EXHIBIT 2.1
1 April 2001
SHARE PURCHASE AGREEMENT
--------------------------------
between
All Shareholders and Warrantholders in Exbit Technology A/S
and
Vitesse Semiconductor Corporation
ESCROW:
Signed by Vitesse and delivered to the Sellers to be kept in escrow by Kromann
Reumert on the condition that all Sellers shall have executed the Agreement by
1 April 2001 at 23.59 CET and that such execution shall be confirmed by Kromann
Reumert by mail to Xxxxx Xxxx at Vitesse on "xxxxxx@xxxxxxx.xxx" , to Xx Xxxxxx
Wellington on "xxxxxx.xxxxxxxxxx@xxx.xxx" , to Morten Skj0nnemand on
"xxx@xxxxxx.xx" and to Olaf Ehrenskjold at "xxx@xxxxxx.xx"- failing which
execution or confirmation this Agreement shall become null and void.
CONTENTS
1. Preamble......................................................1
2. Purchase and Sale of the shares...............................3
3. Intentionally deleted.........................................4
4. Relationship between the Sellers..............................4
5. Consideration.................................................7
6. Closing; Closing Date........................................17
7. The sellers' Representations and Warranties..................18
8. Vitesse's representations and warranties.....................19
9. Covenants of the Sellers.....................................20
10. Vitesse's covenants..........................................24
11. Indemnification..............................................28
12. Conditions Precedent to Closing..............................34
13. Announcements................................................35
14. Notices......................................................35
15. Governing Law and Arbitration................................37
16. Miscellaneous................................................38
17. Appendices...................................................40
SHARE PURCHASE AGREEMENT OF 1 April 2001
between All Shareholders in Exbit Technology A/S listed in Appendix 1
hereto (the "Shareholders") and all holders of warrants (rights to
subscribe new shares) in Exbit Technology A/S listed in Appendix 1
(the "Warrantholders" and together with the Shareholders, the
"Sellers")
and Vitesse Semiconductor Corporation ("Vitesse")
Concerning acquisition of 100 per cent of the share capital and
other actual or potential ownership interests of Exbit Technology
A/S, a company incorporated under the laws of the Kingdom of
Denmark with its registered address at X0xxxxx 00, 0000 Xxxxxx,
Xxxxxxx and with CVR no. 24224694 (the "Company")
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1. Preamble
WHEREAS, the Shareholders in aggregate own 100 per cent of the
issued and outstanding shares of capital stock and voting rights of
the Company;
WHEREAS, the Warrantholders in aggregate own 100 per cent of the
issued and outstanding warrants, which entitle the Warrantholder to
subscribe new shares of the Company (the "Warrants"), and WHEREAS
such Warrants shall be exercised and converted into new shares of
the Company on or prior to Closing (as herein defined) (such new
shares together with the shares of the Company owned by the
Shareholders, the "Shares");
WHEREAS, the Sellers desire to sell all of the Shares to Vitesse as
hereinafter provided;
WHEREAS, Vitesse desires to acquire all the Shares;
WHEREAS, Vitesse shall in consideration of transfer of title to the
Shares issue and deliver to the Sellers common stock of Vitesse
listed on the Nasdaq stock exchange (the "Buyer Shares");
WHEREAS, the Company has prior to the date of this Agreement in
addition to the Warrants declared its intention to issue 13,300 new
warrants (the "Intended Warrants") to the employees of the Company
listed in Appendix 2 (the "Employees"), which as a consequence of
this Agreement, will not be issued and in exchange of which Vitesse
shall issue stock options, which give right to acquire 80,000
shares of common stock of Vitesse (the "Buyer Stock Options");
WHEREAS, the parties recognize that Vitesse has a legitimate
interest in establishing a mechanism that will induce those of the
Sellers who are at the same time employees of the Company to
maintain their positions with the Company after Vitesse's
acquisition of the Company; and
WHEREAS, Vitesse has been allowed to and has conducted a due
diligence review of the Company's activities, assets and
liabilities to its full satisfaction prior to the entering into of
this Agreement, the results of which are reflected in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and in reliance upon the
representations and warranties hereinafter set forth, the parties
agree as follows.
2. Purchase and Sale of the shares
2.1 Transfer of Shares
Subject to the terms and conditions of this Agreement, at the
Closing (as hereinafter defined), the Sellers shall sell, transfer,
assign and deliver to Vitesse, and Vitesse shall purchase from each
of the Sellers all of the Shares, consisting of (1) 1,080,000
shares of nominal DKK 1 each and (2) the shares, nominal DKK
11,700, that shall be issued by the Company pursuant to Clause 2.2.
2.2 Warrants
On or before Closing, the Warrants as set out in Appendix 1 shall
be exercised and the Warrantholders shall subscribe newly issued
shares of the Company of nominal DKK 1 each whereupon such new
shares shall be included in the transfer provided in Clause 2.1.
The exercise of the Warrants and the Warrantholders' subscription
of such new shares of the Company shall be made on the terms and
conditions set out in Appendix 3.
2.3 Each Shareholder's transfer of Shares
The number of Shares that each of the Sellers shall sell to Vitesse
and that Vitesse shall purchase from each of the Sellers is set out
in Appendix 1.
3. Intentionally deleted
4. Relationship between the Sellers
4.1 Part-taking in the consideration
Each of the Sellers shall receive his/her/its proportional part of
the Buyer Shares, cf. Clause 5.1, equal to his/her/its
proportionate ownership of the total number of Shares transferred
to Vitesse pursuant to this Agreement as further specified in
Appendix 1, confer Clause 2.3. The cash amount provided for in
Clause 5.1 shall be paid to i-data international a/s.
