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EXHIBIT 2.1
AGREEMENT
relating to
sale and purchase of all the shares in Paragon
Solutions Limited
EACH PERSON LISTED IN SCHEDULE 1
as a Vendor and the Vendors
TURNSTONE SYSTEMS, INC.
as Purchaser
and
XXXXXX XXXXXXX
as Vendors' Representative
19 JULY 2000
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CONTENTS
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1. INTERPRETATION..........................................................1
2. SALE AND PURCHASE.......................................................7
3. CONDITIONS..............................................................8
4. PURCHASE PRICE.........................................................10
5. PENDING COMPLETION.....................................................11
6. COMPLETION.............................................................13
7. DEFAULT................................................................15
8. NON-SOLICITATION AND NON-HIRING........................................16
9. WARRANTIES.............................................................17
10. VENDORS' REPRESENTATIVE................................................21
11. NOMINATED TRANSFEREE...................................................23
12. EXPENSES...............................................................23
13. DELAY..................................................................23
14. FURTHER ASSURANCES.....................................................24
15. NON MERGER.............................................................24
16. CONFIDENTIALITY AND ANNOUNCEMENTS......................................24
17. ENTIRE AGREEMENT.......................................................25
18. SEVERABILITY...........................................................25
19. ASSIGNMENT.............................................................26
20. NOTICES................................................................26
21. AMENDMENTS.............................................................27
22. COUNTERPARTS...........................................................27
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23. GOVERNING LAW..........................................................27
24. MEDIATION AND ARBITRATION..............................................27
SCHEDULE 1: VENDORS........................................................32
SCHEDULE 2: WARRANTIES.....................................................33
SCHEDULE 3: LIST OF EMPLOYEES..............................................42
SCHEDULE 4: ASSETS SUBJECT TO PERMITTED TRANSFER..........................43
ANNEXURE A: FORM OF EMPLOYMENT AGREEMENT...................................44
ANNEXURE B: FORM OF EMPLOYEE PROPRIETARY INFORMATION AGREEMENT.............45
ANNEXURE C: FORM OF OPINION OF XXXXXXXXX YOUNG XXXXXX......................46
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This AGREEMENT is made on 19 July 2000
BETWEEN (1) EACH PERSON LISTED IN SCHEDULE 1 (each a VENDOR and
together the VENDORS)
AND (2) TURNSTONE SYSTEMS, INC. (the PURCHASER)
AND (3) XXXXXX XXXXXXX (the VENDORS' REPRESENTATIVE).
INTRODUCTION
A. The Vendors, in aggregate, own all of the shares in the Company.
B. Each Vendor has agreed to sell all of the Vendor's shares in the Company
to the Purchaser and the Purchaser has agreed to purchase those shares on
the terms set out in this Agreement.
C. The Vendors' Representative has agreed to act as the agent of each Vendor
under this Agreement.
IT IS AGREED
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless the context otherwise requires:
AGREEMENT means this Agreement together with the schedules and annexures;
AGREED FORM means in a form agreed by the Vendors' Representative and the
Purchaser prior to execution of this Agreement;
ASSETS means all assets owned or used by the Company as at the Completion
Date;
BALANCE DATE means 30 June 2000;
BUSINESS means the business or businesses carried on by the Company at
any time up to Completion;
BUSINESS DAY means a day on which banks are open for general banking
business, other than a Saturday or Sunday, in Wellington, New Zealand and
Santa Clara, California, United States;
COMPANY means Paragon Solutions Limited;
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COMPANIES ACT means the Companies Xxx 0000;
COMPLETION means the performance by each Vendor, the Vendors and the
Purchaser of their respective obligations under clause 6 or, as the
context may require, the time when such performance is completed;
COMPLETION DATE means the date five Business Days after the date on which
the final Condition is fulfilled or waived under clause 3 or such other
date as may be agreed between the Vendors' Representative and the
Purchaser or, as the case may require, the date on which Completion takes
place;
CONDITIONS means the conditions precedent set out in clause 3.1;
CONFIDENTIAL AGREEMENT means each agreement to which the Company is, or
becomes prior to Completion, a party, and which has not been included in
the Due Diligence Materials because of disclosure restrictions contained
in that agreement;
CONFIDENTIAL INFORMATION means the know-how, trade secrets, technical
processes, information relating to products, finances, contractual
arrangements with customers or suppliers and other information relating
to the Business and the Company which by its nature, or by the
circumstances of its disclosure to the holder of the information, is or
could reasonably be expected to be regarded as confidential;
CONSENT means:
(a) any authorisation, approval, consent, licence, permit, franchise,
permission, order, notification, filing, registration, lodgement,
agreement, declaration or exemption from, by or with a Public
Authority; and
(b) in relation to anything which will be prohibited or restricted in
whole or part by law if a Public Authority intervenes or acts in
any way within a specified period after lodgement, filing,
registration, or notification, the expiry of such period without
such intervention or action;
DEFAULT INTEREST means interest calculated at 10 per cent. per annum;
DISTRIBUTION has the meaning given in section 2 of the Companies Act;
DUE DILIGENCE MATERIAL means the documents and materials provided by the
Vendors' Representative to the Purchaser in Agreed Form;
EXCLUDED EMPLOYEES means persons listed in Schedule 3 who, on the date on
which the Second Instalment Payment is to be paid, are, or are to be,
employed by the Purchaser or any of its subsidiaries other than the
Company;
FINANCIAL STATEMENTS means:
(a) the unaudited statement of financial position of the Company as at
the Balance Date; and
(b) the audited statement of financial performance of the Company for
each of the annual financial periods ended 31 March 1999 and 2000
respectively,
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together with all notes or information, directors' and auditor's reports
relating to those statements all as contained in the Due Diligence
Material;
FIRST INSTALMENT PAYMENT means the first instalment payment for the
purchase of the Shares as provided for in clause 4.1;
GAAP means generally accepted accounting practice in New Zealand as
defined in section 3 of the Financial Reporting Xxx 0000;
GOODWILL means the goodwill of the Company including, but not limited to
the benefit of all pending contracts, orders and engagements and the
right to all Intellectual Property Rights relating to the Company;
INCOME TAX ACT means the Income Tax Xxx 0000;
INTELLECTUAL PROPERTY RIGHTS means all trade marks, trade names, patents,
designs, licences, inventions and technical information (whether
registered or not) and any copyright material, the right to all lists of
customers and suppliers of the Company and all other intellectual
property rights and Confidential Information, used by or owned by the
Company;
MATERIAL ADVERSE EFFECT, in relation to the Company, means a material
adverse effect on the Company's financial condition, operations or
Business, but does not include the effect of the termination of any
existing customer contract for the provision of design work and services
to which the Company is a party;
NOMINATED TRANSFEREE means a subsidiary of the Purchaser which has been
nominated by the Purchaser pursuant to clause 11.1 to take the transfers
of the Shares at Completion;
PROPERTY means the property leased by the Company, located at level 3,
Telecom House, 00 Xxxxxx Xxxxx, Xxxxx Xxxx, under a deed of lease dated
17 July 1999 between the Company and Continieau Investments Limited;
PERMITTED TRANSFER means the transfer by the Company to a person
designated in writing by the Vendors' Representative to the Purchaser,
prior to the Completion Date, of the assets listed in Schedule 4 for
nominal consideration;
PUBLIC AUTHORITY means:
(a) any government in any jurisdiction whether national, federal,
state, regional, territorial or local; and
(b) any minister, department, office, commission, delegate,
instrumentality, agency, board, authority or organisation of any
government or any state-owned enterprise;
PURCHASE PRICE means the purchase price for the purchase of the Shares as
provided for in clause 4.1;
PURCHASER includes, where the context so requires, any subsidiary of the
Purchaser nominated by the Purchaser under clause 11.1 as the Nominated
Transferee;
RELATED COMPANY, in relation to the Company, means a company which is
related to the Company in any of the following ways:
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(a) the Company is its holding company or subsidiary; or
(b) more than half of the issued shares of the company, other than
shares that carry no right to participate beyond a specified
amount in a distribution of either profits or capital is held by
the Company and companies related to the Company (whether directly
or indirectly, but other than in a fiduciary capacity); or
(c) more than half of the issued shares, other than shares that carry
no right to participate beyond a specified amount in a
distribution of either profits or capital, of each of them is held
by members of the other (whether directly or indirectly, but other
than in a fiduciary capacity); or
(d) the businesses of the companies have been so carried on that the
separate business of each company, or a substantial part of it, is
not readily identifiable; or
(e) there is another company to which both companies are related;
SECOND INSTALMENT PAYMENT means the second instalment payment for the
purchase of the Shares as provided for in clause 4.1;
SHARES means all the shares in the Company which, at the date of this
Agreement, comprise 2,424,228 Class A shares in the Company;
TAX ACT means the Income Tax Act, the Tax Administration Xxx 0000 and the
Goods and Services Tax Xxx 0000;
VENDORS' REPRESENTATIVE means Xxxxxx Xxxxxxx or any substitute person
appointed under clause 10.2;
VENDOR'S PROPORTION, in relation to a Vendor, means the proportion that
is equivalent to the proportion, at the date of this Agreement, that the
Vendor's Shares bear to the Shares;
VENDOR'S SHARES, in relation to a Vendor, means all the shares in the
Company held by that Vendor being, at the date of this Agreement, the
Shares specified against the Vendor's name in Schedule 1;
VENDORS' SOLICITORS means Xxxxxxxxx Young Xxxxxx, Lower Hutt, New
Zealand; and
WARRANTIES means the warranties contained in Schedule 2.
