaser.
6. PURCHASE CONSIDERATION AND PAYMENT
The purchase consideration payable by the purchaser to the seller for
the sale shares shall be discharged by delivery by the purchaser to
the seller on the closing date of the convertible note duly signed by
the purchaser.
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7. CLOSING
7.1 At 10h30 on the closing date, representatives of the parties
shall meet at XX Xxxxx Attorneys, Notaries and Conveyancers,
which is situate at Kentgate, 00 Xxxx Xxxx, xxx Xxxxxx Xxxx,
Xxxxxxx, Xxxxxxxxxxxx. At that meeting the purchaser shall
deliver the purchase consideration to the seller and
simultaneously therewith the seller shall-
7.1.1 for the purposes of 21.2, deliver to the escrow agent the
share certificates in respect of the sale shares in
negotiable form to be held in escrow pursuant to this
agreement and the escrow agreement for the purchaser as
owner and the seller as pledgee provided that the sale
shares shall be released from escrow and delivered to the
purchaser on the tenth anniversary of the closing date if
the deemed sale contemplated in 21 below has not occurred;
7.1.2 procure that a resolution of the directors of the company is
passed approving the transfer of the sale shares pursuant to
this agreement.
7.2 All certificates in respect of the sale shares shall remain in
the possession of the escrow agent save as expressly otherwise
provided in this agreement and the escrow agreement.
7.3 Subject to the provisions of the escrow agreement, the escrow
agent may not release the share certificates in respect of the
sale shares unless:
7.3.1 a written notice, signed by each of the parties to this
agreement addressed to the escrow agent, directs the escrow
agent to release the share certificates in respect of the
sale shares in negotiable form to the person specified in
the notice;
7.3.2 delivery is required to give effect to the terms of this
agreement, in which event each of the parties shall be
obliged to give the notice referred to in 7.3.1 to the
escrow agent,
or unless an order from a court of competent jurisdiction or
award from an arbitral authority instructs the escrow agent as to
how the sale shares should be disbursed.
8. THE OPTION
8.1 Delivery of the option shares
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8.1.1 Within 10 (ten) business days of the closing date, the
seller shall deliver to the escrow agent the share
certificates in respect of the option shares in negotiable
form to be held in escrow in terms of the escrow agreement.
8.1.2 All certificates in respect of the option shares shall
remain in the possession of the escrow agent save as
expressly otherwise provided in this agreement and the
escrow agreement.
8.1.3 Subject to the provisions of the escrow agreement, the
escrow agent may not release the share certificates in
respect of the option shares unless:
8.1.3.1 a written notice, signed by each of the parties to this
agreement addressed to the escrow agent, directs the
escrow agent to release the share certificates in
respect of the option shares in negotiable form to the
person specified in the notice;
8.1.3.2 delivery is required to give effect to the terms of
this agreement, in which event each of the parties
shall be obliged to give the notice referred to in
8.1.3.1 to the escrow agent,
or unless an order from a court of competent jurisdiction or award
from an arbitral authority instructs the escrow agent as to how the
option shares should be disbursed.
8.2 The option, The option Period, Exercise of the option and Delivery of
the option shares
8.2.1 The seller grants to the purchaser during the option period the
right and option to purchase all of the option shares for the
option consideration subject to the terms and conditions
contained in this agreement.
8.2.2 The purchaser may exercise the option by giving to the seller at
any time during the option period written notice exercising the
option.
8.2.3 If the purchaser exercises the option, the escrow agent shall be
obliged, as provided in 8.1.3, to release the share certificates
in respect of the option shares in negotiable form to the
purchaser within 10 (ten) business days after the exercise date
("the release date") against payment in full by the purchaser to
the seller of the option consideration in terms of 8.3 below.
8.3 The option consideration and payment of the option consideration
The option consideration payable by the purchaser to the seller for
the option shares shall be payable on the release date against
delivery of the share certificates in negotiable form in respect of
the option shares as follows:
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8.3.1 the initial option consideration shares shall be delivered
to the seller on the release date; and
8.3.2 subject to 8.4, the escrow option consideration shares shall
be delivered to the escrow agent and shall remain in the
possession of the escrow agent in terms of this agreement
and the escrow agreement until the later of twenty four
months after the closing date or the date upon which the
company becomes the beneficial owner of at least 51% (fifty
one per centum) of the entire issued share capital of E
Degree after which date the escrow option consideration
shares or such number of the escrow option consideration
shares then held in escrow on such date, in either case in
negotiable form, shall be released from escrow and delivered
to the seller mutatis mutandis in accordance with 8.1.3;
provided that, if by 30 December 2006 the company is not the
beneficial owner of at least 51% (fifty one per centum) of
the entire issued share capital of E Degree, the escrow
option consideration shares or such number of the escrow
option consideration shares then held in escrow on such date
shall be delivered in negotiable form by the seller to the
purchaser.
