Exhibit 2.1
SHARE PURCHASE AGREEMENT
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This Share Purchase Agreement (the "Agreement") is made on December 31,
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1998 by and among Vertel Corporation, a California corporation ("Seller"),
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Newbridge (Barbados) Corporation, a corporation organized under the laws of
Barbados ("Purchaser"), and Sonoma Systems, a California corporation (the
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"Company").
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In consideration for the promises and covenants made herein, the
sufficiency and adequacy of which are hereby acknowledged, the parties hereby
agree as follows:
1. Purchase and Sale of Stock.
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1.1 Sale of Stock.
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Subject to the terms and conditions of this Agreement, Purchaser
agrees to purchase at the Closing (as defined below) and Seller agrees to sell
to Purchaser at the Closing, 1,691,123 shares of the Company's Series B
Preferred Stock (the "Series B Shares") and 3,508,877 shares of the Company's
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Series C Preferred Stock (the "Series C Shares"), at a purchase price of U.S.
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$1.989 per share, for the aggregate purchase price of U.S. $10,342,800. The
Series B Shares and Series C Shares shall be hereinafter collectively referred
to as the "Stock".
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1.2 Closing; Delivery.
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(a) The closing of the purchase and sale of the Stock shall take place
at the offices of Xxxxxx Xxxxxx White & XxXxxxxxx, 000 Xxxxxxxxxx Xxxxxx, Xxxx
Xxxx, Xxxxxxxxxx 00000, on December 31, 1998 (the "Closing") or at such other
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time and place as Seller and Purchaser mutually agree upon, orally or in writing
(the date of the Closing is hereinafter referred to as the "Closing Date").
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(b) At the Closing, Seller shall deliver to Purchaser certificates
representing the Stock being purchased thereby and appropriate stock powers duly
executed transferring the Stock to the Purchaser against payment of the purchase
price therefor by wire transfer to the Seller's bank account.
2. Representations and Warranties of Seller. Seller hereby represents and
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warrants to Purchaser and the Company that:
2.1 Organization, Good Standing and Qualification. Seller is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all requisite corporate power and authority
to carry on its business in each jurisdiction, where the failure to be in good
standing or the failure to
have such power or authority could have a material adverse effect on the
business, properties, assets, condition or prospects of Seller.
2.2 Authorization. All corporate action on the part of Seller
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necessary for the authorization, execution and delivery of this Agreement, the
performance of all obligations of Seller hereunder have been taken or will be
taken prior to the Closing, and the Agreement, when executed and delivered by
Seller, shall constitute a valid and legally binding obligation of Seller,
enforceable against Seller in accordance with its terms except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other laws of general application affecting enforcement of
creditors' rights generally, and as limited by laws relating to the availability
of specific performance, injunctive relief, or other equitable remedies.
2.3 Governmental Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
Seller is required in connection with the consummation of the transactions
contemplated by this Agreement, which consent, approval or authorization has not
been obtained.
2.4 Litigation. There is no action, suit, proceeding or
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investigation pending or, to Seller's knowledge, currently threatened against
Seller or with respect to the Seller's officers or directors, that questions the
validity of the Agreement or the right of Seller to enter into them, or to
consummate the transactions contemplated hereby.
2.5 Compliance with Other Instruments. The execution, delivery and
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performance of the Agreement and the consummation of the transactions
contemplated hereby (i) will not result in any violation or be in conflict with
any provision of Seller's articles of incorporation, bylaws or other equivalent
charter documents, (ii) will not result in any violation or be in conflict with
any provision of federal, state or local law, statute, rule or regulation, and
(iii) will not constitute, with or without the passage of time and giving of
notice, either a default under any such provision, instrument, judgment, order,
writ, decree or contract or an event which results in the creation of any lien,
charge or encumbrance upon the Stock.
