EXHIBIT 2.1
THIS AGREEMENT is made the 4th day of August, 1999
BETWEEN
(1) THE PERSONS whose names and addresses are set out in schedule 1 (the
"Vendors"); and
(2) EXTENDED SYSTEMS INCORPORATED, a corporation incorporated in Delaware, the
principal place of business of which is situated at 0000 Xxxxx Xxxxxx
Xxxxxx Xxxxx Xxxxx XXX (the "Purchaser").
INTRODUCTION
(A) Oval (1415) Limited ("the Company") is a private company limited by shares
incorporated in England and Wales, further details of which are set out in
part A of schedule 2.
(B) The Company is, by virtue of the Advance Exchange Agreement, the registered
holder of the entire issued share capital of Advance Systems Limited.
(C) The Company is, by virtue of the Zebedee Exchange Agreement, the registered
holder of the entire issued share capital of Zebedee Software Limited.
(D) Subject to the terms and conditions of this agreement, the Vendors have
agreed to sell (in the proportions set out opposite their names in schedule
1) and the Purchaser has agreed to purchase all of the issued share capital
of the Company.
AGREED TERMS
2. DEFINITIONS AND INTERPRETATION
2.1 In this agreement and the introduction and schedules the following words
and expressions have the following meanings:
"ACCOUNTING REQUIREMENTS" means the accounting requirements of the
Companies Act, SSAPs, FRSs, abstracts of the Urgent Issues Task Force, any
other requirement of a United Kingdom accounting body having mandatory
effect, FREDs and other generally accepted accounting principles and
practices in the United Kingdom;
"ACCOUNTS" means the audited accounts of each of the Subsidiaries for the
financial period ended on the Balance Sheet Date including the auditors'
and directors' reports, the balance sheet, the audited profit and loss
account and the notes thereto;
"ADVANCE EXCHANGE AGREEMENT" means an agreement dated 27 July 1999 attached
as Appendix A by virtue of which certain of the Vendors have exchanged
their shares in ASL in consideration for the issue of shares in the
Company;
"AFFILIATE" means, in respect of any person:
(a) any person connected with such person (and "connected with" bears the
meaning set out in section 839 of ICTA); and/or
(b) any company under the control of such person (and "control" bears the
meaning set out in section 840 of ICTA); and/or
(c) any Associated Company of such person;
"ASL" means Advance Systems Limited (company number 2314556);
"ASSOCIATED COMPANY" has the meaning set out in section 416 of ICTA;
"BALANCE SHEET DATE" means 30 September 1998 (in relation to Advance
Systems Limited) and 31 January 1999 (in relation to Zebedee Software
Limited);
"XXXXXX XXXXXXX LETTER" means a letter in the agreed form from the Vendors'
Accountants to Advance Systems Limited confirming the terms of the
Sub-Lease;
"BUSINESS" means business carried on at Completion by the Company and/or
by either of the Subsidiaries;
"BUSINESS DAY" means any day other than a Saturday, Sunday or any day which
is a public holiday in England or the United States of America;
"CAA" means the Capital Xxxxxxxxxx Xxx 0000;
"COMMISSION" means the United States Securities and Exchange Commission (or
any other US federal agency at the relevant time administering the Exchange
Act or the Securities Act, whichever is the relevant statute for the
particular purpose);
"COMPANIES ACT" means the Companies Xxx 0000;
"COMPANY IPRS" means the Company Owned IP and the Company Licensed IPRs;
"COMPANY LICENSED IPRS" means all rights arising under Intellectual
Property other than Company Owned IP, which are held by the Company or
either of the Subsidiaries under licence from third parties, including
those identified as such in schedule 3;
"COMPANY OWNED IP" means all Intellectual Property owned by the Company or
either of the Subsidiaries, including that identified as such in schedule
3, and all rights arising thereunder;
"COMPLETION" means completion of the purchase of the Sale Shares in
accordance with the Parties' respective obligations under clause 6;
"COMPLETION DATE" means the date upon which Completion occurs;
"COMPUTER SYSTEM" means the computer systems, including all associated
equipment, hardware, firmware, software and accessories used in the
business of any Group Company including as part of its telecommunications
systems and/or internet presence;
"CONFIDENTIAL INFORMATION" means all technical, commercial, financial and
other confidential information, trade secrets, techniques and Know-how used
in and relating to the business of any Group Company and/or the Products
and all information (in written, graphic or other form, and whether or not
recorded in permanent form) relating to the following which is not in the
public domain and which is in the Group Companies' possession or under
their control:
(a) all processes and information concerning the Company's and/or either
of the Subsidiaries' products and the development of products and the
product development process including, but not limited to, development
process schedules, tools, plans, laboratory notebooks, source books,
listings, codes, and all other matters relating to product
development;
(b) computer programs used in the operation of the Company's and/or either
of the Subsidiaries' businesses and all data stored on computers or on
property used in conjunction with the operation of computers;
(c) information concerning the Company's and/or either of the
Subsidiaries' business processes, methods, policies, business forms,
accounts and each document or computer program or memory containing
all or any portion of the same;
(d) information and data concerning the cost of products sold by the
Company and/or either Subsidiary and each document and computer
program or memory containing all or any portion of the same;
(e) information concerning expiration dates of contracts with customers
and suppliers and information concerning when customers' jobs or
orders with the Company and/or either of the Subsidiaries or for the
Company's or either of the Subsidiaries' products come up for rerun or
rebid and each document and computer program or memory containing all
or any portion of the same;
(f) the processing, producing, manufacturing and printing techniques of
the Company and/or either of the Subsidiaries and each document and
computer program or memory containing all or any portion of the same;
(g) processing, producing, and printing techniques, patterns, machinery,
utensils, arts and formulas used by the Company and/or either of the
Subsidiaries in manufacturing, processing, and producing its products
and each document and computer program or memory containing all or any
portion of the same;
(h) each document and computer program or memory containing all or any
portion of information pertaining to suppliers of the Company and/or
either of the Subsidiaries;
(i) information concerning jobs, service and work processed, printed,
manufactured or performed for customers and each document and computer
program or memory containing all or any portion of the same;
(j) each document and computer program or memory containing all or any
portion of information concerning characteristics of customers helpful
in securing and retaining the business of customers or potential
customers;
(k) information concerning sources and potential sources for the Company
and/or either of the Subsidiaries to secure work done for customers
which work either cannot or is not done by the Company and/or either
of the Subsidiaries for its customers but which the relevant Group
Company undertakes to have performed by others for its customers and
each document and computer program or memory containing all or any
portion of the same;
(l) calculations, plans, and compilations of information concerning the
Company's and/or either of the Subsidiary's customers, suppliers, and
methods of production, manufacturing and printing and all information
and data contained in or about accounts, customer lists, prospective
customers lists, quotes, production costs, contracts and agreements,
manuals, price lists, supplies, sales records, compilations of
information, diaries, books and records, computer printouts, samples,
files, orders, memoranda, correspondence, catalogues, equipment and
all records, documents and property of every kind concerning the
business of any Group Company and each document and computer program
or memory containing all or any portion of the same;
(m) all market research concerning the Company, either Subsidiary, or any
of their products;
(n) each and every other item which in law or equity is considered to be a
trade secret of the Company and/or a Subsidiary;
(o) marketing strategies and tactics;
(p) current activities and current and future plans relating to all or any
of research, development, production or sales including the timing of
all or any such matters; and
(q) pricing, credit policies, credit procedures, payment policies, payment
procedures and systems for the same whether of the Company, a
Subsidiary or of any customer or supplier;
"COSTS" means losses, costs (including legal costs on a full indemnity
basis), and expenses incurred to third parties in each case of any nature
whatsoever which are
reasonably incurred in connection with the item in question (and not, for
the avoidance of doubt, costs of the Purchaser in allocating its own staff
and other of its own resources in dealing with any of such items);
"CURRENT DATE" means, for any system such as (without limitation) a
computer system, at any given time when that system is operating, the date
which that system takes to be, and uses as, the current date at that
particular time;
"CUSTOMER" means any customer or client of any Group Company in connection
with the Restricted Business with whom any Group Company has traded during
the 24 month period immediately prior to Completion;
"CUSTOMER CONTRACTS" means the licence, maintenance, technical support and