8.4 Without prejudice to any rights of the purchaser in terms of this
agreement, in the event of a breach by the seller of any of the
warranties in favour of the purchaser, such number of the escrow
option consideration shares calculated at their fair market value as
shall be determined by KPMG as necessary to compensate the purchaser
in full for all damages and expenses arising from such breach shall be
delivered in negotiable form by the seller to the purchaser.
8.5 It is recorded that the purchaser presently only has ordinary shares
of no par value in its issued share capital. Accordingly it is
recorded and agreed that if the ordinary shares in the purchaser are
consolidated or subdivided at any time-
8.5.1 the applicable numbers of such shares in the purchaser for
the purposes of this agreement; and
8.5.2 the applicable closing price per share of the purchaser on
the stock exchange for the purposes of this agreement,
shall be adjusted accordingly and if any disagreement occurs
in relation to such adjustment, the result of the adjustment
shall be certified correct by the purchaser's auditors at
the relevant time and the decision of such auditors, acting
as experts and not as arbitrators, shall be final and
binding on the parties in the absence of any manifest error
in calculation.
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9. DISPUTES
9.1 Any dispute between any of the parties in regard to any matter
arising out of this agreement or its interpretation or their
respective rights and obligations under this agreement or its
cancellation or alleged cancellation or any matter arising out of its
cancellation or alleged cancellation, shall be referred for
determination to an expert ("the expert"). The costs of the expert
shall be borne and paid equally by the parties.
9.2 The expert shall:
9.2.1 if the matter in issue is an accounting or financial matter
only, be an independent auditor agreed upon between the
parties or, failing such agreement, nominated by the
President for the time being of the Institute of Chartered
Accountants in England and Wales (or its equivalent) or his
nominee at the instance of any of the parties;
9.2.2 if the matter in issue is a legal matter only, be Queen's
Counsel of at least 5 (five) years' standing as such and
practising as such at the London Bar agreed upon between the
parties or, failing such agreement, nominated by the
Chairman for the time being of the Bar Council of England
and Wales (or its equivalent) or his nominee at the instance
of any of the parties;
9.2.3 if the matter in dispute is any other matter, be an
independent person agreed upon between the parties or,
failing such agreement, nominated by Chairman for the time
being of the Bar Council of England and Wales (or its
equivalent),
provided that if the parties cannot agree into which category the
dispute falls, it shall be deemed to be a legal matter only.
9.3 The appointment of the expert shall be agreed upon between the parties
to the dispute, but failing agreement between them within a period of
14 (fourteen) days after the resolution of the dispute has been
demanded, any of the parties shall be entitled to request the
chairperson at the relevant time of the London Bar Council (or his
representatives) to make the appointment and, in making the
appointment, to have regard to the nature of the dispute.
9.4 The expert shall act in all respects as an expert and not an
arbitrator and shall not be bound to follow the general principles of
the laws of any country, but shall decide any dispute according to
what the expert considers just and equitable in the circumstances.
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9.5 The decision of the expert:
9.5.1 shall be final and binding on the parties in the absence of
a manifest error in calculation;
9.5.2 shall be carried into effect; and
9.5.3 may be made an order of any court of competent jurisdiction.
9.6 The provisions of this clause 9:
9.6.1 constitute an irrevocable consent by the parties to any
proceedings in terms of this clause 8 and none of the
parties shall be entitled to withdraw therefrom or claim at
any stage of the proceedings that it is not bound by such
proceedings;
9.6.2 are severable from the rest of this agreement and shall
remain in effect despite the termination of or invalidity or
alleged invalidity for any reason of this agreement or any
part thereof;
9.6.3 shall not preclude any of the parties hereto from
instituting any injunctive proceedings in any appropriate
court.
10. WARRANTIES
10.1 The seller gives to the purchaser the warranties contained in Appendix
C hereto ("the warranties in favour of the purchaser") and the
purchaser gives to the seller the warranties contained in Appendix D
hereto ("the warranties in favour of the seller").
