STOCK PURCHASE AGREEMENT
BETWEEN
SPECTRALINK CORPORATION AND SPECTRALINK DENMARK APS
AND
EACH OF THE SHAREHOLDERS OF XXXX TELECOM A/S
CONTENTS
ARTICLE 1 Certain Definitions............................................. 2
ARTICLE 2 The Share Purchase.............................................. 7
ARTICLE 3 Sellers' Warranties (in Danish: "Indestaelser")................. 12
ARTICLE 4 Warranties and Covenants of Buyer and SpectraLink............... 13
ARTICLE 5 Pre-Closing Covenants of the Sellers............................ 14
ARTICLE 6 Pre-Closing Covenants of Buyer and Principal Shareholders
Guarantee....................................................... 19
ARTICLE 7 Conditions to Obligations of the Sellers........................ 20
ARTICLE 8 Conditions to Obligations of Buyer.............................. 20
ARTICLE 9 Termination of Agreement........................................ 21
ARTICLE 10 Survival Indemnification and Remedies........................... 23
ARTICLE 11 Confidentiality................................................. 27
ARTICLE 12 General Provisions.............................................. 28
EXHIBITS
Exhibit A: List of shareholders of Xxxx Telecom A/S
Exhibit B: Consultant Agreement
Exhibit C: Non-competition and Invention Assignment Agreement
Exhibit D: Accounting Principles
Exhibit E: Disclosure Letter
Exhibit F: Due Diligence Documentation
Exhibit G: Material Agreements
Exhibit H: Escrow Agreement
Exhibit I: Form for Preliminary Net Income Statement
Exhibit J: Press Release
Annex I: Warranties
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of
December 12, 2005 (the "AGREEMENT DATE") between SpectraLink Corporation
("SPECTRALINK"), a Delaware corporation and SpectraLink Denmark ApS, a Danish
limited company registered under CVR no. 29177872 with the Danish Commerce and
Companies Agency and a wholly-owned subsidiary of SpectraLink Corporation
("BUYER") and each of the shareholders of Xxxx Telecom A/S (the "COMPANY")
listed in Exhibit A hereto (the "SELLERS").
RECITALS
A. The Sellers own all of the issued and outstanding shares of the Company,
consisting solely of nominally DKK 10,000,000 ordinary shares in the aggregate
(the "COMPANY SHARES"), and no other securities of the Company are outstanding.
B. The Sellers desire to sell and transfer all of the Company Shares to
Buyer, and Buyer desires to purchase all of the Company Shares from the Sellers,
subject to the terms and conditions set forth in this Agreement (the "SHARE
PURCHASE").
C. Concurrently with the execution and delivery of this Agreement, and as a
condition and inducement for the parties' willingness to enter into this
Agreement: (i) Xxxxx Xxxx is entering into a consultancy agreement with
SpectraLink in the form attached hereto as Exhibit B (the "CONSULTANT
AGREEMENT"), and (ii) each Seller, except DKA, is entering into a
non-competition and invention assignment Agreement with SpectraLink and Buyer in
the form attached hereto as Exhibit C (the "NON-COMPETITION AND INVENTION
ASSIGNMENT AGREEMENT"). All of such agreements would become effective upon the
closing of the Share Purchase.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises,
covenants and conditions contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, each intending to be bound hereby, agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used herein, the following terms will have the meanings set forth below:
"ACCOUNTING PRINCIPLES" means the Company's accounting policies stated in
Exhibit D, except that the corporate income tax rate shall for the purpose of
the Company Net Income be calculated in accordance with Tax laws prevailing at
Closing.
"ACTION" means any action, arbitration, cause of action, claim, demand,
dispute, inquiry, investigation, mediation, proceeding or suit.
"ACQUISITION PROPOSAL" means any offer or proposal by a Person (other than
Buyer or any of its Subsidiaries) relating to (1) the Company Shares or any
other securities of the Company, including (a) any acquisition or purchase of
the Company Shares or other securities of the Company from any of the
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Sellers and/or the Company; (b) any tender offer, exchange offer or private
transaction; (c) any merger, consolidation, business combination or similar
transaction involving the Company; or (2) any sale, lease, exchange, transfer,
license, acquisition or disposition of all or substantially all of the assets or
business of the Company.
"APPLICABLE LAWS" means all foreign, federal, state, local, municipal or
other laws, ordinances, regulations, rules and other provisions having the force
or effect of law, and all judicial and administrative orders, writs,
injunctions, awards, judgments, decrees and determinations, applicable to a
specified Person or to such Person's assets, properties or business.
"BUSINESS DAY" means any day on which banks are generally open for the
public in Denver, Colorado, USA, New York, New York, USA and Copenhagen,
Denmark.
"CLOSING" has the meaning stated in Article 2.2(a).
"COMPANY" means Xxxx Telecom A/S, a company incorporated and existing under
the laws of Denmark, CVR no. 15622741, Xxxxxxxxxxxx 00, XX-0000 Xxxxxxx.
"COMPANY BUSINESS" means the business of the Group Companies as presently
being conducted and as proposed to be conducted between signing of this
Agreement and Closing.
"COMPANY IP RIGHTS" means the Company-Owned IP Rights and Company-Licensed
IP Rights collectively and any other Intellectual Property Right necessary for
the conduct of the Company Business.
"COMPANY-LICENSED IP RIGHTS" means Intellectual Property Rights licensed to
the Company, Xxxx Xxxxxxx or Xxxx U.S. on a non-exclusive basis.
"COMPANY NET INCOME" means the consolidated after tax net profit of the
Group Companies, calculated in accordance with the Accounting Principles and the
Danish Financial Statements Act (in Danish: "Arsregnskabsloven") applying to
enterprises of reporting class C, during the period beginning May 1, 2005
through December 31, 2005 (unless Closing is postponed, cf. subsection 2.2(a) in
which case the actual date of Closing shall be applied) and consistent with the
presentation of such line item on the Company's financial statements for the
financial year 2004/2005. In addition:
- "PRELIMINARY NET INCOME STATEMENT" means a statement delivered by the
Sellers to Buyer at Closing which sets forth the Sellers' best good
faith estimate of the Company Net Income.
- "FINAL NET INCOME STATEMENT" means a statement which sets forth the
Company Net Income prepared and finally agreed upon in accordance with
Section 2.2(b)(iii) hereof.
"COMPANY-OWNED IP RIGHTS" means Company IP Rights that are owned by or
exclusively licensed to the Company, Xxxx Xxxxxxx or Xxxx U.S.
"COMPANY PRODUCT" means any product or service currently manufactured,
marketed, sold, distributed or provided by the Company, Xxxx Xxxxxxx or Xxxx
U.S.
"COMPANY RIGHTS" means all stock appreciation rights, options, warrants,
calls, rights, commitments, conversion privileges or preemptive or other rights
or agreements outstanding to purchase or otherwise acquire any Company Shares,
shares of Xxxx Xxxxxxx or shares of Xxxx U.S., or any securities or debt
(including loans or notes) convertible into or exchangeable for Company Shares,
shares of Xxxx Xxxxxxx or shares of Xxxx U.S., or obligating the Company, Xxxx
Xxxxxxx or Xxxx U.S. to grant, extend or enter into any such option, warrant,
call, right, commitment, conversion privilege or preemptive or other right or
agreement.
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"CONTRACT" means any contract, binding agreement, binding arrangement,
binding commitment, undertaking, instrument, permit, mortgage, license,
sublicense, binding letter of intent or purchase order (in each case, whether
oral or in writing).
"CONTROL" means with respect to any Person, the ability to exercise such
influence over another Person as would make that other Person a Subsidiary.
"DISCLOSURE LETTER" means the disclosure letter from the Sellers to Buyer,
including any and all appendices hereto, referred to in Section 3.2 as set out
in Exhibit E.
"DKA" means Dansk Kapitalanlaeg Aktieselskab, a company incorporated and
existing under the laws of Denmark, CVR. no. 61095918, Xxxxxxxxxxx 000, 0000
Xxxxxxxxxx X, Xxxxxxx.
"DKK" means Danish krone, the basic unit of currency in Denmark.
"DESIGNATED EMPLOYEES" means Xxxx Stridbaek, Xxxxx X. Xxxxxxxxx, Xxx
Xxxxxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxx X. Xxxxxxxxx, Claus X. Xxxxxxx, Xxxxx X.
Xxxxxxxx and Xxxx X. Xxxxxxx.
"DIRECTOR", when used with respect to the Group Companies, means a member
of the Supervisory Board (in Danish: "bestyrelsen") or a similar supervisory
board of the Group Companies.
"DUE DILIGENCE DOCUMENTATION" has the meaning stated in Section 3.2 and as
set out in Exhibit F and "ADDITIONAL DUE DILIGENCE DOCUMENTATION" has the
meaning stated in Section 3.2.
"ENCUMBRANCE" means, with respect to any asset, any mortgage, deed of
trust, lien, pledge, charge, security interest, title retention device,
conditional sale or other security arrangement, collateral assignment, charge,
adverse claim of title, ownership or right to use, or other encumbrance of any
kind in respect of such asset (including any restriction on (a) the voting of
any security or the transfer of any security or other asset, (b) the receipt of
any income derived from any asset, (c) the use of any asset, and (d) the
possession, exercise or transfer of any other attribute of ownership of any
asset).
"ESCROW ACCOUNT" has the meaning stated in subsection 2.2(b)(i).
"ESCROW AGENT" has the meaning stated in subsection 2.2(b)(i).
"ESCROW AGREEMENT" has the meaning stated in subsection 2.2(b)(i).
"FIRST ESCROW AMOUNT" has the meaning stated in subsection 2.2(b)(i).
"FIRST INSTALLMENT" has the meaning stated in stated in subsection
2.2(b)(ii)(A).
"GROUP COMPANIES" means the Company, Xxxx Xxxxxxx and Xxxx U.S.
"HOLDBACK AMOUNT" means DKK 38,800,000.
"INDEPENDENT ACCOUNTANT" has the meaning stated in Article 2.2(b)(iii)(C).
"INTELLECTUAL PROPERTY RIGHTS" means, collectively, all worldwide
industrial and intellectual property rights, including patents, patent
applications, patent rights, trademarks, trademark registrations and
applications therefore, trade dress rights, trade names, service marks, service
xxxx registrations and applications therefore, Internet domain names, Internet
and World Wide Web URLs or addresses, copyrights, copyright registrations and
applications therefore, mask work rights, mask work registrations and
applications therefore, inventions, trade secrets, know-how, customer lists,
supplier lists, proprietary
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processes and formulae, software source code and object code, hardware
description language code, netlists, design databases, design methodologies,
design schematics, transceivers, interconnects, equalizers, algorithms, net
lists, architectures, structures, technology, screen displays, photographs,
images, layouts, development tools, designs, blueprints, specifications,
technical drawings (or similar information in electronic format) and all
documentation and media constituting, describing, embodying or relating to any
of the foregoing, including manuals, programmers' notes, memoranda and records.
"XXXX XXXXXXX" means Xxxx Xxxxxxx A/S, a company incorporated and existing
under the laws of Denmark, CVR no. 25194837, Radhustorvet 0, XX-0000 Xxxxxxx.
"XXXX U.S." means Xxxx telecom Inc., a company incorporated and existing
under the laws of the state of Georgia, U.S.A., 000 Xxxxxxxxx Xxxxxx X.X., xxxxx
0000, Xxxxxxx, XX 00000, U.S.A.
"LIABILITIES" means any debt, liability or obligation, whether accrued or
fixed, absolute or contingent, matured or unmatured, determined or determinable,
known or unknown, and whether due or to become due, in each case that would be
required by Accounting Principles and the Danish Financial Statements Act to be
reflected on a balance sheet or in the notes thereto, as well as off balance
sheet liabilities and obligations.
"MANAGER", when used with respect to the Group Companies, means a member of
the Executive Board (in Danish: "direktionen") or a similar management board of
the Group Companies.