2.6 Disclosure. Seller has fully provided Purchaser with all the
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information that Purchaser or its representatives has requested from Seller in
writing for deciding whether to acquire the Stock. No representation or warranty
of Seller contained in this Agreement, any certificate furnished or to be
furnished to Purchaser by Seller at Closing, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made.
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2.7 Voting Rights. Except pursuant to the Amended and Restated
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Rights Agreement dated as of December 14, 1998 by and among the Company, Seller
and the Company's shareholders (the "Right Agreement"), Seller is not subject to
any voting agreements or arrangements with respect to the voting of the Stock.
2.8 Registration Rights. Upon consummation of the transactions
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contemplated hereby, Purchaser shall be deemed to be a "Holder" under the Rights
Agreement.
2.9 Title to Stock. Seller owns the Stock free and clear of any
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adverse claims, mortgages, liens, loans and encumbrances. Upon consummation of
the transactions contemplated hereby, Purchaser will own the Stock free and
clear of all adverse claims, mortgages, liens, loans and encumbrances. There are
no pre-emptive rights, rights of first refusal or similar rights or obligations
relating to the Stock (other than under the Rights Agreement).
3. Representations and Warranties of the Purchaser. Purchaser hereby
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represents and warrants to Seller and the Company that:
3.1 Organization, Good Standing and Qualification. Purchaser is a
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corporation duly organized, validly existing and in good standing under the laws
of Barbados and has all requisite corporate power and authority to carry on its
business in each jurisdiction where the failure to be in good standing or the
failure to have such powers or authority could have an material adverse effect
on the business, operations, assets, condition or prospects of Purchaser.
3.2 Authorization. Purchaser has full power and authority to enter
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into this Agreement. The Agreement, when executed and delivered by Purchaser,
will constitute a valid and legally binding obligation of Purchaser, enforceable
in accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and any other
laws of general application affecting enforcement of creditors' rights
generally, and as limited by laws relating to the availability of a specific
performance, injunctive relief, or other equitable remedies.
3.3 Restricted Securities. Purchaser understands that the Stock has
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not been, and will not be, registered under the Securities Act, by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of Purchaser's representations as expressed herein. Purchaser
understands that the Stock are "restricted securities" under applicable U.S.
federal and state securities laws and that, pursuant to these laws, Purchaser
must hold the Stock indefinitely unless the Stock is registered with the
Securities and Exchange Commission (the "SEC") and qualified by state
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authorities, or an exemption from such registration and qualification
requirements is
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available. Purchaser acknowledges that the Company has no obligation to register
or qualify the Stock for resale except as set forth in the Rights Agreement.
Purchaser further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Stock, and on requirements relating to the Company which are outside of
Purchaser's control, and which the Company is under no obligation and may not be
able to satisfy.
3.4 No Public Market. Purchaser understands that no public market now
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exists for any of the securities issued by the Company, and that the Company has
made no assurances that a public market will ever exist for the Stock.
3.5 Legends. Purchaser understands that the Stock, and any
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securities issued in respect of or exchange for the Stock, may bear one or all
of the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933."
(b) Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by the certificate so
legended.
3.6 Accredited Investor. Purchaser is an accredited investor as
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defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
3.7 Foreign Investor. As a Barbados corporation, Purchaser
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represents and warrants that it has satisfied itself as to the full observance
of the laws of its jurisdiction in connection with the purchase of the Stock,
including (i) the legal requirements within its jurisdiction for the purchase of
the Stock, (ii) any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other consents that may need to be obtained, and (iv)
the income tax and other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale or transfer of the Stock. Purchaser's
purchase and payment for and continued beneficial ownership of the Stock, will
not violate any applicable securities or other laws of Purchaser's jurisdiction.
3.8 Governmental Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any
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federal, state, or local governmental authority on the part of Purchaser is
required in connection with the consummation of the transactions contemplated by
this Agreement, which consent, approval or authorization has not been obtained.