10.2 The purchaser shall not be entitled to cancel this agreement as a
consequence of any breach by the seller of any such warranties, unless
the breach is a material breach of a material warranty which goes to
the root of this agreement and the breach is incapable of being
remedied by payment of compensation or, if it is capable of being
remedied by payment of compensation, the seller fails to pay the
purchaser such compensation within 30 (thirty) days of the amount
thereof being determined and communicated in writing to the seller.
10.3 The provisions of 10.2 shall apply mutatis mutandis in respect of the
warranties in favour of the seller.
11. INDEMNITIES
11.1 Without prejudice to any of the rights of the purchaser arising from
any of the provisions of this agreement, the seller indemnifies the
purchaser and hold it harmless against all loss, liability, damage or
expense ("damages") which the purchaser and/or the company may suffer
as a result of or which may be attributable to:
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11.1.1 any liability of the company, whether actual, contingent or
otherwise arising out of or relating to any action or
failure to act occurring prior to the signature date not
reflected in its most recent audited annual financial
statement ("the accounts");
11.1.2 any liability of the company for taxation not provided for
in the accounts arising from or out of the profits or income
of the company out of or relating to any action or failure
to act occurring for all periods prior to the signature
date, for which purpose the term "taxation" shall include:
11.1.2.1 normal taxation;
11.1.2.2 value-added tax;
11.1.2.3 regional services levies;
11.1.2.4 secondary tax on companies;
11.1.2.5 capital gains tax;
11.1.2.6 all other forms of taxation;
11.1.2.7 any taxation arising from new assessments of taxation
and/or the reopening of any income tax assessments of
the company; and
11.1.2.8 any penalties or interest as a result thereof and/or in
regard to any of the aforegoing;
11.1.3 any claims or liabilities due to a third party (including
claims or liabilities for consequential loss) arising out of
or relating to any action or failure to act occurring before
the signature date and not provided for in the accounts or
which occurs between the signature date and the closing
date; and
11.1.4 any breach by the seller or in the event any third party
alleges facts that, if true, would mean the seller has
breached of any of the warranties in favour of the
purchaser, and/or the representations and covenants
contained herein and/or any other agreement, instrument,
certificate or document executed or delivered pursuant to
this agreement.
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11.2 The purchaser shall be deemed to have suffered a loss
equivalent to the amount of any liabilities or claims
against which it is indemnified in terms of 11.1.
11.3 The purchaser shall endeavour to notify the seller of any
claim which may be made against the company in respect of
any of the matters referred to in 11.1 within a reasonable
time of the purchaser becoming aware thereof, to enable the
seller to endeavour, if they so elect, to take steps to
contest such claim.
11.4 The seller shall be entitled to contest the claim concerned
in the name of the company arising out of or relating to any
action or failure to act occurring prior to the signature
date and shall be entitled to control the proceedings in
regard thereto, provided that:
11.4.1 the seller utilizes legal counsel selected by the
seller and approved by the purchaser in writing;
11.4.2 the seller indemnifies the purchaser and the company
against all party and party and solicitor and client
costs which may be incurred as a consequence of such
steps and furnishes to the purchaser and the company
reasonable security against such costs; and
11.4.3 the seller shall not settle or otherwise compromise any
such claim, action or proceeding without the prior
written consent of the purchaser, such consent not to
be withheld unreasonably and such consent not to be
withheld at all if the judgment or settlement contains
a full release reasonably satisfactory to the purchaser
and can be satisfied in its entirety by the seller
without any obligation on the part of the purchaser;
and
11.4.4 the purchaser shall procure that the company renders
reasonable assistance to the seller at the seller cost
and expense, in regard to the steps taken by the
seller.
11.5 Without prejudice to any rights of the purchaser in terms of
this agreement, the liability of the seller for damages
hereunder shall be satisfied (i) first by reduction in the
number of secondary stock; and (ii) second by the delivery
in negotiable form by the seller to the purchaser of all or
the requisite number of escrow option consideration shares
calculated at their fair market value.
11.6 The indemnities given by the seller to the purchaser in
terms of this clause 11 shall apply mutatis mutandis to the
subsidiaries.
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12. APPLICABLE LAW AND JURISDICTION
Subject to 9, all rights and obligations arising from or pursuant to
the provisions of this agreement shall be governed exclusively by the
laws of England and the courts of England shall have exclusive
jurisdiction in respect of any matters and/or disputes arising between
the parties hereto and/or any of their respective heirs, successors-
in-title and assigns.