4.2 The Sellers' liability
The Employee Shareholders (defined as all the Sellers except for
i-data international a-s and Xxxxxx Xxxxxxx Holding ApS) shall have
no personal obligations to indemnify under this Agreement except
(i) for indemnification for breach of such Employee Shareholder's
obligation to deliver their Shares, respectively, free of any third
party rights and (ii) as set out in Clause 11. The Sellers'
liability under this Agreement shall be several and not joint. The
Guarantee Escrow Accounts shall be established by each of i-data
international a-s and Xxxxxx Xxxxxxx Holding ApS (in proportion to
their part of the Buyer Shares) for the benefit of Vitesse as a
security for breach of any and all of the Sellers' representations
and warranties set out in Clause 7 below. For the avoidance of
doubt, i-data and Xxxxxx Xxxxxxx Holding ApS' indemnity shall not
be reduced due to the fact that i-data international a-s and Xxxxxx
Xxxxxxx Holding ApS receive less than 100 per cent of the Buyer
Shares. Except as set out in Clause 9.3 and Clause 11.2, neither
i-data international a-s nor Xxxxxx Xxxxxxx Holding ApS shall be
obliged to make indemnification in excess of or in any other manner
than an obligation to transfer back to Vitesse the Buyer Shares
that are placed in the Guarantee Escrow Accounts. Subject to Clause
11.6, i-data international a-s and Xxxxxx Xxxxxxx Holding ApS shall
not be entitled to set forth any claims against the Employee
Shareholders for breach of the Sellers' representations and
warranties set out in Clause 7 below.
4.3 Sellers' Representatives
The Sellers and the Employees hereby designate each of Xxxxxxxx
Xxxxxx, Xxxxxxxxx Xxxxxxxx or another partner of Kromann Reumert
appointed by the foregoing to be the sole Sellers' Representatives'
and to act as agents and attorneys-in-fact of each of them under
this Agreement to the exclusion of any action by the sellers and
Employees individually or jointly. The Sellers' Representatives
shall vis-a-vis Vitesse have the authority to take such actions and
exercise such discretion as is required of or permitted to the
Sellers pursuant to this Agreement and any such actions shall be
binding upon each of the Sellers, including but not limited to (1)
to give and receive notices and communications, cf. Clause 14; (2)
to receive service of process in connection with any Claims (as
defined in Clause 11.1); (3) to authorize delivery to Vitesse of
Buyer Shares in satisfaction of any Claims or to object to such
delivery; (4) to perform the obligations and exercise, or refrain
from exercising, the rights of the Sellers provided for herein,
including the settlement of any Claims and disputes with Vitesse
arising hereunder: and (5) to agree to any amendment to this
Agreement which the Sellers' Representatives at their own
discretion consider in the best interest of the Sellers'. The
designation of the Sellers' Representatives can be revoked in
writing by each of the Sellers at 7 days notice to Vitesse
according to Clause 14 except that such revocation cannot take
effect before Closing. Vitesse shall have the right to rely on all
actions taken or omitted by the Sellers' Representatives pursuant
to this Agreement, all of which actions and omissions shall be
binding on each of the Sellers, as applicable, until the
designation have been revoked, refer this Clause 4.3. Neither
Vitesse nor the Sellers shall have any claim against the Sellers'
Representatives (but only against the party so represented) for any
action undertaken by them in their capacity of Sellers'
Representatives.
5. Consideration
5.1 Consideration for the Shares
5.1.1 In consideration of transfer of ownership of the Shares, Vitesse
shall pay in cash at Closing $ 5,000 to i-data international a/s
and Vitesse shall further issue to the Sellers 6,836,473 newly
issued shares of common stock of Vitesse (the "Buyer Shares") which
shall be transferred in full and released to the Sellers on Closing
on the following terms.
5.1.1.1 Buyer Shares to be released at Closing
At Closing 2,505,418 Buyer Shares shall be transferred and released
to accounts nominated by each of the Sellers in the following
fractions: 1,880,161 Buyer Shares shall be released to i-data
international a-s; 197,912 Buyer Shares shall be released to Xxxxxx
Xxxxxxx Holding ApS and 427,345 Buyer Shares shall be released to
the Employee Shareholders in proportion to their number of Shares,
as set out in Appendix 1. The Buyer Shares released to i-data
international a-s are to be simultaneously pledged in favour of
Danske Bank A/S.
5.1.1.2 Earnout Escrow Account
5.1.1.2.1 At Closing Vitesse shall transfer 2,390,793 Buyer Shares into
escrow accounts (the "Earnout Escrow Accounts") in Amagerbanken in
the name of each of the Sellers (divided among the Sellers based on
their proportional part of the Shares). i-data international a-s'
rights in relation to the Buyer Shares placed in its Earnout Escrow
Account are to be assigned by way of security to Danske Bank A/S
which arrangement shall fully respect and not in any way prejudice
or limit the effect of the provisions of or pertaining to such
Earnout Escrow Account and Vitesse's rights hereunder. Vitesse has
the right to purchase the following number "S" of the Buyer Shares
from the Earnout Escrow Accounts at a price of 0.01 USD per Buyer
Share as set out below in this Clause 5.1.1.2.1, such purchase
right only to be exercised by Vitesse during the period set out in
Clause 5.1.1.2.3. In the following "R" is defined as the realised
gross product revenues (not taking into account any set off,
bonuses or similar discounts) within the Vitesse Group (which
include Vitesse, the Company and majority owned subsidiaries of
these companies) consisting of all gross product revenues arising
from the Vitesse Group in the calendar years 2001 (including the
Company's gross product revenues from the commencement of the
calendar year 2001 until Closing) and 2002 for chips and silicon
products (in USD) incorporating - wholly or partly - the Company's
intellectual property rights, cf. below (R should further be
calculated in accordance with Appendix 5):
1. If R is less than 30.0 million USD then S = 2,390,793;
2. If R is greater than or equal to 30.0 million USD, but less than
or equal to 90.0 million USD then S should be calculated pursuant
to the following formula:
S = 2,390,793 - (2,390,793*R/90,000,000);
3. If R is greater than 90.0 million USD then S = 0.
R shall include product revenue from chip sets from the Company's
existing products and any enhancements or further developments
thereof . R shall further include revenues from (1) products
currently under development with the Company as executed by the
Company's employees, (2) products currently defined in the
Company's "roadmap" (as set forth in Appendix 5A) implemented by
the Company's employees or by any other Vitesse or outside
resource, and (3) products on Vitesse Group's development roadmap
that include the Company's IP rights and are developed by the
Company's employees. Products in Vitesse Group's development
roadmap that include the Company's IP rights and are developed by
Vitesse or outside resources shall not be included in R unless an
identical or materially similar device is currently on the
Company's product roadmap. Specifically, the VSC7xxx (Meigs core,
PHY and OIF) product currently in development at Vitesse is
excluded from R. The Parties agree that they shall from time to
time discuss in good faith any amendments to the list of products
that shall be taken into consideration when calculating R on the
basis of development of the Company's business and competences.