"MATERIAL ADVERSE EFFECT," when used with reference to any Person, means
any event, change, violation, inaccuracy, circumstance or effect (each, an
"EFFECT") that, individually or taken together with all other Effects, (i) is
materially adverse in relation to the near-term or longer term condition
(financial or otherwise), capitalization, properties, employees, assets
(including intangible assets), business, prospects, operations or results of
operations of such Person and its Subsidiaries, taken as a whole, or (ii)
materially impedes or delays such Person's ability to consummate the
transactions consummated by this Agreement in accordance with its terms and
applicable legal requirements.
"MATERIAL AGREEMENTS" shall mean the agreements listed in Exhibit G.
"NET AMOUNT" has the meaning stated in subsection 2.2(b)(iii)(A).
"PERMITTED ENCUMBRANCES" means (i) any Encumbrance existing on April 30,
2005 except to the extent the amount or restriction covered by the encumbrance
has increased; (ii) any netting or set-off arrangement entered into by the
Company, Xxxx U.S. or Xxxx Xxxxxxx, respectively, in the ordinary course of
their banking arrangements for the purpose of netting debit and credit balances;
(iii) any: (aa) Encumbrance arising by operation of law and in the ordinary
course of trading; (ab) Encumbrance which is incidental to the Company Business;
(ac) Encumbrance arising by operation of Tax law and in the ordinary course of
business; (ad) Encumbrance entered into in the ordinary course of business
securing any derivative transaction entered into in connection with protection
against or benefit from fluctuation in any rate or price; or (ae) any
Encumbrance due to a leasing contract entered into in the ordinary course of
business with the Company, Xxxx U.S. or Xxxx Xxxxxxx as lessee; or (iv) any
Encumbrance over or affecting any asset acquired by the Company, Xxxx U.S or
Xxxx Xxxxxxx after the Agreement Date if: (aa) the Encumbrance was not created
in contemplation of the acquisition of that asset by the Company, Xxxx U.S. or
Xxxx Xxxxxxx; (ab) the principal amount secured or the restriction has not been
increased in contemplation of, or since the acquisition of that asset by the
Company, Xxxx U.S. or Xxxx Xxxxxxx; and (ac) the Encumbrance is removed or
discharged within six (6) months of the date of the acquisition of such asset.
"PERSON" means any individual, corporation, general or limited partnership,
limited liability partnership, joint venture, estate, trust, firm, company
(including any limited liability company or joint stock company), association,
organization, entity or Regulatory Authority (defined below).
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"PRELIMINARY NET INCOME STATEMENT" has the meaning stated in Section 5.10.
"PRELIMINARY POSITIVE NET AMOUNT" has the meaning stated in subsection
2.2(b)(ii)(B).
"PRO RATA SHARE" means, with respect to each Seller receiving payment
pursuant to Section 2.1, the quotient (rounded to the fourth decimal place)
obtained by dividing (a) the number of Company Shares held by such Seller
immediately prior to the Closing, by (b) the total number of Company Shares
outstanding immediately prior to the Closing.
"PUBLIC SOFTWARE" means any software that contains, or is derived in any
manner (in whole or in part) from, any software that is distributed as free
software, open source software (e.g., Linux), including software licensed or
distributed under any of the following licenses or distribution models, or
licenses or distribution models similar to any of the following: GNU General
Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public
License (MPL), BSD licenses, the Artistic License, the Netscape Public License,
the Sun Community Source License (SCSL) the Sun Industry Standards License
(SISL) and the Apache License.
"PURCHASE PRICE" means the Base Price, adjusted as follows: (a) increased
or decreased as a result of the Net Income Adjustment; and (b) reduced to the
extent of any Transaction Expenses as of the Closing paid or to be paid by the
Company, to the extent not already reflected in the Net Income Adjustment. For
purposes of this definition:
- "BASE PRICE" means DKK 388,000,000.
- "NET INCOME ADJUSTMENT" means (i) if the Company Net Income exceeds
DKK 21,000,000, a DKK-for-DKK increase to the Base Price equal to the
amount by which the Company Net Income exceeds DKK 21,000,000, and
(ii) if the Company Net Income is less than DKK 21,000,000, a
DKK-for-DKK reduction from the Base Price equal to the amount by which
the Company Net Income is less than DKK 21,000,000.
"REGULATORY AUTHORITY" means any court, administrative agency, commission
or other governmental or regulatory agency or authority.
"REPEATING WARRANTIES" means the Warranties repeated at Closing as set
forth in Section 3.1.
"SELLER ANCILLARY AGREEMENTS" means the Consultant Agreement, the
Non-competition and Invention Assignment Agreements, and any other agreements
(other than this Agreement) and documents to which one or more of the Sellers is
or will be a party that are required to be executed pursuant to this Agreement.
"SELLERS' KNOWLEDGE" shall mean, with respect to any fact, circumstance,
event or other matter in question, the actual knowledge of the Sellers or of
Xxxxx Xxxx, Xxxx Stridbaek, Xxxxx Xxxxxxx Xxxxxxxxx or Xxxxx X. Xxxxxxxxx of
such fact, circumstance, event or other matter after having made due and
reasonable inquiries prior to the Agreement Date (and only then) to each of Xxx
Xxxxxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxx X. Xxxxxxxxx, Claus X. Xxxxxxx and Xxxxx
X. Xxxxxxxx, allowing such persons to make due and reasonable investigations
into the subject matter in question before responding to such inquiries.
"SPECTRALINK" means SpectraLink Corporation, a company incorporated and
existing under the laws of a Delaware, 0000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx,
XXX.
"SUBSIDIARY" shall have the meaning set forth in Annex 1, part B, item 2 of
the Danish Financial Statements Act.
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"TAX" and "TAXES" mean all taxes and tax liabilities whether actual or
deferred, including income, gains, franchise, excise, property, sales, use,
employment, license, payroll, services, occupation, recording, value added or
transfer taxes, VAT, governmental charges, fees, levies, assessments or other
taxes (whether payable directly or by withholding), and, with respect to such
taxes, charges, fees, levies and assessments, any estimated tax, interest,
fines, penalties or additions and interest on such fines, penalties and
additions.
"TERMINATION DATE" means March 31, 2006.
"TRANSACTION EXPENSES" has the meaning specified in Section 12.6.
"USD" means US dollars, the basic unit of currency in the United States of
America.
"WARRANTIES" means the warranties undertaken by the Sellers as set forth in
Section 3.1 and Annex I.
ARTICLE 2
THE SHARE PURCHASE
2.1 Agreement to Sell and Purchase Shares. Each Seller hereby agrees to
sell, convey, assign, transfer and deliver to Buyer, and Buyer hereby agrees to
purchase from each Seller, at Closing and subject to the terms and conditions of
this Agreement, all Company Shares held by each such Seller as set forth
opposite such Seller's name in Exhibit A (which in the aggregate constitute all
of the issued and outstanding shares of the Company), free and clear of all
Encumbrances and with the benefit of all rights of whatsoever nature attaching
or accruing to such shares on or after Closing, in consideration of a cash
payment equal to such Seller's Pro Rata Share of the Purchase Price (subject to
Sections 2.2 and 2.3 below).
2.2 Closing and Purchase Price.
(a) Closing. Closing of the Share Purchase ("CLOSING") will take place
at the offices of Xxxxx Xxxxx, Xxxxxxxx 00, XX-0000 Xxxxxxxxxx K, on January 3,
2006, provided that the conditions set forth in Article 7 and Article 8 have
been satisfied or waived in accordance with this Agreement (other than those
conditions which, by their terms, are to be satisfied at Closing), or at such
other location, time and date as the parties hereto agree in writing.
(b) Payment of Purchase Price.
(i) At the signing. At the signing of this Agreement, the Buyer
shall deposit an amount of USD 55,147,581.37 (the "FIRST ESCROW AMOUNT") in an
escrow account (the "ESCROW ACCOUNT") with Nordea Bank Danmark A/S (the "ESCROW
AGENT") on the terms set out in Exhibit H hereto (the "ESCROW AGREEMENT"), such
payment to be evidenced by a statement from Danske Bank confirming that the
First Escrow Amount has been irrevocably transferred to the Escrow Account.
(ii) At Closing. At Closing the Buyer shall against the Sellers'
delivery of the items listed in subsections 2.2(c) pay the First Installment,
deposit the Preliminary Positive Net Amount, if any, and deposit the Holdback
Amount as follows:
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(A) Payment of First Installment. Buyer shall transfer by
means of wire transfer to each Seller in accordance with the wire instructions
set forth in Exhibit A hereto each such Seller's Pro Rata Share of an aggregate
amount (the "FIRST INSTALLMENT") equal to:
(aa) DKK 349,200,000 minus the Net Income Adjustment
amount if the Company Net Income pursuant to the Preliminary Net Income
Statement is less than DKK 21,000,000; or
(ab) DKK 349,200,000 if the Company Net Income pursuant
to the Preliminary Net Income Statement is equal to or higher than DKK
21,000,000.
At Closing, the First Escrow Amount shall have been
converted into DKK and shall be released to the Sellers as payment of the First
Installment. If the First Escrow Amount in DKK is less than the First
Installment to be paid by Buyer, then Buyer shall pay any difference in DKK
directly to the Sellers. If the First Escrow Amount in DKK exceeds the First
Installment, Buyer shall be entitled to demand that the excess amount be
released to Buyer at Closing.
(B) Deposit of the Preliminary Positive Net Amount. If the
Company Net Income pursuant to the Preliminary Net Income Statement is higher
than DKK 21,000,000, Buyer shall deposit the excess amount (the "PRELIMINARY
POSITIVE NET AMOUNT") on the Escrow Account on the terms set out in the Escrow
Agreement as security for Buyer's duty (if any) to pay the Net Amount.
(C) Deposit of Holdback Amount. Buyer shall deposit the
Holdback Amount on the terms set out in the Escrow Agreement.
(iii) Post-Closing True-Up.
(A) Calculation. The Sellers shall deliver the Final Net
Income Statement as promptly as possible (and in any event within thirty (30)
Business Days) following Closing. The Final Net Income Statement shall be (i)
derived from and in accordance with the books and records of the Group
Companies, (ii) fairly and accurately representative of the revenue, cost of
revenue, operating expenses and after tax "net profit" of the Group Companies as
of the Closing, and (iii) prepared in accordance with the Accounting Principles
and the Danish Financial Statements Act applied on a basis consistent with prior
periods. The Sellers shall specify the basis for any changes between the
Preliminary Net Income Statement and the Final Net Income Statement. If Buyer
accepts the Final Net Income Statement, then: (1) if the net amount of the
Purchase Price, with the Net Income Adjustment component calculated based on the
Final Net Income Statement, less the Holdback Amount and the First Installment
(the "NET AMOUNT") is greater than zero (0), then Buyer shall pay an aggregate
cash amount equal to the Net Amount within five (5) Business Days of such
acceptance, by means of a wire transfer to each Seller of such Seller's Pro Rata
Share of such amount in accordance with the wire instructions set forth on
Exhibit A hereto, whereas (2) if the Net Amount is less than zero (0), then
Buyer shall be entitled to elect either (or a combination of) the following: (a)
the Sellers' shall personally (and severally but not jointly) indemnify, within
five (5) Business Days of such acceptance, Buyer for the amount of such
difference, or (b) such difference shall be treated as indemnifiable Damages
under Section 10.2, and the Sellers shall be conclusively deemed to have
consented (and without any right to contest), to the forfeiture of such portion
of the Holdback Amount sufficient to satisfy such Damages. The Sellers shall in
the period following Closing be granted reasonable access to the books, records
and employees of the Group Companies in order for the Sellers to prepare the
Final Net Income Statement.