13. ADDRESS AND NOTICES
Each of the parties chooses as their address ("address") for the
purposes of the giving of any notice, the payment of any sum, the
serving of any process and for any other purpose arising from or
pursuant to this agreement, as follows:
13.1.1 the seller : x/x Xxxxxxxx Xxxxxxx
0xx Xxxxx, Xxxx C
L'Estoril, Avenue Princess Xxxxx
Xxxxx Xxxxx
XXXXXX
Telefacsimile : 09377 93256 270
13.1.2 the purchaser : 0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxxxxxxx 00000
Telefacsimile : 1 510 540 9313
13.2 Any of the parties shall be entitled from time to time, by written
notice to the others, to vary its address to any other address which
is not a post office box or poste restante, provided that any such
change of address will only become effective on the seventh business
day after the delivery of such written notice to the other parties.
13.3 Any notice given and any payment made by any party to all or any of
the others ("the addressees") which:
13.3.1 is delivered by hand or, in the case of a notice,
transmitted by telefacsimile during the normal business
hours of the addressees at the addressees' address at the
relevant time shall be rebuttably presumed to have been
received by the addressees on the first business day after
the date of such delivery or transmission, as the case may
be;
13.3.2 is delivered by courier to the addressees' address at the
relevant time shall be rebuttably presumed to have been
received by the addressees on the third business day after
the date that it is handed to the courier service.
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13.4 Notwithstanding anything to the contrary herein contained, a
written notice or communication actually received by an addressee
shall be regarded as an adequate written notice or communication
to it notwithstanding that it was not sent to or delivered at its
chosen address.
14. GENERAL
14.1 This agreement constitutes the sole record of the agreement between
the parties in regard to the subject matter hereof.
14.2 None of the parties shall be bound by any representation, warranty,
promise or the like not recorded in this agreement.
14.3 No addition to or variation or agreed cancellation or novation of this
agreement shall be of any force or effect unless in writing and signed
by or on behalf of the parties.
14.4 Any indulgence which any of the parties may grant to the others in
terms of or pursuant to this agreement shall neither constitute a
waiver of any of the rights of the party which granted such indulgence
nor a novation hereof.
14.5 Nothing in this clause 14 limits or excludes the liability for fraud.
15. BREACH
Subject to 10.2, should the purchaser, on the one hand, or the seller,
on the other hand, ("defaulting party") commit a material breach of
any of the material provisions of this agreement and fail to remedy
such breach within 30 (thirty) days (or such longer period as may be
reasonably required to remedy such breach) after receiving written
notice from the purchaser, on the one hand, or the seller, on the
other hand, ("aggrieved party") to do so, then the aggrieved party
shall be entitled, without prejudice to the aggrieved party's other
rights in law, to claim specific performance of all of the defaulting
party's obligations, without prejudice to the aggrieved party's rights
to claim damages.
16. CONFIDENTIALITY
Each of the parties undertakes to keep confidential and to endeavour
to ensure that each of their respective employees, executives and
representatives keeps confidential any information relating to the
provisions of this agreement save to the extent to which any such
information is in the public domain and/or is obtained from another
lawful source and/or is required to be discharged and/or published to
comply with any rules, regulations, requirements or directions of any
statutory body and/or stock exchange.
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17. SUBSTITUTION
The purchaser shall be entitled to nominate in writing any third party
or third parties to be the buyer/s of the whole or any portion of the
sale shares in lieu of the purchaser itself, provided however that the
purchaser itself shall remain responsible nevertheless to procure that
the purchase price and all of the other obligations of the purchaser
in terms of this agreement are discharged.
18. BOARD COMPOSITION, APPOINTMENT OF MANAGING DIRECTOR AND THE LOAN
18.1 Within 60 (sixty) days after the closing date, Xx Xxxxxx Xxxxxx shall
be appointed to the board of directors of the purchaser as a non-
executive director. From the closing date Xx Xxxxx Xxxxxxxxxx
("Nigel") shall have the right to be appointed as managing director of
any subsidiary of the company from time to time that is a trading
company provided that if such right is exercised, such appointment
will terminate on the exercise date. In addition, Nigel shall have the
right to be appointed as managing director of the company provided
that if such right is exercised, such appointment will terminate on
the exercise date.
