Exhibit 2.1
Certain portions of this document have been omitted pursuant to Items 601(a)(5) and 601(b)(2) of Regulation S‑K and, where applicable, have been marked with “[***]” to indicate where omissions have been made. A copy of any omitted portion will be furnished supplementally to the Securities and Exchange Commission upon request; provided, however, that Zynga may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any document so furnished.
Dated 30 June 2021
Amendment and Restatement Agreement
between
Zynga Inc.
as Purchaser
The Persons set out in Schedule 1
as the Sellers
White & Case llp
5 Old Broad Street
London EC2N 1DW
Table of Contents
| Page | |||
1. | - | Interpretation |
| 1 |
2. | - | Amendment and Restatement of the Contract |
| 1 |
3. | - | Further Assurance |
| 1 |
4. | - | Entire Agreement |
| 2 |
5. | - | Severance and Validity |
| 2 |
6. | - | Variations and Waivers |
| 2 |
7. | - | No Rights under Contracts (Rights of Third Parties) Act 1999 |
| 2 |
8. | - | Counterparts |
| 2 |
9. | - | Miscellaneous |
| 2 |
Schedule | - 1 |
| 5 | |
Schedule | - 2 The Amended and Restated Contract |
| 6 |
(i)
This Agreement is made on 30 June 2021
Between:
(1) | Zynga Inc. a company incorporated in Delaware with registered number 4446916 and whose registered office is at 699 8th Street, San Francisco, California 94103 (“Purchaser”); and |
(2) | The Persons set out in Schedule 1 hereto (the “Sellers”). |
Whereas:
(A) | The Purchaser and the Sellers’ Representative have previously entered into an agreement dated 4 August 2020 as later amended on 1 October 2020 in relation to the sale and purchase of the entire issued share capital of Rollic Games Oyun Yazılım ve Pazarlama Anonim Şirketi (the “Contract”). |
(B) | The Parties now wish to amend and restate the Contract pursuant to the terms and conditions set out herein. |
(C) | Clause 25 (Variations) of the Contract provide that any provision of the Contract may be amended if such amendment is in writing and the amendment is signed by the parties to the Contract. |
It is agreed:
1.1 | In this Agreement: |
“Effective Date” means the date of this Agreement; and
“Party” means a party to this Agreement, and “Parties” shall mean the parties to this Agreement.
2.2 | The amendment and restatement of the Contract pursuant to this Agreement shall constitute a variation of the Contract in accordance with Clause 25 (Variations) of the Contract. |
2.3 | Save as amended and restated in accordance with Clause 2.1 above, the Contract shall continue in full force and effect. |
2.4 | With effect from the Effective Date, any reference to the “Contract” shall be read and construed as references to the Contract as amended and restated by this Agreement. |
Each of the Parties shall from time to time and at their own cost do, execute and deliver or procure to be done, executed and delivered all such further acts, documents and things required by law or as may be necessary or desirable to give full effect to this Agreement and the rights, powers and remedies conferred under this Agreement.
4.1 | This Agreement, together with any other documents referred to in this Agreement and all documents entered into pursuant to this Agreement, constitutes the whole agreement between the Parties and supersedes any previous arrangements or agreements between them relating to the subject matter of this Agreement. |
4.2 | The Parties confirm that they have not entered into this Agreement on the basis of any representation, warranty, undertaking or any other statement whatsoever not expressly incorporated into this Agreement. |
4.3 | The Parties agree, to the extent permitted by law, that the only right or remedy in relation to breach of this Agreement shall be for contractual damages. |
4.4 | Nothing in this Clause 4 shall operate to limit or exclude any liability for fraud. |
If any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, such provision shall be deemed to be severed from this Agreement. The remaining provisions will remain in full force in that jurisdiction and all provisions will continue in full force in any other jurisdiction.
No variation or waiver of this Agreement shall be effective unless in writing and signed by or on behalf of the Parties. No single or partial exercise of, or failure or delay in exercising, any right or remedy provided by law or under this Agreement shall constitute a waiver, or preclude any other nor restrict any further exercise, of that or any other right or remedy.
A person who is not a party to this Agreement or the Contract shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of their terms.
This Agreement may be executed in counterparts and shall be effective when each Party has executed and delivered a counterpart. Each counterpart shall constitute an original of this Agreement, but all the counterparts shall together constitute one and the same instrument.
Clause 35 (Governing Law and Jurisdiction) and Clause 36 (Agent for Service of Process) in the Contract shall apply mutatis mutandis to this Agreement.
2
This Agreement has been entered into by the Parties on the date first above written.
Purchaser
Signed for and on behalf | /s/ Frank Gibeau | |
| /s/ James Gerard Griffin |
Sellers
Signed by Mehmet Can Yavuz | /s/ Mehmet Can Yavuz |
Signed by Deniz Başaran | /s/ Deniz Başaran |
Signed by Burak Vardal | /s/ Burak Vardal |
Signed by Volkan Bicer | /s/ Volkan Bicer |
Signed by Mehmet Ayan | /s/ Mehmet Ayan |
Signed by Yunus Emre Gönül | /s/ Yunus Emre Gönül |
Mehmet Can Yavuz
Deniz Başaran
Burak Vardal
Volkan Biçer
Mehmet Ayan
Yunus Emre Gönül
The Amended and Restated Contract
Dated 30 June 2021
Share Sale and Purchase Agreement
relating to the sale and purchase of the entire issued share capital of Rollic Games Oyun Yazılım ve Pazarlama Anonim Şirketi
between
Those persons listed in Schedule 1
as Sellers
Zynga Inc.
as Purchaser
as amended by an Amendment and Restatement Agreement dated 30 June 2021
White & Case llp
5 Old Broad Street
London EC2N 1DW
|
|
| Page |
1. |
| Interpretation | 1 |
2. |
| Sale and Purchase | 17 |
3. |
| Conditions | 18 |
4. |
| Consideration | 19 |
5. |
| Escrow | 19 |
6. |
| Pre-Closing Obligations | 20 |
7. |
| Closing | 23 |
8. |
| Step-In Closing | 24 |
9. |
| Post-Closing Stock Awards | 25 |
10. |
| Post-Closing Undertakings | 26 |
11. |
| Purchasers’ Warranties | 26 |
12. |
| Sellers’ Warranties | 26 |
13. |
| Sellers’ Limitations on Liability | 27 |
14. |
| Specific Indemnities | 28 |
15. |
| Restrictions on the Employee Sellers | 28 |
16. |
| Business Information | 28 |
17. |
| Termination | 29 |
18. |
| Confidentiality | 29 |
19. |
| Announcements | 30 |
20. |
| No Assignment | 30 |
21. |
| Further Assurance | 31 |
22. |
| Entire Agreement | 31 |
23. |
| Severance and Validity | 31 |
24. |
| Variations | 32 |
25. |
| Remedies and Waivers | 32 |
26. |
| Effect of Closing | 32 |
27. |
| Third Party Rights | 32 |
28. |
| Payments | 32 |
29. |
| Costs and Expenses | 33 |
30. |
| Taxes | 33 |
31. |
| Default Interest | 34 |
32. |
| Notices | 34 |
33. |
| Counterparts | 35 |
34. |
| Governing Law and Jurisdiction | 35 |
35. |
| Agent for Service of Process | 35 |
36. |
| Seller’s Representative | 35 |
(i)
|
|
| Page |
Schedule 1 -The Sellers | 37 | ||
Schedule 2 -The Company | 39 | ||
Schedule 3 -Closing Arrangements | 40 | ||
Part 1 |
| Sellers’ Closing Obligations | 40 |
Part 2 |
| Purchaser’s Closing Obligations | 42 |
Part 3 |
| Sellers’ and Purchaser’s Joint Closing Obligations | 43 |
Part 4 |
| Employee Sellers’ Step-In Closing Obligations | 44 |
Part 5 |
| Purchaser’s Step-In Closing Obligations | 45 |
Schedule 4 -Warranties | 46 | ||
Part 1 |
| Fundamental Warranties | 46 |
Part 2 |
| Operational Warranties | 47 |
Schedule 5 -Sellers’ Limitations on Liability | 74 | ||
Schedule 6 -Closing Accounts | 78 | ||
Part 1 |
| Rules for preparation of Closing Accounts | 78 |
Part 2 |
| Specific Accounting Treatments | 79 |
Part 3 |
| Preparation Delivery and Agreement | 80 |
Schedule 7 -Post Closing Financial Adjustments | 82 | ||
Part 1 |
| Adjustments | 82 |
Part 2 |
| Settlement of Adjustments | 82 |
Schedule 8 -Escrow Account | 83 | ||
Part 1 |
| General | 83 |
Part 2 |
| Payments from the Escrow Account | 83 |
Schedule 9 – Tax Covenant | 85 | ||
1. |
| Definitions and interpretation | 85 |
2. |
| Covenant | 86 |
3. |
| Exclusions And Limitations On Liability | 87 |
4. |
| Corresponding Relief | 88 |
5. |
| Recovery From Third Parties | 89 |
6. |
| Conduct Of Pre-Closing Tax Affairs | 90 |
7. |
| Conduct Of Tax Authority Claims | 90 |
8. |
| Payment Of Claims | 93 |
(ii)
The Agreement dated 4 August 2020 as later amended by an amendment agreement dated 1 October 2020, and as further amended by an amendment agreement dated as of 20 April 2021, and as further amended by an Amendment and Restatement Agreement dated 30 June 2021 (the “Agreement”) is made:
Between:
(2) | Zynga Inc., a company incorporated in Delaware with registered number 4446916 and whose registered office is at 699 8th Street, San Francisco, California 94103 (the “Purchaser”). |
Whereas:
(A) | Each of the Sellers is, at the date of this Agreement, the beneficial owner and registered holder of that number of Company Shares as set out opposite its name in Schedule 1. |
It is agreed:
“Accounts Date” means 30 June 2020;
“Actual Cash” means the Cash held by the Company at 9am CET on the Closing Date, as calculated and determined in accordance with Schedule 6 (Closing Accounts);
“Actual Debt” means the Debt owed by the Company as at 9am CET on the Closing Date, as calculated and determined in accordance with Schedule 6 (Closing Accounts);
“Actual Working Capital” means the Working Capital of the Company as at 9am CET on the Closing Date, as calculated and determined in accordance with Schedule 6 (Closing Accounts);
“Agents” means, in relation to a person, that person’s directors, officers, employees, advisers, agents and representatives;
“Amendment and Restatement Agreement” means the amendment and restatement agreement between the Sellers and the Purchaser dated 30 June 2021;
“Annex” means the list of disputes agreed by the Parties and annexed to this Agreement on the date hereof;
“Anti‑Bribery Laws” means, in each case to the extent that they have been applicable to the Company at any time prior to the date of this Agreement: (i) the UK Bribery Act 2010; (ii) the U.S. Foreign Corrupt Practices Act of 1977 (as amended); (iii) any applicable law, rule, or regulation promulgated to implement the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed on 17 December 1997; and (iv) any other applicable law, rule or regulation of similar purpose and scope in any jurisdiction, including books and records of offences relating directly or indirectly to a bribe;
“Anti-Money Laundering Law” means all laws relating to money laundering or the proceeds of criminal activity including, without limitation: (i) European Union Money Laundering Directives and member states’ implementing legislation; (ii) the UK Proceeds of Crime Act 2002; (iii) the U.S. Bank Secrecy Act, the U.S. Patriot Act and other U.S. legislation relating to money laundering, (iv) Federal Law of the Russian Federation No. 115-FZ “On Countering the
Legalization of Illegal Earnings (Money Laundering) and the Financing of Terrorism” dated 7 August 2001 (as amended) and (v) Law on the Prevention of Laundering the Income Generated from Criminal Activities (Suç Gelirlerinin Aklanmasının Önlenmesi Hakkında Kanun) numbered 5549 and published in the Official Gazette dated October 18, 2006 and numbered 26323;
“Antitrust Law” means: (i) Articles 101 and 102 of the Treaty on the Functioning of the European Union and the provisions of national Laws in the European Economic Area member states that are substantially similar thereto; (ii) Sections 1 and 2 of the U.S. Sherman Act; and (iii) any other Law of any jurisdiction, including but not limited to Law on Protection of Competition (Rekabetin Korunması Hakkında Kanun) numbered 4054 published in the Official Gazette dated December 13, 1994 and numbered 22140, intended to prohibit or regulate agreements, understandings, practices or behavior that could restrict competition or could lead to anti-competitive effects, through the merger or combination by any other means of independent businesses, or otherwise if and as applicable to the Company and/or the Seller;
“Applicable Accounting Standards” means International Financial Reporting Standards (IFRSs), International Accounting Standards and Interpretations of those standards issued by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee and their predecessors and the requirements of all relevant laws.