3.9 Purchase Entirely for Own Account. This Agreement is made with
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the Purchaser in reliance upon the Purchaser's representation to the Company and
to the Seller, which by the Purchaser's execution of this Agreement, the
Purchaser hereby confirms, that the Stock to be acquired by the Purchaser will
be acquired for investment for the Purchaser's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that the Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, the Purchaser further represents that the Purchaser does not
presently have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to any third
person, with respect to any of the Stock. The Purchaser has not been formed for
the specific purpose of acquiring the Stock.
3.10 Disclosure of Information. The Purchaser has had the
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opportunity to perform due diligence and ask questions of the Company's
management in connection with transactions contemplated hereby. Purchaser
believes that it, or its representatives, has received all information it has
requested and believes is necessary for evaluating the risks and merits of
acquiring the Stock. Purchaser understands and acknowledges that Seller is not
making any representation or warranty as to the accuracy, completeness or
veracity of any written information or documents relating to the Company (i)
provided to Purchaser by the Company or its representatives or (ii) provided by
Seller or its representatives and not prepared by Seller or its representatives.
3.11 Rights Agreement. Purchaser hereby acknowledges receipt of a
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copy of the Rights Agreement and agrees to be bound by all applicable terms and
conditions therein that relate to a "Holder" (as defined therein.).
4. Representations and Warranties of the Company. The Company hereby
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represents and warrants to Purchaser and Seller that:
4.1 Authorization. All corporate action on the part of the Company
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necessary for the authorization, execution and delivery of this Agreement, the
performance of all obligations of the Company hereunder have been taken or will
be taken prior to the Closing, and the Agreement, when executed and delivered by
the Company, shall constitute a valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws of general application affecting
enforcement of creditors' rights generally,
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and as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
4.2 Governmental Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, which consent, approval or authorization has not
been obtained.
4.3 Litigation. There is no action, suit, proceeding or investigation
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pending or, to the Company's knowledge, currently threatened against the Company
or with respect to the Company's officers or directors, that questions the
validity of the Agreement or the right of the Company to enter into it, or to
consummate the transactions contemplated hereby.
4.4 Compliance with Other Instruments. The execution, delivery and
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performance of the Agreement and the consummation of the transactions
contemplated hereby or thereby (i) will not result in any violation or be in
conflict with any provision of the Company's articles of incorporation, bylaws
or other equivalent charter documents, (ii) will not result in any violation or
be in conflict with any provision of federal, state or local law, statute, rule
or regulation, and (iii) will not constitute, with or without the passage of
time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event which results
in the creation of any lien, charge or encumbrance upon the assets of the
Company.
4.5 Status as "Holder" under the Rights Agreement. Upon consummation
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of the transactions contemplated hereby, Purchaser shall be deemed to be a
"Holder" under the Rights Agreement.
4.6 Amendment to the Articles of Incorporation. The Amended and
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Restated Articles of Incorporation of the Company attached hereto as Exhibit 4.6
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have (i) been duly adopted and approved by the Board of Directors of the Company
and its shareholders, and (ii) been filed with the Secretary of State of the
State of California.
4.7 Company Representation and Warranties. In addition to the
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representations and warranties made by the Company in this Section 4 of this
Agreement, the Company hereby makes the representations and warranties contained
in Exhibit 4.7 hereto to Purchaser. The Company further represents and warrants
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to Purchaser that (i) each such representation and warranty is true and correct
as of the date hereof, and (ii) there has been no material change in the
Company's business, condition (financial or otherwise), assets, properties,
results of operations or prospects since November 12, 1998.
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5. Conditions of the Purchaser's Obligations at Closing. The obligations
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of Purchaser to Seller under this Agreement are subject to the fulfillment, on
or before the Closing, of each of the following conditions, unless otherwise
waived by Purchaser:
5.1 Representations and Warranties. The representations and
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warranties of Seller contained in Section 2 and the representations of the
Company contained in Section 4 shall be true and correct in all material
respects on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing.