other agreements relating to the Product between a Group Company and a
Customer in respect of the licensing of the Product as listed in
schedule 3;
"DEFERRED CONSIDERATION" means the sum of US$1,800,000 to be paid in
accordance with clause 3.1 and schedule 7;
"DEFERRED CONSIDERATION ACCOUNT" means an interest bearing escrow account
in the joint names of the Purchaser's Solicitors and the Vendors'
Solicitors;
"DEFERRED CONSIDERATION ACCOUNT INSTRUCTION LETTER" means a letter in the
agreed form from the Vendors and the Purchaser to the Purchaser's
Solicitors and the Vendors' Solicitors instructing them to set up the
Deferred Consideration Account;
"DISCLOSED" means fairly and accurately disclosed to the Purchaser in the
Disclosure Letter with sufficient detail to enable the Purchaser to be
reasonably aware of the impact on the Group Companies and the Purchaser of
the matter disclosed;
"DISCLOSURE LETTER" means the letter of even date with this agreement from
the Vendors to the Purchaser executed and delivered immediately before the
signing of this agreement disclosing exceptions to the Warranties;
"ENCUMBRANCE" means any mortgage, charge, security interest, lien, pledge,
hypothecation, assignment by way of security, right of pre-emption,
covenant, restriction, reservation, lease, trust, order, decree, judgment,
title defect (including retention of title claim), or conflicting claim of
ownership (whether or not perfected other than liens arising by operation
of law);
"ENVIRONMENT" has the meaning as defined in section 1(2) of the
Environmental Protection Xxx 0000;
"ENVIRONMENTAL LAWS" means all laws of the United Kingdom and elsewhere
relating to pollution or the protection of the Environment, or to health
and safety matters (including, laws relating to workers' and public health
and safety, to emissions, discharges or threatened releases of Hazardous
Materials into the Environment or to the production, processing,
distribution, management, use, treatment, storage, burial,
disposal, transport or handling of any Hazardous Materials) and all
bye-laws, codes, regulations, demands, notices and orders issued
thereunder;
"EXCHANGE ACT" means the Securities Xxxxxxxx Xxx 0000 as the same is in
effect in the United States of America;
"EXCHANGE SHARES" means 625,000 fully paid shares of common stock of
US$0.001 par value in the capital of the Purchaser;
"FREDS" means the financial reporting exposure drafts issued by the
Accounting Standards Board Limited;
"FRSS" means the financial reporting standards established by the
Accounting Standards Board Limited;
"GUARANTEE" means the guarantee in the agreed form from the Purchaser
guaranteeing ASL's obligation to make certain payments under the Service
Agreements;
"GROUP COMPANIES" means the Company and the Subsidiaries and "GROUP
COMPANY" means any of them;
"HAZARDOUS MATERIALS" means wastes, pollutants, contaminants, petroleum,
petroleum products, dangerous, hazardous or toxic substances and materials
(including liquids, solids, gases, ions and noise and substances prescribed
in schedules 4, 5 and 6 of the Environmental Protection (Prescribed
Processes and Substances) Regulations 1991) which may be harmful to human
health or to other life or the Environment;
"ICTA" means the Income and Corporation Taxes Xxx 0000;
"IHTA" means the Inheritance Tax Xxx 0000;
"INDEBTEDNESS" means all indebtedness whatsoever owing by the Company or
either of the Subsidiaries other than:
(a) normal trading debts to suppliers;
(b) finance lease indebtedness; and
(c) any liability to Taxation;
"INTELLECTUAL PROPERTY" means: all patents; registered designs; all
Know-how, trade secrets and confidential information; registered or
unregistered trademarks, service marks and applications therefor and all
other business names, brand names, devices, logos, get up and signs (and
whether or not registered or applied for) with all the goodwill associated
with or symbolised by any of the foregoing; all rights in internet domain
names; all other inventions (whether or not capable of protection by patent
or other form of registration); all copyright, rights in the nature of
copyright or its equivalent in the relevant jurisdiction, design rights,
moral rights and all other like rights in all parts of the world whether
present or vested future or contingent in any
software, object code, source code, database (including extraction rights),
interface, text, drawing, design, artwork, sound recording, film, video,
photograph, mould, three dimensional artistic work or any other material;
all other intellectual property rights throughout the world for the full
term of the rights concerned; and including: all registrations and pending
registrations relating to any such rights and the benefit of any pending
applications for any such registrations; all reversions, extensions and
renewals of such rights; and all accrued rights of action in relation to
such rights (including the right to xxx for and recover damages for past
infringements);
"KNOW-HOW" means technical, commercial and other information, experience,
knowledge, skill, know-how and techniques including formulae, processes,
specifications, trade secrets, test reports, operating and testing
procedures, listings, practices, instruction manuals and marketing methods;
"MANAGEMENT ACCOUNTS" means the management accounts of each Subsidiary in
the agreed form comprising the balance sheet as at the Management Accounts
Date and the profit and loss account for the period ended on that date;
"MANAGEMENT ACCOUNTS DATE" means 30 June 1999;
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System of the United States of America;
"OFFICER'S CERTIFICATE" means a certificate in the agreed form executed by
an officer of the Purchaser confirming the capacity of the Purchaser, and
the authority of its signatories, to enter into this and related
agreements;
"PRESS ANNOUNCEMENT" means the press announcement in the agreed form to be
made following Completion;
"PRODUCT" means the software in the product known as "ASL-Connect" as
marketed and licensed by ASL, including all previous versions of that
software, and all variants of that software (including that in the product
marketed as "IBM Mobile Connect"), and also (for the avoidance of doubt)
including all of the foregoing software in source code, object code and any
other form;
"PROPERTY" means the premises currently occupied by the Subsidiaries under
the Sub-Lease;
"PROSPECTIVE CUSTOMER" means any person, company, or organisation with whom
the Company or either of the Subsidiaries has been in communication with a
reasonable prospect of making a sale of the Product during the 24 month
period immediately prior to Completion;
"PURCHASER'S SOLICITORS" means Xxxxxx Xxxxxxx Xxxxxxx of Carmelite,
00 Xxxxxxxx Xxxxxxxxxx, Xxxxxxxxxxx, Xxxxxx XX0X 0XX;
"RESTRICTED BUSINESS" means the design, development, manufacture,
production, marketing, sale or delivery of software programs, products or
services relating to the server synchronisation of mobile information
devices;
"SALE SHARES" means all the ordinary issued shares of the Company listed in
column (3) of schedule 1;
"SECURITIES ACT" means the Securities Xxx 0000 as the same is in effect in
the United Sates of America;
"SERVICE AGREEMENTS" means the service agreements in the agreed form
between the Company and each of Xxxxxxxx Xxxxxxxxxx Xxxxxx, Xxxxxx Xxxxxxxx
Xxxxx and Xxxxxxx Xxx Xxxxxxx;
"SSAPS" means the statements of standard accounting practice adopted by the
Accounting Standards Board Limited;
"STOCK OPTION AGREEMENTS" means the option agreements in the agreed form to
be entered into on Completion between the Purchaser and each of Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxxxxx Xxxxxx and Xxxxxxx Xxx Xxxxxxx;
"SUB-LEASE" means the arrangement details of which are set out in
schedule 4;
"SUBSIDIARIES" means ASL and Zebedee Software Limited, company number
3023346, further details of which are set out in parts B and C of schedule
2;
"SUPPLIER" means any supplier (other than utilities in the supply of
services in the ordinary and normal course of their business to their
general body of customers) or sub-contractor of the Company and/or either
of the Subsidiaries in connection with the Business with whom the Company
and/or either of the Subsidiaries has traded during the 12 months
immediately prior to Completion;
"SUPPORTING MATERIAL" means:
(a) the user manuals relating to the Product, any training manuals,
upgrade information documents, marketing and product brochures;
(b) all functional and technical design documentation, programmer
documentation and all other documents (in electronic, hard copy or any
other format) relating to design or workings of the Product, and
including without limitation:
(i) all documentation of the overall architectural design of the
Product;
(ii) all descriptions of the design of each module contained in the
Product;
(iii) all descriptions of the data models used in both memory and on
disk for the Product;
(iv) all materials describing the function within the Product of the
Third Party Product Software;
(c) all information in existence used by and/or known to the Company or
either Subsidiary relating to the support and maintenance of the
Product, including details of all bugs known to the Vendors or any
employee of any Group Company in the Product or any of it and any work
to correct any such bugs;
(d) all other software, manuals, text, documents, designs, artwork,
photographs, information and other material devised or used in the
Business in relation to the Product (but not including the Third Party
Product Software or materials relating specifically to it); and
(e) all designs, drafts, documents and other works underlying any of the
items listed at (a) to (d) above
and including all items specifically detailed in schedule 3;