“Auditors” means PwC YMM A.Ş.;
“Authority” means a supra-national, national or sub-national authority, commission, department, agency, regulator or regulatory body with jurisdiction in any jurisdiction whose Laws are applicable to the Company;
“Board” means the board of directors of the Company;
“Business” means the business of the Company comprising the development, marketing and publishing of games on mobile and online platforms and display, distribution and publication of paid-advertisements on mobile and online platforms, as conducted by it on the date of this Agreement and from time to time thereafter;
“Business Data” means all data and information that is created or used by the Company, or is processed by or stored on any Company IT Asset;
“Business Day” means a day (other than a Saturday or Sunday or a public holiday) when commercial banks are open for ordinary banking business in London, United Kingdom, Istanbul, Turkey, and San Francisco, California;
“Business Domain Name” means any domain name which the Company has or purports to have, control of or an ownership interest of any nature in (whether exclusively, jointly with another person, or otherwise) or that is used or held for use by the Company;
“Business Information” means drawings, formulae, test results, reports, project reports and testing, operation and manufacturing procedures, shop practices, instruction and training manuals, tables of operating conditions, market forecasts, specifications, data, quotations, tables, lists and particulars of customers and suppliers, marketing methods and procedures, technical literature and brochures and any other technical, industrial and commercial information and techniques in any tangible form (including paper, electronically stored data, magnetic media, microfiche, film and microfilm);
“Business IP” means any Intellectual Property Right in which the Company has or purports to have an ownership interest of any nature (whether exclusively, jointly with another person, or otherwise) or that is used, or held for use, by the Company;
2
“Business Materials” means all:
| (b) | Business Information and other documents, designs, drawings, methodologies, or materials that are material to the operation of the Business; |
“Business Plan” means the business plan and operating budget [***] in the agreed terms to be adopted by the Company on Closing;
“Business Owned IP” means all:
| (d) | other Business IP in which the Company has or purports to have an ownership interest of any nature (whether exclusively, jointly with another person, or otherwise); |
“Business Owned Software” means any and all Business Software in which the Company has or purports to have an ownership interest of any nature (whether exclusively, jointly with another person, or otherwise);
“Business Product” means all products, games or other offerings:
“Business Social Media Account” means any online social media or customer outreach services maintained by the Company;
“Business Software” means all Software that is:
| (c) | used in the design, development, distribution, publication, testing, maintenance, or support of, any Business Product, |
in each case by or on behalf of the Company at any time, but excluding any third-party Software that is generally available on standard commercial terms and is licensed to the Company solely for internal use, in object code form, and on a non-exclusive basis;
“Business Third Party Software” means any and all Business Software in which a third party has an ownership interest of any nature (whether exclusively, jointly with another person, or otherwise);
“Cash” means, in relation to the Company, the aggregate of its unrestricted cash, cash equivalents and marketable securities held or credited to any account with any banking, financial, acceptance credit, lending or other similar institution or organisation (and any accrued and outstanding interest thereon) as determined in accordance with Applicable Accounting Standards, less
3
|
| (b) | the aggregate cash value of any declared but unpaid dividends and other distributions attributable to the Shares; |
“Cause Event” means any event, act or omission that entitles the Company that employs the relevant Employee Seller to terminate the employment of such Employee Seller due to (i) a material breach by such Employee Seller of this Agreement or Employee Seller Employment Agreement, as applicable, or (ii) reasons as specified under Article 25 of the Turkish Labor Law or (iii) due to the Employee Seller’s misbehavior or poor performance as specified under Article 18 of the Turkish Labor Law or personal misconduct which may not be qualified as one of the reasons as specified under Article 25 of the Turkish Labor Law, however it may be considered reasonably material by the Company to terminate employment for cause provided, that in each case under clause (i) and (iii), the Company provides the relevant Employee Seller (as applicable) with written notice of the facts related to such claimed reason, and if such claimed reason is not cured (if capable of being curable) within 30 days after the receipt of such written notice by the relevant Employee Seller (such 30-day period the “Company Management Cure Period”), and the Company actually terminates, or serves notice to terminate, employment for cause within 10 days after the expiration of the Company Management Cure Period (as applicable);
“Cessation Date” means the earlier of (i) the date on which notice of termination of employment is given or received by the Employee Seller and (ii) the date on which the Employee Seller actually ceases to be an employee of the Purchaser or the Company;
“Change of Control Payments” means any compensation, bonuses, profit sharing, severance or other termination payments or benefits, retention payments, ‘phantom stock agreements’, stock-based or phantom equity compensation items, and other similar payments or benefits owed to the Workers, Key Employees and Employee Sellers, former employees, shareholders, formers shareholders or contractors of the Company that are triggered in connection with the Transaction following the Closing Date and the employer portion of any Taxes resulting from such payments or benefits;
“Claim” means any Warranty Claim or Indemnity Claim;
“Closing” means closing of the sale and purchase of the Closing Shares under this Agreement;
“Closing Accounts” means the accounts prepared in accordance with Part 1 of Schedule 6 (Rules for Preparation of Closing Accounts);
“Closing Accounts Adjusting Payment” means any amount owed by the Sellers to the Purchaser pursuant to Clause 4.2(b) and Schedule 7 (Post Closing Financial Adjustments);
“Closing Date” means the latest to occur of (i) the fifth (5th) Business Day after (and excluding) the day on which the last of the Conditions has been satisfied or waived in accordance with this Agreement, (ii) October 1, 2020 or (iii) such other date as the Parties agree in writing;
“Closing Shares” means the aggregate number of Company Shares sold on Closing and set out in column 3 of Schedule 1;
“Code” means the United States Internal Revenue Code of 1986, as amended;
“Company” means Rollic Games Oyun Yazılım ve Pazarlama Anonim Şirketi, further details of which are set out in Schedule 2;
“Company Bookings” means the Company’s revenue calculated on the basis of the Purchaser’s accounting policies and principles consistent with the principles applied by the Purchaser prior
4
to the Closing Date to determine the Company’s revenue, excluding the impact of the change in the Company’s deferred revenue;
“Company EBITDA” means the EBITDA of the Company prepared in accordance with the Applicable Accounting Standards, specifically including amounts attributable to the operations of the Company (consisting of Company Bookings, cost of sales and operating expenses (which shall include all legal expenses, settlements and judgements actually incurred by or on behalf of the Company) but excluding the impact of the change in the Company’s deferred revenue and non-recurring and one time expenses);
“Company EBITDA Margin” means the amount equal to the Company EBITDA divided by the Company Bookings;
“Company IT Assets” means all Software, databases, systems, servers, computers, Hardware, firmware, middleware, networks, data communications lines, routers, hubs, switches and other information technology or communication equipment used in the operation of the business of the Company;
“Company Shares” means all the issued and outstanding shares of the Company as at the date of this Agreement, together with all issued and allocated option rights (whether vested or unvested), convertible securities or any other rights to acquire shares (or interests in shares) in the Company;
“Conditions” means the conditions referred to in Clause 3 (Conditions);
“Connected Person” means, in relation to an Undertaking:
| (c) | any trust established by or for the benefit of a Controlling Person or a member of a Controlling Person’s Family; |
| (f) | any Undertaking (other than the Company) of which a Controlling Person or a member of a Controlling Person’s Family is a director or equivalent officer; and |
any nominee, trustee or agent or any other person acting on behalf of any person referred to in in this definition;
“Continuing Provisions” means Clause 1 (Interpretation), Clause 12 (Sellers’ Warranties), Clause 13 and Schedule 5 (Sellers’ Limitations on Liability), Clause 18 (Confidentiality), Clause 19 (Announcements), Clause 20 (No Assignment), Clause 22 (Entire Agreement),
5
Clause 23 (Severance and Validity), Clause 24 (Variations), Clause 25 (Remedies and Waivers), Clause 27 (Third Party Rights), Clause 28 (Payments), Clause 29 (Costs and Expenses), Clause 31 (Default Interest), Clause 32 (Notices), Clause 34 (Governing Law and Jurisdiction), Clause 35 (Agent for Service of Process) and Clause 36 (Sellers’ Representative), all of which shall continue to apply after the termination of this Agreement pursuant to Clause 3.6 (Conditions), Clause 7.5(c) (Closing) and 7.6(c) (Closing) or Clause 12.11 (Sellers’ Warranties) without limit in time;
“Control” means, in relation to a person, any person who:
| (a) | holds or controls, directly or indirectly, a majority of the voting rights exercisable at shareholder meetings (or the equivalent) of that person; or |
| (c) | has, directly or indirectly, the ability to direct or procure the direction of the management and policies of that person, whether through the ownership of shares, by contract or otherwise; or |
| (d) | has the ability, directly or indirectly, whether alone or together with another, to ensure that the affairs of that person are conducted in accordance with his or its wishes, |
and the terms “Controlling” and “Controlled” shall be construed accordingly and any two or more persons acting together to secure or exercise Control of another person shall be viewed as Controlling that other person;
“Controller” means any entity that, alone or jointly with others, determines the purposes for which, and means by which, Personal Data are Processed;
“Data Protection Laws” means: (a) all laws applicable to the Processing of Personal Data, including, but not limited to, Regulation (EU) 2016/679, EU Directives 95/46/EC, 2002/58/EC and 2009/136/EC (each as implemented into the national laws of EU Member States and the UK), Turkish Personal Data Protection Law numbered 6698 and its secondary legislation, Federal Trade Commission Act of 1914, Children’s Online Privacy Protection Act of 1998, and California Consumer Privacy Act of 2018; and (b) all formal guidance and codes issued by any EU or UK Data Protection Authority (including guidance and codes issued by the Article 29 Working Party, the European Data Protection Board and the European Data Protection Supervisor), all formal guidance issued by Turkish Personal Data Protection Authority, all guidance and regulations issued by applicable United States federal Authorities (including, but not limited to, the Federal Trade Commission) and applicable state Authorities (including, but not limited to, any state attorney general), each to the extent in force, implemented, and applicable, and each as amended, consolidated or replaced from time to time;
“Data Room” means the electronic file hosting facility operated by [***] and comprising the actual copies of documents and other information relating to the Business and the Company made available to the Purchaser’s Group and its advisers, as recorded in a set of two (2) non-rewritable USBs delivered on the date hereof to the Purchaser’s Lawyers;
“Data Subject” means an individual who is the subject of the relevant Personal Data;
“Debt” means the aggregate of:
6
| commercial paper, finance leases or similar) owed to any banking, financial, acceptance credit, lending or other similar institution or organisation; |
| (b) | all indebtedness of the Company for unsatisfied deferred purchase consideration in respect of shares, assets or businesses owed to any person that is not a member of the Company; and |
“Designated Bank Account” means the relevant bank account details notified by the relevant Seller to the Purchaser in writing by no later than three (3) Business Days before the Closing Date and the Step-In Closing (to the extent the existing details have changed);
“Disclosed” means fairly disclosed with sufficient particularity in such a manner and in such detail as to enable the Buyer to make a reasonably informed identification of the nature and scope of the fact, matter or circumstance concerned and specifically disclosed in the Disclosure Letter and the Disclosure Letter Update;
“Disclosure Letter” means the letter of today’s date from the Sellers to the Purchaser in the agreed terms and delivered to the Purchaser containing disclosures against the Operational Warranties;
“Draft Disclosure Letter Update” means the draft letter from the Sellers delivered to the Purchaser no later than 7 (seven) days prior to the Closing Date of any action, situation, circumstance or event occurring between the date hereof and Closing and which is a draft update to the matters previously Disclosed in the Disclosure Letter;
“Disclosure Letter Update” means the letter from the Sellers delivered to the Purchaser on the Closing Date in the same form and similar content of the Draft Disclosure Letter Update;
“Draft Closing Accounts” has the meaning given in paragraph 1.1, Part 3 of Schedule 6 (Preparation, Delivery and Agreement);
“EBITDA” means with respect to the Company, the earnings before interest, corporate income taxes, depreciation and amortisation of intangible assets (excluding any amortisation of prepaid developer costs) excluding (i) extraordinary items as defined by Purchaser’s accounting policies under U.S. generally accepted accounting principles; and (ii) all gains and losses due to exchange rate movements; all of which determined in accordance with the Applicable Accounting Standards, for the avoidance of doubt, sales tax, employer payroll taxes and other corporate non-income taxes are to be included as operating expenses or deducted from Company Bookings for purposes of computing EBITDA;
“Economic Sanctions Law” means economic or financial sanctions, restrictive measures, trade embargoes or export control laws imposed, administered or enforced from time to time by any Sanctions Authority;
“Employee Sellers” means the Sellers who are employed by the Company on the Closing Date;
“Employee Seller Employment Agreements” means the employment agreement amendments, which include a minimum employment term of five (5) years from the Closing Date and such other terms as agreed by the Purchaser with the Employee Sellers, in the agreed terms to be entered into on Closing between the Company and each of the Employee Sellers;
“Encumbrance” means any pledge, charge, lien, mortgage, debenture, hypothecation, security interest, pre‑emption right, option, claim, equitable right, power of sale, pledge, retention of title, right of first refusal or other third party right or security interest of any kind or an agreement, arrangement or obligation to create any of the above;
7
“Environment” means all or any of the following media (alone or in combination): air (including the air within buildings and the air within other natural or man‑made structures whether above or below ground); water (including water under or within land or in drains or sewers); soil and land and any ecological systems and living organisms supported by these media;
“Environmental Authority” means any legal person or body of persons (including any government department or government agency or court or tribunal) having jurisdiction to determine any matter arising under Environmental Law and/or relating to the Environment;
“Environmental Law” means all applicable laws, statutes, regulations, statutory guidance notes and final and binding court and other tribunal decisions of any relevant jurisdiction whose purpose is to protect, or prevent pollution of, the Environment or to regulate emissions, discharges or releases of Hazardous Substances into the Environment, or to regulate the use, treatment, storage, burial, disposal, transport or handling of Hazardous Substances, and all by‑laws, codes, regulations with any of therein, decrees or orders issued or promulgated or approved under or in connection with any of them;