5.1.1.2.2 If Vitesse prior to the end of the calendar year 2002 dispose of IP
rights or products that according to the foregoing are to be
included in R, then the revenue generated from licence fees and
royalties recognised by the Vitesse Group shall be included 100
percent in R. The Vitesse Group shall abstain from pricing such
products and IP rights below fair market value and if such pricing
below fair market value is being done then for the purpose of this
Clause and the calculation of R, such sales or revenues shall be
included based on a fair market value. For the avoidance of doubt
the foregoing sentence does not apply to the ordinary course volume
discounts or pricing adjustments to meet market conditions. If the
Vitesse Group enters into license agreements or similar agreements
giving third parties a right to sell products to be included in R,
as described in Clause 5.1.1.2.1, (such third party hereinafter
referred to as "TP"), then the revenue to the Vitesse Group from
such agreements ("RTP") should be included in R with a value ("V")
equivalent to the TP's gross revenue from sale of such products at
fair market value. However, in the above calculation, V cannot be
greater than two times RTP. If Vitesse is prior to the end of the
calendar year 2002 is being sold to a third party the Buyer Shares
placed in the Earnout Escrow Accounts shall immediately and without
any restrictions be released to the Sellers in proportion to the
number of Buyer Shares each of them has contributed to such
Account.
5.1.1.2.3 As soon as practicable but no later than 4 weeks after the end of
the calendar year 2002 Vitesse shall deliver to the Sellers a
statement of R (including a calculation of R in accordance with the
definition of R above and otherwise in accordance with the
accounting principles set out in Appendix 5) (the "Statement")
based on the Vitesse Group's audited accounts for the accounting
years 1 October 2000 to 30 September 2001 and 1 October 2001 to 30
September 2002 and the financial statements submitted to the SEC
for the last quarter of 2002. No later than 2 weeks after receipt
of the Statement the Sellers shall confirm in writing that they
accept the statement or be entitled to request an audit of the
Statement (the "Audit"). The Audit includes that the Sellers
appoint an independent accountant, who shall have full access to
the relevant parts of the Vitesse Group's books and records within
2 weeks after the Sellers written request for an Audit in order to
verify the Statement and/or calculate R in accordance with the
definition of R set out above and Appendix 5. The Audit shall be
concluded and the Sellers shall set forth any request for changes
in R within 4 weeks after such independent accountant has been
provided with full access to the Vitesse Group's books and records.
If a dispute concerning the calculation of R is not settled finally
by mutual agreement within 2 months after the conclusion of the
Audit, the Sellers are entitled to refer the dispute to arbitration
in accordance with Clause 15 of this Agreement. Vitesse has the
right to purchase S number of Buyer Shares from the Earnout Escrow
Account in accordance with Clause 5.1.1.2.1 for a period of 2 weeks
after an agreement has been reached with respect to R or the
dispute concerning R has been finally settled by arbitration.
Failure by the Sellers to request an Audit of the Statement within
2 weeks of receipt shall be deemed to be an approval of the
Statement. The same shall apply to failure by the Sellers to set
forth requests for changes in R within 4 weeks after full access
has been granted to the relevant parts of the Vitesse Group's books
and records.
5.1.1.2.4 No later than 4 weeks after the end of the calendar year 2002 the
number of Buyer Shares that can be released pursuant to the
Statement, shall be released to the Sellers based on their
proportional number of Buyer Shares placed in the Earnout Escrow
Account. Immediately after termination of the 2 week-period, in
which Vitesse can repurchase Buyer Shares from the Earnout Escrow
Accounts in accordance with Clause 5.1.1.2.3, the remaining Buyer
Shares in the Earnout Escrow Accounts shall be released to the
Sellers based on their proportional number of Buyer Shares placed
in the Earnout Escrow Accounts. The release of Buyer Shares from
the Earnout Escrow Account to i-data international a-s and Xxxxxx
Xxxxxxx Holding ApS shall be without further restrictions. The
release to the Employee Shareholders shall be subject to Clause
5.1.1.3.
5.1.1.2.5 The terms and conditions of the Earnout Escrow Accounts which shall
be governed by one single agreement and the release of the Buyer
Shares from the Earnout Escrow Accounts are further specified in
Appendix 6.
5.1.1.3 Employee Earnout Escrow Account
The Buyer Shares released to the Employee Shareholders from the
Earnout Escrow Account shall be transferred into new escrow
accounts (the "Employee Earnout Escrow Accounts") in Amagerbanken
in the name of each of the Employee Shareholders in proportion to
their part of the Shares. The Buyer Shares in the Employee Earnout
Escrow Accounts shall be released to an account nominated by each
Employee Shareholder monthly (on the last business date of such
month) during the period 1 January - 31 December 2003 with 1/12 per
month except that if the first release takes place later than 31
January 2003, then the first release shall be increased with any
Buyer Shares which should have been released to the Employee
Shareholder prior to such date on the basis for the foregoing
scheme with 1/12 of the Buyer Shares being released each month. If
the Employee Shareholder terminates his employment agreement or the
employment is terminated by Vitesse or the Company due to the
Employee Shareholder's material breach of the employment contract
(except in case of the Employee Shareholder's death or permanent
disability beyond the reach of the Employee Shareholder, in which
case Vitesse has no right to purchase the Buyer Shares in such
Employee Shareholder's Employee Earnout Escrow Account) Vitesse has
the right to purchase the remaining part of that Employee
Shareholder's Buyer Shares placed in the said Employee
Shareholder's Employee Earnout Escrow Account at a rate of USD 0.01
per share within 14 days of the termination of the employment
contract (meaning the last day for which the Employee Shareholder
receives salary from the Company). The terms and conditions of the
Employee Earnout Escrow Accounts and the release of the Buyer
Shares from the Employee Earnout Escrow Accounts shall be set forth
in a single agreement and are further specified in Appendix 7.