"TAXATION" means all forms of taxation, charges, duties, imposts, levies
and rates whenever imposed and whether of the United Kingdom or elsewhere
and whether chargeable directly or primarily against or attributable
directly or primarily to the Company or to either of the Subsidiaries or to
any other person, including without limitation income tax, withholding
taxes, corporation tax, advance corporation tax, capital gains tax, capital
transfer tax, inheritance tax, rates, water rates, value added tax, customs
duties, excise duties, community charges, stamp duty, stamp duty reserve
tax, national insurance, social security or other similar contributions,
together with any interest, penalty or fine in connection therewith;
"TAX COVENANTS" means the covenants on the part of the Vendors contained in
the Tax Deed;
"TAX DEED" means the tax covenant between the parties to this agreement in
the agreed form;
"TCGA" means the Taxation of Chargeable Gains Xxx 0000;
"THIRD PARTY PRODUCT SOFTWARE" means Third Party Software clearly
identified as such and listed in part H of schedule 3 as forming part of
the Product;
"THIRD PARTY SOFTWARE" means all computer programs and software owned by
persons other than the Company or either of the Subsidiaries;
"VAT" means value added tax;
"VATA" means the Value Added Tax Xxx 0000;
"VENDORS' ACCOUNTANTS" means Xxxxxx Xxxxxxx, of 00 Xxxxxxxx Xxxxxx,
Xxxxxxx, XX0 0XX;
"VENDORS' SOLICITORS" means Xxxxxxx Xxxxxx of 00 Xxxxx Xxxxxxxxx Xxxxxx,
Xxxxxxx XX0 0XX;
"WAIVERS" means letters in the agreed form from each of Xxxx Xxxxxxx and
Xxxxxxx Xxxxxx to ASL and the Purchaser pursuant to which both Xxxx Xxxxxxx
and Xxxxxxx Xxxxxx will waive certain rights connected with a sale by ASL
of its business or a sale of the shares in ASL;
"WARRANTIES" means the representations and warranties set out in
schedule 5;
"YEAR 2000 COMPLIANT" means, in relation to anything which performs any
task(s) or has any functionality (such as without limitation computer
software), that neither its performance nor its functionality is affected
by dates prior to, during or after the year 2000, and in particular:
(a) no value for Current Date will cause any interruption in operation of
the software;
(b) no value for any date element in any data used as input by the
software will cause any interruption in the operation of the software,
which will either correctly interpret the date element (where it is a
valid date) or else detect and report it as an invalid date and
continue processing accordingly;
(c) date-based functionality shall behave consistently for dates prior to,
during and after year 2000 and produce correct results in accordance
with the software's specifications;
(d) in all interfaces and data storage, the century in any date will be
specified either explicitly or by unambiguous algorithms or
inferencing rules; and
(e) Year 2000 will be recognised as a leap year;
"ZEBEDEE EXCHANGE AGREEMENT" means an agreement dated 28 July 1999 attached
as Appendix B by which certain of the Vendors have exchanged their shares
in Zebedee Software Limited in consideration for the issue of shares in the
Company.
2.2 In this agreement references to:
(a) any statute or statutory provision includes a reference to the same as
amended, re-enacted or consolidated and to any regulation, order,
instrument or subordinate legislation under the relevant statute or
statutory provision and, in relation to the Warranties, the provisions
of any earlier statute, statutory provision, regulation, order,
instrument or subordinate legislation of which the said reference is
itself an amendment or re-enactment or consolidation, save in each
case to the extent that, where applicable, any modification,
amendment, re-enactment or consolidation imposes more onerous
obligations on any party to this agreement than otherwise existed at
the date of this agreement;
(b) the singular includes a reference to the plural and vice versa;
(c) any clause, sub-clause or schedule is to a clause, sub-clause or
schedule (as the case may be) of or to this agreement;
(d) any gender includes a reference to all other genders;
(e) persons include individuals, companies, bodies corporate (wherever
incorporated or established or carrying on business), unincorporated
associations, governmental entities and partnerships and, in relation
to any party who is an individual, his legal personal
representative(s);
(f) the words "including", "include" and "in particular" shall be
construed as being by way of illustration only and shall not be
construed as limiting the generality of any foregoing words;
(g) documents "in the agreed form" are to documents in the form of the
draft agreed between the parties and initialled by the parties for the
purposes of identification.
2.3 In part F of schedule 5 reference to a section followed by a number is to a
section of ICTA, reference to a schedule with a number is to a schedule of
ICTA and reference to an Act followed by a year is to the Finance Act of
that year.
2.4 The introduction and schedules form part of this agreement and shall have
the same force and effect as if expressly set out in the body of this
agreement. Accordingly, any reference to this agreement shall include the
introduction and schedules.
3. SALE AND PURCHASE
3.1 Each of the Vendors with full title guarantee shall sell the number of Sale
Shares set out against such Vendor's name in schedule 1 and the Purchaser
shall purchase all right, title and interest in the Sale Shares with effect
from Completion.
3.2 The Sale Shares shall be sold free from all Encumbrances and together with
all rights to dividends and other distributions of whatsoever nature
declared after the date of this agreement in respect of the Sale Shares and
all other rights and advantages belonging to or accruing on the Sale Shares
as at and from that date.
3.3 The Purchaser shall not be obliged to complete the purchase of any of the
Sale Shares unless the purchase of all the Sale Shares is completed
simultaneously.
3.4 Each of the Vendors hereby irrevocably waives all or any pre-emption rights
which that Vendor may have pursuant to the Company's articles of
association or to any other agreement relating to the Sale Shares or
otherwise, so as to enable the sale of the Sale Shares to the Purchaser to
proceed free of any such pre-emption rights.
4. CONSIDERATION
4.1 The consideration for the sale of the Sale Shares shall (subject to the
terms of paragraph 18 of schedule 7 and to the provisions of the Deferred
Consideration Account Instruction Letter) comprise the sum of US$5,000,000
and the issue of the Exchange Shares and shall be satisfied as follows:
(a) as to US$3,200,000 in cash on Completion; and
(b) the Deferred Consideration shall be paid on Completion into the
Deferred Consideration Account in accordance with the provisions of
schedule 7 and the Deferred Consideration Account Instruction Letter;
and
(c) by the issue to the Vendors of the Exchange Shares on Completion ;
such cash sums and the Exchange Shares to be allocated amongst and paid
(subject to the provisions of schedule 7) or issued to the Vendors in the
amounts set out opposite their respective names in schedule 1, provided
that certain of the Exchange Shares shall on Completion be placed in escrow
in accordance with schedule 7 and the Deferred Consideration Account
Instruction Letter.
4.2 The Purchaser confirms that, save for the fact that the Exchange Shares are
not tradeable on NASDAQ following Completion, the Exchange Shares shall
rank pari passu in all respects with the existing fully paid shares of
common stock in the capital of the Purchaser.
4.3 The Purchaser agrees with the Vendors that, with a view to making available
the benefits of certain rules and regulations of the Commission which may
at any time permit the sale of the Exchange Shares to the public without
registration, the Purchaser shall use its best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all
times after the effective date on which the Purchaser becomes subject
to the reporting requirements of the Securities Act or the Exchange
Act, or any similar US statute and the rules and regulations
promulgated thereunder, all as the same shall be in effect at the
time;
(b) file with the Commission in a timely manner all reports and other
documents required of the Purchaser under the Securities Act and the
Exchange Act; and
(c) so long as the Vendors own any Exchange Shares, furnish to the Vendors
forthwith upon request a written statement by the Purchaser as to its
compliance with the reporting requirements of the said Rule 144 and of
the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Purchaser and such other reports and
documents of the Purchaser and other information in the possession of
or reasonably obtainable by the Purchaser as the Vendors may
reasonably request in availing themselves of any rule or
regulation of the Commission allowing the Vendors to sell any such
securities without registration.
4.4 Each Vendor hereby confirms that he is acquiring the Exchange Shares for
his or her own account and not with a view to their distribution within the
meaning of Section 2(11) of the Securities Act. No Vendor is a resident of
the United States of America, or otherwise a "U.S. Person" within the
meaning of Rule 902 under the Securities Act. Each Vendor acknowledges that
the Exchange Shares have not been registered under the Securities Act or
qualified under any applicable state securities law in reliance, in part,
on the representations and warranties of the Vendors set forth herein.
5. WARRANTIES AND INDEMNITY
5.1 The Vendors severally (subject to clause 4.2) represent and warrant to the
Purchaser in the knowledge that the Purchaser is entering into this
agreement in reliance upon the accuracy of each of the Warranties that
(subject to the limitations contained in clause 5) the Warranties are true
and accurate.