“Environmental Permit” means any licence, approval, authorisation, permission, notification, waiver, order or exemption, which is issued, granted or required under Environmental Law, which is required for the operation of the business of the Company as it has been operated in the five (5) years before the date of this Agreement;
“Escrow Account” means the interest bearing deposit account to be opened in the name of the Escrow Agent and operated in accordance with the Escrow Agreement;
“Escrow Agreement” means the escrow agreement to be entered into on or around the date of this Agreement between the Escrow Agent, the Purchaser and the Sellers;
“Escrow Amount” means the amount of US$16,000,000 (sixteen million) and all interest accrued on such amount in the Escrow Account;
“Estimated Debt” means (i) the aggregate Debt estimated by the Sellers in good faith to be owed by the Company as at 9am CET on the Closing Date; (ii) all Change of Control Payments; and (iii) all Transaction Expenses, as notified to the Purchaser in writing not less than (ten) 10 Business Days prior to Closing, supported by such evidence (provided to the Purchaser in writing together with the notification) as is necessary to enable the Purchaser to understand and assess the reasonableness of the estimated Debt figure;
“Estimated Working Capital” means the Working Capital estimated by the Sellers in good faith to be held by the Company as at 9am CET on the Closing Date, as notified to the Purchaser in writing not less than (ten) 10 Business Days prior to the Closing, supported by such evidence (provided to the Purchaser in writing together with the notification) as is necessary to enable the Purchaser to understand and assess the reasonableness of the estimated Working Capital figure;
“Existing Employee Seller Employment Agreements” means the existing employment agreements entered into between the Company and each of the Employee Sellers;
“Existing Shareholders’ Agreement” means the shareholders’ agreement relating to the Company, dated December 13, 2018;
“Expert” has the meaning given in paragraph 2.1, Part 3 of Schedule 6 (Preparation, Delivery and Agreement);
“Finance Director” means [***], or his successor;
“Fundamental Warranties” means the Warranties set out in Part 1 of Schedule 4 (Warranties);
8
“Fundamental Warranty Claim” means any claim for breach of a Fundamental Warranty;
“Good Leaver” means any Employee Seller who becomes a Leaver by reason of: (i) his or her termination of employment by the Company other than as a result of a Cause Event; or (ii) his or her resignation for a Good Reason;
“Good Reason” means any of the following actions without the relevant Employee Seller’s prior written consent (as applicable): (a) the Company requiring the relevant Employee Seller (as applicable) to relocate to a facility or location more than 50 kilometres from the location at which he or she was primarily located immediately prior to such requirement; or (b) any significant reduction in the relevant Employee Seller (as applicable) base salary or target bonus or benefits (other than a reduction consented to by such Employee Seller) (for the avoidance of doubt, this excludes equity-based awards granted by the Purchaser or one-time payments or awards paid or granted in connection with the Transaction); or (c) the assignment of any duties materially inconsistent in any respect with the relevant Employee Seller (as applicable) role and responsibilities or any other action by the Company resulting in a material detriment to the participant’s position, authority, duties or responsibilities; or (d) any other circumstances constituting “haksız fesih” in Turkey of the relevant Employee Seller which shall be a termination which violates Article 18 or Article 25 of the Turkish Labor Law; or (e) any dissolution or liquidation of the Company; or (f) any material breach by the Purchaser of this Agreement or any material breach by the Purchaser or the Company of the Employee Seller Employment Agreement, provided, in each case, that the relevant Employee Seller provides the Company with written notice of the existence of the change, breach or condition described above within 30 days of the relevant Employee Seller becoming aware of its occurrence, and the change, breach or condition is not cured (if curable) within 30 days after the Purchaser’s receipt of such written notice (such 30-day period the “Company Cure Period”), and the relevant Employee Seller ethics(as applicable) actually terminates, or serves notice to terminate, employment for Good Reason within 10 days after the expiration of the Company Cure Period (as applicable);
“Governmental Authority” means any federal, national, supranational, state, provincial, local or similar government, governmental, regulatory or administrative authority, branch, agency or commission or any court, tribunal, or arbitral or judicial body;
“Harmful Code” means “back door,” “drop dead device,” “time bomb,” “Trojan horse,” “virus,” or “worm” (as such terms are commonly understood in the software industry) or any similar mechanism or device, or any other code designed or intended to have, or intended to be capable of performing, any of the following functions: (a) disrupting, disabling, harming, or otherwise impeding in any manner the operation of, or providing unauthorised access to, a computer system or network or other device on which such code is stored or installed; or (b) damaging or destroying any data or file, in each case, without the user’s consent;
“Hazardous Substances” means any wastes, pollutants, contaminants and any other natural or artificial substance (whether in the form of a solid, liquid, gas or vapour) which is capable of causing harm or damage to the Environment or a nuisance to any person;
“Indemnities” means the indemnities given by the Sellers in Clause 14 (Specific Indemnities);
“Indemnity Claim” means any claim under the Indemnities or the Tax Covenant;
9
“Initial Consideration” has the meaning given to it in Clause 4.1;
“Intellectual Property Right” means (i) patents, all reissues, divisions, renewals, extensions, continuations and continuations in part thereof, rights in inventions and invention disclosures and utility models, (ii) trade marks, service marks, trade and business names, trade dress, rights in get-up, goodwill, any right to sue for passing-off, rights in and to domain names, (iii) registered designs, design rights, (iv) copyright and neighbouring rights, rights in Software, works of authorship (whether copyrightable or not) and mask works, (v) database rights, (vi) rights in Business Information, trade secrets, know-how and confidential information of all kinds and (vii) any other intellectual property rights or industrial property rights or proprietary rights which may subsist now or in the future, in each case of (i) through (vii) in any part of the world and whether or not registered, issued or granted, or subject to a pending application for registration, issuance or grant, and including, any registration of and application (and rights to apply) for, registration, issuance or grant, or renewals or extensions of, and all rights to claim priority from, any of the foregoing;
“Interest Rate” means interest at the rate of two per cent. (2%) per annum above the LIBOR, calculated and compounded quarterly, provided if the LIBOR is negative then it should be considered as zero for the purposes of calculation of the Interest Rate;
“IT Contracts” means all written and oral agreements and arrangements relating to any of the Company IT Assets or under which any third party provides or is obliged to provide any element of, or services relating to, any of the Company IT Assets;
“Key Employee” means each of [***];
“Key Employee Employment Agreements” means the employment agreements or employment agreement amendments, which include post termination non-competition and non-solicitation restrictive covenants, in the agreed terms to be entered into on Closing between the Company and each of the Key Employees;
“Knowledge” means (i) with respect to the Employee Sellers, such Employee Seller’s knowledge and the knowledge that such Employee Seller would reasonably be expected to have obtained if such Employee Seller had made all reasonable enquiries of the Key Employees, (ii) with respect to the other Sellers, such Seller’s knowledge, and (iii) with respect to all Sellers, including any knowledge such Seller has obtained (including through the Connected Person of such Seller) as a result of having served as or appointed a director to the Board (if applicable);
“Leased Properties” means the leased land and premises currently owned, used or occupied by the Company;
“Leaver” means an Employee Seller in relation to whom a Cessation Date has occurred;
“LIBOR” means the London Inter-Bank Offered Rate administered by ICE Benchmark Administration Limited (or any other person who takes over the administration of that rate) giving an average rate at which a leading bank can obtain unsecured funding for a given period in a given currency in the London market displayed on pages LIBOR01 or LIBOR 02 of the Thomson Reuters screen (or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters);
“Long Stop Date” means October 31, 2020 or such other date as the Parties may agree in writing;
“Loss” or “Losses” means any and all, direct or indirect or consequential (in each case only to the extent reasonably foreseeable) losses, liabilities (including Tax), actions and claims, including charges, costs, damages, fines, penalties, interest and all legal and other professional fees and expenses (as long as reasonable and documented) including, in each case, all related Taxes, but in each case excluding any punitive, exemplary or special damages;
10
“Management Accounts” means (i) the unaudited balance sheet of the Company as of 31 December 2019 and the unaudited profit and loss account of the Company for the period ended on 31 December 2019, (ii) the income statement for the 12 months prior ended on 31 December 2019, (iii) the balance sheet as of 30 June 2020 and the income statement for the six months period ended on 30 June 2020, each as prepared in accordance with the Applicable Accounting Standards;
“Material Contract” means the agreements set out in paragraph 4.2 of Schedule 4 (Warranties);
“Materiality Threshold” means [***];
“Non‑Acceptance Notice” has the meaning given in paragraph 1.2(b), Part 3 of Schedule 6 (Preparation, Delivery and Agreement);
“Non-Exclusive Software Licences” means non-exclusive licences to third-party software that:
| (a) | is not incorporated into, or used in the development, testing, distribution, maintenance, or support of, any Business Product and that is not otherwise material to the Business; |
| (b) | is licensed solely in executable or object code form, in non-customized form, and solely for the Company’s internal use; and |
“Open Source Code” (a) means any software (including libraries) that (i) consists of, contains, or is derived in any manner (in whole or in part) from, any software that is distributed as free software or open source software or (ii) requires as a condition of its use, modification or distribution that it, or other software incorporated into it, linked with it, distributed with it, or derived from it, be disclosed or distributed in source code form or made available at no charge; and (b) includes any and all software (including libraries) licensed under the GNU General Public License (GPL), the GNU Lesser/Library GPL, the Mozilla Public License, or any other licence listed at www.opensource.org;
“Operational Warranties” means the Warranties set out in Part 2 of Schedule 4 (Warranties);
“Operational Warranty Claim” means any claim for breach of an Operational Warranty;
“Parent Undertaking” means an Undertaking which, in relation to another Undertaking, a “Subsidiary Undertaking”:
| (b) | is a member of the Undertaking and has the right to appoint or remove a majority of its board of directors; or |
| (c) | has the right to exercise a dominant influence over the Undertaking, by virtue of provisions contained in its constitutional documents or elsewhere; or |
| (d) | is a member of the Undertaking and controls alone, pursuant to an agreement with the other shareholders or members, a majority of the voting rights in the Undertaking, |
and an Undertaking shall be treated as the Parent Undertaking of any Undertaking in relation to which any of its Subsidiary Undertakings is, or is to be treated as, the Parent Undertaking, and “Subsidiary Undertaking” shall be construed accordingly;
“Party” means a party to this Agreement and “Parties” shall mean the parties to this Agreement;
“Personal Data” means any information relating to an identified or identifiable natural person;
11
“Personal Data Breach” means a breach of security leading to the accidental or unlawful destruction, loss, alteration, unauthorised disclosure of, or access to, Personal Data transmitted, stored or otherwise Processed;
“Privacy and Data Security Policies” means: (1) all of the privacy policies and procedures of the Company; and (2) all of the policies and procedures of the Company relating to data security; that have been adopted and implemented at any time, whether such policies or procedures are formal or informal or written or unwritten;
“Processing” means any operation or set of operations which is performed upon Personal Data, whether or not by automatic means, including but not limited to: collection, recording, organization, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, blocking, erasure or destruction;
“Processor” means any person or entity that Processes Personal Data on behalf of a Controller (other than an employee of the Controller);
“Prohibited Person” means any person, organisation or vessel: (i) listed on, or owned or controlled (as such terms, including any applicable ownership and control requirements, are defined and construed in the applicable Economic Sanctions Law or in any related official guidance) by a person or organisation listed on, a Sanctions List; (ii) a government of a Sanctioned Territory; (iii) an agency or instrumentality of, or an entity directly or indirectly owned or controlled by, a government of a Sanctioned Territory; (iv) resident or located in, operating from, or incorporated under the laws of, a Sanctioned Territory; or (v) otherwise a target of any Economic Sanctions Law, or is acting on behalf of any of the persons listed in paragraphs (i) to (v) above, for the purpose of evading or avoiding, or having the intended effect of or intending to evade or avoid, or facilitating the evasion or avoidance of any Economic Sanctions Law;
“Properties” means the Leased Properties;
“Pro Rata Portion” means, in relation to a Seller, the percentage figure specified opposite that Seller’s name in column 4 of Schedule 1 (The Sellers);
“Purchaser’s Common Stock” means the Class A common stock, par value US$0.00000625 per share of the Purchaser;
“Purchaser’s Common Stock Price” means the volume-weighted average closing price per share rounded to four decimal places of the Purchaser’s Common Stock as reported on The NASDAQ Global Select Market during the thirty (30) consecutive trading day period immediately prior to the determination of the Closing Accounts in accordance with Schedule 6 (Closing Accounts) and in respect of the Closing;
“Purchaser’s Group” means the Purchaser, its Subsidiary Undertakings, any Parent Undertaking of the Purchaser and all other Subsidiary Undertakings of any such Parent Undertaking as the case may be from time to time (and including, after Closing, the Company);
“Purchaser’s Lawyers” means White & Case LLP of 5 Old Broad Street, London EC2N 1DW and GKC Partners of Ferko Signature, Büyükdere Caddesi No: 175 Kat: 10, 34394 Levent, İstanbul;
“Registered Business IP Right” means any Intellectual Property Right that is the subject matter of a grant, issuance or registration, or of an application for any of the foregoing, and in which the Company has or purports to have an ownership interest of any nature (whether exclusively, jointly with another person, or otherwise);
“Regulation” means Council Regulation (EC) 139/2004;
12
“Related Persons” has the meaning given in Clause 22.4;
“Relevant Party’s Group” means: in relation to the Purchaser, the Purchaser’s Group; in relation to a Seller, the Sellers and their Related Persons;
“Relief” means any relief, loss, allowance, credit, deduction, exemption or set off for the purposes of Tax or any right to repayment of Tax, and:
| (a) | any reference to the use or set off of a Relief shall be construed accordingly and shall include the use of set-off in part; and |
| (b) | any reference to the loss of a Relief shall include the absence, non-existence or cancellation of any such Relief, or to such Relief being available only in a reduced amount; |
“RSUs” has the meaning given in Clause 9.1;
“Sanctioned Territory” means any country or other territory subject to a general export, import, financial or investment embargo under any Economic Sanctions Law, which, as of the date of this Agreement, include Crimea, Cuba, Iran, North Korea, Sudan and Syria;
“Sanctions” means any laws or regulations relating to economic or financial sanctions or trade embargoes or related restrictive measures imposed, administered or enforced from time to time by a Sanctions Authority;