1.2 CONSTRUCTION OF CERTAIN REFERENCES
In this Agreement, unless the context otherwise requires:
(a) AGREEMENT includes a contract, deed, licence, franchise,
undertaking, arrangement or understanding (in each case whether
oral or written) or other document recording obligations (whether
mutual or otherwise);
(b) ASSETS includes the whole or any part of the relevant person's
business, undertaking, property, revenues or choses in action, in
each case, present or future;
(c) DISPOSAL of an asset includes a sale, gift, transfer or any other
disposition of, or the grant of an option over, a right or
interest, whether legal or equitable, in that asset or
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an agreement for any of those acts (and references to DISPOSE are
to be construed accordingly);
(d) ENCUMBRANCE includes a debenture, mortgage, charge, pledge, lien,
hypothecation, title retention, equitable right, deferred
purchase, option, right of pre-emption, tenancy, right of
occupation and any other security interest or third party right
whether legal or equitable;
(e) EVENT includes any act, omission, transaction or other occurrence
(whether or not the Company is a party to it) and includes
Completion. References to the result of any event on or before the
Completion Date include the combined result of two or more events,
the first of which has taken place on or before that date;
(f) RELIEF includes:
(i) any relief, loss, allowance, credit, deduction, or set-off
in computing income, profits or gains for the purposes of
taxation, or any grant conferred on any person; or
(ii) any right to repayment of taxation (whether or not
including interest) available to that person,
whether in New Zealand or elsewhere;
(g) SUBSIDIARY has the meaning given to that term in section 5 of the
Companies Act;
(h) TAXATION includes:
(i) all forms of taxation, withholding, duties, dues, imposts,
levies and rates of New Zealand or elsewhere and, in
particular (but without limitation), income tax, fringe
benefit tax, stamp duty, goods and services tax, gift duty,
customs or excise duties, regional or local taxes,
municipal taxes, accident compensation levies and
withholding taxes; and
(ii) all costs, charges, interest, penalties, fines and
expenses, incidental and relating to or arising in
connection with any such taxes, duties, dues, imposts,
levies and rates or the negotiation of any settlement of
any dispute as to the liability of any person for them, or
any actual or threatened taxation claim or proceedings of
whatever nature and wherever undertaken in connection with
them; and
(i) TAXATION CLAIM includes any notice, demand, assessment, letter or
other document issued, or action taken, by or on behalf of any
Public Authority or other person, whether in New Zealand or
elsewhere, and in particular (but without limitation), the Inland
Revenue Department, the Customs Department and the Accident
Rehabilitation and Compensation Insurance Corporation in New
Zealand (or any overseas body with similar functions or powers),
whereby the Purchaser or a the Company may be, or be sought to be,
placed under any or any increased liability to taxation or may be
deprived or sought to be deprived of any relief which might
otherwise have been available.
1.3 GENERAL REFERENCES
In this Agreement, unless the context otherwise requires:
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(a) CLAUSE, SCHEDULE, ANNEXURE
a reference to a clause, schedule or annexure is a reference to a
clause of, schedule to, or annexure to this Agreement;
(b) VARIED DOCUMENT
a reference to this Agreement or another instrument includes any
variation, novation, or replacement of either of them;
(c) STATUTES
a reference to a statute or other law includes regulations and
other instruments under it and consolidations, amendments,
re-enactments or replacements of any of them (whether before or
after the date of this Agreement);
(d) FINANCIAL REFERENCES
references to and expressions used in connection with financial
calculations, valuations, accounting or financial reporting
functions or their description in this Agreement bear the
respective meanings ascribed to like expressions or expressions to
similar intent under GAAP;
(e) SINGULAR INCLUDES PLURAL
the singular includes the plural and vice versa;
(f) PERSON INCLUDES GROUPS
the word person includes an individual, a body corporate, an
association of persons (whether corporate or not), a trust, a
state and an agency of state, in each case, whether or not having
a separate legal personality;
(g) PERSON INCLUDES SUCCESSORS
a reference to a person includes a reference to the person's
executors, administrators, successors, substitutes (including, but
not limited to, persons taking by novation) and permitted assigns;
(h) JOINT AND SEVERAL
an agreement, representation or warranty in favour of two or more
persons is for the benefit of them jointly and severally;
(i) CURRENCY
a reference:
(i) to U.S.$ or U.S. dollars is a reference to the lawful
currency of the United States of America; and
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(ii) to N.Z.$ or N.Z. dollars is a reference to the lawful
currency of New Zealand;
(j) GENDER
words importing one gender include the other genders; and
(k) VENDOR'S KNOWLEDGE
a reference in the Due Diligence Material or this Agreement to the
knowledge, belief or awareness (or similar expression) of a Vendor
is a reference to the knowledge, belief or awareness of the Vendor
after making due and careful inquiry, whether or not that inquiry
is undertaken. The knowledge, belief or awareness of one Vendor is
deemed to be the knowledge, belief or awareness of all Vendors.
1.4 HEADINGS
Headings are to be ignored in construing this Agreement.
1.5 DISPUTE AS TO GAAP
Any dispute as to the meaning of GAAP is to be determined under clause
24.
1.6 VENDORS
(a) VENDOR INDIVIDUALLY LIABLE FOR OBLIGATIONS
Subject to clauses 1.6(c) and 1.6(d), each Vendor is liable only
for the obligations expressed to be assumed by him or her under
this Agreement and is not liable for the obligations of any other
Vendor.
(b) INDIVIDUAL LIABILITY FOR DEFAULT
Subject to clauses 1.6(c) and 1.6(d), a default or breach of this
Agreement by a Vendor does not constitute a default or breach of
this Agreement by any other Vendor.
(c) VENDORS JOINTLY AND SEVERALLY LIABILITY
A reference in this Agreement to "the Vendors" is deemed to
include all of the Vendors both jointly and severally.
(d) JOINT SHAREHOLDERS
Where two or more Vendors hold any of the Shares jointly those
Vendors' obligations under this Agreement are joint and several,
but their entitlements to participate in payments of the Purchase
Price and to vote under this Agreement are to be treated as if
together they are one Vendor.
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2. SALE AND PURCHASE
2.1 AGREEMENT TO SELL SHARES
Each Vendor will sell, and the Purchaser will purchase, legal and
beneficial title to the Vendor's Shares free from any encumbrances and
with the benefit of all rights attaching to the Vendor's Shares on or
after the date of this Agreement, on the terms and conditions set out in
this Agreement.
2.2 VENDOR ACKNOWLEDGEMENT
Without prejudicing or limiting any prior Consent or waiver, each Vendor,
by executing this Agreement:
(a) COMPANIES AMENDMENT XXX 0000
waives the requirements of the Companies Amendment Xxx 0000;
(b) APPROVAL OF TRANSFER
in accordance with clause 12.9 of the Company's constitution,
approves the transfers of the Shares to the Purchaser in
accordance with this Agreement; and
(c) PRE-EMPTIVE RIGHTS
waives the Vendor's pre-emptive rights under the Company's
constitution to purchase the Shares.
3. CONDITIONS
3.1 CONDITIONS PRECEDENT
Completion of this Agreement is subject to:
(a) COMMERCE ACT
receipt by the Purchaser, in writing, on terms acceptable to the
Purchaser in its absolute discretion, of any clearances or
authorisations as may be considered necessary or desirable by the
Purchaser under Part III of the Commerce Xxx 0000 for the
implementation of this Agreement;
(b) OVERSEAS INVESTMENT REGULATIONS
receipt by the Purchaser, in writing on terms acceptable to the
Purchaser in its absolute discretion, of all consents required
under the Overseas Investment Regulations 1995 for the
implementation of this Agreement;
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(c) DUE DILIGENCE
the Purchaser conducting a due diligence review of the Company and
the Business and all documentation and records relating to the
Company and the Business (other than the Confidential Agreements)
and the results of that review being satisfactory to the Purchaser
in its absolute discretion;
(d) LANDLORD'S CONSENT
the Vendors obtaining for the benefit of the Purchaser all
necessary approvals for the change of control of the Company to
the Purchaser from the landlord of the Property, in a form and on
terms, if any, acceptable to the Purchaser in its absolute
discretion;
(e) TRANSFER OF ALL SHARES
each shareholder of the Company (irrespective of whether or not
that shareholder is named in this Agreement as a Vendor) agreeing
to transfer legal and beneficial title to all shares in the
Company held by that shareholder on the terms and conditions of
this Agreement;
(f) EMPLOYMENT AGREEMENTS
each employee of the Company listed in Schedule 3 agreeing to
continue his or her employment with the Company following
Completion by entering into a new employment agreement with the
Company, substantially in the form attached as Annexure "A", and
an employee proprietary information agreement with the Purchaser,
substantially in the form attached as Annexure "B", and receipt by
the Company of those agreements duly executed by each such
employee; and
(g) OPINION OF VENDORS' SOLICITORS
receipt by the Purchaser of a draft opinion of the Vendors'
Solicitors substantially in the form attached as Annexure "C" and
acceptable in all respects (including as to its content) to the
Purchaser in its absolute discretion.