5.1.1.4 Guarantee Escrow Account
At Closing 230,897 Buyer Shares (which shall be deemed contributed
by i-data international a-s and Xxxxxx Xxxxxxx Holding ApS in
proportion to their fraction of Buyer Shares released pursuant to
Clause 5.1.1.1) shall be paid into two separate escrow accounts
with Danske Bank (the "Guarantee Escrow Agent") under one escrow
agreement on the main terms and conditions set out in Appendix 8 in
the name of i-data international a-s and Xxxxxx Xxxxxxx Holding
ApS, respectively (such escrow accounts are hereinafter together
named the "Guarantee Escrow Accounts" and the escrow account in the
name of i-data international a-s shall be referred to as "Guarantee
Escrow Account 1" and the escrow account in the name of Xxxxxx
Xxxxxxx Holding ApS shall be referred to as "Guarantee Escrow
Account 2"). The 230,897 Buyer Shares shall be transferred to and
divided in Guarantee Escrow Account 1 and 2 pursuant to i-data
international a-s' ApS and Xxxxxx Xxxxxxx Holding ApS' proportional
part of the Buyer Shares. The Guarantee Escrow Accounts shall
provide security for claims of Vitesse against each or all of the
Seller(s) arising out of this Agreement, including claims of
indemnification for breach of the Sellers' representations and
warranties. i-data international a-s' rights in relation to the
Buyer Shares placed in Guarantee Escrow Account 1 are to be
assigned by way of security to Danske Bank A/S which arrangement
shall fully respect and not in any way prejudice or limit the
effect of the provisions of or pertaining to such Guarantee Escrow
Account 1 and Vitesse's rights hereunder. The Buyer Shares placed
in the Guarantee Escrow Account 1 shall be released to i-data
international a-s and the Buyer Shares placed in the Guarantee
Escrow Account 2 shall be released to Xxxxxx Xxxxxxx Holding ApS 12
months after Closing unless Vitesse has prior to such date notified
i-data international a-s and Xxxxxx Xxxxxxx Holding ApS of any
Claim against the Sellers in accordance with this Agreement. The
terms and conditions of the Guarantee Escrow Accounts and the
release of the Buyer Shares from the Guarantee Escrow Accounts
shall be set forth in a single agreement and are further specified
in Appendix 8.
5.1.1.5 Retention Escrow Account
At Closing 1,709,365 Buyer Shares shall be paid into escrow
accounts ("Retention Escrow Accounts") in Amagerbanken in the name
of each of the Employee Shareholders in proportion to their part of
the Buyer Shares. The Buyer Shares in the Retention Escrow Accounts
shall be released without further restrictions monthly over a 3
year period (with 1/36 per month, the first release occurring on
the last day of the month following the Closing Date) on a
proportional basis to an account nominated by each Employee
Shareholder. If the Employee Shareholder terminates his employment
agreement or the employment is terminated by Vitesse or the Company
due to material breach of the employment contract (except in case
of the Employee Shareholder's death or permanent disability, in
which case Vitesse has no right to receive such Employee
Shareholder's Buyer Shares in the Retention Escrow Account) Vitesse
has the right to purchase the remaining Buyer Shares in such
Employee Shareholder's Retention Escrow Account at a rate of USD
0.01 within 14 days of the termination of the employment contract.
The terms and conditions of the Retention Escrow Accounts and the
release of the Buyer Shares from the Retention Escrow Accounts
shall be set forth in a single agreement and are further specified
in Appendix 9.
5.2 The Buyer Shares placed in the escrow accounts pursuant to Clause
5.1.1.2 - 5.1.1.5 shall provide the Sellers with same rights as
other Vitesse common stock, including but not limited to voting
rights, rights to receive dividend and additional shares in case of
share splits etc. Any dividend less withholding or similar taxes,
additional shares received by the Sellers on the Buyer Shares in
the escrow accounts shall be placed in such escrow accounts (or
related escrow accounts) and released in accordance with the
foregoing in the same proportion, at the same time and on the same
terms and conditions as the Buyer Shares to which they relate.
5.3 Vitesse Stock Options
In addition to the Buyer Shares and in consideration for the
Intended Warrants Vitesse shall issue stock options to acquire
80,000 Vitesse common stock to Employees set out in Appendix 2. The
Buyer Stock Options shall be issued on Vitesse standard terms set
out in Appendix 10 at an exercise price (strike price) equivalent
to DKK 79,84 per share Vitesse common stock using an average of the
exchange rate USD/DKK (using the Danish National Banks weighted
average) for 5 consecutive days immediately prior to Closing.
6. Closing; Closing Date
6.1 The closing ("Closing") of the transactions provided for in this
Agreement shall take place at such time, date and place as may be
mutually agreed upon by Vitesse and the Sellers (the day of the
Closing is also referred to herein as the "Closing Date".) The
Closing shall take place as promptly as practicable after all
conditions contained in this Agreement to be satisfied prior to the
Closing shall have been satisfied or waived. However, the Closing
shall take place no later than five business days after the Sellers
have received approval acceptable to the Sellers from the Danish
tax authorities that the "share for share" exchange is tax exempt
according to Danish law, refer Clause 12.2.3 (subject to the others
conditions in Clause 12 hereof being fulfilled or waived at such
date). The Sellers shall do everything within their power to obtain
the approval (including to pursue such approval without undue delay
and not withdraw the application for such approval without
Vitesse's prior approval). Vitesse shall be granted full insight
into the application and the correspondence with the tax
authorities. However, should such conditions not be fulfilled or
waived on 31 May 2001, this Agreement may be terminated by Vitesse
or the Sellers (the Sellers acting only through the Sellers'
Representatives) by giving written notice to the other party and
without either of the parties incurring any further liability
towards the other party.