18.2 From the closing date Nigel shall be invited to attend all board
meetings of the purchaser in an observer capacity and the purchaser
shall send to Nigel all notices and documentation relevant to such
meetings that a director of the company shall receive.
18.3 The parties and the company shall procure that the seller and the
purchaser shall be each entitled to appoint an equal number of
directors to the board of directors of the company during the period
between the closing date and the exercise date.
18.4 The parties record and agree that they shall procure that
18.4.1 the loan shall be utilized by the company solely for the
purposes of new contracts and/or expansion within Africa and
internationally, strategic positioning by the company with
Johnnic Communications Limited and development of software
products;
18.4.2 a significant portion of the initial advance referred to in
18.4.3 may be invested by the company in E Degree;
18.4.3 US$300 000,00 (xxxxx xxxxxxx xxxxxxxx Xxxxxx Xxxxxx Dollars) of
the loan ("initial advance") shall be lent and advanced by the
purchaser to the company on the first business day after the
closing date and the balance of the loan shall be so lent and
advanced on the sixtieth business day after the closing date;
18.4.4 the loan will be repayable in full on 30 December 2006, provided
that if by 30 December 2006 the option has not been exercised,
the loan shall be repayable by the company to the purchaser in
five equal annual instalments, the first instalment being payable
on 31 December 2007 and the remaining instalments payable in
yearly intervals thereafter; and
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if any repayments of the loan are not made on due date and are
not made within 10 (ten) business days after the company receives
written notice from the purchaser demanding such payment, the
purchaser shall be entitled to accelerate repayment of the entire
balance of the loan then outstanding.
19. LEGENDS
The seller understands that the convertible note, the shares issuable
upon conversion of the convertible note, the option consideration and
any securities issued in respect thereof or exchange therefor, may
bear one or all of the following legends
19.1.1 "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, SUCH SHARES MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
WITHOUT AN EXEMPTION UNDER THE SECURITIES ACT OR AN OPINION
OF LEGAL COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED."; and/or
19.2 any legend required by the securities laws of any
jurisdiction to the extent such laws are applicable to the
securities represented by the instrument so legended.
20. MATERIAL DECISIONS AND RESERVED MATTERS
Between the closing date and the exercise date, unless first approved
by both the seller and the purchaser with respect to the following "A"
reserved matters:
"A" reserved matters
20.1.1 neither the company nor any of its subsidiaries at the relevant
time shall sell the whole or substantially the whole of its
undertaking or the whole or the greater part of its assets;
20.1.2 the transfer of shares in the company other than as provided in
this agreement shall not be registered;
20.1.3 save as expressly provided in this agreement, the company will
not create or issue any shares of any kind, debentures of any
kind, debenture stock or other securities;
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20.1.4 save as expressly provided in this agreement, the company will
not pass any special resolutions including, without any
limitations, the taking of any steps:
20.1.4.1 to change its equity or capital structure;
20.1.4.2 to change or alter its memorandum or articles of
association;
20.1.4.3 for it to be voluntarily wound up;
20.1.5 anything approved in regard to an "A" reserved matter shall not
be materially varied or amended, or cancelled or terminated;
20.1.6 neither the company nor any of its subsidiaries at the relevant
time shall introduce any share incentive scheme;
20.1.7 no loans to any shareholder of the company or of any of its
subsidiaries at the relevant time or to any holding or fellow
subsidiary of such shareholder shall be made by the company or
any of its subsidiaries at the relevant time;
20.1.8 no directors who are not elected in writing by the board of
directors of the company will be appointed to the boards of any
of the subsidiaries.