3.2 BENEFIT OF CONDITIONS
The parties acknowledge that the Conditions set out in clause 3.1 have
been inserted for the benefit of the Purchaser only.
3.3 FULFILMENT OF CONDITIONS
The Vendors and the Purchaser must:
(a) REASONABLE ENDEAVOURS
use all reasonable endeavours to procure the fulfilment of the
Conditions; and
(b) PURSUE APPLICATIONS
as soon as possible make all appropriate applications, diligently
pursue those applications, and do all acts, matters and things
within its power and control and
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supply all information as is reasonably necessary or convenient to
satisfy the Conditions.
3.4 NON-FULFILMENT OF CONDITIONS
If the Conditions set out in clause 3.1 have not been fulfilled or (to
the extent that they are capable of waiver) waived by the Purchaser by 30
September 2000, or such later date as agreed in writing by the Vendors'
Representative and the Purchaser, then this Agreement will terminate. If
this Agreement is terminated under this clause 3.4 no party is to have
any claim against any other party arising under or in connection with
that termination other than in respect of any breach of clause 16 or any
breach of this Agreement occurring before termination, but otherwise this
Agreement has no further effect.
3.5 PURCHASE OF ALL SHARES
Notwithstanding any other provision of this Agreement, the Purchaser is
not obliged to perform its obligations under clause 6, and Completion is
not to occur, unless the Purchaser is satisfied that:
(a) SHARES
on Completion, all Shares will be transferred to it and,
immediately following Completion, all Shares will be registered in
its name; and
(b) EMPLOYEES
on Completion, each person listed in Schedule 3 has entered into
the employment agreement and the employee proprietary information
agreement referred to in clause 3.1(f) and remains an employee of
the Company.
4. PURCHASE PRICE
4.1 AMOUNT
The Purchase Price for the purchase of the Shares is the aggregate of:
(a) FIRST INSTALMENT PAYMENT
the first instalment payment of U.S.$5,000,000; and
(b) SECOND INSTALMENT PAYMENT
the second instalment payment, being an amount equal to:
(i) if not more than four of the persons listed in Schedule 3,
other than Excluded Employees, have voluntarily terminated,
or given notice of the termination of, their employment
with the Company on or before the first anniversary of the
Completion Date, U.S.$5,000,000; or
(ii) if more than four of the persons listed in Schedule 3,
other than Excluded Employees, have voluntarily terminated,
or given notice of the termination of,
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their employment with the Company on or before the first
anniversary of the Completion Date, U.S.$2,500,000,
adjusted, in each case, by any deduction under clause 9.6.
4.2 ENTITLEMENT TO VENDOR'S PROPORTION OF PURCHASE PRICE
Subject to clauses 1.6(d) and 9.6, each Vendor is entitled to the
Vendor's Proportion of the First Instalment Payment and the Second
Instalment Payment.
4.3 CORE ACQUISITION PRICE
The Purchase Price does not include any capitalised interest and the
parties agree that the Purchase Price is the "lowest price" for the
purposes of valuing the property in accordance with section EH 48(3)(a)
of the Income Tax Xxx 0000. The parties agree that they will compute
their respective taxable income for the relevant period on the basis that
the Purchase Price includes no capitalised interest and they will file
their respective tax returns accordingly.
5. PENDING COMPLETION
5.1 CONDUCT PRIOR TO COMPLETION
Pending Completion, the Vendors must, unless the Vendors have the prior
written consent of the Purchaser to act otherwise, and except for the
Permitted Transfer:
(a) OPERATE THE BUSINESS
ensure that the Company operates and conducts the Business and
maintains the Goodwill in accordance with good business practice;
(b) NOT ACQUIRE OR DISPOSE OF ASSET
ensure that the Company does not acquire or dispose of any Assets
other than in the normal course of trading and on arms-length
commercial terms for full value;
(c) NOTIFY PURCHASER
procure that the Vendors' Representative promptly notifies the
Purchaser of any events which may be material to the Assets, the
Business or the Company;
(d) AGREEMENTS
ensure that the Company does not enter into any agreement or other
commitment which:
(i) provides over its term for the payment or receipt of any
amount exceeding N.Z.$10,000; or
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(ii) has a term of more than six months and provides over its
term for the payment or receipt of any amount exceeding
N.Z.$25,000;
(e) MAJOR TRANSACTIONS
ensure that the Company does not enter into any major transaction
(as that term is defined in section 129 of the Companies Act);
(f) ALTERED STRUCTURE
ensure that the Company does not:
(i) issue any shares, options or other securities; or
(ii) declare or pay any dividend or other Distribution (except
as provided for in this Agreement or in the Financial
Statements); or
(iii) effect any distribution of any Assets or make any loan or
other payment (other than a payment in the ordinary course
of business) to its shareholders or any other person; or
(iv) buy-back any of its own shares; or
(v) redeem any shares; or
(vi) transfer any shares held as treasury stock;
(g) RIGHTS ATTACHING TO SHARES
ensure that no action is taken, or omitted to be taken, by the
Company, a Vendor, the Vendors or any other person which may
adversely affect the rights attaching to the Shares;
(h) LEGAL MATTERS
procure that the Vendors' Representative promptly notifies the
Purchaser of any legal claims, proceedings or investigations which
may occur, be threatened, brought, asserted or commenced against
the Company or its directors; and
(i) EMPLOYEES
ensure that the Company does not employ any new employees with an
annual remuneration package in excess of N.Z.$30,000, or terminate
the employment of any employees except for the termination of any
employee's employment for justifiable cause.
5.2 ACCESS FOR DUE DILIGENCE
The Vendors must ensure that, from the date of this Agreement, the
Purchaser and its representatives will have such access as they may
reasonably request to the Property and to the Company's employees, books
of account, computerised records, agreements, plant and equipment, stock
and all information relating to the Company, except for any Confidential
Agreements. The Vendors must cause the Company's directors, officers,
employees,
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auditors and lawyers to co-operate with, and make all information
relating to the Company available to the Purchaser and its advisers in a
full and timely manner, except for the Confidential Agreements.
5.3 BREACH OF WARRANTY
The Vendors undertake with the Purchaser that:
(a) DISCLOSURE
they will procure that the Vendors' Representative discloses
immediately in writing to the Purchaser any matter or circumstance
which may arise or become known to any of them before Completion
which does, or may constitute a breach of, or is inconsistent
with, any of the Warranties or could have a Material Adverse
Effect on the Company; and
(b) NO BREACH OF WARRANTIES
pending Completion they will not do, or omit to do, or allow
anything to be done, as a result of which any Warranty is or may
be untrue, misleading or inaccurate as at Completion.
6. COMPLETION
6.1 TIME AND PLACE
Completion is to take place at or about 11.30 a.m. on the Completion Date
at the offices of the Company at level 0, Xxxxxxx Xxxxx, 00 Xxxxxx Xxxxx,
Xxxxx Xxxx.
6.2 VENDOR'S OBLIGATIONS
At Completion, each Vendor must deliver to the Purchaser:
(a) SHARE TRANSFERS AND CERTIFICATES
a registrable transfer of the Vendor's Shares executed by the
Vendor in favour of the Purchaser, together with the relevant
share certificates, or a certificate from a director of the
Company (which may be in respect of all Shares) certifying that no
share certificates have been issued;
(b) WAIVERS
any waivers or consents, whether under the Company's constitution
or otherwise, additional to those specified in clause 2.2 which
are required to enable the Purchaser to be registered as the
holder of the Shares, each such waiver or consent to be in a form
acceptable to the Purchaser; and
(c) RELEASES
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releases of all encumbrances (if any) over the Vendor's Shares and
releases of any guarantees or indemnities given by the Company, in
a form acceptable to the Purchaser.
6.3 VENDORS' OBLIGATIONS
At Completion, the Vendors must deliver, or must procure that the
Vendors' Representative delivers, to the Purchaser:
(a) VENDORS' REPRESENTATIVE CERTIFICATE
an unqualified certificate executed by the Vendors' Representative
confirming, on behalf of the Vendors, that, as at the Completion
Date, no Warranty is untrue, misleading or has been breached;
(b) RESIGNATIONS
the written resignations of each director of the Company notified
by the Purchaser to the Vendors' Representative from his or her
office as director with written confirmation that he or she is
owed no money by the Company and has no claim against the Company,
in a form acceptable to the Purchaser;
(c) STATUTORY BOOKS
the common seal (if any), certificate of registration, minute
book, share register, interests register and all other statutory
registers of the Company;
(d) BOARD RESOLUTIONS
a unanimous resolution in writing of the board of directors of the
Company (passed prior to the taking effect of the resignations
referred to at clause 6.3(b) above):
(i) revoking all mandates to bankers and giving authority in
favour of the directors appointed under paragraph (iii)
below, or other persons nominated by the Purchaser, to
operate the Company's bank accounts;
(ii) approving for registration the transfers of the Shares;
(iii) appointing such persons as the Purchaser may nominate to be
directors of the Company; and
(iv) passing such administrative resolutions as the Purchaser
may reasonably require;
(e) SHAREHOLDER RESOLUTIONS
a unanimous resolution in writing of the shareholders of the
Company:
(i) appointing such persons as the Purchaser may nominate to be
directors of the Company; and
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(ii) passing such administrative resolutions as the Purchaser
may reasonably require;
(f) VENDORS' SOLICITORS LETTER
the opinion referred to in clause 3.1(g) in final form, dated the
Completion Date and signed by the Vendors' Solicitors; and
(g) OTHER RECORDS
all such other resolutions, documents or records as may reasonably
be required by the Purchaser (and notified to the Vendors'
Representative) to implement this Agreement.