(B) Review of Final Net Income Statement. Buyer shall be
entitled to review the Final Net Income Statement for a period of twenty (20)
Business Days after the date it receives the Final Net Income Statement (the
"REVIEW PERIOD"), and during the Review Period the Sellers agree to make
themselves available as reasonably requested by Buyer to address inquiries and
provide supporting information with respect to the Final Net Income Statement.
Buyer may dispute the Final Net Income Statement by delivering written notice to
the Sellers setting forth the item(s) in dispute and, in
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reasonable detail, the basis for the dispute (a "DISPUTE NOTICE"), at any time
during the Review Period. If Buyer does not deliver a Dispute Notice to the
Sellers before 11:59 P.M. Colorado Time on the last day of the Review Period,
Buyer shall be deemed to have accepted the Final Net Income Statement as of the
date following the expiration of the Review Period.
(C) Dispute Resolution. In the event that Buyer delivers a
Dispute Notice to the Sellers during the Review Period, Buyer and the Sellers
shall meet within thirty (30) Business Days of the delivery of such Dispute
Notice to attempt to resolve such dispute in good faith. If a final resolution
of such dispute is reached, the agreed upon Final Net Income Statement shall be
deemed final and binding. If no final resolution is reached within thirty (30)
Business Days of the delivery of such Dispute Notice, either Buyer or each of
the Sellers may, at their option request that the dispute be submitted to Ernst
& Young State-Authorized Accounting Firm, or if Ernst & Young does not accept
such task, another independent, well-reputed, international accounting firm
having an office in Copenhagen, Denmark, appointed by the Association of State
Authorized Accountants in Denmark (in Danish: "Foreningen af Statsautoriserede
Revisorer") or such other firm as mutually agreed to by Buyer and the Sellers
(the "INDEPENDENT ACCOUNTANT"). In the event a dispute is submitted to the
Independent Accountant, (i) each of the parties to this Agreement shall provide
full cooperation to the Independent Accountant, and (ii) each such party may
submit a "position paper" to the Independent Accountant setting forth the
position of such party with respect to such dispute, to be considered by such
Independent Accountant as it deems fit. The Independent Accountant shall (1) act
in its capacity as an expert and not as an arbitrator, (2) consider only those
specific matters as to which there is a dispute between the Buyer and the
Sellers, and (3) be instructed to reach its conclusions regarding any such
dispute within thirty (30) Business Days after its appointment and provide a
written explanation of its decision. The fees and expenses charged by the
Independent Accountant shall be borne by the party whom the Independent
Accountant determines is least correct in the aggregate with respect to the
disputed item(s) referred to the Independent Accountant. In the event both
parties are equally correct/incorrect, the fees and expenses shall be split
evenly between the Buyer, on the one hand, and the Sellers, on the other hand.
The decision of the Independent Accountant shall be final and binding with
respect to the determination of the Final Net Income Statement. Within five (5)
Business Days following the earliest of (aa) mutual agreement upon a Final Net
Income Statement, or (bb) receipt of written notice of a final decision of the
Independent Accountant, Buyer shall pay any additional amount required pursuant
to clause (A) to the extent that the Net Amount calculated on the basis of the
Final Net Income Statement exceeds zero (0), or alternatively Buyer shall
automatically be entitled to elect either indemnification by the Sellers
personally or forfeiture of a portion of the Holdback Amount to the extent that
the Net Amount is less than zero (0).
(iv) Other Terms of Payment. No interest will be paid or accrued
on any cash payable pursuant to Article 2, except the Holdback Amount and except
if any amount is not paid when due in which case interest will accrue under the
Danish Act on Interest (in Danish: "Renteloven"). The Sellers hereby agree that
payment of the First Installment will be in full satisfaction of all rights
pertaining to the Company Shares (other than pursuant to Sections 2.2 and 2.3),
and no dividends or distributions will be paid after the Agreement Date or after
the Closing with respect to the Company Shares or otherwise to the Sellers. Any
Danish stamp duty, transfer Tax or similar Tax payable in connection with the
transfer of Company Shares by any Seller will be payable by such Seller.
(v) Release of a deposited amount in excess of Holdback Amount.
If following the payment of the Net Amount under subsection 2.2(b)(iii)(A) or,
in case a Dispute Notice is given, under subsection 2.2(b)(iii)(C), the amount
on the Escrow Account exceeds the Holdback Amount plus interest accrued thereon,
then the Buyer shall be entitled to demand that the Escrow Agent releases such
excess amount to Buyer. Any such amount shall be released not earlier than five
(5) Business Days and not later than ten (10) Business Days after the Escrow
Agent's receipt of notice from Buyer to this effect, such notice to be given on
or after the date of the Final Net Income Statement becoming final under
subsection 2.2(b)(iii) with a copy to the Sellers.
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(c) Deliverables of the Sellers at Closing. At Closing, the Sellers
shall, against delivery by Buyer of payment of the First Installment pursuant to
subsection 2.2(b)(ii) and Buyer's deposit of the Preliminary Positive Net Amount
(if any) and the Holdback Amount on the Escrow Account pursuant to subsection
2.2(b)(ii),deliver to Buyer:
1. The Company's register of shareholders with the Buyer duly
registered as the owner of the Company Shares, free and clear of all
Encumbrances.
2. The original share certificates pertaining to the Company
Shares duly endorsed to evidence the Share Purchase;
3. The Group Companies' minute books including minutes of general
meetings, minutes of meetings of the boards of directors and audit minutes to
the extent such documents are not in the possession of the Group Companies.
4. Signed letters of resignation from the Directors then in
office and elected by a general meetings of the Group Companies (except for
employee representatives), confirming their respective resignations and
confirming that they do not have any claims against the Group Companies other
than for fees as board members for the period from May 1st 2005 until Closing
(which fees shall be fully reflected in the Preliminary and Final Net Income
Statement), and relinquish any other rights which they may have under any
contract of employment, consultancy, etc. with the Group Companies and under any
statutory provisions or otherwise including any rights to damages for wrongful
dismissal, redundancy or compensation for loss of office or unfair dismissal; it
being agreed and understood that the entire agreement between Xxxxx Xxxx, the
Group Companies and the Buyer shall be as set out in this Agreement, including
Exhibits B and C.
5. Documentation evidencing that the Supervisory Board of the
Company has approved the sale and purchase of the Company Shares as contemplated
in this Agreement.
6. Documentary evidence of the due execution of this Agreement in
accordance with each Sellers' rules of signature.
7. The Preliminary Net Income Statement, cf. Article 5.10.
8. A statement (if any) with respect to Repeating Warranties as
set out in Section 9.1(d).
9. A statement from each Seller confirming that the Sellers'
conditions specified in Article 7 have been fulfilled or waived.
10. A statement confirming that Buyer's conditions specified in
Article 8 are fulfilled to the extent such conditions are under the Sellers'
control.
11. Index of Additional Due Diligence Documentation.
(d) Deliverables of Buyer at Closing. At Closing, Buyer and
SpectraLink shall, against the Sellers' delivery of the items set forth in
subsection 2.2(c), deliver to the Sellers:
1. Documentary evidence of the due execution of the Agreement in
accordance with the Buyer's and SpectraLink's respective rules of signature.
2. Evidence that the First Installment has been transferred to
the Sellers as set forth in subsection 2.2(b)(ii).
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3. Evidence that the Preliminary Positive Net Amount (if any) and
the Holdback Amount have been deposited on the Escrow Account.
4. A statement confirming that Buyer's conditions specified in
Article 8 have been fulfilled or waived.
5. A statement confirming that Sellers' conditions specified in
Article 7 are fulfilled to the extent such conditions are under the Buyer's
control.
(e) Deliverables of the Sellers at signing of this Agreement. At
signing of this Agreement, the Sellers shall deliver to the Buyer:
1. Documentary evidence of the due execution of this Agreement in
accordance with each Seller's rules of signature.
2. The Escrow Agreement duly executed by each Seller.
(f) Deliverables of Buyer and SpectraLink at signing of this
Agreement. At signing of this Agreement, Buyer shall deliver to the Sellers:
1. Documentary evidence of the due execution of this Agreement in
accordance with the Buyer's and SpectraLink's respective rules of signature.
2. The Escrow Agreement duly executed by Buyer and SpectraLink.
3. Documentary evidence that Danske Bank has irrevocably
transferred the First Escrow Amount to the Escrow Agent.
(g) Expenses relating to the termination of Xxxxx Xxxx'x employment
with the Company. The parties agree that if, for accounting purposes, the
Preliminary or Final Net Income Statement includes a provision for the costs
relating to the termination of Xxxxx Xxxx'x employment with the Company, this
shall have no impact on the Purchase Price. Therefore, the Net Income Adjustment
shall be calculated on the basis of a Company Net Income of DKK 21,000,000 less
the after tax effects of such provision. The minimum Company Net Income in
Section 8.5 shall be reduced by the same amount.
2.3 Release of Holdback Amount.
(a) The Holdback Amount shall serve as collateral to secure the
indemnification obligations of Sellers pursuant to Article 10 of this Agreement
from Closing until 11:59 p.m. Colorado time on the date that is fifteen (15)
months following the Closing (the "RELEASE DATE"), or such later date as
provided in Section 2.3(b) and the payment to the Sellers of the remaining part
of the Purchase Price, if any, at the expiry of the Release Date. Interest shall
accrue on the Holdback Amount at the interest rate granted from time to time by
the Escrow Agent for deposits of the same nature and length as the amount on
escrow and as set out in the Escrow Agreement. No portion (nor all) of the
Holdback Amount, nor any beneficial interest therein, may be pledged, subjected
to any Encumbrance, sold, assigned or transferred by Buyer or by any Seller, or
be taken or reached by any legal or equitable process in satisfaction of any
debt or other Liability of Buyer or any Seller, prior to the disbursement of the
Holdback Amount to Buyer or to any Seller in accordance with Section 2.3(b)
below, except that Sellers shall be entitled to assign their rights to the
Holdback Amount by will, by the laws of intestacy or by other operation of law.
(b) Within five (5) Business Days following the Release Date, the
Escrow Agent will disburse to each Seller, in accordance with the wire transfer
instructions for each Seller specified on Exhibit A, such Seller's Pro Rata
Share of the Holdback Amount in excess of that portion of the Holdback Amount
that (i) has been released to Buyer in satisfaction of previously resolved
claims in
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accordance with Article 10 of this Agreement, and/or (ii) is necessary to
satisfy all unsatisfied or disputed claims specified in any notice of Claim
delivered to the Sellers with a copy to the Escrow Agent prior to the Release
Date and pursued by legal action, both as required under Article 10 of this
Agreement. Together with such disbursement each Seller shall receive such
Seller's Pro Rata Share of interest accrued on the released part of the Holdback
Amount. Any portion of the Holdback Amount held following the Release Date with
respect to pending but unresolved Claims that is not awarded to Buyer upon the
resolution of such Claims shall be disbursed to the Sellers within five (5)
Business Days following resolution of such Claims.
2.4 Tax Consequences. Neither Buyer nor the Sellers make any
representations or warranties to the other party regarding the Tax treatment of
the Share Purchase, or any of the Tax consequences to the other party of this
Agreement or any of the transactions or agreements contemplated hereby. The
parties acknowledge that they are relying solely on their own Tax advisors in
connection with this Agreement and the transactions and agreements contemplated
hereby.
2.5 Tax Withholding Rights. Buyer shall be entitled to deduct and withhold
from the payments to any Seller hereunder such amounts as Buyer is required to
deduct and withhold under the laws of Denmark due to the Sellers' tax
liabilities with respect to any such deliveries and payments. To the extent that
amounts are so withheld, such withheld amounts shall be treated for all purposes
of this Agreement as having been delivered and paid to such holders in respect
of which such deduction and withholding was made.