5.2 The liability of:
(a) Xxxxxx Xxxxxxxx Xxxxx and Xxxxx Xxxxxxxx Xxxxxxxx; and
(b) Xxxxxxxx Xxxxxxxxxx Xxxxxx and Xxxxxx Xxxxxxxxx Xxxxxx,
pursuant to clause 4.1 shall as between those Vendors specified in (a)
above be joint and several, and as between those Vendors specified in (b)
above be joint and several.
5.3 If there is a breach of any of the Warranties then, in respect of each such
breach and without prejudice to the right of the Purchaser to claim damages
on any basis available to it or to any other right or remedy available to
the Purchaser, the Purchaser shall be entitled to claim for:
(a) such sum as would, if paid to the relevant Group Company, put such
Group Company into the position which (after payment of any Taxation
payable in respect of the receipt of such sum) would have existed if
there had been no such breach;
or (at the option of the Purchaser (such option to be exercisable
separately in respect of each such breach) as an alternative to making
a claim under sub-clause 4.3(a)):
(b) such sum as is equal to the difference between the value of the Sale
Shares at Completion after taking into account that the fact or matter
giving rise to such breach was not as warranted and the value which
the Sale Shares would have had at that date if the fact or matter
giving rise to such breach had been as warranted;
plus in either case all Costs incurred by the Purchaser or any Group
Company in connection with such breach of the Warranties.
5.4 The benefit of the Warranties may be assigned in whole or in part by the
Purchaser to any Associated Company of the Purchaser provided that:
(a) no assignee shall be entitled to a greater sum of damages or other
compensation than the sum to which the Purchaser would have been
entitled had it not assigned the benefit of the Warranties; and
(b) if the Associated Company to which the benefit of the Warranties has
been assigned ceases to be an Associated Company of the Purchaser, the
Purchaser shall procure that, prior to such cessation, the company to
which the benefit of the Warranties has been assigned re-assigns such
benefit either to the Purchaser or to another Associated Company of
the Purchaser.
5.5 Each of the Warranties shall be construed as a separate and independent
warranty and (save as expressly provided to the contrary in clause 5) shall
not be governed, limited or restricted by reference to or inference from
any other terms of this agreement, the Tax Deed or any other Warranty.
5.6 Any payments made by the Vendors to the Purchaser in respect of claims
under the Warranties or under the Tax Covenants shall so far as possible be
treated by the parties as a reduction in the cash element of the
consideration for the Sale Shares.
5.7 Where any of the Warranties is qualified by the expression "so far as the
Vendors are aware" or any similar expression, each of the Vendors shall be
deemed to have the awareness of each other Vendor and to have such
additional awareness as the Vendors would have after having made diligent
and careful enquiry (including diligent and careful enquiry of the Vendors'
Accountants in relation to tax and accounting matters, and the Vendors'
Solicitors in relation to legal matters).
5.8 Each of the Vendors hereby agrees with the Purchaser (for itself and as
trustee for each Group Company) to waive any right which he may have in
respect of any misrepresentation, inaccuracy or omission in or from any
information or advice supplied or given by any Group Company or any of
their respective officers and employees or advisers in enabling the Vendors
to give the Warranties, to prepare the Disclosure Letter and to enter into
this agreement and undertakes not to make any claim in respect of such
reliance.
5.9 The rights and remedies of the Purchaser in respect of any breach of this
agreement shall not be affected by any investigation made by or on behalf
of the Purchaser into the affairs of any Group Company or actual or
constructive knowledge on the part of the Purchaser or its agents or
advisers or by any other event or matter whatsoever, except a specific and
duly authorised written waiver or release given by the Purchaser and except
as otherwise expressly provided in this agreement or in the Disclosure
Letter.
5.10 The Vendors shall indemnify the Purchaser and each Group Company and keep
indemnified the Purchaser and each Group Company against all Costs arising
under or in respect of any claim against any Group Company by any broker,
finder, financial
adviser or other person retained by any of the Vendors or any Group Company
in connection with this agreement or the transactions effected by this
agreement.
5.11 All sums payable by the Vendors under this agreement shall be paid free and
clear of all deductions or withholdings unless the deduction or withholding
is required by law, in which event the Vendors shall pay such additional
amount as shall be required to ensure that the net amount received by the
Purchaser (taking into account any tax credits received by the Purchaser in
consequence of such deduction or withholding) will equal the full sum which
would have been received by it had no such deduction or withholding been
required to be made.
5.12 If any payment made by the Vendors in relation to a claim for breach of
Warranty or pursuant to the Tax Deed will be or has been subject to
Taxation in the hands of the Purchaser, the Vendors shall pay to the
Purchaser 60% of such additional sum (after taking into account any
Taxation payable in respect of such additional sum and after taking into
account any tax credit received by the Purchaser following any deduction or
withholding pursuant to sub-clause 4.11) as will ensure that the Purchaser
receives and retains a net sum equal to the sum which it would have
received had the payment not been subject to Taxation, and the Purchaser
shall furnish the Vendors at the time it claims pursuant to this sub-clause
with all information regarding the Taxation payable that the Vendors
reasonably require in order to assess the validity of the Purchaser's
claim. The Purchaser shall use its reasonable endeavours to ensure that any
such liability to Taxation is the minimum possible.
5.13 The Vendors shall pay to the Purchaser the amount of any Taxation suffered
by the Purchaser as provided in sub-clause 4.12 on the fifth business day
before the date on which the Taxation is payable or, if later, five
Business Days following the date on which the Purchaser notifies the
Vendors of their liability to make such payment.
5.14 Where the Vendors are required to make a payment under sub-clause 4.12 the
Vendors may make the payment direct to the relevant tax authority within
the time period as provided in sub-clause 4.13 and subject to giving notice
to the Purchaser (at the time of making the relevant payment) of the fact
that such payment has been made.
6. LIMITATIONS
LIMITATIONS NOT TO APPLY
6.1 Notwithstanding any other provision of this agreement, no limitations of
any kind whatsoever shall apply to any claim under this agreement or under
the Tax Deed against the Vendors, or any of them:
(a) which is (or the delay in discovery of which is) the consequence of
any fraud, dishonesty or deliberate concealment on the part of any of
the Vendors, their agents or advisers; or
(b) which is the result of a breach of any Warranty in part A of
schedule 5.
TIME LIMITS
6.2 The rights of the Purchaser in respect of any breach of the Warranties
(other than the Warranties in part F (Tax) of schedule 5) shall (subject as
provided in sub-clause 5.8) only be enforceable if notice in writing
(giving in so far as may then be practicable the amount and details of the
claim) shall be given to the Vendors on or prior to 31 December 2001.
6.3 The rights of the Purchaser in respect of any breach or non-fulfilment of
any of the Warranties in part F (Tax) of schedule 5 and claims under the
Tax Deed shall (subject as provided in sub-clause 5.8) only be enforceable
if notice in writing (giving insofar as may then be practicable the amount
and details of the claim) shall be given to the Vendors on or before
31 December 2005.
DE MINIMIS
6.4 The Purchaser shall not be entitled to make any claim or claims (however
many in number) under the Warranties or the Tax Deed where the sum claimed
is less than L2,000, and any such claim or claims of less than L2,000 shall
be disregarded in computing the figure of L100,000 referred to in
sub-clause 5.5.
6.5 The Vendors shall not be liable in respect of any claim under the
Warranties or under the Tax Deed unless the aggregate cumulative liability
of the Vendors in respect of all such claims exceeds L100,000 (in which
event the Vendors shall be liable for the whole of such liability and not
merely for the excess).
MAXIMUM CLAIMS
6.6 Subject to sub-clause 5.1, the Purchaser shall not be entitled to recover
under the Warranties and the Tax Deed any sum in excess of the total amount
received by the Vendors as consideration for the Sale Shares (valuing for
these purposes each Exchange Share at the closing price for such share as
quoted on NASDAQ on the Business Day immediately prior to the Completion
Date) plus all Costs incurred by the Purchaser or any Group Company in
connection with such breach(es) of Warranty(ies) or claim(s) under the Tax
Deed. The maximum liability of each Vendor under the Warranties and the
Tax Deed shall, subject to sub-clause 5.1, be the aggregate amount received
by each respective Vendor as consideration for those of the Sale Shares
transferred by him (valuing Exchange Shares as above) plus Costs incurred
by the Purchaser or any Group Company (as above).