“Sanctions Authority” means: (i) the United States; (ii) the United Nations Security Council; (iii) the European Union or any member state thereof; (iv) the United Kingdom; or (v) the respective governmental institutions of any of the foregoing including, without limitation, OFAC, the U.S. Department of Commerce, the U.S. Department of State, any other agency of the U.S. government, and Her Majesty’s Treasury;
“Sanctions List” means any of the lists of designated or sanctioned individuals or entities (or equivalent) issued by any Sanctions Authority, each as amended, supplemented or substituted from time to time, including, without limitation, the List of Specially Designated Nationals and Blocked Persons, Foreign Sanctions Evaders List, Sectoral Sanctions Identifications List, and List of Persons Identified as Blocked Solely Pursuant to Executive Order 13599, each administered by OFAC; the Consolidated List of Persons, Groups and Entities Subject to EU Financial Sanctions; and the Consolidated List of Financial Sanctions Targets in the UK, each administered by Her Majesty’s Treasury;
“Sellers’ Lawyers” means Çalışkan Okkan Toker of Krizantem Sokak No. 52, 34330, Levent Beşiktaş, İstanbul;
“Sellers’ Representative” means the person designated by each of the Sellers to serve as its representative in accordance with Clause 36 (Sellers’ Representative);
“Software” means any and all (i) computer code and computer programs, including all application programming interfaces (APIs), whether in Source Code, object code or other form, (ii) electronic databases and other electronic compilations and collections of data and information, and all data and information included in any of the foregoing, (iii) screens and user interfaces; (iv) descriptions, flow-charts, diagrams, user requirements, specifications, algorithms and other materials used to design, plan, organize and develop any of the foregoing, and (v) source code annotations and other documentation (including user, installation and other manuals) relating to any of the foregoing;
“Source Code” means software programming code (including flash .swf source code, C++ server source code and JAVA source code) expressed in human readable language;
13
“Statutory Books” means all statutory books and records of the Company, including, (i) for the Company: journal (yevmiye defteri), book of final entry (defter-i kebir), inventory book (envanter defteri), fixsed asset ledger (amortisman defteri), general assembly resolution book (genel kurul karar defteri), board of directors resolution book (yönetim kurulu karar defteri), share book (pay defteri); and (ii) for the Subsidiary: shareholders’ register, special register, board of directors and shareholders’ resolutions, annual reports, and financials;
“Step-In Closing” means the closing of the sale and purchase of the Step-In Closing Shares;
“Step-In Closing Date” means 9 July 2021, or such later date as agreed between the Purchaser and the Employee Sellers;
“Step-In Closing Shares” means, in relation to a Seller, those Company Shares set out beside that Seller’s name in Column 5 of Schedule 1 (The Sellers);
“Step-In Consideration” means US$60,000,000 (sixty million) paid in accordance with Clauses 4.5 and 4.6 (Consideration);
“Step-In Deferred Payment Date” means 28 February 2022, or such later date as agreed between the Purchaser and the Employee Sellers;
“Step-In Deliverables” has the meaning given to it in Clause 8.4;
“Subsidiary Undertaking” means any Undertaking in relation to which another Undertaking is its Parent Undertaking;
“Target Working Capital” means [***];
“Tax” or “Taxation” means: (i) any form of tax, levy, impost, or duty, including net income, alternative or add-on minimum, gross income, estimated, gross receipts, sales, use, ad valorem, VAT, digital, advertising, entertainment, transfer, franchise, fringe benefit, capital stock, profits, license, registration, resource utilization support fund, special consumption, special transaction, banking and insurance transaction, recycling contribution fee, withholding, payroll, social security, employment, unemployment, disability, excise, severance, stamp, occupation, premium, property (real, tangible, or intangible), environmental or windfall profit tax, custom duty or other tax, governmental fee or other similar assessment or charge, together with any interest or any penalty, addition to tax, or additional amount (whether disputed or not) imposed, collected or assessed by, or payable to, a Tax Authority; (ii) any liability for the payment of any amounts of the type described in clause (i) of this sentence as a result of being a member of an affiliated, consolidated, combined, unitary or aggregate group for any period; and (iii) any liability for the payment of any amounts of the type described in clause (i) or (ii) of this sentence as a result of being a transferee of or successor to any person or as a result of any contract (other than an ordinary commercial agreement);
“Tax Authority” means any government, federal, state, local, or foreign tax service, agency, municipality, customs office, competition authority, social security institution, office, commission, department, bureau, court or similar organization with authority to assess, assert, or otherwise impose Tax or collect unpaid Taxes of any Party;
“Tax Claim” means any Tax Covenant Claim or Tax Warranty Claim;
“Tax Covenant” means the tax covenant set out in Schedule 9;
“Tax Covenant Claim” means any claim by the Purchaser under the Tax Covenant;
“Tax Return” means any return, declaration, report, claim for refund, information return or other document (including any related or supporting schedule, statement or information) filed or required to be filed in connection with the determination, assessment or collection of any Taxes
14
or the administration of any laws or administrative requirements relating to any Taxes, and including any amendment thereof;
“Tax Warranties” means the Warranties set out in paragraph 23 of Schedule 4 (Warranties);
“Tax Warranty Claim” means any claim for breach of a Tax Warranty;
“TCC” means the Turkish Commercial Code No. 6102 (Türk Ticaret Kanunu) published in the Official Gazette dated February 14, 2011 and numbered 27846;
“Termination Agreement” means the termination agreement to be entered into among each of the Sellers at the Closing pursuant to which the Existing Shareholders' Agreement shall be terminated;
“Total Purchase Consideration” means the aggregate of the Initial Consideration and the Step-In Consideration;
“Transaction” has the meaning given to it in Recital (B);
“Transaction Documents” means this Agreement, the Disclosure Letter, the Escrow Agreement and the Disclosure Letter Update;
“Transaction Expenses” means any fees, costs and expenses incurred or agreed to be incurred by the Company, including: (i) all termination, balloon or similar payments resulting from early termination of contracts or outstanding debt as a result of or in connection with the Transaction; (ii) all payments required to obtain consents, waivers, terminations or amendments under any agreement of the Company as a result of or in connection with the Transaction; (iii) the employer portion of any taxes and any withholding taxes resulting from the cash out of share options and other compensatory payments in connection with the Transaction; (iv) all premiums and other amounts payable to obtain tail coverage under the Company’s existing D&O insurance policy; (v) any other similar expenses that remain unpaid as a result of the transactions contemplated by this Agreement; and (vi) any and all costs, Taxes that the Company will pay in connection with the Transaction, including but not limited to payables to advisors and/or bonus payments to the Workers, Key Employees and the Employee Sellers and/or any other employees of the Company;
“Transfer Taxes” means all transfer, documentary, sales, use, stamp, registration and other similar Taxes and fees (including any penalties and interest);
“Undertaking” means a body corporate or partnership or an unincorporated association carrying on trade or business;
“VAT” means any Tax levied by reference to added value or any sales or turnover tax of a similar nature;
“Warranties” means the representations and warranties referred to in Clause 12.1 (Sellers’ Warranties) and set out in Schedule 4 (Warranties);
“Warranty Claim” means any claim for breach of Warranty;
“Workers” means current or former employees, directors, officers, workers, consultants and self-employed contractors of the Company; and
“Working Capital” means the aggregate working capital of the Company, being the aggregate of the Company’s Cash, current accounts receivables, advances paid, pre-paid VAT and current liabilities (including any pre-Closing taxes and accounts payable but excluding any Debt).
15
1.4 | Any reference to “writing” or “written” means any method of reproducing words in a legible and non‑transitory form (excluding, for the avoidance of doubt, email). |
1.6 | References to a “company” include any company, corporation or other body corporate wherever and however incorporated or established. |
1.8 | The table of contents and headings are inserted for convenience only and do not affect the construction of this Agreement. |
1.9 | Unless the context otherwise requires, words in the singular include the plural and vice versa and a reference to any gender includes all other genders. |
1.10 | References to Clauses, paragraphs and Schedules are to clauses and paragraphs of, and schedules to, this Agreement. The Schedules form part of this Agreement. |
1.13 | If any liability of a Seller is, or becomes illegal, invalid or unenforceable in any respect this shall not affect or impair the liability of the other Sellers under this Agreement. |
1.15 | In relation to a Claim, the date of such conversion shall be the date of receipt of notice of that Claim in accordance with Schedule 4. |
1.17 | This Agreement shall be binding on and be for the benefit of the successors and permitted assignees of the Parties. |
16
that the indemnified party or recipient of the Payment (as applicable) reasonably determines, acting in good faith, the Payment, or matter or thing giving rise to the Payment Obligation, is reasonably expected to give rise to at any time up to the twenty four (24) months after the end of the accounting period in which the matter or thing giving rise to the Payment Obligation arose. |
2.2 | At the Step-In Closing, the Purchaser shall purchase the Step-In Closing Shares with all rights attaching to them as at the Step-In Closing Date and each of the Employee Sellers shall transfer full legal and beneficial title to its Step-In Closing Shares to the Purchaser free from all Encumbrances on the terms of this Agreement. |
2.3 | Each of the Sellers hereby waives and shall procure the waiver of any rights which have been conferred on it as may affect the transactions contemplated by this Agreement (other than its rights pursuant to this Agreement) including, without limitation: |
| (a) | any rights of redemption, pre-emption, first offer, first refusal, drag-along, tag-along or transfer, pursuant to the Existing Shareholders’ Agreement, it may have with respect to the Company Shares; and |
| (b) | any rights to acquire any Company Shares, |
in each case at Closing.
Each of the Employee Sellers hereby waives and shall procure the waiver of any rights which have been conferred on it as may affect the transactions contemplated by this Agreement (other than its rights pursuant to this Agreement) including, without limitation:
| (c) | any rights of redemption, pre-emption, first offer, first refusal, drag-along, tag-along or transfer it may have with respect to the Company Shares; and |
| (d) | any rights to acquire any Company Shares, |
at the Step-In Closing.
| (a) | Closing Shares unless the purchase of all of the Closing Shares is completed simultaneously at Closing; |
| (b) | Step-In Closing Shares unless the purchase of all of the Step-In Closing Shares is completed simultaneously on the Step-In Closing, |
in each case in accordance with the terms of this Agreement.
2.5 | The Purchaser hereby acknowledges and undertakes to pursue the Transaction and continue to uphold the terms of this Agreement (including the payment obligations under Clause 4 (Consideration) in the event of a change of Control of the Purchaser arising on or after the date hereof. |
17
3.1 | The obligations of the Purchaser and the Sellers to complete the sale and purchase of the Closing Shares are in all respects conditional on the satisfaction (or waiver, as the case may be) of: |
3.2 | The Purchaser may waive in whole or in part the Conditions set out at Clause 3.1(a) and (b) by notice in writing to the Sellers. |
3.7 | For the avoidance of doubt, the Step-In Closing is not subject to any conditions. |
| (b) | less the aggregate of (i) the Actual Debt; (ii) all Change of Control Payments; and (iii) all Transaction Expenses; |
| (c) | plus the amount by which the Actual Working Capital exceeds the Target Working Capital or less the amount by which the Actual Working Capital is less than the Target Working Capital, |
18
|
(together, the “Initial Consideration”).
4.3 | Payments from the Escrow Account shall be determined in accordance with the provisions of 10 (Escrow Account). |
4.5 | For the sale of the Step-In Closing Shares, at the Step-In Closing Date, the Purchaser shall pay to the Employee Sellers US$20 million (twenty million) in cash and on the Step-In Deferred Payment Date, the Purchaser shall pay the remaining portion of the Step-In Consideration, being US$40 million (forty million), in cash. |
4.6 | For the avoidance of doubt, the payment of the Step-In Consideration to the Employee Sellers shall not be conditional or dependent upon whether any Employee Seller continues or ceases to be employed by the Company or the Purchaser following Closing. |
19
| (c) | creating, issuing, redeeming or granting any option or right to subscribe in respect of any share or loan capital or other securities; |
| (d) | entering into, modifying or terminating any Material Contract unless otherwise required by applicable law or otherwise than in the ordinary course of business; |
| (h) | making any material change in the nature, organisation or geographic scope of how and where its Business if conducted; |
| (i) | discontinuing or ceasing to operate any part of its business; |
| (j) | making any variation to the terms and conditions of employment of an Employee Seller, a Key Employee or of any employee earning US$[***] per annum, including any change in salary, benefits, job title or responsibilities or reportings, and granting or amending any existing rights to severance benefits, stay pay or termination pay; |
| (m) | dismissing an Employee Seller or a Key Employee; |
| (n) | dismissing any other employee earning US$[***] per annum or more otherwise than in the ordinary course of business; |
| (o) | borrowing money or incurring any indebtedness otherwise than in the ordinary course of business (and within limits subsisting at the date of this Agreement); |
| (p) | granting any loan, advance or capital contribution to any other person other than those to be granted to the current employees not exceeding in aggregate US$[***]; |
20
|
| (r) | acquiring any share or other interest in any person or other venture or acquiring any business carried on by any person; |
| (t) | creating any Encumbrance or redeeming or releasing any Encumbrance or giving any guarantees or indemnities; |
| (x) | settling or compromising any Tax Claims, liabilities, disputes, investigations or audits with a Tax Authority; |
| (z) | taking any steps of other action which could result in either a change to its residence for Tax purposes and/or in establishing a taxable presence in any jurisdiction outside of its jurisdiction of incorporation; |
| (aa) | taking any steps or other action which could reduce or otherwise adversely impact the availability, utility or quantum of any Relief; |
| (bb) | take any step or other action (including making any admission to a Tax Authority) which is inconsistent with past practice which could increase any liability to Tax; |
| (cc) | take any step or other action (including making any admission to a Tax Authority) which could result in any liability to Tax arising (or being deemed to arise) in the post-Closing period rather than the pre-Closing period; |
| (ff) | consenting to an extension or waiver of the limitations period applicable to any Tax Claim or assessment; |
| (gg) | failing to take any action to maintain in force any of its insurance policies or doing anything to make any policy of insurance void or voidable or reducing the level of insurance cover provided; |
21
|
provided that the prior written consent of the Purchaser shall be deemed obtained if the Purchaser does not respond to the Sellers’ request for consent within seven (7) Business Days of receipt in accordance with Clause 32. For the purposes of this Clause, each of the Purchaser’s Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Legal Officer, Chief Accounting Officer, Chief People Officer or President of Publishing or such other person notified by the Purchaser to the Sellers (or the Sellers’s Representative) in accordance with Clause 32 shall have the authority to act on behalf of the Purchaser.