2.6 Further Assurances. The Sellers hereby agree, subject to the Buyer's
performance of its obligations under this Agreement, from and after the
Agreement Date and continuing after the Closing, to (i) file any notice,
statement or other communication, (ii) obtain and provide to Buyer (and will
immediately prepare all filings and applications, requests and notices
preliminary to obtaining) all approvals and consents, (iii) execute and deliver
all such other and additional instruments, notices, assignments, releases,
undertakings and documents, and (iv) do all such other acts and take such
further actions necessary or reasonably desirable to assure to Buyer all the
rights and interests granted under this Agreement. The Sellers further agree to
take or cause to be taken such other actions as Buyer may reasonably require (a)
to transfer, convey and assign to Buyer, and vest in Buyer, the Company Shares
and (b) to carry out such Sellers' obligations under this Agreement and give
effect to the transactions contemplated hereby.
ARTICLE 3
SELLERS' WARRANTIES (IN DANISH: "INDESTAELSER")
3.1 Warranties. By executing this Agreement, each Seller (severally and not
jointly) makes to the Buyer the warranties and statements contained in Annex I
hereto (the "WARRANTIES"), each of which will be considered a part of this
Article 3. Such Warranties are made and shall, subject to the qualifications set
out in section 3.2, be true and correct as of the Agreement Date, and those
marked with an asterix (*) in Annex I (the "REPEATING WARRANTIES") shall be
repeated at Closing and shall, subject to the qualifications set out in section
3.2, also be true and correct as of Closing.
3.2 Qualifications of Warranties.
The Sellers' Warranties are subject to the following qualifications:
(a) The Buyer and its advisors have prior to the execution of this
Agreement conducted, and will prior to Closing be able to conduct, a review of
the written material of the Group Companies set out in Exhibit F hereto (the
"DUE DILIGENCE DOCUMENTATION"), which material will be updated in the period
from the Agreement Date until Closing to reflect events occurring in this
period,
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which updating (the "ADDITIONAL DUE DILIGENCE DOCUMENTATION") will be
communicated to Buyer and specified in an appendix to be delivered by the
Sellers at Closing. The Sellers shall not be liable for any breach of the
Warranties to the extent it was within Buyer's or its advisors' actual knowledge
prior to signing of this Agreement that the Warranties were incorrect.
Information shall only be deemed to have been within Buyer's and/or its
advisors' actual knowledge if it has been fairly and adequately presented to
Buyer and/or Buyer's external advisors in the Due Diligence Documentation and in
a manner or form that would reasonably enable a buyer of the Company Shares to
recognize an issue in violation of the Warranties. The Additional Due Diligence
Documentation shall not serve as a disclosure to the Repeating Warranties.
(b) The Warranties, including all Schedules thereto, are subject to
the disclosures set forth in the letter addressed to Buyer from the Sellers and
dated as of the Agreement Date (which will specifically reference the Sections
of this Agreement, including the Warranties, to which the specific items of
disclosure therein constitute an exception, and which shall be considered
included under any other Section of the Agreement only to the extent such
inclusion is readily recognizable based on the substance of such disclosure)
which has been delivered by the Sellers to Buyer concurrently with the parties'
execution of this Agreement as Exhibit E (the "DISCLOSURE LETTER"). The Sellers
shall not be liable for any breach of the Warranties if, subject to the
preceding provisions of this Section, the event, circumstance or document making
the Warranties incorrect, incomplete and/or misleading is fairly and adequately
stated or specifically referred to in the Disclosure Letter, and provided that
any document referred to in the Disclosure Letter have been presented as part of
the Due Diligence Documentation.
(c) The Sellers understand that Buyer is entering into this Agreement
in reliance on the Warranties and no qualifications is made with respect to the
Warranties set forth in Section I.1 (Good and Valid Title), Section II.4
(Capitalization) and Section 10 (Taxes) of Annex I, except for such
qualifications explicitly stated in the corresponding section of the Disclosure
Letter.
3.3 No implied warranties etc. Subject to what is stated elsewhere in this
Agreement, the Warranties are the Sellers' complete and exhaustive warranties
regarding the business of the Group Companies, and, consequently, the Buyer
cannot rely on any other warranties including but not limited to implied
warranties or assumptions in this respect; nor do the Sellers make any
warranties in respect of forecasts, estimates, assessments, on future
developments, events, or figures found in the Due Diligence Documentation or the
Additional Due Diligence Documentation or elsewhere expressing the Sellers', the
Company's management's and/or the Group Companies' expectations.
ARTICLE 4
WARRANTIES AND COVENANTS OF BUYER AND SPECTRALINK
Buyer and SpectraLink warrant to the Sellers that each of the statements
contained in the following sections of this Article 4 is true and correct as of
the Agreement Date and will be true and correct as of the Closing, and hereby
agrees with the Sellers as follows.
4.1 Organization and Good Standing. SpectraLink is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and Buyer is a corporation duly organised and validly existing under
the laws of Denmark, and Buyer and SpectraLink have the power and authority to
own, operate and lease their properties and to carry on their business as
presently being conducted and as proposed to be conducted.
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4.2 Power, Authorization and Validity.
(a) Buyer and SpectraLink have the right, power and authority to enter
into and perform their respective obligations under this Agreement. The
execution, delivery and performance of this Agreement, and the Share Purchase,
have been duly and validly approved and authorized by the Boards of Directors of
Buyer and SpectraLink. This Agreement has been duly executed and delivered by
Buyer.
(b) No filing, authorization, consent, approval, permit, order,
registration or declaration, governmental or otherwise, is necessary to enable
Buyer or SpectraLink to enter into and to perform their respective obligations
under this Agreement, except for such filings, authorizations, consents,
approvals, permits, orders, registrations and declarations, if any, that if not
made or obtained by Buyer or SpectraLink would not be material to Buyer's
ability to consummate the Share Purchase or to perform their respective
obligations under this Agreement.
(c) This Agreement constitutes a valid and binding obligation of Buyer
and SpectraLink enforceable against Buyer and SpectraLink in accordance with its
terms, subject only to the effect, if any, of (i) applicable bankruptcy and
other similar laws affecting the rights of creditors generally, and (ii) rules
of law governing specific performance, injunctive relief and other equitable
remedies.
4.3 No Conflicts. Neither the execution and delivery of this Agreement, nor
the consummation of any of the transactions contemplated herein or therein, will
(a) conflict with or violate any provision of the Certificate of Incorporation
or Bylaws of SpectraLink or the articles of association of Buyer, each as
currently in effect, or (b) except as would not have a Material Adverse Effect
on Buyer or SpectraLink, conflict with or violate any Applicable Law.
4.4 No Warranty Claims. On the Agreement Date Buyer represents that Buyer
has no actual knowledge of any claims (actual or potential) against the Sellers
due to a breach of the Warranties.
ARTICLE 5
PRE-CLOSING COVENANTS OF THE SELLERS
During the time period from the Agreement Date until the earlier to occur
of (a) the Closing and (b) the termination of this Agreement in accordance with
the provisions of Article 9, each of the Sellers covenant and agree with Buyer
as follows:
5.1 Advice of Changes. If and when known to each of the Sellers, each of
the Sellers will promptly advise Buyer in writing of (a) any event occurring
after the Agreement Date that would render any of the Warranties to be untrue or
inaccurate such that the condition set forth in Section 8.1 would not be
satisfied if made on or as of the date of such event or the Closing; (b) any
breach of any covenant or obligation of the Sellers pursuant to this Agreement
such that the condition set forth in Section 8.2 would not be satisfied; (c) any
termination, expiration or lapsing of any Material Agreement or any material
provision thereof to the extent reasonably possible at least five Business Days
prior thereto; and (d) any event, change, violation, inaccuracy, circumstance or
effect that has a Material Adverse Effect on the Company. Each of the Sellers
will notify Buyer in writing promptly after learning of any Action by or before
any Regulatory Authority or arbitrator initiated by or against it, or if it
receives or becomes aware of any written threat of any Action against the
Company or any of its directors, officers, employees or shareholders in their
capacity as such.
5.2 Maintenance of Business. The parties hereto understand and acknowledge
that it is their intent to work closely together during the time period from the
Agreement Date until the Closing to the extent permissible under Applicable Law.
If the Sellers become aware of a material deterioration in the
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relationship between the Company and any significant customer, significant
supplier, Designated Employee or significant number of other employees of the
Company, each of them will promptly bring such information to the attention of
Buyer in writing and, if requested by Buyer, will exert all reasonable efforts
to restore and retain the affected relationship. To the extent permitted by
Applicable Law, each of the Sellers will procure that the Company will use all
reasonable efforts to optimize its business, planning, operations, research and
development and other similar matters with Buyer before the Closing. At Buyer's
request and subject to the foregoing, such cooperation may include setting
sales, marketing, planning, research and development schedules and other similar
matters. Each of the Sellers shall use reasonable best efforts to procure that
the Group Companies comply with US export control laws (requiring a company not
to ship products to designated countries and individuals, cf.
xxx.xxx.xxx/xx/xxxx/xxxxxx/xxxxxxx_xxxx) except to the extent such compliance
would cause the Group Companies to breach Contracts existing on the Agreement
Date.
5.3 Conduct of Business. Each of the Sellers will procure that the Company
will continue to conduct its business in the ordinary course, consistent with
past practice, and, to the extent consistent therewith, will (i) pay all of its
debts and material Taxes when due, subject to good faith disputes over such
debts or material Taxes, (ii) pay or perform its other obligations when due, and
(iii) carry on and preserve intact its current business organization, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers, licensors, licensees, distributors and
others with whom Company has contractual or other material commercial relations
in substantially the same manner as they have prior to the Agreement Date; it
being understood and agreed that nothing in this Agreement shall constitute or
be deemed a covenant or undertaking that such officers, employees, customers,
suppliers, licensors, licensees, distributors and other business relations will
in fact continue their relation with the Company. Without limiting the
foregoing, prior to the Closing, each of the Sellers shall procure that the
Company will not, without the prior written consent of a duly authorized officer
of Buyer, enter into any transaction or Contract, make any payment or take any
action, in each case outside of the ordinary course of business or inconsistent
with past practice, including:
(a) incur any Liability other than in the ordinary course of business
and consistent with past practice;
(b) incur any Liability as guarantor or surety with respect to any
obligation of a Person other than Group Companies;
(c) make any loan to Directors or Managers of Group Companies or the
Sellers or make a capital contribution to, or invest in, any Person other than
in the ordinary course of business and consistent with past practice (or as
required to effect the transactions contemplated by this Agreement);
(d) place any Encumbrance on any of its properties or grant any
Encumbrance with respect to any of its assets other than Permitted Encumbrances;
(e) purchase, license, sell or otherwise dispose of, or enter into any
Contract for the purchase, license, sale or other disposition of, any assets or
properties (real or personal, tangible or intangible) other than in the ordinary
course of business and consistent with past practice;
(f) declare, set aside or pay any dividend on, or make any other
distribution in respect of, its share capital, split, combine or recapitalize
its share capital or directly or indirectly redeem, purchase or otherwise
acquire its share capital;
(g) enter into, materially amend, terminate or not renew any Material
Agreement;
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(h) pay or discharge any Encumbrance or Liability other than in the
ordinary course of business, consistent with past practice;
(i) amend or change its articles of association and in the case of
Xxxx U.S. its articles of incorporation or bylaws;
(j) make proposals for or effect unsolicited, accelerated shipments of
inventory on terms others than in accordance with the agreement in effect with
such customer to any customers with the intent to distort or manipulate
earnings;
(k) materially change the manner in which it extends discounts,
credits or warranties to customers or otherwise deals with its customers;
(l) terminate the employment of any of its employees as of the
Agreement Date other than for misconduct, malfeasance or otherwise for cause (in
which case the Company shall to the extent reasonably possible provide Buyer at
least five Business Days' advance written notice prior to any such termination);
(m) sell, issue, create, grant or authorize the issuance or grant of
any Company Shares or any Company Rights;
(n) amend any Employee Plan (except as may be required by Applicable
Law), or pay, increase or modify any bonus, royalty, increased salary, severance
or special remuneration, or increase or amend any salary, or incur any Liability
to any Director, Manager, employee, consultant or independent contractor (except
as is already accrued or pursuant to existing Contracts), amend any existing or
enter into any new employment, consulting or severance Contract with any such
person, or enter into any new Employee Plan;
(o) fail to maintain its equipment and other assets in accordance with
applicable governmental rules, regulations and ordinances and working order and
repair according to the standards it has maintained to the Agreement Date,
subject only to ordinary wear and tear;
(p) change accounting methods or policies or other than in accordance
with the Accounting Policies revalue, write off or write up the value of any
inventory, accounts receivable or other assets;
(q) waive or release any material right or claim;
(r) except for the Share Purchase, merge, consolidate or reorganize
with, or acquire, any Person;
(s) agree to any material audit assessment by any Tax authority or
file any material Return unless a copy of such Return has first been delivered
to Buyer for its review at a reasonable time prior to filing;
(t) change any insurance coverage or issue any certificates of
insurance (except for the planned renewal of existing policies on terms not
materially different from those in effect on the Agreement Date);
(u) commence a lawsuit other than (i) for the routine collection of
bills or (ii) to enforce this Agreement or otherwise in connection with the
transactions contemplated hereby, or (iii) in
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such cases where it in good faith determines that failure to commence such a
lawsuit would result in the material impairment of a valuable aspect of the
Company Business; provided, however, that in the case of clause (iii), it
consults with Buyer at a reasonable time prior to the filing of such a lawsuit;
or
(v) (i) give, offer, pay, promise to pay or authorize payment of any
money, any gift or anything of value, with the purpose of influencing any act or
decision of the recipient in his or her official capacity or inducing the
recipient to use his or her influence to affect an act or decision of a
government official or employee, to (ii) any (aa) governmental official or
employee, (ab) political party or candidate thereof, or (ac) Person while
knowing that all or a portion of such money or thing of value would be given or
offered to a governmental official or employee or political party or candidate
thereof.