DOUBLE CLAIMS
6.7 The Purchaser shall not be entitled to recover from the Vendors under the
Warranties and the Tax Deed more than once in respect of the same damage
suffered, and accordingly the Vendors shall not be liable in respect of any
breach of the Warranties if and to the extent that the loss is or has been
included in a claim under the Tax Deed which has been satisfied to the
extent that it has been so satisfied, nor shall the Vendors be liable in
respect of a claim under the Tax Deed if and to the extent that the loss is
or
has been included in a claim for breach of the Warranties which has been
satisfied to the extent that it has been so satisfied.
CONTINGENT LIABILITIES
6.8 The Vendors shall not be liable in respect of any Warranty or under the Tax
Deed which in either such case is based upon a liability which is
contingent, future or unascertainable unless and until such liability
becomes an actual liability; provided that this clause shall not operate to
avoid a claim in respect of a contingent, future or unascertainable
liability made before the expiry of the relevant period specified in
clauses 5.2 or 5.3 if notice in writing (giving in so far as may then be
practicable the amount and details of the claim) has been delivered before
the expiry of such period even if such liability shall not become an actual
liability until after the expiry of the relevant period.
DISCLOSURE LETTER
6.9 The Vendors shall be under no liability under the Warranties in respect of
any matter to the extent that the fact, matter, event or circumstance
giving rise to such liability was Disclosed in the Disclosure Letter
provided that nothing in the Disclosure Letter shall limit the Vendors'
liability under the Warranties in part A of schedule 5 or the Tax Deed.
6.10 The Vendors shall not be liable for any claim or claims under the
Warranties if and to the extent that:
(a) a specific allowance, provision or reserve in respect of any liability
the subject of the claim or claims is made in the Accounts or the
Management Accounts;
(b) the subject matter of the claim or claims gives rise to a
corresponding quantifiable benefit of any kind;
(c) any liability specifically identified in the Accounts has been
discharged or satisfied below the amount attributed to it or included
in respect of it in the Accounts;
(d) it would not have arisen or would have been reduced or eliminated but
for:
(i) any claim or claims, election, surrender or disclaimer made or
notice or consent given or any other thing done after Completion
by any Group Company or the Purchaser except (in the case of a
Group Company) anything done pursuant to any contract or
obligation entered into or incurred prior to Completion;
(ii) a failure or omission on the part of any Group Company after
Completion to make, adjust or revise any claim, election,
surrender or disclaimer or the failure or omission after
Completion to give any notice or consent to do any other thing
the making, giving or doing of which in each case was taken into
account in computing the provision or reserve
for Tax in the Accounts and was expressly referred to in the
Disclosure Letter;
(e) it is attributable to or arises as a result of:
(i) any voluntary act or omission of the Purchaser (or any persons
deriving title from it) or any Group Company after Completion
done or suffered outside the ordinary course of business;
(ii) a change in the law (whether retrospectively or not);
(iii) any change after Completion in the bases upon which the accounts
of any Group Company are prepared or any change in accounting or
taxation practice, policies or principles;
(iv) any change after Completion in the date to which any Group
Company makes up its accounts;
(v) the retrospective imposition of Taxation or any increase in
rates of Taxation occurring after Completion or the withdrawal
after Completion of any published concession or general practice
previously made by a tax authority or by a change in the law
(whether retrospectively or not);
(f) the Purchaser is indemnified against any loss or damage suffered by it
under the terms of any insurance policy for the time being in force or
would have been so indemnified had the insurance policies held by the
Group Companies immediately prior to Completion remained in full force
and effect;
(g) it arises or is increased by a failure of the Purchaser or any Group
Company to comply with their respective obligations under this
agreement;
(h) the claim or claims are in respect of a charge to corporation tax on
chargeable gains arising on a disposal of an asset after Completion
(other than pursuant to a contract or obligation entered into or
incurred prior to Completion);
(i) it has been or is made good or is otherwise compensated for without
cost to the Purchaser or any Group Company.
6.11 Where the Vendors have paid any sum pursuant to the Warranties to the
Purchaser or any Group Company but the Purchaser or any Group Company is
entitled to recover from some other person (whether under the provisions of
any statute, rule of law, contract, right of action or otherwise) any sum
or claim reimbursement of any sum the Purchaser shall if so required by the
Vendors itself take or procure the relevant company to take all reasonable
steps to enforce or procure the enforcement of such recovery or
reimbursement and shall once it or the relevant company has received such
amount immediately repay or procure the repayment to the Vendors of either:
(a) the amount of such receipt (after deducting an amount equal to the
reasonable costs of the Purchaser or the relevant Group Company
incurred in recovering such receipt and any Taxation payable on it);
or if lesser
(b) the amount paid by the Vendors,
together with any interest or repayment supplement paid to the Purchaser or
the relevant Group Company in respect of it.
6.12 Where the subject matter of a claim or claims under the Warranties is
capable of remedy, the Vendors shall not be liable for the claim or claims
if the breach or default is remedied by them to the reasonable satisfaction
of the Purchaser within 30 days of receipt by them of a notice pursuant to
sub-clauses 5.2 or 5.3.
6.13 Nothing in this agreement shall relieve the Purchaser from its duty to the
Vendors to mitigate its loss.
6.14 The Purchaser shall procure that each Group Company shall comply with the
provisions of this clause 5 to the extent that it is required to do so.
6.15 Where all of the Vendors shall have made full payment in respect of a claim
or claims under the Warranties each Vendor shall be entitled to request
that the Purchaser for no consideration assigns or procures the assignment
to that Vendor of his share of any rights of recovery or reimbursement
which the Purchaser or any Group Company may have against any third party
in relation to any such claim or claims.
6.16 If any of the Vendors has made payment to the Purchaser following a claim
or claims under the Warranties and the provisions of this clause 5 then
have effect to reduce the total liability of the Vendors for all claims
under the Warranties to less than L100,000 then the Purchaser shall
immediately reimburse the relevant Vendor with the sum paid by him in
respect of that claim or claims.
6.17 The parties acknowledge that clauses 9 and 10 of the Tax Deed are
applicable to claims for any breach of the Warranties contained in part F
(Tax) of schedule 5 as if they were stated herein.
7. COMPLETION
7.1 The sale and purchase of the Sale Shares shall be completed at the offices
of the Purchaser's Solicitors forthwith following signing of this agreement
(or at such other time or place as the parties shall agree).
7.2 On Completion the Vendors shall deliver or cause to be delivered to the
Purchaser:
(a) duly executed stock transfer forms in respect of the Sale Shares
together with the related share certificates (such stock transfer
forms to be in favour of the Purchaser or its nominees, as the
Purchaser shall direct) together with such waivers, consents, or other
documents as the Purchaser may require to enable it
or its nominees to be registered as the holders of the Sale Shares
free from all Encumbrances and other adverse rights whatsoever;
(b) an acknowledgement in the agreed form from each of the Vendors to the
Purchaser and the Company executed as a deed to the effect that save
in relation to remuneration or reimbursement of expenses incurred in
relation to his or her employment, details of which are specified in
such deed, there is no outstanding indebtedness owing at Completion
from any Group Company to such Vendor or to any such Vendor's
Affiliate or vice versa;
(c) letters of resignation in the agreed form from Xxxxxxx Xxx Xxxxxxx as
a director of ASL and from the secretary of each Group Company;
(d) the statutory books of each Group Company complete and accurate up to
Completion and any company seal(s), certificates of incorporation,
certificates of incorporation on change of name and all unused share
certificates of each Group Company and all cheque books of each Group
Company;
(e) the Tax Deed duly executed by the Vendors;
(f) the Service Agreements duly executed by the relevant Vendors;
(g) the Disclosure Letter duly executed by the Vendors or on behalf of the
Vendors by the Vendors' Solicitors;
(h) the Deferred Consideration Account Instruction Letter duly executed by
the Vendors;
(i) the Xxxxxx Xxxxxxx letter;
(j) a complete source code for the current version of ASL Connect and for
the current version of IBM Mobile Connect;
(k) the Waivers, duly executed by Xxxx Xxxxxxx and Xxxxxxx Xxxxxx
respectively;
(l) the Stock Option Agreements duly executed by the Vendors.