5.2 Performance. All covenants, agreements and conditions contained
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in this Agreement to be performed by Seller and the Company on or prior to
Closing shall have been performed or complied with in all material respects.
5.3 Qualifications. All authorizations, approvals or permits, if
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any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful sale of the Stock
pursuant to this Agreement shall be obtained and effective as of Closing. No
stop order or other order enjoining the sale of the Stock shall have been issued
and no proceedings for such purpose shall be pending or, to the knowledge of
Seller, threatened by the SEC, the California Commissioner of Corporations, or
similar of any other state having jurisdiction over this transaction. At the
time of the Closing, the sale of the Stock shall be legally permitted by all
laws and regulations to which the Purchaser, the Company and Seller are subject.
5.4 Opinion of Seller's Counsel. Purchaser shall have received from
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Xxxxxxxx, Xxxxxxxxxx & Xxxxx LLP, special counsel for Seller, an opinion, dated
as of Closing, in substantially the form of Exhibit 5.4.
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5.5 Waiver of Right of First Refusal. The Company and at least a
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majority of the Holders (as such term is defined in the Rights Agreement) shall
have executed and delivered a waiver substantially in the form attached hereto
as Exhibit 5.5.
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5.6 Amendment of Articles of Incorporation. The Amended and Restated
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Articles of Incorporation of the Company attached hereto as Exhibit 4.6 shall
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have been filed with the Secretary of Sta te of the State of California.
5.7 Delivery of Stock. Seller shall have delivered to
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Purchaser stock certificates representing the Stock along with appropriate stock
powers duly executed by an authorized officer of Seller. The Company's transfer
agent shall have noted the transfer of the Stock from Seller to Purchaser on the
Company's stock transfer books.
6. Conditions of Seller's Obligations at Closing. The obligations of
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Seller to Purchaser under this Agreement are subject to the fulfillment, on or
before the Closing, of each of the following conditions, unless otherwise waived
by Seller:
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6.1 Representations and Warranties. The representations and
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warranties of Purchaser contained in Section 3 shall be true and correct in all
material respects on and as of Closing with the same effect as though such
representations and warranties had been made on and as of the Closing.
6.2 Performance. All covenants, agreements and conditions contained
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in this Agreement to be performed by Purchaser on or prior to the Closing shall
have been performed or complied with in all material respects.
6.3 Qualifications. All authorizations, approvals or permits, if any,
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of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful sale of the Stock pursuant
to this Agreement shall be obtained and effective as of the Closing. No stop
order or other order enjoining the sale of the Stock shall have been issued and
no proceedings for such purpose shall be pending or, to the knowledge of
Purchaser, threatened by the SEC, the California Commissioner of Corporations,
or similar officer of any other state having jurisdiction over this transaction.
At the time of the Closing, the sale of the Stock shall be legally permitted by
all laws and regulations to which Purchaser, the Company and the Seller are
subject.
6.4 Payment of Purchase Price. Purchaser shall have delivered to
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Seller the entire purchase price set forth in Section 1.1 hereof via wire
transfer of immediately available funds.
7. Miscellaneous.
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7.1 Survival of Representation, Warranties and Covenants. tHE
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warranties, representations and covenants of each party contained in or made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement, any investigation made by Purchaser, and the Closing of the
transactions contemplated hereby for a period of two years and shall in no way
be affected by any investigation of the subject matter thereof made by or on
behalf of such party unless such party had actual knowledge of a breach of such
warranty, representation or covenant prior to the Closing Date and chose to
consummate the transactions contemplated hereby despite such actual knowledge.
All statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of any party to this Agreement pursuant
hereto shall be deemed to be representations and warranties by such party
hereunder as of the date of such certificate or instrument.
7.2 Knowledge Defined. For purposes of this Agreement, with respect
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to each party hereto, knowledge shall mean the knowledge of such party's
officers and directors.