6.4 PAYMENT
The Purchase Price must be paid in accordance with this clause 6.4.
(a) COMPLETION
At Completion, immediately after each Vendor has complied with
clause 6.2 and the Vendors have complied with clause 6.3, the
Purchaser must pay to the Vendors' Solicitors the First Instalment
Payment.
(b) FIRST ANNIVERSARY OF COMPLETION
On the first anniversary of the Completion Date (or, if that day
is not a Business Day, on the next following Business Day), the
Purchaser must pay to the Vendors' Solicitors the Second
Instalment Payment, less any deductions made by the Purchaser in
accordance with clause 9.6.
6.5 METHOD OF PAYMENT
Payments of the Purchase Price to be made by the Purchaser under this
Agreement will be made to the Vendors' Solicitors:
(a) SAME DAY FUNDS
on the due date in same day cleared funds; and
(b) FREE AND CLEAR
free of any deduction, withholding, set-off, counterclaim,
restrictions or conditions (other than as provided in clause 9.6).
6.6 VENDORS' SOLICITORS OBLIGATIONS
The Vendors' Solicitors are to be responsible, and the Purchaser is to
have no responsibility, for the payment to each Vendor of the Vendors'
Proportion of the First Instalment Payment and the Second Instalment
Payment. Payment by the Purchaser of the First Instalment Payment and the
Second Instalment Payment to the Vendors' Solicitors is a full discharge
of the Purchaser's obligations under clauses 6.4(a) and (b) (as the case
may be).
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7. DEFAULT
7.1 VENDOR OR VENDORS IN DEFAULT
If a Vendor does not, or the Vendors do not, fulfil his, her or their
respective obligations under clause 6 then, without prejudice to any
other rights or remedies available to the Purchaser, the Purchaser may
xxx the Vendor or the Vendors, as the case may be, for specific
performance, or cancel this Agreement and xxx the Vendor or the Vendors,
as the case may be, for damages.
7.2 PURCHASER IN DEFAULT
If the Purchaser does not fulfil the Purchaser's obligations in clause 6
then, without prejudice to any other rights or remedies available to, the
Vendors (but not a Vendor) may xxx the Purchaser for specific
performance, or cancel this Agreement and xxx the Purchaser for damages.
7.3 DEFAULT INTEREST
If any party does not pay any sum payable by it under this Agreement as
and when due and in the manner provided in this Agreement, it must pay
Default Interest on that unpaid sum in the currency in which the unpaid
sum is due. Default Interest is to accrue on any unpaid sum from day to
day from the due date to the date of actual payment, both before and
after judgment. Interest on overdue payments is to be capitalised
monthly. The demand for or the payment of Default Interest is not in
substitution for, or to the exclusion of, any rights or remedies
otherwise available to a party under this Agreement.
8. NON-SOLICITATION AND NON-HIRING
8.1 UNDERTAKINGS
As further consideration for the Purchaser agreeing to purchase the
Shares from the Vendors on the terms contained in this Agreement, each
Vendor undertakes with the Purchaser that he or she will not (except with
the prior written consent of the Purchaser):
(a) NOT SOLICIT EMPLOYEES
at any time during the term of his or her employment by the
Company, and for a period of twelve months from the date of
termination of such employment, directly or indirectly for himself
or herself or on behalf of or in conjunction with any other
person, directly or indirectly, solicit or entice any employee of
the Company to terminate his or her employment with the Company;
or
(b) NOT TO EMPLOY
at any time engage or employ (directly or indirectly) any person
who is an employee of the Company, while Vendor is employed by the
Company and for a period of 12 months following the termination of
Vendor's employment by the Company, without the prior written
consent of the Purchaser; or
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(c) INTELLECTUAL PROPERTY RIGHTS
at any time after Completion, use or disclose to any other person
any Intellectual Property Rights.
8.2 UNDERTAKINGS INDEPENDENT
Each undertaking contained in clause 8.1 is to be read and construed
independently of the other undertakings contained in that clause so that
if one or more is held to be invalid as an unreasonable restraint of
trade or for any other reason whatsoever then the remaining undertakings
are to be valid to the extent that they are not held to be so invalid.
8.3 REASONABLE UNDERTAKINGS
(a) VALUE OF SHARES
The value of the Shares upon which the Purchase Price has been set
and accepted by the Purchaser is dependent upon each Vendor giving
the undertakings contained in this clause 8.
(b) REASONABLE UNDERTAKINGS
The undertakings contained in this clause 8 are reasonable and
have been given for the protection of the Goodwill.
8.4 MODIFICATION
If any undertaking is held to be invalid as an unreasonable restraint of
trade or for any other reason but would have been valid if part of the
wording had been deleted or the period reduced or the range of activities
or area dealt with reduced in scope, those undertakings are to apply with
those modifications necessary to make them valid and effective.
8.5 ASSIGNMENT
The Purchaser may assign the benefit of the undertakings contained in
this clause 8, in whole or in part.
8.6 EQUITABLE RELIEF
Each Vendor acknowledges that, if there is an alleged breach of this
clause 8 by that Vendor, the Purchaser may seek equitable relief from
that Vendor in addition to damages. In any proceedings brought by the
Purchaser against a Vendor seeking equitable relief for a breach of this
clause 8, neither the Vendor, nor any person directly or indirectly under
his or her direction or control, may claim that the breach is one which
may not or ought not to be the subject of equitable relief.
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9. WARRANTIES
9.1 VENDORS' REPRESENTATIONS
(a) EACH VENDOR'S WARRANTY
Each Vendor represents and warrants to the Purchaser in the terms
of the Warranties in clauses 2.1 and 2.2 of Schedule 2 in the
knowledge that the Purchaser is entitled to rely on the truth of
the statements contained in those Warranties. Each of those
Warranties is to be repeated by the Vendor continuously from the
date of this Agreement until Completion, and remain in effect by
reference to the facts and circumstances then existing.
(b) THE VENDORS' WARRANTIES
The Vendors represent and warrant to the Purchaser in the terms of
the Warranties (other than the Warranties in clauses 2.1 and 2.2
of Schedule 2) in the knowledge that the Purchaser is entitled to
rely on the truth of the statements contained in those Warranties.
Each of those Warranties is to be repeated by the Vendors
continuously from the date of this Agreement until Completion, and
remain in effect by reference to the facts and circumstances then
existing.
9.2 NOTICE OF WARRANTY CLAIMS
All Warranty claims made by the Purchaser against a Vendor or the Vendors
(as the case may be) under this Agreement are to be in writing and
delivered to the Vendors' Representative or the Vendors' Solicitors, and
any notice under this clause is to specify in reasonable detail the
matter which gives rise to the breach, the nature of the breach and the
amount claimed. All claims so made (other than in respect of the
Warranties in clauses 2.1 and 2.2 of Schedule 2) are to be deemed to have
been made against all Vendors.
9.3 LIMIT ON CERTAIN WARRANTY AND INDEMNITY CLAIMS
(a) LIMITED LIABILITY
Subject to paragraph (b) below, the Vendors' maximum aggregate
joint and several liability:
(i) (including under clause 9.8(a)) in relation to Warranty
claims; and
(ii) under clause 9.8(c),
is limited to an amount equivalent to the Second Instalment
Payment.
(b) EXCEPTION TO LIMITED LIABILITY
Notwithstanding paragraph (a) above:
(i) a Vendor's several liability (including under clause
9.8(a)) in relation to any Warranty claim which relates to
the Warranties in clauses 2.1 and 2.2 of Schedule 2 is
unlimited; and
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(ii) the Vendors' aggregate joint and several liability
(including under clause 9.8(a)) in relation to any Warranty
claim which relates to the Warranties in clauses 2.3 and
2.4 of Schedule 2 is unlimited.
(c) LIMIT ON PURCHASER'S REMEDIES
Where a matter arises in respect of which the Vendors' liability
is limited under clause 9.3(a), the Purchaser agrees that its
remedies in respect of that matter are limited to equitable
remedies, any rights of cancellation at law or under this
Agreement and the right to make the deduction from the Second
Instalment Payment specified in clause 9.6.
9.4 PERIOD FOR WARRANTY CLAIMS
The Purchaser may not make any Warranty claims after the end of the
period of twelve months following the Completion Date.
9.5 WARRANTIES QUALIFIED
Each of the Warranties is given subject to:
(a) AGREEMENT
anything done, or omitted to be done, either under any express
provision of this Agreement or after the date of this Agreement at
the request in writing, or with the prior written approval, of the
Purchaser; and
(b) DUE DILIGENCE MATERIAL
any matter to the extent that it is fully and fairly disclosed in
the Due Diligence Material or the Vendors' Solicitors' draft
opinion referred to in clause 3.1(g),
but is subject to no other qualification. No other information relating
to the Company of which the Purchaser has knowledge (whether actual,
constructive or implied) is to preclude or affect any claim for a breach
of Warranty or reduce any amount recoverable by the Purchaser.