5.4 No Solicitation; Acquisition Proposals. Each of the Sellers shall
procure that neither the respective Seller nor the Company or any of its
directors, officers, employees or Affiliates or any investment banker, attorney
or other advisor or representative retained by any of them (collectively, the
"COMPANY REPRESENTATIVES") shall, directly or indirectly: (i) solicit or
initiate, encourage or induce the making, submission or announcement of any
Acquisition Proposal or take any other action intended to lead to an Acquisition
Proposal; (ii) respond to any inquiry, offer or proposal concerning any
Acquisition Proposal (other than to respond to such inquiry, offer or proposal
by indicating that the Company is not interested in any Acquisition Proposal);
(iii) furnish any information regarding the Company to any Person in connection
with or in response to any inquiry, offer or proposal concerning any Acquisition
Proposal (other than to respond to such inquiry, offer or proposal by indicating
that Company is not interested in any Acquisition Proposal); (iv) participate in
any discussions or negotiations regarding, or furnish to any Person any
information with respect to, or take any other action to facilitate any
inquiries or the making of, any Acquisition Proposal; (v) cooperate with,
facilitate or encourage any effort or attempt by any Person to effect any
Acquisition Proposal; (vi) withhold, withdraw or modify (or publicly propose or
announce any intention or desire to withhold, withdraw or modify), in a manner
adverse to Buyer, the approval of the Supervisory Board of Company of this
Agreement and/or any of the transactions contemplated hereby, (vii) approve,
endorse or recommend any Acquisition Proposal; (viii) execute, enter into or
become bound by any letter of intent or similar document or any Contract
contemplating or otherwise relating to any Acquisition Proposal; or (ix) take
any action or position that is inconsistent with, or withdraw or modify (or
publicly propose or announce any intention or desire to withdraw or modify), in
a manner adverse to Buyer, the Company's support of the Share Purchase. The
Sellers will and will procure that the Company will immediately cease and cause
to be terminated any and all existing activities, discussions or negotiations,
if any, with any parties conducted heretofore with respect to any Acquisition
Proposal. Without limiting the foregoing, it is understood that any violation of
the restrictions set forth in this Section 5.4 by any Company Representative
will be deemed to be a breach of this Section 5.4 by the Sellers. The Sellers
will advise Buyer, as soon as reasonably practicable (and in no event more than
two business days thereafter), orally and in writing, of (i) any Acquisition
Proposal, any request for nonpublic information which the Sellers reasonably
believe could lead to an Acquisition Proposal or any inquiry with respect to or
which the Sellers reasonably believe could lead to an Acquisition Proposal, (ii)
the material terms (including price) and conditions of such Acquisition
Proposal, request or inquiry, and (iii) the identity of the Person or group
making any such Acquisition Proposal, request or inquiry.
5.5 Necessary Consents. Each of the Sellers shall procure that the Company
will use its reasonable best efforts to obtain all such written consents,
assignments, waivers and authorizations or other certificates from third parties
(including those disclosed under Section II.12 of the Disclosure Letter, if
any), give notices to third parties and take such other actions as may be
necessary or appropriate, in addition to those set forth in this Article 5, to
facilitate and effect the consummation of the transactions provided for herein
and to facilitate and allow Buyer and the Company to carry on the Company
Business after the Closing and to keep in effect and avoid the breach of,
violation of, termination of, or adverse change to any Contract to which the
Company is a party or is bound or by which any of its assets or properties are
bound or affected; it being understood and agreed that nothing in this Agreement
shall
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constitute or be deemed a covenant or undertaking that such consents,
assignments, waivers and authorizations or certificates will in fact be
obtained, or that the Company Business can in fact be carried on after Closing,
or that such breach, violation, termination or adverse change will in fact not
occur.
5.6 Access to Information. Each of the Sellers shall procure that the
Company will provide Buyer and its agents with reasonable access at reasonable
times to the files, books, records, technology (other than source code), assets,
Contracts, personnel and offices of the Company, including any and all
information relating to Taxes, commitments, Contracts, real, personal and
intangible property (other than source code), Liabilities and financial
condition. Each of the Sellers shall procure that the Company will use
reasonable efforts to cause its accountants to cooperate with Buyer in making
available all financial information reasonably requested by Buyer, including all
working papers pertaining to all financial statements prepared or audited by
such accountants. Subject to compliance with applicable law, from the Agreement
Date until the earlier of the termination of this Agreement and the Closing,
each of the Sellers shall procure that the Company shall confer from time to
time as requested by Buyer with one or more representatives of Buyer to discuss
any material changes or developments in the operational matters of the Company
and the general status of the ongoing operations of the Company. No information
or knowledge obtained in any investigation pursuant to this Section 5.6 or
otherwise shall affect or be deemed to modify any representation or warranty
contained herein or the conditions to the obligations of the parties hereto to
consummate the Share Purchase.
5.7 Satisfaction of Conditions Precedent; Cooperation.
(a) Each of the Sellers will use all reasonable best efforts to
satisfy or cause to be satisfied all of the conditions precedent which are set
forth in Article 8 as promptly as reasonably possible and will use all
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things as may be necessary or reasonably desirable to
effect completely the Share Purchase and the other transactions provided for
herein as promptly as reasonably possible.
5.8 Employees.
(a) The Sellers shall procure that the Group Companies will use all
reasonable efforts to retain the employment of the Designated Employees and to
secure their continued employment after Closing, and the Sellers will, and will
procure the Group Companies to, promptly notify Buyer if any of them becomes
aware that any Designated Employee intends to leave the employ of the Group
Companies; it being understood and agreed that nothing in this Agreement shall
constitute or be deemed a covenant or undertaking that such continued employment
of the Designated Employees can in fact be secured.
(b) With respect to any employee of the Group Companies, (i) the
Sellers shall procure that the Group Companies shall assist Buyer in any manner
reasonably requested by Buyer in encouraging such employees to continue their
employment with the Group Companies, and (ii) the Sellers shall procure that the
Group Companies shall cooperate with Buyer and assist Buyer with respect to any
reasonable inquiries relating to the employees of the Group Companies, including
reasonable amendments to such employees employment terms; it being understood
and agreed that nothing in this Agreement shall constitute or be deemed a
covenant or undertaking that such continued employment of the employees or that
such amendments can in fact be secured. With respect to matters described in
this Section 5.8(b), the Sellers shall procure that the Company will not send
any notices or other communication materials to its employees that may adversely
effect Buyer's attempt to retain such Company employees without Buyer's prior
written consent.
5.9 Termination of Shareholder Agreements. The Sellers will cause the
shareholders' agreement between themselves regarding the Company (the
"SHAREHOLDERS' AGREEMENT") to be terminated, effective as of the Closing, and
the Sellers will cause the parties to the Shareholders'
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Agreements to waive all of their respective rights vis-a-vis the Company
thereunder, effective as of the Closing.
5.10 Preliminary Net Income Statement. The Sellers shall prepare and
deliver to Buyer on December 28, 2005 before 5 p.m. C.E.T. or - if Closing is
postponed - at least five (5) Business Days prior to Closing, a draft of the
Preliminary Net Income Statement as well as the corresponding balance sheet
allowing the Buyer to discuss such draft statement with the Sellers prior to
Closing. At Closing, the Sellers shall deliver to Buyer the Preliminary Net
Income Statement certified by Xxxxx Xxxx in the form set out in Exhibit I. The
Preliminary Net Income Statement shall be derived from and in accordance with
the books and records of the Group Companies, and in conformity with the
Accounting Principles and the Danish Financial Statements Act applied as for
year end financial statements and with no changes in the method of application
of the Accounting Principles or changes in the method of applying the Group
Companies use of estimates as compared with the Financial Statements and which
fairly presents the financial conditions of the Group Companies as of the date
thereof. Subject to the foregoing general principles, the Sellers shall prepare
the Preliminary Net Income Statement in good faith and on the basis of
assumptions and estimations which were reasonable as of Closing, including but
not limited to with respect to holiday allowances, taxes, overtime payments, and
employee bonuses to which employees have a legal right and shall include any
extraordinary items, which extraordinary items shall be described therein.
Subject to the foregoing general principles, the Sellers shall also prepare the
corresponding balance sheet in good faith and on the basis of assumptions and
estimations with respect to the following, but not limited to inventory, holiday
allowances, guarantee provisions, and research and development amortizations
which were reasonable as of Closing.
5.11 Repeating Warranties. The Sellers shall inform Buyer in writing as
soon as practically possible of any breaches to the Repeating Warranties
occurring from the Agreement Date until Closing.
ARTICLE 6
PRE-CLOSING COVENANTS OF BUYER AND PRINCIPAL SHAREHOLDERS GUARANTEE
6.1 Ultimate Shareholder Guarantee. Buyer's ultimate shareholder,
SpectraLink Corporation, a Delaware corporation, who adheres to this Agreement,
guarantees - as primary obligor (in Danish: "selvskyldner") - the due and
punctual discharge by Buyer of any and all of its agreements, obligations,
covenants and liabilities existing or arising under this Agreement.
6.2 Satisfaction of Conditions Precedent; Cooperation. The Buyer will use
all reasonable best efforts to satisfy or cause to be satisfied all of the
conditions precedent which are set forth in Article 7 as promptly as reasonably
possible and will use all reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things as may be necessary or
reasonably desirable to effect completely the Share Purchase and the other
transactions provided for herein as promptly as reasonably possible.
6.3 Principal Shareholder Guarantee Xxxxx Service ApS. Xxxxx Service ApS'
principal shareholder, Xxxxx Xxxx, who adheres to this Agreement, guarantees -
as primary obligor (in Danish: "selvskyldner") - the due and punctual discharge
by Xxxxx Service ApS of any and all of its agreements, obligations, covenants
and liabilities existing or arising under this Agreement.