7. The sellers' Representations and Warranties
7.1 Representations and warranties
As of the date of this Agreement and as at the Closing Date the
Sellers make the representations (in Danish: "erklaeringer") and
warranties (in Danish: "garantier") set out in Appendix 11 to
Vitesse.
7.2 Sellers' Knowledge
For the purpose of this Clause 7, the phrase "Sellers' Knowledge",
or terms of similar meaning used in Appendix 11 shall include the
knowledge of the current Board of Directors of the Company, Xxx
Xxxxxxxx and Xxxxx Xxxxx Xxxxxxx, including such knowledge which
the aforementioned persons ought to have been aware of in the
reasonable exercise of their duties as managers and directors of
the Company and after having made all necessary investigations and
inquiries with respect to the subject matter of the issues covered
by this Agreement.
7.3 General
7.3.1 The Sellers' representations and warranties shall be subject only
to the general and specific disclosures made herein and in the
schedules attached hereto, including but not limited to the
Disclosure Schedule set out in Appendix 12 to the extent such
matters have been fully and fairly disclosed.
7.3.2 The Sellers make no other representations and warranties to Vitesse
other than those set out in Appendix 11, whether implied or arising
out of law or otherwise.
7.3.3 Vitesse acknowledges that it has been invited to ask questions and
obtain information relating to the affairs and position of the
Company and that all such questions have been answered.
8. Vitesse's representations and warranties
8.1 Representations and warranties
As of the date of this Agreement and as at the Closing Date Vitesse
makes the representations (in Danish: "erklaeringer") and
warranties (in Danish: "garantier") set out in Appendix 13 to the
Sellers.
8.2 Vitesse's Knowledge
For the purpose of this Clause 8.1, the phrase "Vitesse Knowledge",
or terms of similar meaning used in Appendix 13 shall include the
knowledge of the persons identified in Appendix 14, including such
knowledge which the aforementioned persons ought to have been aware
of in the reasonable exercise of their duties as managers,
directors and/or employees of Vitesse and after having made all
necessary investigations and inquiries with respect to the subject
matter of the issues covered by this Agreement.
The Sellers acknowledge that they have been invited to ask
questions and obtain information relating to the affairs and
position of Vitesse and that all such questions have been answered.
8.3 General
8.3.1 Vitesse's representations and warranties shall be subject only to
the general and specific disclosures made herein and in the
schedules attached hereto.
8.3.2 Vitesse makes no other representations and warranties to the
Sellers other than those set out in Appendix 13, whether implied or
arising out of law or otherwise.
9. Covenants of the Sellers
The Sellers covenant and agree with Vitesse as follows:
9.1 Undertakings not to compete
At Closing each of the Sellers listed in Appendix 15 delivers
signed non-compete clauses on the terms set out in Appendix 15.
9.2 Deliveries at Closing
At Closing, the Sellers shall deliver, or cause to be delivered, to
Vitesse the following:
9.2.1 Shares certificates
Certificates representing the Shares duly endorsed in blank (or
with a stock power duly endorsed in blank and affixed to such
certificate(s)), in proper form for transfer, free and clear of all
options, liens, claims, charges, restrictions, equities and other
encumbrances of any nature whatsoever.
9.2.2 Accuracy of representations and warranties; performance of covenants
A certificate dated the Closing Date and signed by Sellers'
Representatives, cf. Clause 4.3, to the effect that the
representations and warranties made by the Sellers in this
Agreement are in all material respects true and correct as of the
Closing Date, and that the Sellers have duly performed or complied
with all of the obligations to be performed or complied with by
them under the terms of this Agreement on or prior to Closing.
9.2.3 Registration Rights Agreement
The registration rights agreement set out in Appendix 16 duly
signed by the Sellers.
9.3 Extraordinary general assembly in the Company
The Shareholders shall cause an extra-ordinary general assembly to
be held in the Company at Closing where the following decisions
shall be rendered:
9.3.1 Election of new members of the Board of Directors
The current members of the Board of Directors appointed by the
Company's shareholders shall resign at Closing and Vitesse shall
appoint new members of the Board of Directors of the Company. The
Shareholders shall deliver to Vitesse at Closing a written
statement from the members of the Company's Board of Directors that
will resign at Closing confirming that the resigning members do not
in their capacity as former members of the Board of Directors have
any unfulfilled claims against the Company.
9.4 Non-Competition
9.4.1 Each of i-data international a-s and Xxxxxx Xxxxxxx Holding ApS
(together the "Restricted Parties") undertake in favour of both
Vitesse and the Company for a period of 2 years after Closing not
to carry out any commercial activity anywhere in the world which
competes or might compete with the gigabit and 10-gigabit Ethernet
Switching Silicon activities of the Company as of the date referred
to above or to actively seek to solicit or hire any current or
future employee of the Company without the prior written consent of
Vitesse, or in any way to cause such employees to leave the
Company.
9.4.2 Clauses 11.3.5 and 11.4 of this Agreement shall not apply to
violations of this Clause 9.3.
9.5 Period from signing until Closing
9.5.1 During the period from the signing of the Agreement until Closing,
the Sellers shall procure that the Company will not without
Vitesse's prior written consent (not to be unreasonably withheld):
9.5.1.1 Cancel, amend or otherwise change any existing and/or enter into
new material contracts or commitments (including employment
contracts with Sellers who are employed with the Company), save as
is necessary to comply with or is expressly provided for in this
Agreement and save in accordance with the ordinary course of
business of the Company;
9.5.1.2 Undertake any actions or obligations or give up any rights
concerning the Company or its businesses save in accordance with
the ordinary course of business of the Company;
9.5.1.3 Make any alterations in the Articles of Association or other
constituent documents of the Company or distribute or decide to
distribute any dividends to the Shareholders;
9.5.1.4 Undertake or abstain from any actions that would result in the
Sellers not being able to fulfil their obligations according to
this Agreement, whether or not the effects thereof occur prior to
or subsequent to Closing.