7.3 On Completion the Vendors shall procure the holding of a meeting of the
directors of the Company at which the directors of the Company shall:
(a) (subject to stamping) approve the transfers to the Purchaser (or its
nominees) of the Sale Shares;
(b) appoint Xxxxxx Xxxxxxx, Xxxxx Xxxx and Xxx Xxxxxxxxxxx as additional
directors of the Company;
(c) appoint TJG Secretaries Limited as the new secretary of the Company;
(d) accept the resignation(s) referred to in sub-clause 6.2(c);
(e) insofar as necessary change the accounting reference date of the
Company to 30 June;
(f) change the registered office of the Company to Carmelite, 00 Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxx, Xxxxxx XX0X 0XX;
(g) alter the existing mandates to the Company's bankers by adding Xxxxxxx
Xxxxxxx and Xxxxx Xxxx as authorised signatories; and
(h) pass any other resolutions reasonably requested by the Purchaser.
7.4 On Completion the Vendors shall also procure the holding of separate board
meetings of each of the Subsidiaries at which the directors of each
respective Subsidiary shall:
(a) in the case of ASL, approve each of the Service Agreements and
authorise one or more of the directors of ASL to execute the same on
behalf of ASL;
(b) appoint Xxxxxx Xxxxxxx, Xxxxx Xxxx and Xxx Xxxxxxxxxxx as additional
directors of that Subsidiary;
(c) appoint TJG Secretaries Limited as the new secretary of that
Subsidiary;
(d) accept the resignation(s) referred to in sub-clause 6.2(c) relating to
that Subsidiary;
(e) change the accounting reference date of that Subsidiary to 30 June;
(f) change the registered office of that Subsidiary to Carmelite, 00
Xxxxxxxx Xxxxxxxxxx, Xxxxxxxxxxx, Xxxxxx XX0X 0XX;
(g) alter the existing mandates to that Subsidiary's bankers by adding
Xxxxxx Xxxxxxx and Xxxxx Xxxx as authorised signatories; and
(h) pass any other resolutions reasonably requested by the Purchaser.
7.5 On Completion the Purchaser shall deliver, or shall procure to be
delivered, to the Vendors or to the Vendors' Solicitors (whose receipt
shall be a sufficient discharge):
(a) a counterpart of the Tax Deed duly executed by the Purchaser;
(b) (subject to satisfaction of the Vendors' obligations under
clause 6.4), counterparts of the Service Agreements duly executed by
ASL;
(c) a counterpart of the Disclosure Letter, duly receipted by the
Purchaser or on behalf of the Purchaser by the Purchaser's Solicitors;
(d) the Stock Option Agreements, duly executed by the Purchaser;
(e) the Guarantee, duly executed by the Purchaser;
(f) the Deferred Consideration Account Instruction Letter, duly executed
by the Purchaser;
(g) a certified copy of the minutes of the board of directors of the
Purchaser authorising the execution and performance by the Purchaser
of its obligations under this agreement and the Tax Deed; and
(h) the Officer's Certificate, duly executed.
7.6 On Completion the Purchaser shall:
(a) on account of its obligation under sub-clause 3.1 cause the sum of
US$3,200,000 to be paid by electronic funds transfer to the bank
account of the Vendors' Solicitors at National Westminster Bank plc,
00 Xxxx Xxxxxx, Xxxxxxx, sort code 56-00-05, Account No: 00000000 and
payment made in accordance with this clause shall constitute a good
discharge for the Purchaser of its obligations under sub-clause 3.1(a)
(to the extent of the payment so made);
(b) cause the sum of US$1,800,000 to be paid by electronic funds transfer
to the Deferred Consideration Account and payment made in accordance
with this clause shall constitute a good discharge for the Purchaser
of its obligations under sub-clause 3.1(b); and
(c) issue the Exchange Shares to the Vendors in the proportions set out in
schedule 1 (subject to the Deferred Consideration Account Instruction
Letter and it being acknowledged that definitive certificates in
respect of the Exchange Shares shall not be available on the
Completion Date but shall be delivered to the Vendors as soon as
practicable following Completion).
8. POST-COMPLETION
8.1 The Vendors shall, at the Purchaser's expense (unless the relevant act or
thing which needs to be done results from or is connected with a breach by
the Vendors of the terms of clause 2 or the Warranties in part A of
schedule 5), and shall procure (as far as they are able) that any other
necessary party shall, execute and do all such documents acts and things as
may be reasonably required on or subsequent to Completion by the Purchaser
for securing to or vesting in the Purchaser the legal and beneficial
ownership of the Sale Shares.
8.2 Each Vendor:
(a) irrevocably appoints the Purchaser on Completion to be his attorney to
exercise in the absolute discretion of the Purchaser all rights
attaching to the Sale Shares registered in his name or exercisable by
him in his capacity as a member of the Company, and without prejudice
to the generality of the foregoing the powers
exercisable by the Purchaser shall include the power to execute,
deliver and do all deeds, instruments and acts in that Vendor's name
and on that Vendor's behalf in pursuance of the foregoing, and shall
include the power to sub-delegate this power;
(b) undertakes and agrees that, other than at the written request of the
Purchaser, he shall not exercise any rights attaching to the Sale
Shares or exercisable by that Vendor in his or her capacity as a
member of the Company or appoint any other person to exercise such
rights;
(c) undertakes and agrees that any dividends, securities or notices,
documents or other communications which may be received after
Completion by that Vendor from the Company or any third party in
respect of the Sale Shares or in that Vendor's capacity as a member of
the Company shall be received by that Vendor and held in trust for the
Purchaser and, without prejudice to the generality of the obligations
imposed by the foregoing, undertakes and agrees promptly to procure
the forwarding to the Purchaser of all such benefits or communications
and to account to the Purchaser for all benefits arising from the Sale
Shares registered in his name and/or from that Vendor's capacity as a
member of the Company;
(d) agrees and undertakes upon written request by the Purchaser to ratify
all deeds, instruments and acts exercised by the Purchaser in
pursuance of this power;
(e) agrees that in acting under this power the Purchaser may act by any
corporate officer or any director or person acting pursuant to
authority conferred by its board of directors or any director; and
(f) declares that such power, undertaking and agreement shall cease and
determine upon that Vendor ceasing to be a member of the Company, but
without prejudice to any power exercised prior to such date and shall
not, save as may be required by law, terminate on that Vendor's
previous death, bankruptcy or mental disorder, and shall, save as
aforesaid, in connection with the Sale Shares be accordingly binding
upon any personal representative, trustee in bankruptcy or trustee in
respect of any mental disorder.
8.3 The Purchaser hereby undertakes with each Vendor to use all reasonable
endeavours to register the transfer of the Sale Shares as soon as
reasonably practicable following Completion.
8.4 The Vendors shall following Completion use all reasonable endeavours to
ensure that any concerns or issues raised by employees of any Group Company
as a result of the transactions envisaged by this agreement are dealt with
promptly and in such a manner as to alleviate as far as possible any such
concerns, and the Vendors shall in addition use all reasonable endeavours
to encourage all employees of Group Companies to maintain their employment
arrangements following Completion.
9. RESTRICTIONS
9.1 By way of further consideration of the Purchaser agreeing to purchase the
Sale Shares from the Vendors, each of the Vendors covenants with the
Purchaser that he will not whether alone or jointly with or as agent of any
person or persons directly or indirectly:
(a) for the period stated in column (a) of schedule 6 opposite his name
after Completion:
(i) take up or hold any office in or with any business which is
engaged in the Restricted Business;
(ii) take up or hold any post or position which enables or permits
that Vendor to exercise whether personally or by an agent and
whether on his own account or in association with or for the
benefit of any other person a controlling influence over any
business which is engaged in the Restricted Business;
(iii) take up or hold any employment or consultancy with any person
which is engaged in the Restricted Business,
which results in that Vendor being engaged in business activities
which are in competition with the Restricted Business, provided that
that Vendor shall not be precluded from being employed or otherwise
engaged by a company whose activities include the Restricted Business
so long as that Vendor will not be directly or indirectly employed in,
engaged in or otherwise responsible for the Restricted Business;
(b) for the period stated in column (b) of schedule 6 opposite his name
after Completion either personally or by an agent and either on his
own account or by an association with any other person or otherwise
directly or indirectly engage in any capacity in any business concern
(of whatever kind) which shall be in competition with the Restricted
Business provided always that that Vendor may hold as an investment
not more than 5% of the issued share capital of a company quoted on a
recognised investment exchange (as that expression is defined in
section 207 Financial Services Act 1986);
(c) for the period stated in column (c) of schedule 6 opposite his name
after Completion either personally or by an agent and either on his
own account or by or in association with any other person directly or
indirectly deal with any Customer in connection with any goods or
services in competition with those provided by any Group Company in
the course of the Restricted Business provided that that Vendor shall
not be precluded from dealing with a company whose activities include
the Restricted Business so long as that Vendor does not either
directly or indirectly deal in goods or services in competition with
the Restricted Business;
(d) for the period stated in column (d) of schedule 6 opposite his name
after Completion either personally or by an agent and either on his
own account or by or in association with any other person directly or
indirectly canvass, solicit, approach or seek out or cause to be
canvassed, solicited, approached or sought out or by any other means
endeavour to entice away from any Group Company any person for orders
or instructions in respect of any goods or services provided to or
supplied by any Group Company in the course of the Restricted Business
and with whom any Group Company has transacted the Restricted Business
as a Customer or as a Supplier;
(e) for the period stated in column (e) of schedule 6 opposite his name
after Completion either personally or by an agent and either on his
own account or for or in association with any other person directly or
indirectly canvass, solicit, approach, seek out, or cause to be
canvassed, solicited, approached or sought out or by any other means
endeavour to entice away from any Group Company, or aid or assist any
other person or persons in employing or otherwise retaining the
services of anyone who is employed by any Group Company or who is a
consultant to any Group Company at Completion and who is employed or
engaged in or about one or more of the following:
(i) research, development, test, engineering or production;
(ii) sales, marketing, technical support or distribution including
establishing or maintaining relationships or dealings with
Customers or Prospective Customers;
(iii) establishing or maintaining relationships or dealings with
Suppliers,
but shall not include any person performing the functions of junior
administrative or secretarial staff;
(f) after Completion either represent himself or hold himself out to be in
any way connected with or interested in the Restricted Business of any
Group Company.