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ARTICLE 7
CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers hereunder are subject to the fulfillment or
satisfaction, on and as of the Closing, of each of the following conditions (any
one or more of which may be waived by the Sellers, but only in a writing signed
by the Sellers):
7.1 Accuracy of Warranties. The warranties of Buyer set forth in this
Agreement will be true and correct in all material respects on the Agreement
Date and as of the Closing with the same force and effect as if they had been
made at the Closing (except for any such representations and warranties that, by
their terms, speak only as of a specific date or dates).
7.2 Covenants. Buyer will have performed and complied in all material
respects with all of its covenants and obligations contained in this Agreement
at or before the Closing (to the extent that such covenants and obligations
require performance by Buyer, as applicable, at or before the Closing).
7.3 Compliance with Law; No Legal Restraints. There will not be issued,
enacted or adopted, or threatened in writing by any Regulatory Authority, any
order, decree, temporary, preliminary or permanent injunction, legislative
enactment, statute, regulation, or Action, or any judgment or ruling by any
Regulatory Authority that prohibits or renders illegal the Share Purchase.
7.4 Closing Deliverables. The Sellers will have received each of the
documents and funds set forth in Section 2.2(d), provided however, that the
Sellers receipt of such documents and funds will not be deemed to be an
agreement by the Sellers that such documents are accurate and will not be deemed
to be an acknowledgement or agreement by the Sellers that the Buyer's and
SpectraLink's warranties herein are true and correct or diminish the Sellers'
remedies under this Agreement if such warranties are not true and correct.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer hereunder are subject to the fulfillment or
satisfaction, on and as of Closing, of each of the following conditions (any one
or more of which may be waived by Buyer, but only in a writing signed on behalf
of Buyer by a duly authorized officer of Buyer):
8.1 Accuracy of Warranties. The Warranties set forth in this Agreement will
be true and correct in all material respects (provided that, with respect to
such representations and warranties that are modified by the qualifier
"material", "Material Adverse Effect" or any similar qualifier, then such
qualifier(s) shall be disregarded for purposes of this Section 8.1) on the
Agreement Date and, as regards the Repeating Warranties, as of Closing (unless
specifically stated otherwise in such Warranty) with the same force and effect
as if they had been made at Closing (except for any such Warranties that, by
their terms, speak only as of a specific date or dates).
8.2 Covenants. Each Seller will have performed and complied in all material
respects with all of their respective covenants and obligations contained in
this Agreement at or before the Closing (to the extent that such covenants and
obligations require performance at or before the Closing).
8.3 Compliance with Law; No Legal Restraints. There will not be issued,
enacted or adopted, or threatened in writing by any Regulatory Authority or
Person, any order, decree, temporary, preliminary or permanent injunction,
legislative enactment, statute, regulation, or Action, or any judgment or ruling
by any Regulatory Authority that (a) challenges or seeks to prohibit or render
illegal or impose material limitations on the Share Purchase; (b) seeks to
obtain material damages in connection with the Share Purchase, or (c) seeks to
impose any condition or restriction that in the judgment of Buyer, acting
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reasonably, would be materially burdensome to the future operations or business
of Buyer or the Company after the Closing.
8.4 No Material Adverse Effect. There shall not have occurred any Material
Adverse Effect on the Group Companies.
8.5 Net Income. The Company Net Income (as set forth on the Preliminary Net
Income Statement) shall be no less than DKK fifteen (15) million.
8.6 Resignations of Directors. All members of the Supervisory Boards of the
Group Companies (except for employee representatives) will have resigned in
writing from such positions effective as of the Closing.
8.7 Closing Deliverables. Buyer will have received each of the documents
set forth in Section 2.2(c); provided, however, that receipt of such documents
(and receipt by Buyer of the Preliminary Net Income Statement) will not be
deemed to be an agreement by Buyer that such documents are accurate and will not
be deemed to be an acknowledgement or agreement by Buyer that the Warranties
herein are true and correct or diminish Buyer's remedies under this Agreement if
such Warranties are not true and correct.
ARTICLE 9
TERMINATION OF AGREEMENT
9.1 Termination. This Agreement may be terminated at any time before
Closing:
(a) by the mutual written consent of Buyer and the Sellers;
(b) by either Buyer or each of the Sellers, if all conditions to such
party's obligations to consummate the transactions contemplated by this
Agreement have not been satisfied or waived, and Closing has not occurred, on or
before the Termination Date; provided, however, that the right to terminate this
Agreement under this Section 9.1(b) will not be available to any party whose
breach of any covenant or agreement hereunder will have been a principal cause
of, or will have resulted in, the failure of Closing to occur on or before such
date;
(c) by each of the Sellers, if (i) there has been a material breach by
Buyer of any representation, warranty, covenant or agreement contained herein on
the part of Buyer, or if any representation or warranty of Buyer will have
become untrue, and which Buyer fails to cure within a reasonable time, not to
exceed ten (10) Business Days, after written notice thereof has been given to
Buyer by the Sellers (except that no cure period will be provided for a breach
by Buyer which by its nature cannot be cured), and (ii) such breach or failure
to be true would result in the failure of any of the conditions set forth in
Article 7 to be satisfied; provided, however, that the right to terminate this
Agreement under this clause (c) will not be available to a Seller if the Seller
is at that time in material breach of this Agreement;
(d) by Buyer, if (i) there has been a material breach by the Sellers
of any representation, warranty, covenant or agreement contained herein on the
part of the Sellers, or if any representation or warranty of the Sellers will
have become untrue, and which the Sellers fail to cure within a reasonable time,
not to exceed ten (10) Business Days, after written notice thereof has been
given to the Sellers by Buyer (except that no cure period will be provided for a
breach by the Sellers which by its nature cannot be cured), and (ii) such breach
or failure to be true would result in the failure of any of the conditions set
forth in Article 8 to be satisfied; provided, however, that the right to
terminate this Agreement under this clause (d) will not be available to Buyer if
Buyer is at that time in material breach of this Agreement; and provided that if
any Repeating Warranties become incorrect due to events
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occurring between the Agreement Date and Closing and such incorrectness is
disclosed to Buyer in a separate written statement, then (i) if Closing is
effected, Buyer shall forfeit any remedy, including any claim for Damages for
such breach of a Repeating Warranty and (ii) Buyer's sole remedy shall be prior
to Closing to terminate the Agreement as set out above;
(e) by either Buyer or each of the Sellers, if any permanent
injunction or other order of a court or other competent authority preventing the
consummation of the Share Purchase becomes final and nonappealable; or
(f) by Buyer, if a Material Adverse Effect on the Group Companies
taken as a whole has occurred prior to Closing.
Any termination of this Agreement under clauses (b) through (f) of
this Section 9.1 will be effective by the delivery of a written notice of the
terminating party to the other party hereto.
9.2 Effect of Termination. If this Agreement is terminated as provided in
Section 9.1, this Agreement will be of no further force or effect; provided,
however, that (a) Article 11 (Confidentiality), this Section 9.2 (Effect of
Termination) and Article 12 (General Provisions) will survive the termination of
this Agreement and will remain in full force and effect and (b) the termination
of this Agreement will not relieve any party from any Liability for any breach
of this Agreement. Termination of this Agreement in accordance with this Article
9 shall not prejudice the accrued rights of the Parties in respect of any breach
of this Agreement occurring prior to such termination.
9.3 Release of Escrow. If the Agreement is terminated prior to Closing or
if the transaction that is the subject of the Agreement otherwise fails to close
by March 31, 2006, the First Escrow Amount shall be released immediately to
SpectraLink upon joint request from SpectraLink and the Sellers, unless Buyer or
SpectraLink pursuant to the Agreement is obliged to pay the Purchase Price or
compensation to the Sellers in which case only the amount in dispute between
Buyer and the Sellers shall remain on the Escrow Account. SpectraLink may, in
accordance with the foregoing, request the release of the First Escrow Amount by
providing simultaneous written notice by certified mail (in Danish: "ved
anbefalet brev") hereof to the Escrow Agent and to the Sellers. Unless the
Sellers have disputed the release of funds no later than ten Business Days after
the receipt by the Escrow Agent of the notice of SpectraLink, the Sellers shall
be deemed to have consented to the release of the First Escrow Amount and the
Escrow Agent may release the First Escrow Amount. If the Sellers dispute the
release of the First Escrow Amount or part thereof and the arbitral tribunal
competent to decide the substance of the dispute subsequently finds that the
Sellers were not entitled to the amount withheld on escrow, then the Sellers
shall, in addition to other losses suffered by SpectraLink, be obliged to
compensate SpectraLink for the financing loss on the amount withheld calculated
as the difference between SpectraLink's financing costs under the arrangement
with XX Xxxxxx Chase and accrued Escrow Income. The dispute shall be subject to
final and binding arbitration, cf. Section 12.1 of the Agreement. In the event
of such arbitration, the parties to the arbitration and the arbitration tribunal
shall use best efforts to hear the case and have an award rendered no later than
the later of (i) two months from the receipt by the arbitration tribunal of
notice of dispute (in Danish: "voldgiftsklage") from SpectraLink or (ii) March
31 2006.
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ARTICLE 10
SURVIVAL INDEMNIFICATION AND REMEDIES
10.1 Survival; Not Limited by Due Diligence.
(a) All Warranties contained in this Agreement, will remain operative
and in full force and effect until the earlier of (a) the termination of this
Agreement in accordance with its terms and (b) 11:59 p.m. Colorado, United
States Time on the date that is fifteen months (15) after Closing; provided,
however, that the Warranties contained in Section I.1 (Good and Valid Title),
II.4 (Capitalization), Section 10 (Taxes) of Annex I will remain operative and
in full force and effect until 30 Business Days after the expiration of the
applicable statute of limitations for such Claim; provided further, that the
Warranties shall not terminate with respect to any Claim based upon
misrepresentation or breach of such Warranties that is submitted and pursued by
legal action in accordance with this Agreement until such Claim is fully
resolved; provided, further, that any Indemnified Person will be entitled to
seek recovery for fraud, gross negligence, willful misrepresentation and/or
willful misconduct until the expiration of the applicable statute of limitations
for any Claim alleging fraud, gross negligence, willful misrepresentation and/or
willful misconduct. All warranties of Buyer and SpectraLink contained in this
Agreement will remain operative and in full force and effect, regardless of any
investigation or disclosure made by or on behalf of any of the parties to this
Agreement, until the earlier of (a) the termination of this Agreement in
accordance with its terms and (b) the performance by Buyer of all its
obligations under this Agreement. All covenants of the parties will survive
according to their respective terms.
(b) Buyer has, for the purpose of determining whether to enter into
and negotiate the transactions contemplated by this Agreement, conducted
investigations into the Group Companies' commercial, financial, legal and other
affairs. The parties acknowledge and agree that the Warranties of the Sellers
set forth in this Agreement shall only be qualified as set out in Section 3.2.