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7.3 Transfer; Successors and Assigns. The terms and conditions of
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this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.4 Governing Law. This Agreement and all acts and transactions
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pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
7.5 Counterparts. This Agreement may be executed in two counterparts,
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each of which shall be deemed an original and all of which together shall
constitute one instrument.
7.6 Titles and Subtitles. The titles and subtitles used in this
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Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.7 Notices. Any notice required or permitted by this Agreement shall
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be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or sent by telegram or fax, or forty-eight
(48) hours after being deposited in the U.S. mail, as certified or registered
mail, with postage prepaid, addressed to the party to be notified at such
party's address as set forth on the signature pages hereto, or as subsequently
modified by written notice.
7.8 Finder's Fee. Except for the fees of BancBoston Xxxxxxxxx
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Xxxxxxxx ("Xxxxxxxxx Xxxxxxxx"), which has acted as financial advisor to
Purchaser in connection with the transactions contemplated hereby, each of
Purchaser and Seller represent that it is not, nor will it be, obligated for any
finder's fee or commission in connection with the transactions contemplated by
this Agreement. The Company represents that it is not nor will it be, obligated
for any finder's fee or commission in connection with the transactions
contemplated by this Agreement. Seller and Purchaser each agree to indemnify and
to hold harmless each other and the Company from any liability for any
commission or compensation in the nature of a finder's fee (and the costs and
expenses of defending against such liability or asserted liability) for which
such party or any of its officers, employees, or representatives is responsible.
7.9 Fees and Expenses. Seller and Purchaser each hereby agrees to pay
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Xxxxxxxxx Xxxxxxxx $250,000 of its $500,000 fee in connection with the services
provided by them regarding the transactions contemplated hereunder. Except for
such
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fees, each party shall bear its own costs and expenses related to the
transaction contemplated by this Agreement.
7.10 Attorney's Fees. If any action at law or in equity (including
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arbitration) is necessary to enforce or interpret any of the terms of the
Agreement, the prevailing party shall be entitled to reasonable attorney's fees,
costs and necessary disbursements in addition to any other relief to which such
party may be entitled.
7.11 Amendments and Waivers. Any term of this Agreement may be
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amended (either generally or in a particular instance, either retroactively or
prospectively, and either for a specified period of time or indefinitely), with
the written consent of Seller, Purchaser and the Company.
7.12 Severability. If one or more provisions of this Agreement are
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held to be unenforceable under applicable law, then (a) such provision shall be
excluded from this Agreement, (b) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (c) the balance of the
Agreement shall be enforceable in accordance with its terms.
7.13 Delays or Omissions. No delay or omission to exercise any right,
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power or remedy accruing to any party under this Agreement, upon any breach or
default of any other party under this Agreement, shall impair any such right,
power or remedy of such non-breaching or non-defaulting party nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, of any similar breach or default thereafter occurring; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of any party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
7.14 Entire Agreement. This Agreement, the documents referred to
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herein, the Rights Agreement and the letter agreement between Purchaser and the
Company dated as of the date hereof constitute the entire agreement among the
parties hereto pertaining to the subject matter hereof, and any and all other
written or oral agreements relating to the subject matter hereof existing
between the parties hereto are expressly canceled.
[Signature Pages Follow]
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The parties have executed this Share Purchase Agreement as of the date
first written above.
SELLER:
VERTEL CORPORATION
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
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(print)
Title: President & C.E.O.
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Address: 0000 Xxxxxxx Xxxx., Xxx. 0000
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Xxxxxxxx Xxxxx, XX 00000
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PURCHASER:
NEWBRIDGE (BARBADOS)
CORPORATION
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
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(print)
Title: Attorney in fact
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Address: 000 Xxxxx Xx.
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Xxxxxx, Xxxxxxx
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THE COMPANY:
SONOMA SYSTEMS
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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(print)
Title: Vice President Finance,
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Chief Financial Officer
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Address:
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