9.2 None of the Vendors shall at any time and whether directly or indirectly
use in connection with any competing or similar trade or business the name
"Advance Systems" or "ASL" in connection with any business involved in a
business similar to or competing with the Business.
9.3 The Vendors hereby acknowledge and declare that the restrictions in
sub-clauses 8.1 and 8.2 are reasonable in all the circumstances as at the
date of this agreement; that such restrictions are integral to the terms on
which the Purchaser has agreed to purchase the Sale Shares; and that each
of such restrictions shall be construed and take effect independently of
the others.
9.4 If any breach or violation of the provisions of sub-clauses 8.1 or 8.2
occurs, the Vendors and the Purchaser agree that damages alone are likely
not to be sufficient compensation and that injunctive relief is reasonable
and is likely to be essential to
safeguard the interests of the Purchaser and of relevant Group Company(ies)
and that injunctive relief (in addition to any other remedies afforded by a
court of equity) may (subject to the discretion of the courts) be obtained.
No waiver of any breach or violation shall be implied from forbearance or
failure by the Purchaser to take action.
9.5 At any time after Completion while he is acting as a director, consultant
or employee of the Company in accordance with the terms of the Service
Agreements, no relevant Vendor shall, by virtue of such fact, be treated as
committing a breach or violation of the provisions of sub-clauses 8.1 (a),
(b) or (f).
10. CONFIDENTIALITY
10.1 Each Vendor acknowledges that he has been exposed to information about the
Group Companies which is either a trade secret, confidential or
commercially sensitive and which may not be readily available to others
engaged in a similar business to that of any Group Company or to the
general public and which if disclosed may cause harm to a Group Company or
the Purchaser.
10.2 Each Vendor shall keep secret and shall not at any time, for whatever
reason, use communicate or reveal to any person for that Vendor's own or
another's benefit, any Confidential Information which shall have come to
his knowledge prior to Completion. Each Vendor shall as soon as reasonably
practicable inform the Purchaser of any disclosure or use of any such
information of which he becomes actually aware knowing it to be
Confidential Information.
10.3 The restrictions contained in sub-clause 9.2 shall not apply to:
(a) any disclosure or use authorised in writing by the Purchaser or
required in the ordinary and proper course of the particular Vendor's
Service Agreement or in or as required by the order of a court of
competent jurisdiction or an appropriate regulatory authority; or
(b) any information which was known to the particular Vendor concerned
prior to the commencement of his employment or engagement by any Group
Company or is in the public domain otherwise than as a result of a
breach of this clause.
10.4 Except:
(a) as may be required by law or in the case of the Purchaser or any of
its Affiliates the regulations of any recognised investment or stock
exchange; or
(b) as may be required in relation to any registration of this agreement
or any arrangement of which it forms part under the Restrictive Trade
Practices Xxx 0000; or
(c) as may be required to vest the full benefit of this agreement in the
Purchaser, including informing any employee, consultant, trade contact
or customer
connection of any Group Company or of the Purchaser of the change of
ownership of the Company;
(d) by virtue of the issue of the Press Announcement,
the provisions of this agreement and all negotiations relating to this
agreement are strictly confidential and no announcement or disclosure of
or publicity relating to the sale and purchase hereunder and terms of this
agreement shall be made by the parties to any third party (other than their
professional advisers) without the written agreement of the other parties.
11. RESTRICTIVE TRADE PRACTICES ACT
Unless this agreement or any agreement or arrangement of which this
agreement forms part is a non-notifiable agreement for the purposes of
section 27A of the Restrictive Trade Practices Xxx 0000, if there is a
provision of this agreement, or of any such agreement or arrangement, which
causes or would cause this agreement or any such agreement or arrangement
to be subject to registration under the Restrictive Trade Practices Xxx
0000, that provision shall not take effect until the day after the day upon
which particulars of this agreement (or of that agreement or arrangement,
as the case may be) have been furnished to the Director General of Fair
Trading pursuant to section 24 of the Restrictive Trade Practices Act 1976
and if the agreement (or any other such agreement or arrangement) is
subject to registration under the Restrictive Trade Practices Act 1976 the
parties shall co-operate in good faith in order to carry out such
registration as soon as reasonably practicable following the date of this
agreement and in any event within three months of the date of this
agreement.
12. NOTICES
12.1 Any notice or other written communication given under or in connection with
this agreement may be delivered personally or sent by pre-paid recorded
delivery or registered post or express courier service or by facsimile to
the address and for the attention of the relevant party set out or referred
to in sub-clause 11.2 (or such other address in England as is otherwise
notified from time to time).
12.2 The addresses and facsimile numbers of the parties for the purpose of
sub-clause 11.1 are as follows:
The Vendors: As set out in schedule 1.
The Purchaser: Extended Systems Incorporated
Attn: Xxxxx Xxxx, Chief Financial Officer
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxx, Xxxxx 00000 XXX
Fax: 000 000 000 0000
12.3 Any such notice or other written communication shall be deemed to have been
served:
(a) if delivered personally, at the time of delivery;
(b) if posted, at the expiry of five Business Days after it was posted and
marked for overnight delivery;
(c) if sent by express courier service, at the expiry of two Business Days
after it was delivered to the relevant carrier;
(d) if sent by facsimile message, at the time of transmission (if sent
during normal business hours) or (if not sent during normal business
hours) at the beginning of normal business hours next following the
time of transmission in the place to which the facsimile was sent.
12.4 In proving such service it shall be sufficient to prove that personal
delivery was made, or that such notice or other written communication was
properly addressed stamped and posted or in the case of a facsimile message
that an activity or other report from the sender's facsimile machine can be
produced in respect of the notice or other written communication showing
the recipient's facsimile number and the number of pages transmitted.
13. MISCELLANEOUS
13.1 Each party shall bear its own costs incurred in the negotiations leading up
to and in the preparation of this agreement and of matters incidental to
this agreement.
13.2 This agreement shall so far as it remains to be performed after execution
continue in full force and effect notwithstanding Completion and, in
particular, the rights and remedies of the Purchaser in respect of the
Warranties and/or the Tax Deed shall not be affected by Completion.
13.3 No term or provision of this agreement shall be varied or modified by any
prior or subsequent statement, conduct or act of any party, except that the
parties may amend this agreement but only by letter or written instrument
signed by all of the parties.
13.4 No waiver by any of the parties to this agreement of any requirements of
this agreement or of any of such party's rights under this agreement shall
be valid unless such waiver is in writing and signed by or on behalf of
each of the parties to this agreement.
13.5 No failure to exercise, and no delay in exercising, on the part of the
Purchaser any right or remedy under this agreement shall operate as a
waiver of such right or remedy nor shall any single or partial exercise of
any right or remedy preclude the exercise of any other right or remedy.