9.6 REDUCTION OF PURCHASE PRICE
In addition to any other rights or remedies of the Purchaser against a
Vendor or the Vendors (but subject to clause 9.3(c)), the Purchaser may
deduct and retain the aggregate amount (in this clause 9, the
INDEMNIFICATION AMOUNT) of each loss, damage, cost or expense for which
the Purchaser or the Company is entitled to be indemnified under clause
9.8 or in respect of which the Purchaser has made a Warranty claim
pursuant to clause 9.2:
(a) A VENDOR
where the claim for indemnification or the Warranty claim is made
against a Vendor only, from the Second Instalment Payment up to
the amount of the Vendor's Proportion of the Second Instalment
Payment, and the amount of the Vendor's entitlement to participate
in the Second Instalment Payment and the amount of the Second
Instalment Payment that must be paid by the Purchaser will be
reduced accordingly; or
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(b) ALL VENDORS
where the claim for indemnification or the Warranty claim is made
against (or in the case of a Warranty claim is deemed to be made
against) the Vendors, from the Second Instalment Payment up to the
amount of that Second Instalment Payment, and the amount of the
Second Instalment Payment that must be paid by the Purchaser will
be reduced accordingly.
9.7 CURRENCY CONVERSION OF INDEMNIFICATION AMOUNT
For the purposes of clause 9.3(a) and clause 9.6, the Indemnification
Amount (or other relevant amount) is to be expressed in U.S. dollars and
is to be the aggregate amount of U.S. dollars that will be required by
the Purchaser or the Company (as the case may be) to purchase the amount
in the relevant currency of each loss, damage, cost or expense that was,
or is expected to be, suffered or incurred by the Purchaser or the
Company at the average of the spot rates of exchange for the purchase of
that currency notified to the Purchaser by Silicon Valley Bank, Santa
Clara, California, USA, or such other financial institution that is
acceptable to the Purchaser for the five Business Days immediately
preceding the second Business Day prior to the first anniversary of the
Completion Date.
9.8 INDEMNITY
Subject only to clause 9.3(a), each Vendor and the Vendors must indemnify
and keep indemnified the Purchaser against any loss, damage, cost or
expense (including legal or other costs associated with the enforcement
of this Agreement) suffered or incurred, or expected to be suffered or
incurred, by the Purchaser or by the Company arising directly or
indirectly from:
(a) BREACH OF WARRANTY
the breach of any Warranty made by it or them (as the case may
be); or
(b) BREACH OF OTHER PROVISION
the breach of any other provision of this Agreement binding on it
or them (as the case may be) (a STIPULATION); or
(c) ACQUISITION OF SHARES
the purchase of the Shares by the Purchaser except if such loss,
damage, cost or expense arises solely and directly from any breach
of a warranty in, or other provision of, this Agreement by the
Purchaser,
such loss, damage, cost and expense to include, without limitation:
(d) COST OF RESTORATION
any cost of correcting or restoring the subject matter to the
warranted or covenanted state or condition; and
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(e) DIFFERENCE IN VALUE
any difference in value between the actual value of the subject
matter of any Stipulation on the Completion Date and the value it
would have had if the relevant Stipulation were true and accurate
or had otherwise been complied with.
The loss, damage, cost or expense is to be determined without taking
account of any increase in the value of the Shares arising from any
offsetting factor.
9.9 GROSS-UP
If:
(a) DEDUCTION OR WITHHOLDING
a Vendor is, or the Vendors are, required by law to make any
deduction or withholding from any sum payable by it or them to the
Purchaser under this Agreement; or
(b) PAYMENT OF TAXATION
the Purchaser or any person on its behalf is required by law to
make any payment on account of taxation in relation to any amount
received or receivable by the Purchaser or that person under this
Agreement,
then the sum payable by that Vendor, or the Vendors, will be increased to
the extent necessary to ensure that after the making of that deduction,
withholding or payment the Purchaser or that person receives and retains
(free of any liability in respect of any such deduction, withholding or
payment) a net sum equal to the sum that the Purchaser or that person
would have received and retained had no deduction, withholding or payment
been made.
9.10 CANCELLATION
If, pending Completion:
(a) BREACHES OBLIGATIONS
a Vendor fails, or the Vendors fail, to perform any of his, her or
their respective obligations in any material respect under this
Agreement;
(b) BREACHES WARRANTIES
any circumstances exist or arise which have the effect of making
any of the Warranties materially incorrect or untrue; or
(c) ADVERSE CIRCUMSTANCES
a Vendor, the Vendors or the Purchaser becomes aware of any event
or circumstance which has or may have a Material Adverse Effect on
the Company,
the Purchaser may, at the Purchaser's absolute discretion, give the Vendors'
Representative notice cancelling this Agreement at any time prior to Completion.
This right of cancellation is
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in addition to, and not limited by, any other rights or remedies of the
Purchaser against the Vendors or any of them. If the Purchaser does not
exercise its rights under this clause, its other rights and remedies
under this Agreement or at law are not to be prejudiced. Any notice given
under this clause 9.10 is to be effective as against the Vendors or any
of them if given to the Vendors' Representative or the Vendors'
Solicitors.
9.11 TRUTH OF THE WARRANTIES ESSENTIAL
Each Vendor acknowledges, and the Vendors acknowledge, that they and the
Purchaser have agreed that the truth of the statements contained in the
Warranties and the fulfilment by that Vendor, and the Vendors, of all of
their respective obligations under this Agreement, are essential to the
Purchaser.
9.12 CERTIFICATES CONCLUSIVE
A certificate by the Purchaser of any amount payable under this Agreement
is to be conclusive evidence for all purposes including for any
proceedings.
10. VENDORS' REPRESENTATIVE
10.1 APPOINTMENT OF VENDORS' REPRESENTATIVE
Each Vendor irrevocably appoints the Vendors' Representative, and the
Vendors' Representative accepts the appointment, to act as the Vendor's
agent under this Agreement with all powers expressly delegated to him by
this Agreement, together with all other powers reasonably incidental to
those powers.
(a) POWERS
In the exercise of the Vendors' Representative's rights, powers,
obligations and discretions under this Agreement, the Vendors'
Representative must act in accordance with the instructions (if
any) of the Vendors, including any instructions or guidelines
contained in any other document or agreement between the Vendors'
Representative and the Vendors and, in each case, may take any
other action reasonably incidental thereto.
(b) NO OBLIGATION TO INVESTIGATE AUTHORITY
As between the Vendors and the Vendors' Representative on the one
hand, and the Purchaser on the other, all action taken by the
Vendors' Representative under this Agreement will be taken to be
authorised by the Vendors and to be in accordance with the
instructions of the Vendors.
(c) SATISFACTION
Provided that the Purchaser satisfies its obligations to the
Vendors' Representative in relation to any matter under this
Agreement, the Purchaser will be taken to have satisfied its
obligations to each Vendor in relation to that matter.
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10.2 REPLACEMENT OF VENDORS' REPRESENTATIVE
(a) RETIREMENT OF VENDORS' REPRESENTATIVE
The Vendors' Representative may retire at any time without
assigning any reason upon giving 10 Business Days' written notice
to the Purchaser and each Vendor, subject to the due appointment
of a new vendors' representative.
(b) REMOVAL OF VENDORS' REPRESENTATIVE
The power to remove the Vendors' Representative is vested in the
Vendors. The Vendors may remove the Vendors' Representative by way
of a resolution in writing approved by a majority of the Vendors
entitled to vote and voting. Subject to clause 1.6(d), each Vendor
has one vote on any resolution to remove the Vendors'
Representative. Removal of the Vendors' Representative is subject
to the due appointment of a new vendors' representative.
(c) APPOINTMENT OF NEW VENDORS' REPRESENTATIVE
The power to appoint a new vendors' representative is vested in
the Vendors. The Vendors may appoint a new vendors' representative
by way of a resolution in writing approved by a majority of the
Vendors entitled to vote and voting. Subject to clause 1.6(d),
each Vendor has one vote on any resolution to appoint a new
vendors' representative.
10.3 LIABILITY OF VENDORS' REPRESENTATIVE TO PURCHASER
As between the Purchaser on the one hand and the Vendors' Representative
on the other, the Vendors' Representative will have no liability to the
Purchaser for the performance of his obligations, or the exercise of his
rights, as Vendors' Representative under this Agreement except in the
case of fraud, bad faith or gross negligence. This clause does not affect
the liability of the Vendors' Representative as a Vendor under this
Agreement.
11. NOMINATED TRANSFEREE
11.1 NOMINATION OF NOMINATED TRANSFEREE
The Purchaser may give notice to the Vendors' Representative (which
notice must be given no less than two Business Days prior to the
Completion Date) nominating a subsidiary of the Purchaser to take the
transfers of the Shares from the Vendors at Completion. If any such
notice is given, then no later than the Business Day prior to the
Completion Date, the Purchaser must deliver to the Vendors'
Representative a deed of accession duly executed by the Purchaser and the
Nominated Transferee by which the Nominated Transferee agrees to become a
party to this Agreement and to observe and perform the obligations of the
Purchaser under this Agreement.