10.2 Agreement to Indemnify. Subject to the limitations set forth in
Sections 9.1 (d) and 10.3-10.8, each Seller (each, an "INDEMNIFYING PERSON" and
collectively, the "INDEMNIFYING PERSONS") will severally, and not jointly, based
on each such Seller's Pro Rata Share, indemnify and hold harmless Buyer, the
Group Companies and their respective directors, officers, agents,
representatives, shareholders and employees, and each Person, if any, who
controls or may Control Buyer or the Group Companies (each, an "INDEMNIFIED
PERSON" and collectively, the "INDEMNIFIED PERSONS") from and against any and
all losses, costs, damages, Liabilities and expenses, including reasonable
attorneys' fees, other professionals' and experts' reasonable fees, and court or
arbitration costs (collectively, "DAMAGES"), directly incurred, paid or accrued
in connection with, resulting from or arising out of any breach of the Sellers'
obligations under this Agreement, including (a) any failure of any Warranty of
the Sellers in this Agreement to be true and correct as of the Agreement Date
and, as regards the Repeating Warranties, as of Closing as though such Warranty
were made as of Closing (except for any such Warranties that, by their terms,
speak only as of a specific date or dates), (b) any breach of or default in
connection with any of the covenants or agreements made by any Seller in this
Agreement, the Disclosure Letter or any certificate or document delivered
pursuant to this Agreement; and (c) any Transaction Expenses paid or to be paid
by the Company to the extent not already deducted from the Purchase Price
pursuant to the definition thereof. Damages shall be calculated as the
Indemnified Person's direct loss (DKK for DKK or that other currency which may
apply to the Damages) without regard to any method of calculation (P/E, cash
flow multiple or similar method) used for the determination of the Purchase
Price. The Damages shall be the net loss effectively sustained by the
Indemnified Person less any benefits available to the Indemnified Person
directly connected to the Damages, including but not limited to loss covered by
insurance and the Tax benefit of a Tax deductible loss. Damages shall be
calculated exclusive of any indirect or consequential loss. In addition, as
stated in subsection 2.2(b)(iii), if the Net Amount calculated pursuant to such
section is less than zero (0), such difference shall constitute indemnifiable
Damages hereunder. Materiality, Material Adverse Effect, knowledge and similar
standards or qualifications in any representation, warranty or covenant shall
only be taken into account in determining whether a breach of or default in
connection with such representation, warranty or covenant (or failure of any
representation or warranty to be true and correct) exists, and shall not be
reapplied in determining the amount of any indemnifiable Damages with respect to
such breach, default or failure to be true and correct.
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10.3 Limitations.
(a) De Minimis. The Sellers shall not be liable for any Damages
suffered by the Indemnified Person as a result of a claim arising out of a
single breach of the Warranties, unless each such Damage is in excess of DKK
250,000 (the "DE MINIMIS THRESHOLD"), provided that claims originating from
identical or connected matters, facts or triggering events or having a serial
effect shall be aggregated for the purposes of determining whether the De
Minimis Threshold has been reached. Legal fees or other advisors' fees shall not
be included for the purposes of determining whether the De Minimis Threshold has
been reached.
(b) Basket. In seeking indemnification for Damages under this Article
10, the Indemnified Persons will make no Claim unless and until such Damages
aggregate at least DKK 4,000,000, inclusive of legal fees (the "BASKET"), in
which event such Indemnified Persons may make Claims for all Damages (i.e.
including the first DKK 4,000,000), disregarding in any event damages which
falls within the De Minimis Threshold. The Basket shall only apply with respect
to the first DKK 4,000,000 of Damages, and shall not be re-applied with respect
to any subsequent Claims if Damages in excess of DKK 4,000,000 have previously
been paid or are subject to a pending Claim. Notwithstanding anything contained
herein to the contrary, the Basket will not apply to any Claim by any
Indemnified Person for indemnification for (i) any Claim based upon a breach of
Section I.1 (Good and Valid Title) or Section II.4 (Capitalization), or Section
10 (Title) of the Warranties; (ii) fraud, gross negligence, willful
misrepresentation and/or willful misconduct, (iii) any default in or breach of
any of the covenants given or made by any Seller in this Agreement, (iv) any
Transaction Expenses paid or to be paid by the Company to the extent not already
deducted from the Purchase Price pursuant to the definition thereof, or (v) the
tax indemnification is Section 10.9.
(c) Sole Remedy; Limitation on Liability. If the Share Purchase is
consummated, recovery against the Holdback Amount as provided in this Section
10.3(c) shall be the sole and exclusive remedy under this Agreement, except in
the case of fraud, gross negligence, willful misrepresentation and/or willful
misconduct by any Seller, and except as provided in subsection 2.2(b)(iii) and
Section 10.9. For the avoidance of doubt, Buyer thus waives any right under the
laws of Denmark to rescind (in Danish: "ophaeve") the Agreement after Closing or
to claim a proportionate reduction of the Purchase Price (in Danish:
"forholdsmaessigt afslag"). The aggregate Liability of each Seller pursuant to
Section 10.2 will not exceed such Seller's Pro Rata Share of the Holdback Amount
(the "LIABILITY LIMIT"). Notwithstanding the preceding sentence or any other
provision of this Agreement, in the event a Claim for Damages is based upon a
breach or failure to be true and correct of Section I.1 (Good and Valid Title),
Section II.4 (Capitalization), and Section II.10 (Taxes) of the Warranties, or
fraud, gross negligence, willful misrepresentation and/or willful misconduct, or
Section 10.9, the Liability Limit shall not apply, and each Seller instead shall
be liable for its Pro Rata Share of all such Claim for Damages.
(d) Time Limit for Claims. Except with respect to Claims arising from
or relating to (i) fraud, gross negligence, willful misrepresentation and/or
willful misconduct, or (ii) section I.1 (Good and valid Title), Section II.4
(Capitalization), and Section II.10 (Taxes) of the Warranties, which may be
brought at any time within 30 Business Days after expiry of the applicable
statute of limitations, no Claim may be asserted or brought by an Indemnified
Person against the Indemnifying Persons after 11:59 p.m. Colorado, United States
Time on the date that is fifteen (15) months after the date of Closing;
provided, however, that any Claim asserted by an Indemnified Person against the
Indemnifying Persons prior to the applicable preceding deadline may thereafter
be prosecuted as provided in this Article 10 and recovery on such Claim may be
had by the Indemnified Person as provided herein. Further, in order for a Claim
to be timely pursued, Notice of Claim must be given in accordance with Section
10.5 and such notice must be followed by timely legal action as required under
Section 10.7.
(e) Mitigation. The Indemnified Person shall actively and in good
faith seek to mitigate the Damages by all reasonable means.
10.4 Representation. Each Indemnifying Person shall be treated individually
with respect to claims for indemnification pursuant to this Article 10 and the
taking by an Indemnifying Person of any
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and all actions and the making of any decisions required or permitted to be
taken by the Indemnifying Person pursuant to this Agreement, including the
exercise of the power to: (a) authorize the release to Buyer of the relevant
portion of the Holdback Amount in satisfaction of indemnification claims of any
Indemnified Person pursuant to this Article 10; (b) resolve, settle or
compromise, and/or comply with orders of courts with respect to, any claim for
indemnification made pursuant to this Article 10; and (c) take all actions
necessary in the judgment of the Indemnifying Person for the accomplishment of
the foregoing. An Indemnifying Person will not have authority and power to act
on behalf of other Indemnifying Persons with respect to the disposition,
settlement or other handling of all claims for indemnification pursuant to this
Article 10 and all rights or obligations arising under this Article 10.
10.5 Notice of Claim. As used herein, "CLAIM" means a claim for
indemnification of any Indemnified Person for Damages pursuant to this Article
10. Buyer will give a written notice of a Claim executed by an officer of Buyer
(a "NOTICE OF CLAIM"), whether for its own Damages or for Damages incurred by
any other Indemnified Person. Buyer shall give a Notice of Claim within a
reasonable time after the Buyer became aware of the events or circumstances
giving rise to a Claim and subject to the limitations set forth in Section
10.3(d). Buyer will deliver a Notice of Claim based on, arising from, relating
to or caused by:
(a) any item specified in Section 10.2; or
(b) the assertion, whether oral or in writing, against any Indemnified
Person of an Action brought by a third party against such Indemnified Person (in
each such case, a "THIRD-PARTY CLAIM") that is based on, arises out of, relates
to or is caused by any item specified in Section 10.2.
Delay on the part of Buyer in giving any Indemnifying Persons a Notice
of a Claim within reasonable time according to this Section 10.5 will relieve
the Indemnifying Person from its obligations pursuant to this Article 10 only to
the extent that the Indemnifying Person is prejudiced thereby. The assertion of
any single Claim for indemnification hereunder will not bar an Indemnified
Person from asserting any other Claim or Claims hereunder.
10.6 Contents of Notice of Claim. Each Notice of Claim by Buyer given
pursuant to Section 10.5 will contain the following:
(a) a statement that the Indemnified Person has incurred, paid or
accrued (in accordance with GAAP) or, in good faith, believes it will have to
incur, pay or accrue (in accordance with GAAP) Damages in an aggregate stated
amount arising from such Claim (which amount may be the amount of damages
claimed by a third party in a Third-Party Claim); and
(b) a brief description, in reasonable detail (to the extent
reasonably available to Buyer), of the facts, circumstances or events giving
rise to the alleged Damages based on Buyer's good faith belief thereof,
including the identity and address of any third-party claimant (to the extent
reasonably available to Buyer) and copies of any formal demand or complaint, the
amount of Damages, other written documentation readily available, the date each
such item was incurred, paid or accrued, or the basis for such anticipated
Liability, and the sections of this Agreement alleged to have been breached.
10.7 Resolution of Notice of Claim. Each Notice of Claim delivered by Buyer
will be resolved as follows:
(a) Uncontested Claims. If, within thirty (30) Business Days after a
Notice of Claim is received by the Indemnifying Person, the Indemnifying Person
does not contest such Notice of Claim in a writing given to Buyer as provided in
Section 10.7(b), then the Indemnifying Person shall be considered to contest the
Claim and the Claim shall be considered a Contested Claim.
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(b) Contested Claims. If the Indemnifying Person gives Buyer written
notice contesting all or any portion of a Notice of Claim (a "CONTESTED CLAIM")
within the thirty (30) Business Days period specified in Section 10.7(a), then
such Contested Claim will be resolved either (i) by a written settlement
agreement executed by Buyer and the Indemnifying Person or (ii) in the absence
of such a written settlement agreement, in accordance with Section 12.1.
(c) Settled Claims. If a Claim (including a Contested Claim) is
settled by a written settlement agreement executed by Buyer and the Indemnifying
Person (a "SETTLED CLAIM"), then the parties will resolve such Settled Claim as
provided in such settlement agreement.
(d) Legal action. Any Contested Claim must be pursued by Buyer or any
Indemnified Person legal action in accordance with Section 12.1 not later than
forty-five (45) Business Days after the expiration of the fifteen (15) months
period after the date of Closing set out in Subsection 10.3(d) (Time Limit for
Claims). If no such legal action is initiated, the Buyer and any Indemnified
Person shall be considered to have forfeited the Claim.
10.8 Defense of Third-Party Claims.
(a) Buyer's defense. Subject to Sub-section 10.8 (b) below, Buyer will
defend any Third-Party Claim, and the costs and expenses incurred by Buyer in
connection with such defense (including reasonable attorneys' fees, other
professionals' and experts' fees and court or arbitration costs) will be
included in the Damages for which Buyer may seek indemnification pursuant to a
Claim made by any Indemnified Person hereunder. Buyer will (i) be free to handle
the prosecution or defense of such Third-Party Claim, subject to due and loyal
consideration of the interest of any Indemnifying Persons, (ii) take all
necessary steps to contest such Third-Party Claim or to prosecute such
Third-Party Claim to conclusion or settlement satisfactory to Buyer without
requiring the consent of the Indemnifying Persons, (iii) notify the Indemnifying
Persons of the progress of such Third-Party Claim, (iv) permit each Indemnifying
Person, at the Indemnifying Person's expense, to participate in the defense
proceedings and settlement negotiations with respect to such Third-Party Claim,
and (v) provide the Indemnifying Persons with reasonable access to all relevant
information and documentation relating to such Third-Party Claim and Buyer's
prosecution or defense thereof to the extent that access to such information and
documentation by the Indemnifying Persons does not affect any privilege relating
to the Indemnified Person. Upon the conclusion or settlement of a Third-Party
Claim, the Indemnified Party will provide the Indemnifying Persons with written
notice of such conclusion or settlement ("NOTICE OF CONCLUSION"). Within thirty
(30) Business Days of delivery of such Notice of Conclusion, the Indemnifying
Persons shall elect in writing to (A) admit that such Third-Party Claim is an
indemnifiable Claim hereunder, in which case the Indemnified Person shall be
entitled to recover Damages related to such Third-Party Claim or (B) dispute, in
accordance with the provisions of Sections 10.7 and 12.1, whether such
Third-Party Claim is an indemnifiable Claim hereunder. If any Indemnifying
Person fails to make an election within the time period specified in the
preceding sentence, then the Indemnifying Person will be conclusively deemed to
have admitted that such Third-Party Claim is an indemnifiable Claim hereunder
and the Indemnified Person shall be entitled to recover Damages related to such
Third-Party Claim from the Holdback Amount.