20.2 Subject to 20.3, between the closing date and the exercise date,
unless first approved by both the seller and the purchaser with
respect to the following "B" reserved matters:
"B" reserved matters
20.2.1 no asset of the company or any of its subsidiaries at the
relevant time will be pledged or hypothecated or in any way
encumbered as security;
20.2.2 neither the company nor any of its subsidiaries at the relevant
time will furnish any guarantee, suretyship, undertaking or
indemnity or any other form of intercession for any obligation
whatsoever of any third party, namely of anyone other than a
member of the group other than any bid, performance and/or
warranty guarantees to customers or potential customers;
20.2.3 no guarantee, suretyship, undertaking or indemnity or any other
form of intercession for any obligation of any third party as
contemplated in 20.2.3 furnished by the company or any of its
subsidiaries shall be varied or amended in any manner whatsoever;
20.2.4 neither the company nor any of its subsidiaries at the relevant
time will incorporate any company or subscribe for any shares in
any company, save that the same shall be regarded as an "A"
reserved matter if such incorporation or subscription is not in
respect of a subsidiary of the company or does not result in the
relevant company becoming a subsidiary of the company;
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20.2.5 none of the company's subsidiaries at the relevant time will make
any material change to the nature or structure of its business if
the same would be unlike its business at that time;
20.2.6 none of the company's subsidiaries at the relevant time shall
create or issue (save to the company) any shares of any kind,
debentures of any kind, debenture stock or other securities;
20.2.7 save in the ordinary and regular course of business or provided
for in the relevant budget, no material or long term contracts
shall be entered into by the company or any of its subsidiaries
at the relevant time or cancelled or amended;
20.2.8 none of the company's subsidiaries at the relevant time will pass
any special resolution including, without any limitations, the
taking of any steps:
20.2.8.1 to change its equity or capital structure;
20.2.8.2 to change or alter its memorandum or articles of
association;
20.2.8.3 for it to be voluntarily wound-up;
20.2.9 neither the company nor any of its subsidiaries at the relevant
time will:
20.2.9.1 change its auditors and/or bankers;
20.2.9.2 change its financial year end;
20.2.10. no contracts exceeding US$100 000,00 (xxx xxxxxxx xxxxxxxx Xxxxxx
Xxxxxx Dollars) per annum with any shareholder of the company or
any of its subsidiaries at the relevant time or with any holding
or fellow subsidiary of such shareholder, or any abnormal or
long-term contract or any contract outside the normal and
ordinary course of business, shall be entered into by the company
or any of its subsidiaries at the relevant time or cancelled or
amended;
20.2.11. neither the company nor any of its subsidiaries at the relevant
time will:
20.2.11.1 enter into any contract to delegate any of its
administration or management responsibilities;
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20.2.11.2 enter into, cancel or amend any licensing, franchise,
technical, supply, distribution or any royalty or similar
agreement of any kind or any consultancy agreement where the
other party to the contract is a shareholder of the company
or the holding company or subsidiary or fellow subsidiary or
associate of such shareholder;
20.2.11.3 approve, cancel or effect material changes to the annual
budget or any modification thereof, or to its strategic
plans or marketing strategy or incur unbudgeted capital
expenditure in excess of US$150 000,00 (one hundred and
fifty thousand United States Dollars) per item or
US$500 000,00 (xxxx xxxxxxx xxxxxxxx Xxxxxx Xxxxxx Dollars)
in total per annum;
20.2.11.4 change its accounting policies or tax practices, save as
required by any relevant legislation;
20.2.11.5 save for loans to employees in the ordinary course of
business, grant any loans to any persons who are not
employees of the company or any of its subsidiaries;
20.2.12 anything approved in regard to a "B" reserved matter shall not be
materially varied or amended, or cancelled, or terminated;
20.2.13 no material acquisitions, disposals, mergers or joint ventures
will be entered into by the company;
20.2.14 neither the company nor any of its subsidiaries at the relevant
time will suspend or cease all or any material part of its
business unless failure to do so is adverse to the best interests
of the company or its subsidiary concerned;
20.2.15 neither the company nor any of its subsidiaries at the relevant
time will undertake any new business ventures of any kind
whatsoever outside the company's existing lines of business at
the relevant time or any diversification outside the company's
existing lines of business;
20.2.16 the company will not change its dividend policy or make any other
distributions of a similar nature.
20.3 In the event that the approval required in terms of 20.2 cannot be
obtained, the purchaser shall be entitled to require that the dispute
be submitted for determination by the expert in terms of 9 above on
the basis that the expert shall have regard to what he considers to be
in the best interests of the business/es of the company in contra
distinction to that of the shareholders of the company.
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20.4 Should any of the provisions of this clause 20 conflict with any of
the provisions of the memorandum and articles of association from,
time to time of the company, the provisions of this clause 20 shall
prevail as between the parties.
21. DEEMED SALE
21.1 If an event of default as defined in section 8 of the convertible note
occurs, the purchaser shall be deemed to have sold the sale shares to
the seller for cash at their par value ("the deemed offer purchase
consideration") on the day immediately preceding the date upon which
the aforementioned event of default occurs ("the deemed sale date").