| (a) | maintaining the assets and the properties of the Company in good operating condition and repair and continue normal maintenance; |
| (d) | maintaining all registrations of each of the Company’s Intellectual Property Rights and any applications thereof; and |
6.3 | (a)Subject to Clause 6.3(b), from the date of this Agreement until Closing the Sellers shall procure that the Purchaser and its Agents shall be allowed: |
| (i) | reasonable access to, and to take copies of (at the Purchaser’s sole expense), the books, records and documents of or relating in whole or in part to the Company; |
| (i) | on reasonable prior written notice (where an e-mail would be sufficient) having been provided to the Sellers; |
| (ii) | to the extent reasonably required by the Purchaser to plan for the integration of the Company into the Purchaser’s Group; and |
22
|
| (b) | any matter expressly permitted by, or necessary for performance of, this Agreement or the Transaction Documents or necessary for Closing; |
| (d) | providing information to any regulatory body or government agency or commissioning body in the ordinary course of business; and |
7.2 | On Closing, the Sellers shall undertake those actions listed in Part 1 and Part 3 of Schedule 3 (Closing Arrangements). |
7.3 | On Closing, the Purchaser shall undertake those actions listed in Part 2 and Part 3 of Schedule 3 (Closing Arrangements). |
| (b) | proceed to Closing as far as practicable (without limiting its rights and remedies under this Agreement); or |
| (c) | treat this Agreement as terminated for breach of condition subject to, and on the basis set out in, Clause 17 (Termination). |
| (a) | defer Closing (with the provisions of this Clause 7 applying to Closing as so deferred); or |
23
| (b) | proceed to Closing as far as practicable (without limiting its rights and remedies under this Agreement); or |
| (c) | treat this Agreement as terminated for breach of condition subject to, and on the basis set out in, Clause 17 (Termination). |
7.7 | The payment of the amounts set out in Clause 4.2 in accordance with paragraph 1, Part 2 and Part 3 of Schedule 3 (Closing Arrangements) shall discharge the obligations of the Purchaser under Clauses 2 (Sale and Purchase) and 4 (Consideration), in each case pertaining to the payment of the Initial Consideration for the Closing Shares, and the Purchaser shall not be concerned with the application of such sum by the Sellers. |
8.2 | At the Step-In Closing, the Employee Sellers shall undertake those actions listed in Part 4 (Employee Sellers’ Step-In Closing Obligations) of Schedule 3 (Closing Arrangements). |
8.3 | At the Step-In Closing, the Purchaser shall undertake those actions listed in Part 5 (Purchaser’ Step-In Closing Obligations) of Schedule 3 (Closing Arrangements). |
| (a) | defer the Step-In Closing (with the provisions of this Clause 8 (Step-In Closings) applying to the Step-In Closing as so deferred); or |
| (b) | proceed to the Step-In Closing as far as practicable (without limiting its rights and remedies under this Agreement). |
8.6 | If there is a material breach of Clause 8.2 and Part 5 (Purchaser’s Step-In Closing Obligations) of Schedule 3 (Closing Arrangements) on the Step-In Closing (as applicable) the Employee Sellers shall not be obliged to complete the Step-In Closing and may: |
| (a) | defer the Step-In Closing (with the provisions of this Clause 8 (Step-In Closings) applying to Closing as so deferred); or |
| (b) | proceed to the Step-In Closing as far as practicable (without limiting its rights and remedies under this Agreement). |
8.7 | The payment of the Step-In Consideration in accordance with Schedule 3 (Closing Arrangements) shall discharge the obligations of the Purchaser under Clauses 2 (Sale and Purchase) and Clause 4 (Consideration), in each case pertaining to the payment of the Step-In Consideration for the Step-In Closing Shares and the Purchaser shall not be required to concern itself with any subsequent allocation of such amounts between the Sellers. |
24
| (a) | any such RSU awards will be granted in accordance with the Purchaser’s standard practices; |
| (b) | any such RSU awards shall begin vesting on the 15th day of the following month immediately following Closing; |
| (c) | any such RSU awards shall vest [***]; and |
provided that any unvested RSU awards granted to any Employee Seller in connection with the transactions contemplated by this Agreement shall accelerate in full upon a person becoming a Good Leaver.
25
|
| (d) | the Purchaser has, and will have at the time of payment, immediately available on an unconditional basis (subject only to Closing) the necessary cash resources to pay the Initial Consideration. |
11.2 | If a material breach of a Purchaser’s warranty occurs prior to Closing, the Sellers shall be entitled to treat this Agreement as terminated subject to, and on the basis set out in, Clause 17 (Termination). |
11.3 | Where the context so requires, references in Clause 11.1 are repeated in respect of the Step-In Closing. |
12.1 | Each of the Sellers warrants, on a several basis and in respect of itself only, to the Purchaser that: |
| (a) | each of the Fundamental Warranties is true and accurate on the date hereof and will continue to be true and accurate in all material respects on Closing; and |
| (b) | each of the Operational Warranties is true and accurate on the date hereof and will continue to be true and accurate in all material respects on Closing. |
12.5 | No Disclosure relating to any possible violation of any agreement or Applicable Law shall be construed as an admission that any such violation exists or has actually occurred. |
26
12.6 | The Purchaser shall be entitled to postpone the Closing Date for assessment of the content of the Disclosure Letter Update by a number of days that is equal to the number of days that have lapsed between the Draft Disclosure Letter Update and the Disclosure Letter Update. |
12.7 | The Sellers shall not and shall procure that the Company shall not do or omit to do anything which would result in any of the Warranties being breached or misleading at any time up to and including Closing. |
12.10 | Each of the Warranties shall be separate and independent and (unless expressly provided otherwise) shall not be limited by reference to any other Warranty or by anything in this Agreement. |
The liability of the Sellers in respect of a claim under the Warranties shall be limited as provided in Schedule 5 (Sellers’ Limitations on Liability).
| (a) | a breach of any of the Warranties, save for a breach of the warranty set out in paragraph 4.1(b) in Schedule 4 (Warranties) on Closing pursuant to the terms of this Agreement; |
| (b) | any claims arising out of the disputes as specified in the Annex; and |
| (c) | any matter arising out of fraud, intentional misrepresentation or wilful breach of the relevant Seller. |
14.2 | The Purchaser retains the right to unilaterally deduct from the Escrow Account in accordance with Schedule 8 (Escrow Account) such amounts equal to any payments under Clause 14.1. |
27
following the Closing Date: |
the rights and obligations of the Parties under this Agreement shall cease immediately, save in respect of antecedent breaches and under the Continuing Provisions.
28
17.4 | If this Agreement is terminated by the Sellers in accordance with Clause 7.6(c) (Closing), the rights and obligations of the Parties under this Agreement shall cease immediately, save in respect of antecedent breaches and under the Continuing Provisions. |
17.5 | In addition to the circumstances provided in Clause 17.4, the Sellers shall be entitled to terminate this Agreement at any time before Closing by notice in writing to the Purchaser if: |
| (a) | in accordance with Clause 11.1 (Purchaser’s Warranties), a material breach of a Warranty occurs prior to Closing; or |
| (b) | the Purchaser commits a material breach of any of their other obligations under this Agreement, |
whereupon the rights and obligations of the Parties under this Agreement shall cease immediately, save in respect of antecedent breaches and under the Continuing Provisions.
17.6 | The Purchaser undertakes to disclose promptly to the Sellers in writing any breach, matter, event, condition, circumstance, fact or omission of which any Purchaser or Related Persons is or becomes aware that may reasonably give rise to a termination right under this Agreement. |
17.7 | For the avoidance of doubt, to the extent that a breach by any Party of any of its obligations under this Agreement does not limit, restrict, hinder or otherwise obstruct the sale and purchase of the Shares, the other Party shall not be entitled to terminate the Agreement pursuant to Clause 17.2 or 17.5(b). |
18.3 | A Party may disclose, or permit the disclosure of, information which would otherwise be confidential if and to the extent that it: |
| (d) | is required in order to manage the Tax Affairs of that Party or other members of the Relevant Party’s Group; |
29
|
| (e) | was already in the lawful possession of that Party or its Agents without any obligation of confidentiality (as evidenced by written records); or |
| (f) | is in the public domain at the date of this Agreement or comes into the public domain other than as a result of a breach by a Party of this Clause 18, |
provided that prior written notice of any confidential information to be disclosed pursuant to Clause 18.3(b) shall be given to the other Party and their reasonable comments taken into account.
20.2 | The Purchaser shall be free to assign its rights and obligations under this Agreement to a third party without having to obtain the consent of the Employee Sellers, provided that (i) any assignee agrees to be bound to the terms and conditions of this Agreement (as may be amended from time to time); and (ii) if the Purchaser proposes to assign its obligations this Agreement (including, for the avoidance of doubt, Clause 10 (Post-Closing Undertakings)) as amended from time to time), it shall, prior to such assignment, enter into a guarantee with and in favour of the Employee Sellers, in a form satisfactory to the Employee Sellers (acting reasonably and in good faith, having regard to the relevant circumstances, the identity of the assignee and customary market practice), pursuant to which, amongst other things, the Purchaser will, as principal obligor (A) guarantee to the Employee Sellers the due, punctual and full performance by the assignee of all of the Purchaser’s obligations under this Agreement (including the payment, when due, of any amount payable to the Employee Sellers); (B) in the event of default by the assignee, perform immediately on demand such obligations (including paying any amount which has become due to the Employee Sellers); and (C) indemnify the Employee Sellers, on or after Tax basis, in respect of any failure or delay by the assignee in complying with or discharging any of the obligations under this Agreement assigned to it by the Purchaser. The Purchaser’s guarantee will remain in full force and effect until all of the assigned obligations have been discharged in full and will remain in full force and effect notwithstanding any waiver, amendment or variation to the Agreement. The Parties agree and acknowledge that a change of control of the Purchaser shall not constitute an assignment of the Purchaser’s rights and obligations under this Agreement. |
30
The Parties shall from time to time and at their own cost do, execute and deliver or procure to be done, executed and delivered all such further acts, documents and things necessary in order to give full effect to this Agreement and its rights, powers and remedies under this Agreement.
22.4 | In this Clause 22, “Related Persons” means, in relation to a Party, members of the Relevant Party’s Group and the Agents of that Party and of members of the Relevant Party’s Group. |
If any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, it shall be deemed to be severed from this Agreement and the Parties shall use all reasonable endeavours to replace such provision with one having an effect as close as possible to the deficient provision. The remaining provisions will remain in full force in that jurisdiction and all provisions will continue in full force in any other jurisdiction.
No variation of this Agreement shall be effective unless in writing and signed by or on behalf of the Parties.
25.2 | No delay or omission by any Party in exercising any right or remedy provided by law or under this Agreement shall constitute a waiver of such right or remedy. |
25.3 | The single or partial exercise of a right or remedy under this Agreement shall not preclude any other nor restrict any further exercise of any such right or remedy. |
25.4 | The rights and remedies provided in this Agreement are cumulative and do not exclude any rights or remedies provided by law. |
31
The provisions of this Agreement and of the other Transaction Documents which remain to be performed following Closing shall continue in full force and effect notwithstanding Closing.
27.2 | The Parties may amend or vary this Agreement in accordance with its terms without the consent of any other person. |
28.4 | If immediately prior to or on the Step-In Closing or on the Step-In Deferred Payment Date (as applicable), a claim has been made against an Employee Seller by the Purchaser for an amount in respect of a breach of any of the Warranties or to satisfy any claims under the Tax Covenant or any claim pursuant to Clause 14 (Specific Indemnities), but that claim has not become a determined claim (an “unresolved claim”), the Purchaser shall be entitled to withhold from the Relevant Employee Seller Step-In Consideration the sum which the Purchaser has been advised in writing by the legal advisers engaged in pursuing the claim to be the maximum amount reasonably likely to be awarded to the Purchaser in respect of the unresolved claim (which may be the full amount of the unresolved claim if so advised in writing) (the “withheld sum”). If, when the unresolved claim becomes a determined claim, an amount is owed by the Employee Seller to the Purchaser in respect of such determined claim, such amount will be satisfied by set off against the withheld sum in accordance with Clause 28.3 and any balance of the withheld sum in excess of such amount shall be dealt with as if it had become payable as part of the Relevant Employee Seller Step-In Consideration. |
32
28.7 | If any amount payable by the Sellers to the Purchaser under this Agreement is subject to Tax in the hands of the Purchaser, that amount shall be increased so as to ensure that the net amount retained by the Purchaser after taking the Tax into account is equal to the full amount which would have been retained by the payee but for the Tax. |
of any such Turkish Transfer Taxes which arise as a result of or in connection with the transfer of the Company Shares.
30.2 | The Seller will procure that the necessary conditions will be satisfied to apply for VAT exemption on the transfer of the Company Shares as per article 17 of Turkish VAT Law numbered 3065. |
30.3 | The Sellers shall bear the entire cost of any non-Turkish Transfer Taxes which arise as a result of or in connection with the transfer of the Company Shares, including the payment of the income taxes, if any, arising from the same. |
30.4 | Schedule 9 (Tax Covenant) shall apply with effect from the date of this Agreement. |
Any and all amounts which are due and payable by one Party to another under this Agreement shall be paid in US$ and shall carry interest at the Interest Rate from the due date for payment up to and including the date of actual payment (both before and after any judgment). In the case of a Claim, the due date for payment shall be treated as being the date of receipt of notice of that Claim in accordance with Schedule 5 (Sellers’ Limitations on Liability).
33
| (c) | two (2) Business Days after the time and date of posting if sent by pre‑paid recorded delivery; or |
provided that if deemed receipt of any Notice occurs after 6:00 pm or is not on a Business Day, deemed receipt of the Notice shall be 9:00 am on the next Business Day. References to time in this Clause 32 are to local time in the country of the addressee.
Sellers’: to the addresses set out under their names in Schedule 1.
Purchaser:
Name:Zynga Inc.
Address: 699 8th Street, San Francisco, California 94103
For the attention of:Chief Legal Officer
Email address:legalnotices@zynga.com
This Agreement may be executed in counterparts and shall be effective when each Party has executed and delivered a counterpart. Each counterpart shall constitute an original of this Agreement, but all the counterparts shall together constitute one and the same instrument.
34.1 | This Agreement, including any non‑contractual obligations arising out of or in connection with this Agreement, is governed by and shall be construed in accordance with English law. |
34.2 | The Parties agree that any claim, dispute or difference of whatever nature arising under, out of or in connection with this Agreement (including a claim, dispute or difference regarding its |
34
existence, termination or validity or any non-contractual obligations arising out of or in connection with this Agreement) (a “Dispute”), shall be referred to and finally settled by arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce (“ICC”) (the “Rules”) as in force at the date of this Agreement and as modified by this clause, which Rules shall be deemed incorporated into this clause. The number of arbitrators shall be one to be jointly nominated by the claimant(s) and by the respondent(s) following the request in writing from the claimant(s) to the respondent(s) (the “Request for Joint Appointment”), provided that if such arbitrator has not been nominated within thirty (30) days of the Request for Joint Appointment, such arbitrator shall be appointed by the ICC Court. The seat of arbitration shall be London, England and the language of arbitration shall be English. |
36.5 | The Sellers shall, on the signing of this Agreement, execute and provide to the Purchaser a certified copy of a power of attorney granted by each Seller in favour of the Sellers’ |
35
Representative in the agreed terms, and shall promptly notify the Purchaser of any revocation of modification of such powers of attorney. |
In Witness Whereof each Party has executed and delivered this Agreement as a deed on the date which first appears above.