(b) In any case, the party not in control of such Third-Party Claim
will cooperate with the other party in the conduct of the prosecution or defense
thereof.
10.9 Tax Indemnification. The Sellers shall fully and unconditionally, each
for their Pro Rata Share, on a DKK for DKK basis, indemnify and hold harmless
Buyer and the Group Companies for any and all Taxes attributable to any period
or partial period before Closing, to the extent such Taxes exceed the aggregate
amount of (i) the provisions specifically made therefore in the audited annual
report for the financial year 2004/2005, and (ii) the Taxes set forth in the
Final Net Income Statement; provided that the Sellers shall have no obligation
to provide indemnification for any Taxes or increased Taxes
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resulting from actions taken by Buyer or the Group Companies after Closing, e.g.
by sales of assets or changes to, failure to prolong or discontinuation of the
joint taxation scheme applied by the Company and Xxxx U.S. prior to Closing. The
provisions of this Section 10.9 shall apply notwithstanding any other provision
of this Agreement and notwithstanding any provisions of any other related
agreements or documentation including, without limitation, the application of
the De Minimis Threshold, the Basket and the limitation of liability in
Subsection 10.3(c) and (d), and the qualifications in Section 3.2.
ARTICLE 11
CONFIDENTIALITY
11.1 Confidentiality obligation. Subject to Sections 11.2 and 11.3 below,
the parties shall treat as strictly confidential any discussions, negotiations,
terms and conditions, etc. of this Agreement and the Sellers shall keep strictly
confidential all confidential or proprietary information relating to the Group
Companies or Spectralink Corporation and its affiliates.
11.2 Exceptions to confidentiality obligation. Notwithstanding the
provisions of Section 11.1, each party may disclose information which would
otherwise be confidential in the event that:
11.2.1 it is required by law or regulations, or a court of competent
jurisdiction;
11.2.2 it is required by any securities exchange or regulatory or
governmental body, whether or not the requirement for the information has the
force of law;
11.2.3 the disclosure is made as a normal part of a Seller's
preparation of the accounts and/or other reports and as normal part of the
information given by the Sellers to their existing and/or future/potential
investors;
11.2.3 it is required by an entity Controlling the party, provided
always that a similar obligation to keep such information confidential is
imposed on such entity Controlling the party;
11.2.4 it is deemed necessary or appropriate that the party discloses
such information to its advisors or banks or finance providers, provided always
that a similar obligation to keep such information confidential is imposed on
such advisors or banks or finance providers;
11.2.5 the information has come into the public domain through no
fault of that party or any authorized recipient under Sections 11.2.4 - 11.2.5;
and
11.2.6 the other party has given prior written approval to the
disclosure, such approval not to be unreasonably withheld or delayed.
11.3 Press release. The parties agree immediately after signing of this
Agreement to issue press releases with the content attached as Exhibit J.
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ARTICLE 12
GENERAL PROVISIONS
12.1 Governing Law; Submission to Jurisdiction. The laws of Denmark,
irrespective of choice of law principles, will govern the validity of this
Agreement, the construction of its terms, and the interpretation and enforcement
of the rights and duties of the parties hereto. Subject to the exception of any
dispute to be finally resolved by the Independent Accountant, any dispute
arising out of or relating to this Agreement or the transactions contemplated
hereby shall be finally settled by the Danish Court of Arbitration in accordance
with the Rules of Procedure of the Danish Institute of Arbitration (Danish
Arbitration).
12.2 Assignment; Binding Upon Successors and Assigns. No party hereto may
assign any of its rights or obligations hereunder without the prior written
consent of the other parties hereto; provided, however, that Buyer may, without
the consent of any other party hereto, assign this Agreement (a) to any of its
majority-owned Subsidiaries, (b) by operation of law, or (c) in connection with
any merger, consolidation or sale of all or a significant portion of its assets
or in connection with any similar transaction. This Agreement will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Any assignment in violation of this Section
12.2 will be void.
12.3 Severability. If any provision of this Agreement, or the application
thereof, is for any reason held to any extent to be invalid, illegal or
unenforceable, then the remainder of this Agreement and the application thereof
will nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated by this Agreement are not
affected in any manner materially adverse to any party hereto. Upon such
determination that any provision is invalid, illegal or unenforceable, the
parties agree to replace such provision with a valid, legal and enforceable
provision that will achieve, to the maximum extent legally permissible, the
economic, business and other purposes of such provision.
12.4 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred by this Agreement or by law on
such party, and the exercise of any one remedy will not preclude the exercise of
any other. The parties hereto agree that irreparable damage would occur if any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties will be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof.
12.5 Amendment and Waivers. This Agreement may not be amended or modified
except by a written instrument signed by Buyer and the Sellers. At any time
prior to the Closing, each of Buyer and the Sellers may, to the extent legally
allowed: (a) extend the time for the performance of any of the obligations or
other acts of the other contained herein or in any agreement, certificate or
document delivered pursuant hereto; (b) waive any inaccuracies in the warranties
made to it contained herein or in any agreement, certificate or document
delivered pursuant hereto; and (c) waive compliance with any of the agreements
or conditions for its benefit contained herein or in any agreement, certificate
or document delivered pursuant hereto. No such extension or waiver will be
effective unless signed in writing by the party against whom such extension or
waiver is asserted. The waiver by a party of any breach hereof or default in the
performance hereof will not be deemed to constitute a waiver of any other breach
or default or any succeeding breach or default. The failure of any party to
enforce any of the provisions hereof will not be construed to be a waiver of the
right of such party thereafter to enforce such provisions.
12.6 Expenses. Each party will bear its respective expenses and fees
incurred with respect to this Agreement and the transactions hereby (including
the Share Purchase), including the expenses and fees of its own accountants,
attorneys, investment bankers, advisors and other professionals ("TRANSACTION
EXPENSES"). If the Share Purchase is consummated and any Transaction Expenses
have been incurred by the Company as of Closing, then the Purchase Price will be
reduced by the amount of such Transaction Expenses, provided that such
Transaction Expenses have not been deducted in the Final Net Income Statement.
If, for any reason, no such reduction of the Purchase Price is made at the
Closing with respect to Transaction Expenses paid or to be paid by the Company,
then Buyer will be entitled to treat such Transaction Expenses as Damages
recoverable against the Holdback Amount under Section 10.2, without giving
effect to the De Minimis Threshold or the Basket; it being understood and
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agreed that Buyer's claim for recovery of Transaction Expenses shall not be
limited to the Holdback Amount.
12.7 Attorneys' Fees. Should suit be brought to enforce or interpret any
part of this Agreement, the prevailing party will be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees to
be fixed by the court (including costs, expenses and fees on any appeal). The
prevailing party will be entitled to recover its costs of suit, regardless of
whether such suit proceeds to final judgment.
12.8 Notices. All notices and other communications required or permitted
under this Agreement will be in writing in the English language and will be
either hand delivered in person, sent by facsimile, sent by certified or
registered first-class mail, postage pre-paid, or sent by nationally recognized
express courier service. Such notices and other communications will be effective
upon receipt if hand delivered or upon confirmation if sent by facsimile, five
calendar days after mailing if sent by mail, and one Business Day after dispatch
if sent by express courier, to the following addresses, or such other addresses
as any party may notify the other parties in accordance with this Section 12.8:
(a) If to Buyer or SpectraLink:
SpectraLink Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 0000
Attention: General Counsel
Fax: (000) 000 0000
with a copy to:
Fenwick & West LLP
Silicon Valley Center
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
(b) If to the Sellers:
Dansk Kapitalanlaeg Aktieselskab
Gothersgade 103
XX Xxx 0000
XX-0000 Xxxxxxxxxx K
Attention: Managing Director Xxxxx Xxxxxxx Xxxxxxxxx
Fax: x00 00 00 00 00
Xxxxx Service ApS
x/x Xxxxx Xxxx
Xxxxxxxxxx 00
XX-0000 Xx
Xxxx Xxxxxxxxx
Xxxxxxx Xxxxxx Xxx 0
XX-0000 Xxxxx C
Xxxxx X. Xxxxxxxxx
Sonderbaekparken 31
-00-
XX-0000 Xxxxxxxxxxx
with a copy to:
Xxxxx Xxxxx
Xxxxxxxx 00
XX-0000 Xxxxxxxxxx K
Attention: Xxxxxxx Xxxxxx-Xxxxx, Esq.
Fax: x00 00 00 00 00
12.9 Interpretation; Rules of Construction. When a reference is made in
this Agreement to Recitals, Exhibits, Sections, Annexes or Articles, such
reference will be to a recital, an Exhibit, a Section, an Annex or an Article,
respectively, to this Agreement unless otherwise indicated. When a reference is
made in this Agreement to a Schedule, such reference will be to a Schedule in
the Company Disclosure Letter unless explicitly stated otherwise. The words
"include," "includes" and "including" when used herein will be deemed in each
case to be followed by the words "without limitation." Reference to any
agreement or other document is to such agreement or document as amended and
supplemented from time to time. The singular includes the plural and vice versa.
The headings contained in this Agreement are for reference purposes only and
will not affect in any way the meaning or interpretation of this Agreement.
References to any "Person" or "entity" include such Person's or entity's
successors and permitted assigns. When reference is made herein to "the business
of" an entity, such reference will be deemed to include the business of all
Subsidiaries of such entity. The parties hereto agree that they have been
represented by legal counsel during the negotiation and execution of this
Agreement and the other agreements, certificates and documents contemplated by
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement,
certificate or document will be construed against the party drafting such
agreement, certificate or document. Each reference herein to a law, statute,
regulation, document or Contract will be deemed in each case to include all
amendments thereto.
12.10 Absence of Third-Party Beneficiary Rights. No provisions of this
Agreement are intended, nor will be interpreted, to provide or create any
third-party beneficiary rights or any other rights of any kind in any client,
customer, Affiliate, shareholder, partner or employee of any party hereto or any
other Person, unless specifically provided otherwise herein, and, except as
otherwise so provided, all provisions hereof will be personal solely between the
parties to this Agreement; provided, however, that Article 10 and Article 12 is
intended to benefit the Indemnified Persons.
12.11 Time is of the Essence. The parties hereto acknowledge and agree that
time is of the essence in connection with the execution, delivery and
performance of this Agreement and that they will each utilize all reasonable
efforts to satisfy all the conditions to Closing of the other party on or before
the Termination Date.
12.12 Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto, and the Confidentiality Agreement constitute the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and thereof and supersede all prior and contemporaneous agreements
or understandings, inducements or conditions, express or implied, oral or
written, between the parties, including that certain Confidential Term Sheet
negotiated between the Sellers and Buyer to the extent they relate in any way to
the subject matter hereof. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any of the terms
hereof.
12.13 Governing Language. This Agreement has been negotiated and executed
by the parties hereto in the English language. In the event any translation of
this Agreement is prepared for convenience or any other purpose, the provisions
of the English language version shall prevail.
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12.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument.
[THE REMAINDER OF THIS PAGE WAS LEFT BLANK INTENTIONALLY.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
SPECTRALINK CORPORATION DANSK KAPITALANLAEG AKTIESELSKAB
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Title: Title:
------------------------------ ---------------------------------
SPECTRALINK DENMARK APS XXXXX SERVICE APS
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Title: Title:
------------------------------ ---------------------------------
XXXX STRIDBAEK
----------------------------------------
XXXXX X. XXXXXXXXX
----------------------------------------
XXXXX XXXX
----------------------------------------
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