9.5.2 Until Closing, Vitesse shall be kept fully informed about the
Company's business on an ongoing basis. Any and all questions and
requests for information set forth by Vitesse shall be answered
swiftly, fully and correctly.
10. Vitesse's covenants
Vitesse covenants and agrees with the Sellers as follows:
10.1 Deliveries at Closing
At Closing, Vitesse shall deliver, or cause to be delivered, to
each of the Shareholders and Warrantholders (or the Sellers'
Representatives, as applicable), the following:
10.1.1 Buyer Shares and cash payment to i-data international a-s
Documentation satisfactory to the Sellers that Vitesse has issued
and delivered the Buyer Shares in favour of each of the Sellers,
cf. Clause 5.1 and 4.1, in accordance with Vitesse's corporate
documents and applicable laws, that such Buyer Shares have been
listed on the Nasdaq stock exchange together with Vitesse's other
shares of common stock and that the Buyer Shares have been
transferred to the Sellers in accordance with Clause 5.1. In
addition Vitesse shall effect payment of the cash consideration
provided for in Clause 5.1 to i-data international a-s to a bank
account nominated by i-data international a-s.
10.1.2 Vitesse Stock Options
Documentation reasonably satisfactory to the Employees that Vitesse
has issued the Buyer Stock Options in favour of each of the
Employees, cf. Clause 5.3 in accordance with Vitesse's corporate
documents and applicable laws. As soon as practicable after the
Closing, the Buyer Shares subject to Buyer Stock Options shall be
covered by an effective registration statement on Form S-8 (or any
successor form) or another appropriate form.
10.1.3 Legal opinion
A legal opinion from Vitesse's in-house counsel reasonably
satisfactory to the Sellers and the Employees evidencing that the
Buyer Shares have been duly authorised, validly issued, fully paid
and are non-assessable and that the Buyer Stock Options have been
duly authorised and validly issued in favour of each of the Sellers
and the Employees, respectively cf. Clause 5.1 and 5.2, in
accordance with Vitesse's corporate documents and applicable laws.
10.1.4 Accuracy of representations and warranties; performance of
covenants
A certificate dated the Closing Date and signed by duly authorized
representatives of Vitesse to the effect that the representations
and warranties made by Vitesse in this Agreement are in all
material respects true and correct as of the Closing Date, and that
Vitesse has duly performed or complied with all of the obligations
to be performed or complied with by it under the terms of this
Agreement on or prior to Closing.
10.1.5 Repayment of loan
Cause the loan granted by i-data international a-s to the Company
in the amount of DKK 13 mio. (exclusive of interests) to be repaid
to i-data international a-s by the Company.
10.1.6 Registration Rights Agreement
The registration rights agreement set out in Appendix 16 duly
signed by Vitesse.
10.1.7 Appendix 18
Undertake the actions provided for in Appendix 18.
10.2 No intention to sell the Company
By the signing of this Agreement, and with a view for the
share-for-share exchange to be tax free, cf. Clause 12.2.3 below,
Vitesse confirms that it has no intention of disposing of the
Company, in whole or in part, prior to the third anniversary of
Closing. Vitesse covenants and agrees to comply with any other
reasonable conditions that may be stipulated by the Danish tax
authorities in their grant of the permission provided for in Clause
12.2.3, provided that such conditions do not have a material
adverse effect upon Vitesse.
10.3 Preparation of Registration Statement
Vitesse covenants and agrees that, commencing with the execution of
this Agreement, it will (i) use its best efforts to file a
preliminary prospectus on Form 3 (or any successor form) covering
all the Buyer Shares with the Securities and Exchange Commission
prior to the Closing and (ii) use its commercially reasonable
efforts to cause such registration statement on Form S-3 (or any
successor form) covering all the Buyer Shares to be declared
effective within 15 days of the Closing but in no event more than
45 days after the Closing.
11. Indemnification
11.1 Indemnification for Claims
From and after the date of this Agreement, each of on the one side
the Sellers and on the other side Vitesse (the "Indemnifying
Party") covenants and agrees to reimburse, defend and indemnify and
hold the other party (the "Claimant") harmless from, against and in
respect of any and all damage, loss, liability or deficiency
incurred by the Claimant resulting from or arising out of, in whole
or in part, directly or indirectly, any misrepresentation, breach
of warranty or non-fulfillment of any covenant or agreement of the
Indemnifying Party under this Agreement (the "Claim(s)") subject to
the limitations set out in this Clause 11.
11.2 Exclusive remedy
Except that claims by Vitesse for breach of clauses 2, 3.1, 5 and 6
of Appendix 11 shall not be subject to any limitations in amount or
time according to this Agreement and shall be claimable by Vitesse
against all Sellers (severally and not jointly) irrespective of the
arrangements relating to the Guarantee Escrow Accounts and except
for breach of Clause 9.3 the parties agree that the remedies
provided in this Clause 11 shall be the exclusive remedy of the
parties with respect to any breach of any representation, warranty,
covenant or agreement of the parties contained in this Agreement.
11.3 Method of asserting claims, etc.
11.3.1 Notification of Claims
The Claimant shall as soon as possible after becoming knowledgeable
thereof notify the Indemnifying Party of any Claim which it
discovers or of which it receives notice after the Closing and
which might give rise to a Claim by it against the Indemnifying
Party under this Clause 11 hereof, stating the nature, basis and
(to the extent known) amount thereof. In case of any Claim or suit
by a third party or by any governmental body, or any legal,
administrative or arbitration proceeding with respect to which the
Indemnifying Party may have liability under the indemnity contained
in this Clause 11, the Indemnifying Party shall be entitled to
participate therein, and to assume the defense thereof with legal
counsel reasonably satisfactory to the Claimant. The parties will
render to each other such assistance as may reasonably be required
of each other in order to ensure proper and adequate defense of any
such suit, claim or proceeding. The Claimant will not make any
settlement of any claim which might give rise to liability of the
Indemnifying Party under the indemnities contained in this Clause
11 without the written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld. If the Indemnifying
Party shall desire to effect a bona fide compromise or settlement
of any such suit, claim, or proceeding and the Claimant shall
unreasonably refuse to consent to such compromise or settlement,
then the Indemnifying Party's liability under this Clause 11 with
respect to such suit, claim or proceeding shall be limited to the
amount so offered in compromise or settlement together with all
legal and other expenses which may have been incurred prior to the
date on which the Claimant refused to consent to such compromise or
settlement. In all events, the Claimant shall assign or caused to
be assigned to the Indemnifying Party all right, title and interest
in any Claim against others, which is indemnified by the
Indemnifying Party hereunder.