11.2 CONSEQUENCES OF NOMINATION
(a) PURCHASER NOT RELEASED
Notwithstanding any nomination made by the Purchaser under clause
11.1, and notwithstanding the transfer of the Shares to the
Nominated Transferee, the Purchaser
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will not be released from its obligations under this Agreement,
will remain a party to this Agreement, and will remain
unconditionally liable to the Vendors to observe and perform all
of the Purchaser's obligations under this Agreement (in accordance
with this Agreement), including the obligation to pay the Purchase
Price in accordance with this Agreement.
(b) NOMINATED TRANSFEREE'S RIGHTS
The Nominated Transferee and any other person to whom the
Nominated Transferee may transfer the Shares will be entitled to
exercise all the rights of the Purchaser under this Agreement and
will have the benefit of all representations, warranties,
undertakings and obligations made or given to the Purchaser by a
Vendor, the Vendors or the Vendors' Representative under this
Agreement, and a Vendor, the Vendors and the Vendors'
Representative will each have the same liability in all respects
to the Nominated Transferee as if the Nominated Transferee was a
party to, and named as the Purchaser under, this Agreement.
12. EXPENSES
Whether or not any of the transactions contemplated by this Agreement are
completed, each of the parties is (unless otherwise specified in this
Agreement) to bear its own legal and accountancy costs and other expenses
of and incidental to the preparation, execution and Completion of this
Agreement.
13. DELAY
13.1 TIME OF ESSENCE
Time is of the essence in the performance by the parties of their
respective obligations under this Agreement.
13.2 EXERCISE OF RIGHTS AND WAIVERS
No delay, grant of time, release, compromise, forbearance (whether
partial or otherwise) or other indulgence by one party in respect of any
breach of any other party's obligations under this Agreement is to:
(a) OPERATE AS WAIVER
operate as a waiver of or prevent the subsequent enforcement of
that obligation; or
(b) NOT RELEVANT FOR OTHER BREACHES
be deemed a delay, grant of time, release, compromise, forbearance
(whether partial or otherwise) or other indulgence in respect of,
or a waiver of, any subsequent or other breach.
No waiver by a Vendor, the Vendors or the Purchaser of their respective
rights under this Agreement will be effective unless it is in writing and
signed by the Vendors' Representative or the Purchaser (as the case may
be).
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14. FURTHER ASSURANCES
Each party must sign, execute and do all deeds, schedules, acts,
documents and things as may reasonably be required by any other party
effectively to carry out and give effect to the terms and intentions of
this Agreement, whether before or after Completion.
15. NON MERGER
The obligations, warranties, undertakings and indemnities undertaken or
given pursuant to this Agreement, to the extent not already performed at
Completion, are not to merge on Completion, or on the execution or
delivery of any document, pursuant to this Agreement, but are to remain
enforceable to the fullest extent and notwithstanding any rule of law to
the contrary.
16. CONFIDENTIALITY AND ANNOUNCEMENTS
16.1 BUSINESS INFORMATION
Each Vendor covenants with the Purchaser that he or she will not, either
before or after Completion, use or disclose to any person any
Confidential Information he or she has or acquires and will make every
effort, including issuing legal proceedings, to prevent the use or
disclosure of Confidential Information by any person, including, without
limitation, any other person who was considered as a potential purchaser
of the Shares.
16.2 NEGOTIATIONS
Each party may announce the existence of this Agreement, but no party may
make any disclosure relating to the terms of this Agreement and any
confidential information about any other party to this Agreement to any
third party (other than its professional advisers, or in connection with
a financing transaction) without the prior written consent of the other
parties. No party may make any press release or other public announcement
related to this Agreement written or oral, without the prior written
consent of the other party.
16.3 EXCEPTIONS
The obligations contained in clauses 16.1 and 16.2 do not apply:
(a) REQUIREMENTS OF LAW OR STOCK EXCHANGE
to the extent required by law or by the listing requirements of
any relevant stock exchange; or
(b) FULFIL THE CONDITIONS
to the extent reasonably required by a party to fulfil the
Conditions; or
(c) PUBLIC DOMAIN
to the extent that such information is already in the public
domain.
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The parties are to consult with each other and use reasonable
endeavours to agree on the form and timing of any public
announcements or disclosure referred to in this sub-clause.
17. ENTIRE AGREEMENT
This Agreement and clauses 3, 4 and 6 of the Letter of Intent dated 10
July 2000 between the Purchaser, the Vendors and the Company:
(a) ENTIRE UNDERSTANDING
constitute the entire understanding and agreement of the parties
relating to the sale and purchase of the Shares; and
(b) SUPERSEDES PRIOR AGREEMENTS
supersede and extinguish all prior agreements and understandings
between the parties relating to that sale and purchase.
18. SEVERABILITY
If any provision of this Agreement is, or becomes, unenforceable, illegal
or invalid for any reason, the relevant provision will be deemed to be
modified to the extent necessary to remedy such unenforceability,
illegality or invalidity or, if this is not possible, then the relevant
provision will be severed from this Agreement without affecting the
enforceability, legality or validity of any other provision of this
Agreement.
19. ASSIGNMENT
19.1 SUCCESSORS
This Agreement is to be binding on and ensure for the benefit of the
parties and their respective successors and permitted assignees or
transferees.
19.2 VENDOR AND VENDORS' REPRESENTATIVE
No Vendor nor the Vendors' Representative may assign or transfer all or
part of his or her respective rights or obligations under this Agreement.
Each Vendor acknowledges that the Purchaser may rely on the warranties
and undertakings in this Agreement in giving warranties and undertakings
to any subsequent purchaser of all or any of the Shares.
19.3 PURCHASER
The Purchaser may assign or transfer its rights and obligations under
this Agreement. Following assignment, the Purchaser will remain liable to
the other parties in respect of any obligations so assigned. Each
assignee or transferee of the Purchaser is to have the same rights
against the other parties to this Agreement as if named in this Agreement
as Purchaser.
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20. NOTICES
20.1 FORM OF NOTICE
Each notice or other communication under this Agreement is to be in
writing, is to be made by facsimile, personal delivery or by post to the
addressee at the facsimile number or address, and is to be marked for the
attention of the person or office holder (if any), from time to time
designated for the purpose by the addressee to the other parties. The
initial facsimile number, address and relevant person or office holder of
each party is set out under its name at the end of this Agreement.
20.2 NOTICE EFFECTIVE
No communication is to be effective until received. A communication is to
be deemed to be received by the addressee:
(a) FACSIMILE
in the case of a facsimile, on the Business Day on which it is
sent or, if sent after 5 p.m. (in the place of receipt) on a
Business Day or, if sent on a non-Business Day, on the next
Business Day after the date of sending;
(b) PERSONAL DELIVERY
in the case of personal delivery, when delivered; and
(c) POST
in the case of a letter, on the third Business Day after posting
by fastpost or by airmail.
21. AMENDMENTS
No amendment to this Agreement is to be effective unless it is in writing
and signed by the Purchaser and the Vendors' Representative on behalf of
the Vendors and the Vendors' Representative, or the Purchaser, the
Vendors and the Vendors' Representative.
22. COUNTERPARTS
22.1 NUMBER OF COUNTERPARTS
This Agreement may be executed in any number of counterparts each of
which is to be deemed an original, but all of which together are to
constitute a single instrument. A party may enter into this Agreement by
executing any counterpart.
22.2 FACSIMILE EXCHANGE
This Agreement may be executed on the basis of an exchange of facsimile
copies and execution of this Agreement by such means is to be a valid and
sufficient execution.
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23. GOVERNING LAW
23.1 SUBMISSION TO NEW ZEALAND LAW
This Agreement is to be governed by and construed by the laws of New
Zealand. Subject to clause 24, each of the parties irrevocably and
unconditionally agrees that the New Zealand courts have jurisdiction to
hear and determine each suit, action or proceeding (PROCEEDINGS), and to
settle disputes, which may arise out of or in connection with this
Agreement and for those purposes irrevocably submits to the jurisdiction
of the New Zealand courts.
23.2 NON-EXCLUSIVE JURISDICTION
Subject to clause 24, the submission to jurisdiction in clause 23.1 does
not (and is not to be construed to) limit the rights of a party to take
Proceedings against any of the other parties in another court of
competent jurisdiction, nor is the taking of Proceedings in one or more
jurisdictions to preclude the taking of Proceedings in another
jurisdiction, whether concurrently or not.
24. MEDIATION AND ARBITRATION
24.1 MEDIATION
(a) NO PROCEEDINGS
Subject to clause 24.4, if a dispute (a DISPUTE) arises under or
in relation to this Agreement (including any claim in tort, in
equity or pursuant to any statute), no party may commence any
legal or arbitration proceedings relating to the dispute unless
the party has complied with this clause 24.1.
(b) NOTICE OF DISPUTE
A party claiming that a dispute has arisen must give written
notice to the other party specifying the nature of the dispute.
(c) INFORMAL DISPUTE RESOLUTION TECHNIQUES
On receipt of that notice, the parties are to use all reasonable
endeavours to resolve the dispute expeditiously using informal
dispute resolution techniques such as mediation, expert appraisal
or determination or similar techniques agreed to by them.
(d) MEDIATION
If the parties do not resolve the dispute within 10 Business Days
of the receipt of the notice (or any longer period agreed to by
the parties in writing):
(i) the parties are to refer the dispute to mediation which is
to be conducted in terms of the LEADR New Zealand Inc.