13.6 The Purchaser may release or compromise the liability of any of the Vendors
under this agreement or grant to any Vendor time or other indulgence, at
the Purchaser's absolute discretion, without affecting the liability of any
other Vendor under this agreement or in any way prejudicing the Purchaser's
rights against any other party, but if the Purchaser
compromises or releases the liability of any Vendor the liability of the
other Vendors shall not be increased beyond what would have been the case
in the absence of any compromise or release of liability.
13.7 The rights and remedies conferred on the Purchaser in this agreement are
cumulative and in addition to and without prejudice to all other rights and
remedies available to the Purchaser.
13.8 The headings to the clauses in this agreement and in the schedules are for
ease of reference only and shall not form any part of this agreement for
the purposes of construction.
13.9 This agreement and the documents to be delivered on Completion as set out
in clause 6:
(a) set out the entire agreement and understanding between the parties in
respect of the sale and purchase of the Shares; and
(b) (in relation to such subject matter) supersede all prior discussions,
understandings, undertakings, promises, conditions, covenants,
undertakings and agreements between the parties and their agents (or
any of them) and all prior representations, warranties and expressions
of opinion by any party (or its agent) to any other party (or its
agent) unless such representation, warranty or expression of opinion
was made fraudulently.
13.10 It is acknowledged and agreed that:
(a) no party has entered into this agreement in reliance upon any
representation, warranty, promise, condition, covenant, indemnity or
undertaking of any other party which is not expressly set out in this
agreement;
(b) no party shall have any claim or remedy in respect of
misrepresentation or breach of warranty (whether negligent or
otherwise) or any untrue statement made by any other party save to the
extent set out in or expressly incorporated in this agreement and each
party irrevocably and unconditionally waives any right which it may
have to claim damages for any misrepresentation (other than a
misrepresentation contained in this agreement) or for breach of any
express or implied warranties (other than a warranty set out in or
expressly incorporated in this agreement),
provided that this clause shall not exclude or limit any right of the
Purchaser in relation to fraudulent misrepresentation or other breach of
this agreement arising out of any matter referred to in clause 5.1(a).
13.11 This agreement may be entered into in any number of counterparts and by
the parties to it on separate counterparts, each of which when so executed
and delivered shall be an original, but all the counterparts shall
together constitute one and the same instrument.
13.12 If at any time any term or provision in this agreement shall be held to be
illegal, invalid or unenforceable, in whole or in part, under any rule of
law or enactment, such term or
provision or part shall to that extent be deemed not to form part of this
agreement, but the enforceability of the remainder of this agreement shall
not be affected.
13.13 Any liability of the Vendors (save as expressly provided) arising under or
in connection with this agreement shall be joint and several.
13.14 This agreement shall be binding on and shall enure for the benefit of the
personal representatives and successors of the parties.
14. LAW AND JURISDICTION
14.1 This agreement shall be governed by and construed in accordance with
English law and each party to this agreement submits to the exclusive
jurisdiction of the English courts.
14.2 The Vendors and the Purchaser agree that any legal action or proceeding
arising out of or in connection with this agreement may be brought in the
High Court of Justice in England, and the Vendors and the Purchaser hereby
irrevocably submit to the exclusive jurisdiction of such court in
connection with any such legal action or proceedings.
15. POTENTIAL INFRINGEMENT OF SPECIFIC INTELLECTUAL PROPERTY OF THIRD PARTIES
15.1 This clause 14 relates specifically to the possibility that the Product
might infringe a patent registered in the United States of America patent
registry by a third party. For the purposes of this clause 14 such a
patent is referred to as a "SOFTWARE PATENT", such a risk of infringement
is referred to as the "INFRINGEMENT RISK", and any claim made by the
holder of a Software Patent that the Product infringes such patent is
referred to as an "INFRINGEMENT CLAIM".
15.2 Notwithstanding that no statement or disclosure is made in the Disclosure
Letter in relation to the Infringement Risk, all parties acknowledge the
existence of the Infringement Risk. Without limitation to the generality
of clause 4.9, it is hereby agreed that:
(a) the consideration for the Sale Shares has been negotiated and agreed
on the basis that the Infringement Risk does not exist, that there
will be no Infringement Claim, and on the basis of the truthfulness
and accuracy of the Warranties;
(b) in the event of any breach of the Warranties arising as a result of an
Infringement Claim, the Purchaser shall not be precluded or estopped
from making a claim under the Warranties in accordance with the terms
of this agreement on the basis that the Purchaser was or could
reasonably have been expected to be aware of the possibility of such a
breach;
(c) the liability of the Purchaser and/or any of the Group Companies in
the event of an Infringement Claim is potentially material.
15.3 Subject to sub-clause 5.1, the maximum liability of the Vendors in respect
of a breach or breaches of the Warranties arising as a result of an
Infringement Claim shall be US $7,000,000 plus all Costs (but on a party
and party basis, not on an indemnity basis) incurred by the Purchaser or
any Group Company in connection with such breach(es) of the Warranties.
The maximum liability of each Vendor in respect of such breach(es) of the
Warranties shall, subject to sub-clause 5.1, be such proportion of US
$7,000,000 as is equal to the proportion which the aggregate amount
received by such Vendor as consideration for those of the Sale Shares
transferred by him (valuing each Exchange Share at the closing price for
such share as quoted on NASDAQ on the Business Day immediately prior to
the Completion Date) bears to the aggregate amount received by all the
Vendors as consideration for the Sale Shares (valuing Exchange Shares as
above), plus all Costs (but on a party and party basis, not on an
indemnity basis) incurred by the Purchaser or any Group Company in
consideration with such breach(es) of the Warranties.
15.4 If there is a breach or breaches of any of the Warranties arising out of
an Infringement Claim, each Vendor shall be entitled to satisfy his
liability in respect of such breach in whole or in part by delivering
stock certificates free from any Encumbrances with associated stock powers
duly completed in respect of the Exchange Shares to the Purchaser for
cancellation. In such event, each Exchange Share so cancelled shall be
valued (for the purpose of determining how much of the relevant Vendor's
liability is thereby discharged) at the closing price for such share as
quoted on NASDAQ on the Business Day immediately prior to the Completion
Date.
15.5 If an Infringement Claim is made, the Purchaser shall procure that the
claim and any associated proceedings are defended in a commercially
appropriate and reasonable manner, and that the Software Patent is
(subject to there being commercially reasonable grounds for so seeking)
sought to be declared invalid or unenforceable. All costs incurred in
defending such claim or such proceedings shall be shared equally between
the Purchaser and the Vendors.
15.6 For the avoidance of doubt, all the provisions of clause 5 apply to an
Infringement Claim (save as expressly varied by the terms of this clause
14).
The parties to this agreement have signed and entered into this agreement as a
deed on the date and year first written above.
EXECUTED as a deed (but not )
delivered until the date appearing )
at the head of page 1) by XXXXXXXX ) /s/ Xxxxxxxx Xxxxxxxxxx Xxxxxx
SCRIMGEOUR XXXXXX in the )
presence of: )
/s/ Xxxx Xxxxxx
EXECUTED as a deed (but not )
delivered until the date appearing ) /s/ Xxxxxx Xxxxxxxx Xxxxxxxxxxx
at the head of page 1) by XXXXXX )
XXXXXXXX XXXXX in the presence of: ) As attorney for Xxxxxx Xxxxxxxx Xxxxx
/s/ Xxxx Xxxxxx
EXECUTED as a deed (but not )
delivered until the date appearing ) /s/ Xxxxxxx Xxx Xxxxxxx
at the head of page 1) by XXXXXXX )
XXX XXXXXXX in the presence of: )
/s/ Xxxx Xxxxxx
EXECUTED as a deed )
(but not delivered until the date appearing ) /s/ Xxxxxx Xxxxxxxx Xxxxxxxxxxx
at the head of page 1) by XXXXX )
XXXXXXXX XXXXXXXX in the ) As attorney for Xxxxx Xxxxxxxx Xxxxxxxx
presence of: )
/s/ Xxxx Xxxxxx
EXECUTED as a deed (but not )
delivered until the date appearing )
at the head of page 1) by XXXXXX ) /s/ Xxxxxxxx Xxxxxxxxxx Xxxxxx
XXXXXXXXX XXXXXX in the )
presence of: ) As attorney for Xxxxxx Xxxxxxxxx Xxxxxx
/s/ Xxxx Xxxxxx
EXECUTED as a deed (but not )
delivered until the date appearing at ) /s/ Xxxxxx X. Xxxxxxx
the head of page 1) by EXTENDED )
SYSTEMS INCORPORATED acting ) /s/ Xxxxx X. Xxxx
by two authorised signatories: )