36
Number of Closing Shares (3) | Step-In Closing Shares (5) | ||||
Mehmet Can Yavuz Address: [***]
| 16,667 | 5,212 | 9.7% | 11,455
| 1,552,000
|
Deniz Başaran Address: [***]
Email: [***] | 16,667
| 5,212 | 9.7% | 11,455
| 1,552,000
|
Burak Vardal Address: [***]
Email: [***] | 16,667
| 5,212 | 9.7% | 11,455
| 1,552,000
|
Volkan Biçer Address: [***] Email: [***] | 68,386 | 68,386
| 39.8% | - | 6,368,000
|
Mehmet Ayan Address: [***]
Email: [***]
| 35,052
| 35,052
| 20.4% | - | 3,264,000
|
37
Number of Closing Shares (3) | Step-In Closing Shares (5) | ||||
Yunus Emre Gönül Address: [***] Email: [***] | 18,385
| 18,385
| 10.7%
| - | 1,712,000
|
Total | 171,824 | 137,459 | 34,365 | 16,000,000 |
38
: | ||
: | 169468-5 | |
Date and place of incorporation | : | December 14, 2018; İstanbul |
Registered address | : | Hacımimi Mahallesi Hocaali Sokak No.14/2 Beyoğlu, İstanbul/Turkey |
Issued share capital | : | 171,824 shares of TL 1.00 each |
Shareholders | : | Mehmet Can Yavuz Deniz Başaran Burak Vardal Volkan Biçer Mehmet Ayan Yunus Emre Gönül |
Directors | : | Volkan Biçer (Chairperson of the Board) Mehmet Ayan (Vice-Chairperson) |
Auditors | : | PwC YMM A.Ş. |
Accounting reference date | : | 31 December |
: | Turkey |
39
Schedule 3Closing Arrangements
Part 1
Sellers’ Closing Obligations
The Sellers shall on Closing:
(b) | the registration of the Purchaser as the owners of the Closing Shares in the share ledger of the Company be approved; |
(d) | the general assembly meeting of the Company shall be convened to resolve on (i) the amendment to the articles of association of the Company; (ii) appointment of the members of the board of directors nominated by the Purchaser and the Employee Sellers; and (iii) releasing the incumbent members of the board of directors for their actions until immediately prior to Closing which shall in no case give detriment to the indemnification obligations of the Purchaser (“Closing General Assembly”); |
2. | or, if the ordinary general assembly meeting of the Company for the financial year 2019 (“Ordinary General Assembly”) has not been convened before the Closing, the Closing General Assembly shall be convened as the Ordinary General Assembly to resolve on, inter alia, approving the balance sheet, and profit and loss statement of 2019; |
4. | Execute and deliver to the Purchaser the Updated Disclosure Letter, if any; |
(a) | all necessary documents, duly executed, to enable title to the Closing Shares to pass fully and effectively in the name of the Purchaser or such other person as the Purchaser may nominate; |
(b) | a certified copy of the Board resolution of the Company at which the entry into the Transaction Documents and the Transaction are approved; |
(c) | the duly endorsed share certificates (in paper form) for the Closing Shares together with printed copies (in paper form) of the share certificates for the Closing Shares; |
(d) | completed relevant IRS Forms (including W-8 forms) from the Sellers in order for the Purchaser to pay the Escrow Amount in the Escrow Account; |
(e) | a certified copy of each power of attorney, as the case may be, under which any document to be delivered to the Purchaser has been executed; |
(f) | a certified copy of the minutes of the meetings of the Board and Closing General Assembly referred to in Part 1, paragraph 1 and Part 3, paragraph 3; and |
(g) | subject to Disclosure Letter Update, a certificate signed by the Sellers confirming that the Operational Warranties are true and accurate in all material respects as of the Closing Date, and |
40
that the Company has performed and complied with each of the covenants and obligations under this Agreement required to be performed and complied with by it as of the Closing Date. |
(c) | statements from the banks at which each the Company maintain an account giving the balance as at the close of business on the last Business Day prior to the Closing; |
(d) | the cash book balances each of the Company with statements reconciling the cash book balances with the bank statements in paragraph 4.3 above; |
(e) | evidence as to the repayment of any existing loans, advances or capital contributions granted by the Company to Employee Sellers, if any; and |
(f) | copies of written agreements replacing any verbal arrangements entered into by the Company and continuing to exist immediately prior to Closing in relation to game production and collaboration agreements with respect to the current games. |
41
Part 2
Purchaser’s Closing Obligations
On Closing the Purchaser shall:
42
Part 3
Sellers’ and Purchaser’s Joint Closing Obligations
On Closing the Purchaser and Sellers shall:
1. | procure that the Board resolves on: |
(a) | the Business Plan; |
(b) | the authority distribution among the board members; and |
(c) | the cancellation of the signature authorities of the Company and appointment of the new signature authorities in line with this Agreement, and notification to İstanbul Trade Registry of the fact that the Buyer has become a shareholder of the Company in accordance with the Article 198 of the TCC; |
2. | hold the Closing General Assembly and resolve on the agenda as agreed in paragraph 1(d) of Part 1 of this Schedule; and |
3. | have the Company apply to the İstanbul Trade Registry for the registration of the resolutions in paragraph 1 of this Schedule 3. |
43
Part 4
Employee Sellers’ Step-In Closing Obligations
At the Step-In Closing the Employee Sellers shall deliver to the Purchaser or the Purchaser’s Lawyers:
1. | all necessary documents, duly executed, to enable title to the Step-In Closing Shares to pass fully and effectively in the name of the Purchaser or such other person as the Purchaser may nominate; |
2. | the duly endorsed share certificates (in paper form) for the Step-In Closing Shares; and |
3. | such waivers, consents and other documents in the relevant jurisdiction as the Purchaser may require, to enable the Purchaser, or such other person as the Purchaser may nominate, to be registered as holder of the Step-In Closing Shares in accordance with the provisions of Clause 2 (Sale and Purchase). |
44
Part 5
Purchaser’s Step-In Closing Obligations
1. | At the Step-In Closing the Purchaser shall procure that the amounts due to the Employee Sellers pursuant to Clause 4.5 shall be transferred to each such Employee Seller’s Designated Bank Account as by electronic transfer in immediately available cleared funds (save for the amounts due to the Employee Sellers on the Step-In Deferred Payment Date which shall be due on the Step-In Deferred Payment Date). |
45
2.3 | The Company Shares constitute the entire allotted and issued share capital of the Company and are fully paid up. |
2.4 | The Company does not have any Subsidiary Undertakings. |
46
2.6 | There are no agreements or commitments outstanding which give to any person the right to call for the issue, transfer or purchase of any shares, debentures or other securities of the Company. |
2.8 | The articles of association, by-laws or equivalent constitutional documents of the Company are complete and accurate. |
2.9 | The Company does not have any branch or agency in any jurisdiction, other than Rollic Games Oyun Yazılım ve Pazarlama A.Ş. Ankara Şubesi. |
2.10 | The Company does not own any legal or beneficial interest in any shares, securities or participation interests of any kind in any undertaking. |
1.2 | The particulars of the Company set out in Schedule 2 (The Company) are complete, accurate and up to date in all respects. |
1.3 | The information contained in this Agreement is complete and accurate in all material respects and not misleading. |
1.4 | The information made available to the Purchaser in the Data Room was and remains complete and accurate in all material respects and not misleading. |
2.1 | The Management Accounts have been prepared in accordance with the Applicable Accounting Standards. |
2.2 | The Management Accounts give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company at the Accounts Date and in the financial periods to which they relate. |
47
2.5 | The Management Accounts are not affected by any unusual or non‑recurring item or by any other factor that makes the Management Accounts unusual or misleading in any respect. |
3. | Events Since the Accounts Date |
| (b) | there has been no material adverse change in the financial or trading position or prospects of the Company; |
| (f) | no dividend or other distribution has been, or has agreed to be, declared, made or paid by the Company; |
| (g) | the Company has not made any investment in or loan any other person; |
| (h) | The Company has not made advance payment to any other person other than ordinary course of business; |
| (j) | the Company has not issued or agreed to issue any share or loan capital or other similar interest. |
3.3 | There are no debts of the Company which have been outstanding for a period in excess of one hundred and eighty (180) days as at the date of this Agreement. |
48
Complete and accurate copies (including of any amendment, variation or extension of any such contract) are contained in Data Room folder Project Rock - Zynga / Due Diligence List / 14. Material Agreements and 2. Facilities, Properties, and Leases and item 2, 3, 4, 5, 6, 7 and 8 of the Disclosure Letter of any contract to which the Company is a party which:
| (a) | involves revenue or expenditure in excess of five thousand (US$ 5,000) per annum (including pursuant to the terms of such contract or the course of dealing in the prior twelve (12) months; |
| (f) | involves publishing of advertisements, insertion orders, user acquisition campaigns and/or other marketing arrangements; |
| (a) | is of an unusual or exceptional nature or is not in the ordinary course of business; |
| (c) | restricts the Company’s ability to carry on the whole or any part of its business in any part of the world or to use or exploit any of its material assets; |
| (d) | is an agency, distribution, franchise, licensing, management, joint venture, consortium, partnership, association (other than a bona fide trade association) or shareholders’ agreement or a sale and purchase agreement relating to shares, a business or any material asset; |
| (h) | is a collective bargaining agreement, works council agreement or similar agreement with any Employee Representatives; or |
| (i) | is an agreement which provides for Change of Control Payments; or |
| (j) | is a sale or purchase or option or similar arrangement affecting an asset owned, occupied, possessed or used by the Company; or |
49
|
| (k) | is a bid or offer which, if accepted, would give rise to a contract falling within paragraphs 4.2(a) to (k) above. |
4.3 | Each of the contracts to which the Company is a party is in full force and effect. No party is in breach of any such contract nor has any allegation of any breach or invalidity been made or received by any Seller or the Company. No notice of termination of any such contract has been served or received by any Seller or the Company, to the knowledge of the Sellers, there are no grounds for the termination, rescission, avoidance or repudiation of any such contract and there has been no allegation in writing of any such grounds. |
4.4 | Save for those listed in item 8 of the Disclosure Letter, each of the contracts to which the Company is a party is in writing. |
4.5 | The Company is not, or since its incorporation has not been, a party to a contract which is, or was, not entirely of an arm’s length nature and the Company has not transferred or has agreed to transfer any assets except at market value. |
4.6 | The Company is not a party to or has any liability (actual or contingent) under any guarantee, indemnity or letter of credit, or any leasing, rental, hire purchase or credit sale agreement. |
4.7 | No person is entitled to receive from the Company any finder’s fee, brokerage or commission in connection with any of the transactions contemplated by this Agreement. |
6.2 | None of the Sellers has breached its obligations under the Existing Shareholders’ Agreement and the articles of association of the Company that may have an adverse impact on the Company. |
7.1 | The Company has carried out its business and dealt with its assets in accordance with all applicable laws and regulations in any relevant jurisdictions in all material respects. |
50
Trade Control Law. The Company has never been subject to any inquiries and investigations with respect to Trade Control Laws. |
8.1 | The Company complies and has at all times complied with all applicable Anti-Bribery Law, Anti-Money Laundering Law, Antitrust Law and Economic Sanctions Law. |
| (b) | to or for the benefit of any Government Official for the purposes of influencing any official act or decision; |
| (d) | and in relation to (a) through (c) above, with the intention of winning or retaining business or a business advantage for the Company or any of its affiliates. |
51
9.2 | The direct or indirect change of control of the Company pursuant to the sale and purchase of the Company Shares will not result in the suspension, cancellation, variation, revocation, termination or non-renewal of any Licence or give rise to a right to suspend, cancel, vary, revoke, terminate or not renew any Licence. |
11.2 | The Company does not have any overdraft facilities and there is no any agreements or arrangements in respect of or providing for monies borrowed by the Company. |
52
occurred or been alleged which is, or which may become or result in, an event of default, an early repayment or a breach of the terms of or under any borrowing or financial facility of the Company and no change in the direct or indirect control of the Company will or may result in such an event of default, early repayment or breach. |
11.5 | No indebtedness (actual or contingent) and no contract or arrangement is outstanding between the Company or any Connected Persons of such a member. |
The Company has not applied for or received any grant, subsidy or allowance from any governmental or other body save for those as listed in item 11 of the Disclosure Letter and Data Room folder Project Rock – Zynga/ Due Diligence List / PWC Tax DD/ Addition 2.7.2020/32.
The Company has not given any power of attorney or other authority (express, implied or ostensible) which is still in force to any person to enter into any contract or commitment on its behalf save for those as listed in item 12 of the Disclosure Letter and Data Room folder Project Rock – Zynga/ Due Diligence List / 11. Corporate Records and Organizational Information/ Power of Attorney.