11.3.2 Settlement of Claims against the Sellers
Subject to clause 11.2, all Claims pertaining to breach of the
Sellers' warranties set out in Clause 7 above to be indemnified by
the Sellers shall be indemnified exclusively by i-data
international a-s and Xxxxxx Xxxxxxx Holding ApS, and shall be
settled by delivering to Vitesse such number of Buyer Shares from
the Guarantee Escrow Accounts in accordance with Clause 11.4,
(rounded down to the nearest whole number of Buyer Shares), which
calculated on the basis of the closing price on the Closing date at
the Nasdaq stock market of Vitesse's common stock and converted
according to the exchange rate on such date represent an aggregate
value equal to the Claim or, at i-data international a-s and Xxxxxx
Xxxxxxx Holding ApS discretion to be exercised on settlement of the
Claim in cash on a 1 DKK - 1 DKK basis provided, however, that
exercise of the option to effect payment in cash shall be notified
to Vitesse and the Guarantee Escrow Agent together with the payment
instruction and the cash payment must be deposited with the
Guarantee escrow Agent no later than one business day thereafter
(following the procedure set out in Appendix 8) - failing which
notice or deposit, the cash option shall be deemed to have been
waived and the Guarantee Escrow Agent shall automatically release
the relevant amount of Buyer Shares. For the avoidance of doubt the
amount to be indemnified in accordance with the foregoing shall be
computed on a 100 per cent basis, meaning that i-data international
a-s and Xxxxxx Xxxxxxx Holding ApS shall also make indemnification
for the Employee Shareholders' proportionate part of the Claim.
11.3.3 Settlement of Claims against Vitesse
All Claims to be indemnified by Vitesse shall be settled in cash on
a 1 DKK - 1 DKK basis.
11.3.4 Mitigation of losses
The Claimant shall and shall cause any undertaking it controls to
mitigate any and all losses to the extent a buyer would be under an
obligation to mitigate losses under Danish law. Any losses shall be
eliminated or reduced by any insurance payments and tax savings
relating to such losses and, in respect of losses to be indemnified
by the Sellers, by any provisions or reserves made in the Company's
Financial Statements specifically related thereto and not required
for any other purpose for which such provisions or reserves were
also made.
11.3.5 Only direct losses
The losses to be indemnified hereunder shall only include the
Claimant's direct losses, and shall not extend to any indirect or
consequential losses, including but not limited to loss of profits
or goodwill. Notwithstanding the generality of the foregoing, the
indemnity shall extend to all costs and expenses (including
reasonable attorney's fee) incurred by the Claimant in connection
with a Claim.
11.4 Limitations in Sellers' obligation to make indemnification
11.4.1 Except for breach of warranties 2, 3.1, 5 and 6 of Appendix 11 and
Clause 9.3 no Claims shall be payable by the Sellers, unless the
aggregate amounts for indemnification exceed DKK 5,000,000, but
then for the full amount.
11.4.2 Except as set out in Clauses 9.3 and this Clause 11, neither i-data
international a-s nor Xxxxxx Xxxxxxx Holding ApS shall be obliged
to make indemnification in excess of an obligation to transfer back
to Vitesse the Buyer Shares that are placed in the Guarantee Escrow
Accounts, cf. Clause 5.1.1.4. As between i-data international a-s
and Xxxxxx Xxxxxxx Holding ApS any amount of indemnification and
transfer of Buyer Shares placed in Guarantee Escrow Accounts to
Vitesse in accordance with this Clause 11.4 shall be transferred
from Guarantee Escrow Account 1 and 2 to Vitesse in proportion to
the number of Buyer Shares in Guarantee Escrow Account 1 and 2,
respectively.
11.4.3 Subject to Clause 11.2 and 11.6 the Employee Shareholders shall
have no obligation under this Agreement to indemnify Vitesse,
except to deliver their Shares, respectively, to Vitesse at Closing
free of any third party rights. Subject to Clause 11.2 and 11.6
i-data international a-s and Xxxxxx Xxxxxxx Holding ApS shall not
be entitled to set forth any claims against the Employee
Shareholders for breach of the Sellers' representations and
warranties set out in Clause 7.
11.5 Survival of representations and warranties
The Parties' obligation to make indemnification for breach of the
representations and warranties set out in this Agreement shall
survive the Closing for 12 months, except in the case of breach of
the representations and warranties set out in Appendix 11, Clause
10 (taxes), in which case the obligation to make indemnification
shall irrespective of the release of the Guarantee Escrow Accounts
remain in force for the statutory periods provided for in
applicable laws plus 20 working days.
11.6 Willful misconduct
Any limitations in the obligation of the Sellers or Vitesse to make
indemnification contained in this Agreement shall not apply in any
cases of willful misconduct.
12. Conditions Precedent to Closing
12.1 Vitesse's Conditions Precedent
The following terms shall be conditions precedent to the Closing on
part of Vitesse:
12.1.1 Fulfilment of the covenants provided for in Clause 9.1
12.1.2 There shall have been no material adverse change since the date
hereof and through the Closing Date in the conditions (financial or
otherwise), earnings, assets or business of the Company.
12.1.3 Any necessary consents from competent authorities having been
obtained (not including the Danish tax authorities approval of a
tax free "share for share" exchange, refer Clause 12.2.3.