Standard Mediation Agreement;
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(ii) the mediation is to be conducted by a mediator and at a fee
agreed to in writing by each party; and
(iii) if the parties fail to agree to the mediator and/or the
mediator's fee within five Business Days of the reference
of the dispute to mediation under clause 24.1(d)(i), the
mediator is to be selected, and/or the mediator's fee is to
be determined, by the Chair for the time being of LEADR New
Zealand Incorporated.
(e) ARBITRATION OR LEGAL PROCEEDINGS
If the dispute is not resolved by mediated agreement or otherwise
within 20 Business Days of the reference of the dispute to
mediation under clause 24.1(d)(i), either party may refer the
dispute to arbitration in accordance with clause 24.2.
24.2 ARBITRATION
(a) SINGLE ARBITRATOR
If a dispute is referred to arbitration under clause 24.1, it is
to be determined by:
(i) a single arbitrator agreed to by the parties; or
(ii) failing agreement within 10 Business Days, a single
arbitrator appointed by the President of the New Zealand
Law Society for the time being or by the President's
delegate appointed in writing for this purpose in
accordance with the Arbitration Xxx 0000.
(b) CONDUCT OF ARBITRATION
The arbitration is to be held in Wellington and is to be conducted
in accordance with the Arbitration Xxx 0000.
24.3 LIMITED RECOURSE TO COURTS
Each party agrees that it will not commence any legal proceedings under
or in relation to this Agreement, except:
(a) SET ASIDE ARBITRATION AWARD
by way of an application to set aside an award of the arbitrator
in accordance with clause 34 of the First Schedule to the
Arbitration Xxx 0000; or
(b) CLAUSE 24.4
where clause 24.4 applies.
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24.4 EQUITABLE REMEDIES
Nothing in this clause 24 prevents any party from seeking through legal
proceedings an injunction, an order for specific performance or other
equitable remedy in respect of any breach or threatened breach of this
Agreement.
24.5 VENDORS' REPRESENTATIVE
(a) ACTION BY VENDORS
Any action to be taken by a Vendor or the Vendors in relation to
the Purchaser under this clause 24 may be taken by the Vendors'
Representative on that Vendor's behalf or those Vendors' behalves.
(b) ACTION BY PURCHASER
Any notice to be given by the Purchaser to, or any agreement to be
reached by the Purchaser with, a Vendor or the Vendors under this
clause 24 may be given to, or reached with, the Vendors'
Representative.
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EXECUTION
EXECUTED as an Agreement
TURNSTONE SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
ADDRESS OF TURNSTONE SYSTEMS, INC.
ADDRESS 2220 Central Expressway FACSIMILE 000-000-000 1401
Xxxxx Xxxxx, XX 00000
ATTENTION General Counsel TELEPHONE 000-000-000 1400
THE VENDORS
/s/ Xxxxx Xxxx Xxxxxx
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Xxxxx Xxxx Xxxxxx
/s/ Xxxxx Xxxxx Xxxxx
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Colin Xxxxx Xxxxx
/s/ Xxxxxxxx Xxxxxxx
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Xxxxxxxx Xxxxxxx
/s/ Xxxxxxxxx Xxxxxx Xxxxxxxx
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Xxxxxxxxx Xxxxxx Xxxxxxxx
/s/ Xxxx Xxxxxxx Xxxxxxxxxxxx
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Xxxx Xxxxxxx Xxxxxxxxxxxx
/s/ Xxxxxx Xxxxx Xxxxxxx
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Xxxxxx Xxxxx Xxxxxxx
/s/ Xxxx Xxxxxxx Xxxxxxx
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Xxxx Xxxxxxx Xxxxxxx
/s/ Xxxxxxx Xxxxxx Xxxxxxx
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Xxxxxxx Xxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxx Xxxxxxx Xxxxxx
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Xxxxxx Xxxxx Xxxxxxx Xxxxxx
/s/ Xxxxx Xxxxxx Xxxxx
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Xxxxx Xxxxxx Xxxxx
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/s/ Xxxxx Xxxxxxx Xxxxxxxx
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Xxxxx Xxxxxxx Xxxxxxxx
/s/ Xxxx Xxxxxxx Xxxxxxx
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Rory Xxxxxxx Xxxxxxx
/s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
/s/ Xxxx Xxxxx Xxxxxxx Xxxxx
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Xxxx Xxxxx Xxxxxxx Xxxxx
/s/ Xxx Xxxxx Page
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Jan Maree Page
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
/s/ Xxxxxxxxx Xxxx Xxxx Xxxxxx
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Xxxxxxxxx Xxxx Xxxx Xxxxxx
/s/ Xxxxx Xxxx Xxxxxxxx
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Xxxxx Xxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx Xxxxxxx
/s/ Lynley Xxxx Xxxxxxx
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Lynley Xxxx Xxxxxxx
ADDRESS OF VENDORS
ADDRESS C/- Paragon Solutions Limited FACSIMILE 0000-0-000 3888
Xxxxx 0, Xxxxxxx Xxxxx
00 Xxxxxx Xxxxx, Xxxxx Xxxx, Xxx Xxxxxxx
ATTENTION The Vendors' Representative TELEPHONE 0000-0-000 3887
VENDORS' REPRESENTATIVE
/s/ Xxxxxx Xxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxx
ADDRESS OF VENDORS' REPRESENTATIVE
ADDRESS C/- Paragon Solutions Limited FACSIMILE 0000-0-000 3888
Xxxxx 0, Xxxxxxx Xxxxx
00 Xxxxxx Xxxxx, Xxxxx Xxxx, Xxx Xxxxxxx
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ATTENTION Xxxxxx Xxxxxxx TELEPHONE 0000-0-000 3887
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SCHEDULE 2: WARRANTIES
1. INFORMATION
1.1 ALL INFORMATION
All information:
(a) contained in the Introduction to this Agreement and the Due
Diligence Material; and
(b) in respect of the Company given by or on behalf of the Vendors
(whether by any director, agent, employee or professional adviser
of the Vendors) to the Purchaser or any adviser or representative
of the Purchaser,
is accurate and complete and is not misleading in any material
particular, whether by inclusion of misleading information or omission of
material information.
1.2 NO OMISSION
No material information has been omitted to be disclosed by the Vendors
to the Purchaser in writing which, if disclosed, would be likely to lead
a proposing Purchaser for value of the Shares to:
(a) reduce its assessment of the value of the Shares; or
(b) reverse its decision to purchase the Shares on the terms of this
Agreement.
2. THE SHARES
2.1 TITLE
The Vendor has legal and beneficial title to the Vendor's Shares free of
encumbrances.
2.2 POWER
The Vendor has the right and power to sell the Vendor's Shares on the
terms set out in this Agreement.
2.3 FULLY PAID
The Shares are fully paid and no money is owing in respect of them.
2.4 NO OTHER SHARES OR RIGHTS
The Shares comprise all the issued shares in the capital of the Company.
The Company has not issued any option to subscribe for equity capital or
loan capital in the Company to any person. No person has any right to
call for the issue or transfer of equity capital or loan capital in the
Company at any time.
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3. CONSTITUTION
There has been no alteration to the constitution of the Company. The
affairs of the Company have been conducted in accordance with its
constitution.
4. FINANCIAL MATTERS
4.1 ACCURACY OF THE FINANCIAL STATEMENTS
The Financial Statements:
(a) comply with the provisions of the Financial Reporting Xxx 0000 and
have been prepared under GAAP, and are complete and accurate in
all respects;
(b) have been prepared on a basis consistent with the basis on which
all audited financial statements of the Company have generally
been prepared;
(c) give a true and fair view of the assets and liabilities and the
state of affairs, financial position and results of the Company as
at the Balance Date and the financial performance of the Company
for the financial periods ended 31 March 1999 and 2000;
(d) are not affected by any abnormal, extraordinary or non-recurring
item;
(e) make full provision for all liabilities including liabilities for
long service leave and annual leave entitlements; and
(f) give full particulars in the notes of all contingent liabilities
and commitments and any other liabilities which cannot be
quantified under GAAP.
4.2 FINANCIAL BOOKS AND RECORDS
The books and records of the Company (other than the Financial
Statements) accurately set out and disclose in all material respects the
financial condition of the Company. All financial transactions of the
Company have been accurately recorded in all material aspects in such
books and records. Such books and records:
(a) accurately reflect in all material respects the basis for the
financial condition and the revenues, expenses, results of
operations and financial performance of the Company shown in the
Financial Statements; and
(b) present fairly in all material respects the financial condition
and the revenues, expenses, results of the operations and
financial performance of the Company.
4.3 NO REVALUATION
Since the Balance Date there has been no revaluation of any Asset.
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4.4 FINANCING
The Company has not and is not engaged in financing of a type which is
not required to be shown or reflected in its financial statements.
5. OPERATION OF THE BUSINESS SINCE BALANCE DATE
Since the Balance Date there has not been any event or circumstance which
could have a Material Adverse Effect on the Company.
6. ASSETS
6.1 NO ENCUMBRANCES
The Company has legal and beneficial title to all of its Assets, free
from encumbrances, except:
(a) as expressly noted in the Financial Statements; or
(b) for any item less than N.Z.$5,000 in value to which a supplier to
the Company has retained title in the ordinary course of trade.