14.1 | A complete and accurate list of all insurance policies maintained by or covering the Company is listed in Data Room folder Project Rock – Zynga/ Due Diligence List / 3. Insurance. |
14.3 | Neither the Company nor any Seller has any individual insurance claims outstanding, under any of the policies. |
53
Registered Business IP Rights and Business Domain Names
16.1 | Items listed in 13, 14 and 15 of the Disclosure Letter and Data Room folder Project Rock – Zynga/ Due Diligence List / 12. Intellectual Property and Related Matters accurately identify: |
| (a) | each Business Domain Name, and each Registered Business IP Right and each Business Social Media Account; |
| (b) | the jurisdiction in which each Registered Business IP Right has been granted, issued, registered or filed for, and the applicable application, registration or serial number; |
16.2 | The Sellers have provided to the Purchaser, complete and accurate copies of all applications, and other material documents related to each Business Domain Name and Registered Business IP Right. |
Business Software
54
Software List contains a complete and accurate list (by name and version number) of all Business Owned Software. |
16.10 | Data Room folder Project Rock – Zynga/ Due Diligence List / 12. Intellectual Property and Related Matters/q/Open Sources Tool List accurately identifies and describes: |
| (c) | the Business Product(s) or Business Owned Software to which each such item of Open Source Code relates; and |
16.11 | The Company has complied with all of the terms and conditions of the license for each such item of Open Source Code, including all requirements pertaining to attribution and copyright notices. |
| (b) | otherwise impose or could impose any other limitation, restriction or condition on the right or ability of the Company to use or distribute any Business Product or Business Owned Software. |
55
|
Business IP
56
| name owned, used, or applied for by any other person. No event or circumstance (including a failure to exercise adequate quality controls and an assignment in gross without the accompanying goodwill) has occurred or exists that has resulted in, or could reasonably be expected to result in, the abandonment of any trade mark (whether registered or unregistered) owned, used, or applied for by the Company. None of the goodwill associated with or inherent in any trade mark (whether registered or unregistered) in which the Company have or purports to have an ownership interest has been impaired. |
16.21 | Data Room folder Project Rock-Zynga/Due Diligence List/14. Material Agreements/Studio Contracts accurately identifies: |
57
(“Outbound IP Contracts”). Save for those contracts Disclosed in Data Room folder Project Rock-Zynga/Due Diligence List/14. Material Agreements/Studio Contracts, the Company is not bound by, and none of the Business IP is subject to, any contract containing any covenant or other provision that: |
| (a) | limits or restricts the ability of the Company to use, exploit, assert or enforce any Business IP anywhere in the world in any manner; or |
16.23 | The Sellers have provided to the Purchaser complete and accurate copies of all Inbound IP Contracts and all Outbound IP Contracts (together, the “IP Contracts”). |
16.26 | The Sellers have provided to the Purchaser a complete and accurate copy of each form used by the Company at any time, of: |
| (a) | employee agreement containing any assignment or license of Intellectual Property Rights or any confidentiality provision; |
| (b) | professional services, outsourced development, consulting or independent contractor agreement containing any assignment or licence of Intellectual Property Rights or any confidentiality provision |
| (e) | developer agreement (including the game production cooperation agreement and the software launching service agreement); and |
58
or otherwise violating, any Business IP. Data Room folder Project Rock-Zynga/Due Diligence List/13. Litigation accurately identifies (and the Sellers have provided to the Purchaser a complete and accurate copy of) each letter or other written or electronic communication or correspondence that has been sent or otherwise delivered by or to any of the Sellers or the Company regarding any actual, alleged, or suspected infringement, misappropriation or violation of any Business IP, and provides a brief description of the current status of the matter referred to in such letter, communication, or correspondence. |
59
any other person of any licence or other right or interest under, to, or in any Business IP or Intellectual Property Rights of the Purchaser or any Subsidiary Undertaking. |
| (a) | are in good working condition and are functioning properly and in accordance with their specifications and all applicable service levels set forth in the relevant IT Contracts; and |
| (b) | are fit for the purpose of effectively performing all information technology operations necessary to conduct the Business; and |
60
reasonably result in a material adverse effect. No notice of termination of any IT Contract has been served or received by any Seller or the Company, there are no grounds for the termination, rescission or repudiation of any IT Contract, and no allegation of any such grounds have been made or received by any Seller or the Company. |
| (a) | complying with all data protection principles and legal requirements established under any Data Protection Laws; |
| (b) | honouring requests from Data Subjects to exercise their legal rights as required by Data Protection Laws; and |
| (c) | complying with all applicable requirements to notify, or register with, the relevant Authorities in relation to the Processing of Personal Data. |
18.2 | At no point since its incorporation has the Company engaged in any unauthorised or unlawful Processing of any Personal Data. |
| (e) | any notice of any actual or suspected Personal Data Breach regarding any Personal Data Processed by, or on behalf of, the Company, |
and to the Knowledge of the Sellers, the Company has no reason to believe that any such notice or complaint is likely to be received.
61
18.4 | In each instance in which the Company has engaged a Processor to Process Personal Data for the Company: |
| (a) | the Company has initiated necessary proceedings to ensure that such Processor has provided sufficient written guarantees confirming that: |
| (i) | such Processor has only Processed the relevant Personal Data in accordance with the documented instructions of the Company; |
| (i) | carried out appropriate due diligence to confirm such Processor’s compliance with the guarantees described in Clause 18.1(a) above; and |
| (ii) | initiated necessary proceedings to have an appropriate and enforceable written contract with the Processor, in accordance with the requirements of applicable Data Protection Laws. |
18.8 | The Company has in place, and has at all times since its incorporation maintained in all material respects: |
| (a) | appropriate Privacy and Data Security Policies governing the lawful Processing of Personal Data by the Company and its Processors; and |
| (b) | appropriate, and regularly refreshed, training for all relevant employees and other personnel, contractors or Processors who Process Personal Data for or on behalf of the Company. |
62
|
| (a) | all current registrations or notifications materially required in respect of the Company under any Data Protection Laws; |
| (b) | all Privacy and Data Security Policies currently in force, or in force at any point since the Company’s incorporation; |
| (c) | all documentation required materially under Data Protection Laws, including any records of processing, data protection impact assessments and records of consent; |
| (d) | all contracts or agreements between the Company and any Processor and/or Controller, including without limitation contracts for data sharing, data storage, servers, and analytics services; and |
Business Products
18.13 | Save for those as listed in item 17 of the Disclosure Letter, there are no publishing or distribution rights in respect of any of the Business Products that are solely owned by the Company. |
63
all sales and licenses, through the date of the most recent balance sheet and (ii) any advances against royalties made or guarantees owed, with respect to such Business Product. |
18.15 | No external developer of any Business Products which account for five per cent. (5%) or more by value of the Company’s annual sales, as the case may be, has during the twelve (12) months immediately preceding the date of this Agreement ceased, reduced or indicated an intention to cease or reduce, or changed the terms of or indicated an intention to change the terms of, its relationship with the Company. |
18.16 | There are no notices, disputes, complaints, liabilities, claims or demands relating to or in respect of the use, enjoyment or otherwise of any Business Products by any person under the age of 18. |
18.17 | There is and has been no claim, enquiry, investigation, action, suit or proceeding pending or threatened by or against the Company before any court, arbitrator, regulator (e.g. the Federal Trade Commission, the Children’s Advertising Review Unit or otherwise) or other governmental body, in connection with the use, enjoyment or otherwise of any Business Products by any person under the age of 18 (the “Minors”). |
18.18 | The Group does not advertise the Business Products on any websites, applications or other media directed towards Minors or which could be reasonably regarded as addressed to Minors. |
18.19 | The Company does not produce, develop or incorporate in any Business Products any features, applications or otherwise, directed to, or for the purposes of attracting the attention of, Minors (e.g. a “kid’s club” or otherwise). |
19.2 | The information listed in Data Room Folder Data Room Folder Project Rock – Zynga/ Due Diligence List / 2. Facilities, Properties, and Leases sets forth a true and complete list of each lease or other Contract under which of the Company is the lessee of, or holds or operates, any Properties owned by a third Person, including, in each case, the expiration date thereof and a brief description of the property covered. |
64
19.10 | None of the leases or occupation agreements relating to the Properties can be terminated or amended upon a change in the direct or indirect ownership or control of the Company. |
19.11 | No rent reviews and/or rent adjustments under any leases of the Properties are currently outstanding or in process. |
65
66
20.17 | Neither the Employee Sellers nor the Key Employees are bound by any non‑compete agreements with third parties that may affect their working conditions or the business of the Company. |
20.19 | To the Knowledge of the Sellers, there are no indemnities in place by the Company for the benefit of the Company’s directors in respect of third party proceedings. |
67
20.29 | The Company has not within the eighteen (18) months preceding the date hereof entered into any agreement which involved or may involve the automatic transfer of staff by operation of law. |
21. | Pensions |
For the purposes of this paragraph 21, the following expressions shall have the following meanings:
“Defined Contribution Plan” means a plan that provides for an individual account for each participant and for Pension Benefits based solely on the amount contributed to the participant’s account and any income, expenses, gains and losses and any forfeitures of accounts of other participants which may be allocated to such participant’s account;
“Pension Benefits” means any pension, lump sum or other benefit payable on, in anticipation of, or following retirement, death, reaching a particular age, illness or disability, or in similar circumstances; and
“Worker” means a current or former employee or a current or former director or other officer of the Company.
68
21.2 | Only eighteen (18) employees of the Company are included in the compulsory individual pension plan by the Company. |
21.3 | There are not outstanding contributions, costs (including levies) or expenses payable by the Company in respect of any Plans and the Company has no monetary obligations (including actuarial, consultancy, legal or other fees) to or in respect of any Plans. |
| (a) | is or was in breach of any competition or similar legislation in any jurisdiction in which the Business is or has been carried on; |
69
23.3 | No Tax Authority has agreed to operate a special arrangement (being an arrangement not based on a strict application of the relevant legislation) in relation to the Tax affairs of the Company. |
23.5 | Proper records have been maintained, and all applicable regulations have been complied with, in relation to all deductions and withholdings in respect of Tax. |
70
23.16 | The Company has not at any time entered into or been engaged in or been a party to or promoter of any scheme, transaction or arrangement which was required by any applicable law to be specifically disclosed to a Tax Authority or a main or dominant purpose or object of which was the avoidance or deferral of or the obtaining of a reduction in or other advantage in respect of a liability to Tax. |
23.19 | The Company is resident for Taxation purposes solely in the jurisdiction in which it is incorporated and the Company is not nor has ever been liable for Tax in any other jurisdiction. |
71
23.30 | All personal income tax obligations and social security contributions relating to employee benefits have been calculated, filed and paid in accordance with Turkish Law in relation to Tax. |
23.32 | The Company has not filed an entity classification election under Treasury Regulation Section 301.7701-3(c). |
72
23.35 | The Company is not nor has been engaged in the conduct of a “trade or business within the United States” within the meaning of sections 864(b) or 882(a) of the Code. |
23.36 | The Company does not own any “United States real property interest” within the meaning of section 897(c) of the Code nor has filed an election under section 897(i) of the Code. |
73
Schedule 5
Sellers’ Limitations on Liability
For the purposes of this paragraph (b), the term “Claims” shall mean Claims in respect of which liability is admitted by the Sellers or which have been decided upon by a Court of competent jurisdiction with all rights of appeal having been exhausted.
1.3 | To the extent that the Purchaser shall be entitled to recover an amount greater than the Escrow Amount in respect of such a claim, or the Escrow Amount is insufficient to cover the Losses of the Purchaser in respect of such a claim, the Purchaser shall be entitled in accordance with Clause 28 (Payments) to claim and deduct the amount of such claim (or the outstanding amount of such claim, as applicable) from the respective Seller directly, including by setting-off or deferring any payments due to the Sellers on the Step-In Closing and on the Step-In Deferred Payment Date under this Agreement against the Step-In Consideration. |
The Sellers shall not be liable in respect of any Warranty Claim (other than a Tax Warranty Claim) unless written notice of the matter giving rise to the Claim setting out reasonable details of the Claim and so far as then known to the Purchaser is given by or on behalf of the Purchaser to the Sellers or the Sellers’ Representative:
2.1 | in the case of a Fundamental Warranty Claim by no later than three (3) years from the Closing Date; |
2.2 | in the case of an Operational Warranty Claim by no later than twenty four (24) months from the Closing Date; and |
provided that any such Claim (other than a Tax Claim) shall (if not previously satisfied, settled
74
or withdrawn) be deemed to have been withdrawn unless legal proceedings in respect of it have been commenced within twelve (12) months of such written notice being given to the Sellers or to the Sellers’ Representative, except that the Seller shall not be liable for any Claim based upon a liability which is contingent unless and until such contingent liability becomes an actual liability, save that the fact that the liability may not become an actual liability by the relevant date in this paragraph 2 of this Schedule 5 shall not exonerate or release any of the Sellers from liability in respect of any Claim properly notified before that date.
| (b) | make no admission of liability or settle or compromise the Third Party Claim without prior consultation with the Sellers’ Representative; and |
| (d) | subject to maintaining legal privilege and any applicable confidentiality restrictions, allow the Sellers’ Representative and its advisers and agents to investigate the Third Party Claim (including whether and to what extent any amount is payable in respect thereof); |
| (e) | consult in good faith with the Sellers’ Representative as to any ways in which the Third Party Claim might be avoided, disputed, resisted, mitigated, settled, compromised, defended or appealed; |
The Purchaser shall be entitled to bring more than one Claim arising out of the same subject matter, fact, event or circumstance but shall not be entitled to recover damages or obtain payment, reimbursement, restitution or indemnity more than once in respect of any one shortfall, damage or deficiency, irrespective of whether it gives rise to more than one Claim.
75
Nothing in this Schedule 5 applies to a Claim that arises or is delayed as a result of fraud, intentional misrepresentation or wilful breach by any of the Sellers or any of their respective Agents, in which case the liability of the Sellers is uncapped.
6. | Changes on and/or after Closing |
The Sellers shall not be liable for any Claim (other than a Tax Claim) if it arises, or if and to the extent it is increased or extended by:
| (a) | any change to legislation, any increase in rates of Taxation or any change in the published practice of a revenue authority, in each case made on and/or after Completion with retrospective effect; |
| (b) | any change in the accounting reference date of the Purchaser or the Company made on and/or after Closing; or |
| (c) | any change in any accounting policy or practice of the Company made on and/or after Closing, save where such change is required to conform such policy or practice with law or generally accepted United Kingdom or Turkish accounting policies, principles, practices and conventions or where such change is necessary to correct an improper policy or practice.. |
The Sellers shall not be liable for any Claim (other than a Tax Claim) if and to the extent that the fact, matter, event or circumstance giving rise to such Claim is remediable and is remedied by, or at the sole expense of the Sellers within 20 days of the date on which written notice of such Claim is given to the Sellers.
The Sellers shall not be liable for any Claim (other than a Tax Claim) which arises by reason of a liability which, at the time when written notice of the Claim is given to the Sellers, is contingent only or is otherwise not capable of being quantified and the Sellers shall not be liable to make any payment in respect of such Claim unless and until the liability becomes an actual liability or (as the case may be) becomes capable of being quantified.
9. | Reimbursement of Claims |
If, after any Sellers has made any payment in respect of a Claim (other than a Tax Claim), the Purchaser recovers from a third party a cash sum which is referable to that payment (the "Recovery Amount"), then the Purchaser shall forthwith repay (or procure the repayment of) to the relevant Sellers so much of the Recovery Amount less all costs, charges and expenses incurred in making such recovery.