21.2 As security for the due performance of the purchaser's obligations to
the seller in terms of 21.1 above, the purchaser agrees to pledge the
sale shares to the seller pursuant to the deed of pledge attached
hereto as Appendix E which deed of pledge shall be signed and executed
by the purchaser and the seller contemporaneously with this agreement
on the basis that the sale shares as pledged shall be delivered in
negotiable form to the escrow agent and remain in escrow in terms of
this agreement and the escrow agreement for the purchaser as owner and
the seller as pledgee.
21.3 All certificates in respect of the sale shares shall remain in the
possession of the escrow agent save as expressly otherwise provided in
this agreement and the escrow agreement.
21.4 Subject to the provisions of the escrow agreement, the escrow agent
may not release the share certificates in respect of the sale shares
unless:
21.4.1 a written notice, signed by each of the parties to the
agreement addressed to the escrow agent, directs the escrow
agent to release the share certificates in respect of the
sale shares in negotiable form to the person specified in
the notice;
21.4.2 delivery is required to give effect to the terms of this
agreement, in which event each of the parties shall be
obliged to give the notice referred to in 21.4.1 to the
escrow agent,
or unless an order from a court of competent jurisdiction or
award from an arbitral authority instructs the escrow agent as to
how the sale shares should be disbursed.
21.5 The escrow agent shall be obliged, as provided in 21.4, to release the
share certificates in respect of the sale shares in negotiable form to
the seller within 10 (ten) business days after the deemed sale date
against cash payment of the deemed offer purchase consideration.
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22. COSTS
Each of the parties shall bear and pay their own costs of and
incidental to the negotiation, drawing and conclusion of this
agreement, provided however that any duty payable with respect to the
registration of the transfer of the sale shares pursuant to this
agreement shall be borne and paid by the purchaser. The costs payable
to the escrow agent for their services, which costs are referred to in
the escrow agreement, shall be borne and paid equally by the parties.
In addition, the parties shall be jointly and severally liable in
favour of the escrow agent for such costs.
23. CANCELLATION OF CERTAIN DOCUMENTS
23.1 The seller and the purchaser specifically record and agree that
the following documents are upon the signature date cancelled
and of no further force and effect:
23.1.1 the Definitive Agreement concluded by and between the
parties and signed by the seller on 30 June 2003 and by the
purchaser on or about such date and all addenda to same;
23.1.2 the Convertible Promissory Note signed by the purchaser in
favour of the seller on or about 10 July 2003 and by the
seller on or about 10 July 2003 and the Convertible
Promissory Note signed by the purchaser in favour of the
seller on 1 August 2003 and by the seller on 1 August 2003;
and
23.1.3 the Deed of Pledge concluded by and between the purchaser
and the seller and signed by the seller on or about 8 July
2003 and by the purchaser on or about 10 July 2003 and the
Deed of Pledge concluded by and between the purchaser and
the seller and signed by the seller on 1 August 2003 and by
the purchaser on that date.
23.2 The execution of this Definitive Agreement, the Convertible Note
and the Deed of Pledge (both attached hereto as Appendix A and
Appendix E respectively) shall respectively substitute and
replace the documents referred to in 23.1 above.
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SIGNED at California on 1 September 2003
AS WITNESSES: For: TRINITY LEARNING CORPORATION
1_________________________________
2_________________________________ ______________________________________
who warrants being duly
authorised hereto
SIGNED at Monaco on 1 September 2003
AS WITNESSES: For: GREAT OWL LIMITED
1_________________________________
2_________________________________ ______________________________________
who warrants being duly
authorised hereto
_______________
APPENDIX A
THE CONVERTIBLE NOTE
_______________
_______________
APPENDIX B
THE ESCROW AGREEMENT
_______________
_____________
APPENDIX C
THE WARRANTIES IN FAVOUR OF THE PURCHASER
_______________
_____________
APPENDIX D
THE WARRANTIES IN FAVOUR OF THE SELLER
_______________
_____________
APPENDIX E
DEED OF PLEDGE
_______________
ACQUISITION AGREEMENT
_______________
between Great Owl Limited,
Trinity Learning Corporation and Ayrshire Trading Limited
_______________
XX XXXXX ATTORNEYS, NOTARIES & CONVEYANCERS
Kentgate, 00 Xxxx Xxxx, xxx Xxxxxx Xxxx, Xxxxxxx, 0000
XX Xxx 00000, Xxxxxxxxx, 0000, Xxxxxxxxxxxx
Tel : 000 000 0000 Fax : 000 000 0000
Reference: Xx XX Xxxxxxx