The Company has not created, or agreed to create, any encumbrance in
respect of any of its Assets.
6.2 NO OTHER INTEREST
No person other than the Company, is entitled to possession of, or any
interest in, any Assets.
7. INTELLECTUAL PROPERTY
7.1 OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS
Other than those Intellectual Property Rights permitted to be transferred
under the Permitted Transfer, the Company owns absolutely:
(a) all Intellectual Property Rights, free from any encumbrance; and
(b) all rights in intellectual property necessary or desirable for the
operation of the Business as it is currently conducted.
7.2 INTELLECTUAL PROPERTY
There has not been:
(a) any infringement of the Intellectual Property Rights;
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(b) any act or omission which may affect the validity or
enforceability of any Intellectual Property Rights; or
(c) any claim by any third party relating to Intellectual Property
Rights.
7.3 NO TRADE XXXX INFRINGEMENT
The Company does not infringe and has not infringed any trade xxxx,
patent, registered design or copyright or other intellectual property
right of a third person and the Company has given an indemnity in respect
of any infringement of intellectual property.
7.4 NO USER AGREEMENTS
The Company is not:
(a) a party to any user licence, know-how, information, assistance or
development agreement; or
(b) under any liability to make payments to any person in respect of
any Intellectual Property Rights.
8. MATERIAL COMMITMENTS
8.1 MATERIAL COMMITMENTS
The Company is not party to any agreement which:
(a) relates to the provision of financial accommodation to the
Company;
(b) is outside the ordinary course of business;
(c) is incapable of performance in accordance with its terms within
six months after the date on which it was entered into or
undertaken;
(d) involves the Company giving a guarantee, indemnity or letter of
comfort in respect of, or to be otherwise contingently liable for,
the obligations of, any other person;
(e) involves any express warranty or guarantee, or any obligation to
maintain, service, repair, repurchase or otherwise do or refrain
from doing anything, in respect of goods or services provided by
the Company;
(f) is with any Related Company of the Company or of the Vendors or
any of them;
(g) restricts or prevents the Company from carrying on any activity or
business in any area;
(h) confers on any person any rights, or requires the Consent of any
person, as a consequence of a change in the shareholding in, or
composition of the board of, directors of the Company;
(i) is likely to result in a loss to the Company on completion of
performance;
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(j) is of an unusual, long term or onerous nature or cannot readily be
performed by the Company without undue or unusual expenditure of
money or effort;
(k) requires an aggregate consideration payable by the Company in
excess of N.Z.$25,000; or
(l) is for any reason considered material.
9. PROPERTY
9.1 COMPLETE LIST
The Property comprises all lands and buildings leased or occupied by the
Company or in which the Company has any interest.
9.2 USE PERMITTED
The use of the Property for the purposes for which it is now used is not
precluded by any restrictive covenant or provision, legislation or order.
9.3 NO BREACH
The Company is not in breach of any agreement with respect to, or any
obligation affecting, the Property.
10. COMPLIANCE WITH LAWS
10.1 COMPLIANCE
There are no applicable requirements of any statute, regulation, or
Public Authority with which the Company has not complied fully and in a
timely manner.
10.2 ALL CONSENTS HELD
The Company has all Consents required or desirable for carrying on the
Business. No Consent is likely to be adversely affected in any manner.
The Company is not in breach of the provisions of any Consent.
11. LEGAL PROCEEDINGS
11.1 NO LITIGATION
The Company is not, and has not in the last three years, been:
(a) party to any investigation, prosecution, litigation, arbitration,
proceedings or any other form of mediation or dispute resolution
(except as plaintiff in normal debt collection proceedings); or
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(b) subject to any investigation by any Public Authority.
11.2 NO CAUSE OF ACTION
There is no cause of action relating to the Company or the Assets that
could or might be used to commence legal proceedings, either civil or
criminal.
11.3 NO PROCEEDINGS
There are no enquiries pending before or threatened by, any Public
Authority, and in particular the Company is not involved in any dispute
with the Commissioner of Inland Revenue.
12. STATUTORY RECORDS
12.1 ALL RECORDS KEPT
The Company holds all accounting and other records which it is required
by law to retain either indefinitely or for a particular period or
periods and such records are properly and fully maintained.
12.2 DOCUMENTS OF TITLE
All documents of title, or documents that otherwise evidence title, to
the Assets are in the Company's possession or under the control of the
Company.
13. EMPLOYEES
13.1 FULL DISCLOSURE
The Vendors' Representative has provided to the Purchaser in Agreed Form,
the following details of each employee of the Company:
(a) all of the terms and conditions of the employment;
(b) all benefits provided (including discretionary benefits);
(c) details of any applicable redundancy policies;
(d) details of length of service;
(e) accrued entitlements to leave (including, without limitation,
annual leave, special leave (as defined in the Holidays Act 1981)
and long service leave); and
(f) details of any employee who has given or received notice of
termination of employment.
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13.2 NO DISPUTES WITH EMPLOYEES
The Company is not involved in any personal grievance, wrongful dismissal
claim, dispute, or any other claim with any of its employees, or former
employees, or any person representing any employee or former employee. No
event has occurred which might give rise to such a claim.
13.3 HEALTH AND SAFETY
The Company is not involved in any health and safety investigation by any
Public Authority nor have any events occurred which might give rise to
any audit, prosecution, investigation or claim related to health and
safety.
13.4 ACC RATING
The Company's experience rating under the Accident Rehabilitation and
Compensation Insurance (Experience Rating) Regulations 1993 has not led
to its basic ACC employer premium being increased or loaded in the past
or in the current premium liability year. To the Vendor's knowledge,
there is no event that is likely adversely to affect the experience
rating attributable to the Company.
13.5 SUPERANNUATION
There is no claim for, nor is the Company under any legal liability to
pay, any superannuation, pension, retirement, death, disability, employee
insurance premium or any other similar payment to any past or present
director, employee or contractor of the Company or any of their families
or dependants and no such pension or payment is now being paid
voluntarily.
14. TAXATION
14.1 FULL PROVISION
The Financial Statements make full provision or reserve for all taxation
liable to be assessed on the Company or for which it may be accountable,
including in particular (but without limitation) taxation of profits,
gains, income, receipts, benefits and other items subject to taxation for
any period ending on or before, and for any transactions or events
occurring on or before the Balance Date.
14.2 TAXATION LIABILITY AFTER THE BALANCE DATE
All of the Company's liability for taxation in respect of the period from
the Balance Date to the Completion Date has been incurred in the ordinary
course of business.
14.3 NO DEDUCTION DISALLOWED
Since the Balance Date, the Company has not paid or agreed to make any
payment or transfer which would not be allowable as a deduction in
computing the profits of the Company in the relevant financial year for
taxation purposes, other than in relation to the purchase of fixed assets
in respect of which a depreciation allowance is available to the Company
under section EG 1 of the Income Tax Act.
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14.4 ALL DEDUCTIONS MADE
Since Balance Date the Company has:
(a) made all appropriate deductions from payments made by it and all
consequent payments due as a result to the Inland Revenue
Department and other relevant authorities; and
(b) remitted the amount of these deductions to the Inland Revenue
Department or any other relevant authority.
14.5 PROVISIONAL TAXATION PAID
Since Balance Date the Company has made and will make payment in full
when due to the Inland Revenue Department or any other relevant authority
for each instalment of provisional tax of the Company in respect of
periods commencing on or before Completion, together with any additional
tax payable thereon.
14.6 NO TAXATION RELIEF REFUSED
No transaction or event has occurred or arrangement been entered into in
consequence of which the Company:
(a) has or may be deprived of relief otherwise available to it; or
(b) is or may be held liable for any taxation relating to any period
up to Completion, including taxation primarily chargeable against
some other company or person (whether by reason of any such other
company being or having been a member of the same group of
companies or otherwise)
for which provision has not been made in the Financial Statements or if
occurring or entered into after the Balance Date has been incurred
otherwise in the ordinary course of business.
14.7 ALL RETURNS MADE
The Company has made all returns and supplied all information to the
Inland Revenue Department, the Customs Department and other relevant
authorities as is required by law. All returns and information supplied
were correct and made on a proper basis and are not the subject of any
dispute. The Company has kept and preserved those records as are required
to be kept and preserved for the purpose of taxation and any Tax Act.
14.8 RESIDENCE
The Company is a tax resident in New Zealand and not in any other country
or jurisdiction and has and has had no branch, agency, place of business
or permanent establishment outside New Zealand which may result in the
Company being subject to tax in that other country.
14.9 G.S.T. REGISTRATION
The Company:
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(a) is a registered person for the purposes of the Goods and Services
Tax Xxx 0000;
(b) has complied in all respects with that Act; and
(c) is not in default of any obligation to make any payment or return
or notification under that Act.
14.10 NO TAXATION EVASION
The Company has not at any time:
(a) obtained or sought to obtain a taxation advantage through any
fraud or evasion; or
(b) obtained a taxation advantage from any arrangement to which
section BG 1 of the Income Tax Act or section 76 of the Goods and
Services Tax Xxx 0000 applies; or
(c) made or entered into any arrangement, undertaking or scheme which
was at the time it was entered into a sham or fiscal nullity.
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