12.2 The Sellers' Conditions Precedent
The following terms shall be conditions precedent to the Closing on
part of the Sellers:
12.2.1 Fulfilment of the covenants provided for in Clause 10.1.
12.2.2 There shall have been no material adverse change since the date
hereof and through the Closing Date in the conditions (financial or
otherwise), earnings, assets or business of Vitesse.
12.2.3 Any necessary consents from competent authorities having been
obtained (including approval acceptable to the Sellers from the
Danish tax authorities that the "share for share" exchange is tax
exempt according to Danish law).
13. Announcements
Neither the Sellers, the Employees or the Company nor Vitesse will
issue any press release or any other public statement without a
prior written consent of Vitesse, i-data international a-s and the
Company. The Parties agree to keep secret towards third parties the
content of this Agreement, except to the Danish tax authorities or
as otherwise required by law or by applicable stock exchange rules
in which case they agree to consult with each other prior to making
any such announcements.
14. Notices
All notices, consents, waivers or other communications which are
required or permitted hereunder shall be in writing and shall be
deemed to have been duly given on the date delivered personally or
sent by telefax or seven (7) business days after the same shall be
deposited in the mails, registered or certified first-class mail,
return receipt requested, postage prepaid, or sent by recognised
overnight courier service, as follows:
If to Vitesse: Xx Xxxxx Xxxx, Vice President
Vitesse Semiconductor Corporation
000 Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Telefax x0 000 000 0000
With a copy to
Xx Xxxxxxx X. Xxxxxx
Xxxxx Xxxx & Wardwerll
0000 Xx Xxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Telefax x0 000 000 0000
and to:
Xx Xxxxxx Skjonnemand
Gorrissen Xxxxxxxxxx Xxxxxxxxxxx
X.X. Xxxxxxxxx Xxxxxxxxx 00
0000 Xxxxxxxxxx V
Telefax x00 00 00 00 00
or to such other person or address as Vitesse may designate in
writing.
If to the Sellers: Xxxxxxx Xxxxxxx, Xxxxxxxxxxxxx 00, XX 0000
Xxxxxxxxxx att. Xxxxxxxx Xxxxxx and/or Xxxxxxxxx
Xxxxxxxx (or any other Sellers' Representatives
that may be appointed in accordance with Clause
4.3).
If to the Employees: Xxxxxxx Xxxxxxx, Xxxxxxxxxxxxx 00, XX 0000
Xxxxxxxxxx att. Xxxxxxxx Xxxxxx and/or
Xxxxxxxxx Xxxxxxxx (or any other Sellers'
Representatives that may be appointed in
accordance with Clause 4.3).
or to such other person or address as the Sellers/the Employees may
designate in writing.
15. Governing Law and Arbitration
15.1 Governing Law
This Agreement shall be governed by the laws of the Kingdom of
Denmark.
15.2 Arbitration
Any dispute arising out of or relating to this Agreement or the
transactions contemplated hereby shall be finally settled by the
Copenhagen Court of Arbitration (Copenhagen Arbitration) in
accordance with "Det Danske Voldgiftsinstituts regler for
behandling xx xxxxx ved Den Almindelige Voldgiftsret i Danmark"
(the Danish tribunal rules for deducting arbitration matters at the
Arbitration Tribunal in Denmark). The Court of Arbitration shall be
composed of three arbitrators. Each Party shall appoint one
arbitrator (the Sellers and the Employees together constituting one
party) and the two arbitrators shall appoint the third arbitrator
who shall be the chairman of the Court of Arbitration. In the
absence of appointment by a Party within 30 days of having received
notice of the request for arbitration, such arbitrator shall be
appointed by Copenhagen Arbitration. The Court of Arbitration shall
distribute both Parties' full cost in respect of reasonable
attorney's fee and the costs of the Court of Arbitration in
whichever portion the Court find fair and reasonable. The language
of the proceedings shall be English unless otherwise agreed between
the Parties.
16. Miscellaneous
16.1 Expenses
Each party shall carry its own expenses and fees in connection with
preparing , negotiating and entering into this Agreement.Vitesse
shall undertake to pay any fees to Salomon Brothers International
Limited, doing business as Xxxxxxxx Xxxxxxx Xxxxx Xxxxxx, , Xxxxxxx
Reumert, Sherman & Sterling, Xxxxxxxx & Xxxxxxx and KPMG X.
Xxxxxxxxx.
16.2 Changes
This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written
agreement executed by all parties hereto. However, any party may
waive any condition to its obligations hereunder.
16.3 Counterparts
This Agreement may be executed in several counterparts, each of
which shall be an original, but all of which together shall
constitute one and the same agreement.
16.4 Headings
Descriptive headings herein are for convenience of reference only
and shall not control or affect the meaning or construction of any
provision of this Agreement.
16.5 Assignment
This Agreement shall be binding on the parties hereto, their
successors and heirs.
17. Appendices
1. List of Shareholders, Warrantholders, Warrants and allocation of
Shares.
2. List of Employees.
3. Terms of exercise of Warrants.
4. Deleted.
5. Accounting principles for calculation of R.
5.a The Company's roadmaps.
6. Terms of Earnout Escrow Account Agreement.
7. Terms of Employee Earnout Escrow Account Agreement.
8. Terms of Guarantee Escrow Account Agreement.
9. Terms of Retention Escrow Account Agreement.
10. Standard terms of Vitesse's Stock Options.
11. Sellers representations and warranties.
12. Disclosure Schedule.
13. Vitesse representations and warranties.
14. List of persons included in Vitesse's Knowledge.
15. Terms of non-compete clause and list of employees undertaking
non-compete clauses.
16. Registration Rights Agreement.
17. Deleted.
18. Covenant of Vitesse.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto on the day and year first written above.
On behalf of Vitesse Semiconductor Corporation:
-----------------------------------
Name:
Title:
Signatures of the Sellers' and the Employees are set out in a
separate document, which forms an integral part of this Agreement.
31 March 2001
CL/cl/143233/266030-13