Any amount paid by the Sellers in respect of any Claim or Tax Claim or under Clauses 12, 13 and 14 of this Agreement shall (so far as it is lawful so to do) be treated as a reduction in the consideration paid to the Sellers under this Agreement.
11. | Other Limitations |
| (a) | Without prejudice to the limitations set out in this Schedule, each Seller’s liability in relation to a Claim shall be limited to the Seller’s Pro Rata Portion of the total value of such Claim and the Purchaser shall be entitled to recover from any of the Sellers such |
76
| Seller’s Pro Rata Portion of the total value of such Claim without imposing any obligation or responsibility on the Purchaser to recover against all Sellers. |
| (b) | The Purchaser shall not and shall cause the Company not to initiate (save in respect of fraud, dishonesty or criminal matters) any claim, action or proceedings against the members of the board with respect to any action taken by the board or matter occurring on or before Closing in their capacity as representatives of the board (but excluding any other capacity, including, for the avoidance of doubt but not limited to, employees). For the avoidance of doubt this provision shall give no detriment to the indemnification rights of the Purchaser against the Sellers. |
| (c) | Without prejudice to the limits set out in this Schedule 5, the liability of each Seller under this Agreement shall not in any circumstance exceed the amount of the Total Purchase Consideration actually received by such Seller under the Transaction Documents at the time that the Purchaser makes the Claim. |
| (d) | For the avoidance of doubt, when suffered by the Company, the calculation of the Loss shall be computed without regard to any valuation parameter or multiple of valuation factor that may have been used in determining the consideration for the sale and transfer of the Closing Shares and Step-In Closing Shares. |
77
| (i) | by applying the specific accounting treatments set out in Part 2 (Specific Accounting Treatments) of this Schedule 6; |
78
| (c) | so as to exclude the costs incurred in relation to this Agreement (including the costs of the preparation, delivery, review and resolution of the Closing Accounts); |
(b) | In determining the Actual Debt, Change of Control Payments, Transaction Expenses and Actual Working Capital, no amount shall be double counted. |
79
1.2 | Within ten (10) Business Days of receipt from the Purchaser of the Draft Closing Accounts, the Sellers’ Representative shall either: |
80
|
| (ii) | subject to paragraph 2.2(c)(i) above, such terms of reference as are submitted jointly to it by the Parties in writing any time prior to its final decision in relation to the dispute; and |
| (iii) | subject to paragraphs 2.2(c)(i) and (ii) above, such terms of reference as it deems reasonably appropriate; |
| (d) | in giving its determination, the Expert shall state what adjustments (if any) are necessary to the draft Closing Accounts in relation to the disputed matters for the purposes of this Agreement; |
3.1 | Each Party shall bear its own costs in connection with the Closing Accounts, save that the fees and costs of any Expert shall be borne equally by the Purchaser and the Sellers’ Representative. |
81
Schedule 7
Post-Closing Financial Adjustments
Debt
(a) | is less than the Estimated Debt, then the Purchaser shall pay an amount equal to the difference to the Sellers; or |
(b) | is greater than the Estimated Debt, then the Sellers shall pay an amount equal to the difference to the Purchaser. |
Working Capital
(a) | is greater than the Estimated Working Capital, then the Purchaser shall pay an amount equal to the difference to the Sellers; or |
(b) | is less than the Estimated Working Capital, then the Sellers shall pay an amount equal to the difference to the Purchaser. |
The Purchaser and the Sellers agree that the sums that each is respectively obliged to pay pursuant to Part 1 (Adjustments) of this Schedule 7 shall be aggregated and set off against each other. Whichever of the Purchaser or the Sellers is then left with any payment obligation thereunder shall make such aggregated payment to the other Party within ten (10) Business Days of the date on which the Closing Accounts are agreed or determined pursuant to Schedule 6 (Closing Accounts) and in accordance with Clause 28 (Payments). For the avoidance of doubt, when the Purchaser is due to make an adjusting payment to the Sellers pursuant to this Schedule, such payment shall be made pro rata to the portion of Initial Consideration paid to each Seller pursuant to this Agreement.
82
2. | No amount shall be released from the Escrow Account except in accordance with the provisions of this Schedule 8 and the Escrow Agreement. |
5. | The Parties agree that the Sellers will, and will be treated as, and will be reported for US federal tax purposes as, the beneficial owners of the Escrow Account. |
and the Escrow Period shall be deemed to be extended pending settlement of all such Escrow Claims.
83
| (i) | at the request of either party, the determination of the Estimated Liability shall be referred to a barrister of not less than 10 years standing, having experience in claims similar to a relevant Escrow Claim, as agreed by the Sellers’ Representative and the Purchaser, or failing such agreement, as appointed by the President for the time being of the Law Society in England and Wales on the application of either party ("Counsel"); |
| (ii) | Counsel shall be requested to provide his determination of the Estimated Liability within 15 Business Days of accepting his appointment (or such other period as the Purchaser and the Sellers’ Representative may otherwise agree with Counsel); |
| (iii) | Counsel shall act as an expert and not as arbitrator and his determination regarding the amount of the Estimated Liability shall, in the absence of manifest error, be final and binding on all the parties; and |
| (iv) | Counsel's fees in making his determination of the Estimated Liability shall be borne by the Purchaser on the one hand and the Sellers on the other equally. |
and the balance of the Escrow Amount, if any, shall be retained in the Escrow Account pending settlement of the remaining Escrow Claims, if any. Following payment of the final outstanding Escrow Claim in accordance with this paragraph 5, the balance of the Escrow Account, if any, shall be released to the Sellers and the Escrow Agreement shall terminate.
| (b) | when an order or judgment of a court of competent jurisdiction has been given in respect of it with all rights of appeal having been exhausted; or |
| (c) | when such amount is unconditionally withdrawn by the Purchaser in writing. |
8. | Payment of any amount in accordance with this Schedule 8 to settle an Escrow Claim shall, so far as possible, be deemed to be a reduction of the Initial Consideration. |
9. | The Sellers’ Representative and the Purchaser undertake to issue instructions for payment from the Escrow Account of the amounts due under the above clauses without delay. |
84
1.1 | In this Schedule, unless the context requires otherwise: |
“Accounts Relief” means a Relief which has been treated as an asset in the Closing Accounts or which has been taken into account in computing (and reducing) any provision for Tax (including deferred Tax) which appears in the Closing Accounts or which has resulted in no provision for Tax (including deferred tax) being made in the Closing Accounts;
“Actual Tax Liability” means any liability of the Company to make an actual payment of or in respect of, or on account of, Tax, whether or not the same is primarily payable by the Company and whether or not the Company has or may have any right of reimbursement against any other person, in which case the amount of the Actual Tax Liability will be the amount of the actual payment;
“Deemed Tax Liability” means:
| a) | where the Accounts Relief lost, reduced or unavailable was a right to repayment of Tax, the amount of the repayment which would otherwise have been obtained; |
| c) | in the case of the set-off of an Accounts Relief against Income, Profits or Gains or against Actual Tax Liabilities, the amount of Tax saved in consequence of such set-off, and |
“Event” means an event, transaction, action or omission whatsoever whether alone or in conjunction with any other transaction, action or omission and includes further (without limitation) the death of any person, becoming, being or ceasing to be a member of a group of companies (however defined) for the purposes of any Tax;
“Income”, “Profits” or “Gains” means revenue profits, chargeable gains and any other similar measure by reference to which Tax is chargeable or assessed;
“Loss” or “Losses” means any and all direct or indirect or consequential losses, liabilities (including Tax), actions and claims, including charges, costs, damages, fines, penalties, interest and all legal and other professional fees and expenses (as long as reasonable and documented) including, in each case, all related Taxes;
85
“Purchaser’s Relief” means:
| i. | an Accounts Relief; |
| ii. | any Relief arising to the Company to the extent that it arises in respect of either an Event occurring or a period after the Closing Date; and |
| iii. | any Relief arising to any member of the Purchaser’s Group (other than the Company); |
“Tax Authority Claim” means the issue of any notice, demand, assessment or letter by a Tax Authority post-Closing; and
“Tax Liability” means an Actual Tax Liability or a Deemed Tax Liability.
1.2 | In this Schedule: |
| (a) | the obligations and liabilities of the Sellers under this Schedule are assumed jointly and severally; |
| (b) | references to paragraphs are to paragraphs of this Schedule; |
| (c) | references to any “Income”, “Profits” or “Gains” earned, accrued or received shall include income, profits and gains which are deemed to have been earned, accrued or received for Tax purposes; |
| (d) | references to any “Income”, “Profits” or “Gains” earned, accrued or received before a particular date or in respect of a particular period include income, profits or gains which are deemed for the purposes of any Tax to have been earned, accrued or received at or before the date or in respect of that period; |
| (e) | references to an Event occurring on or before a particular date or time shall include the case where such Event is deemed or treated for Tax purposes as having occurred on or before that date; and |
| (f) | references to any pre-Closing Date period or pre-Closing period in this Schedule shall include any period (or part period) ending on or before the relevant date. |
1.3 | Each of the covenants contained in paragraph 2.1 shall be construed as a separate and independent covenant and shall not be limited or restricted by reference to or inference from any other covenant contained in paragraph 2.1. |
The Sellers covenant to pay to the Purchaser (as far as possible, as an adjustment to the consideration for the sale of the Closing Shares), subject to the other provisions of this Schedule, an amount equal to:
| (a) | any Event which occurred on or before Closing; or |
| (b) | in respect of any Income, Profits or Gains which were earned, accrued or received on or before Closing; |
2.2 | any Deemed Tax Liability; |
86
2.3 | any Actual Tax Liability which is primarily the liability of another person (the “Primary Person”) for which the Company is liable in consequence of: |
| (a) | the Primary Person failing to discharge such Tax Liability; |
| (b) | the Company at any time before Closing: |
| (i) | being a member of the same group of companies as the Primary Person; or |
| (ii) | having control of, having been controlled by, or otherwise being connected with, the Primary Person or being controlled by the same persons as the Primary Person for any Tax purpose; and |
3.1 | The covenant at paragraph 2 does not apply in respect of any Tax Liability of the Company to the extent that: |
| (a) | specific provision or reserve in respect of that Tax Liability was made in the Closing Accounts; |
| (b) | the Tax Liability arises or is increased as a result of: |
| (i) | a change in Tax rates or in legislation made after Closing; or |
| (ii) | a change or withdrawal after Closing of any previously published practice, concession or interpretation of any Tax Authority; |
in each case announced and occurring after Closing with retrospective effect;
| (c) | the Tax Liability arises as a result of a change after Closing in the length of any accounting period for Tax purposes of the Company; |
| (d) | such Tax Liability has been discharged without cost to the Purchaser, the Company and/or any member of the Purchaser’s Group; |
| (f) | the Tax Liability would not have arisen but for: |
87
3.2 | The Sellers shall not be liable in respect of any Tax Claim unless notice of such Tax Claim has been provided to the Sellers’ Representative within 66 (sixty six) months from the date of Closing. |
3.3 | The provisions of paragraph 3.1 shall also apply to limit or reduce the liability of the Sellers in respect of any Tax Warranty Claim. |
4.2 | Subject to the remainder of this paragraph, if such auditors determine that a Corresponding Relief has arisen and that the Company in question has utilised such Corresponding Relief to give rise to a cash Tax saving (the “Tax Saving Amount”) for the Company, then an amount equal to the lesser of: |
| (a) | the Tax Saving Amount (less any Losses incurred in establishing, obtaining or and/or utilising the relevant Corresponding Relief); and |
| (b) | the amount already paid by the Sellers in respect of the relevant Tax Liability (and not previously refunded), |
shall be accounted for under paragraph 4.3.
4.3 | Subject to the remainder of this paragraph, any amount required to be accounted for under this paragraph 4.3: |
| (a) | shall, for eighteen (18) months after the Closing Date, be credited to the Escrow Account to the extent the amount in the Escrow Account falls short of the Escrow Amount; |
| (b) | to the extent there is any excess after sub-paragraph (a) directly above, such excess shall be set off against any payment then due from the Sellers to the Purchaser under this Schedule; and |
| (c) | to the extent there is any excess after sub-paragraph (b) directly above, such excess shall be set against any payment(s) already made or subsequently due under this Schedule in chronological order until exhausted. |
88
4.4 | The Purchaser shall only be required to account to the Sellers in accordance with paragraph 4.3 to the extent that the Purchaser is satisfied that such accounting will not: |
| (a) | prejudice any of the entitlement of the Company to the Corresponding Relief; nor |
| (b) | result in the loss, reduction or non-availability of the Tax saving obtained by the Company from the utilisation of such Corresponding Relief. |
| (ii) | the amount already paid by the Sellers in respect of the relevant Tax Liability (and not previously refunded under this Schedule). |
| (a) | shall, for eighteen (18) months after the Closing Date, be credited to the Escrow Account to the extent the amount in the Escrow Account falls short of the Escrow Amount; |
| (b) | to the extent there is any excess after sub-paragraph (a) directly above, such excess shall be set off against any payment then due from the Sellers to the Purchaser under this Schedule; and |
89
|
| (c) | to the extent there is any excess after sub-paragraph (b) directly above, such excess shall be set against any payment(s) already made or subsequently due under this Schedule in chronological order until exhausted. |
The Sellers (at their expense) are to provide the Purchaser and the Company with all reasonable assistance, co-operation and information as the Purchaser may request in respect of the pre-Closing Tax affairs of the Company, including (but not limited to) information and co-operation requested in connection with Tax computations and returns outstanding at Closing and in connection with all negotiations, correspondence and agreements in respect of the Company’s Tax liabilities.
7.4 | Subject to this paragraph 7, if the Sellers’ Representative takes control of any proceedings pursuant to paragraph 7.3, the Sellers’ Representative shall (in each case at the Sellers expense): |
90
| (a) | keep the Purchaser informed of all actual or proposed material developments known to any Seller; |
| (b) | promptly notify the Purchaser of any intended material oral communication or any meeting with a relevant Tax Authority in relation to the relevant proceedings, including details of the proposed agenda (and a summary of the position proposed to be taken in relation to the points on such agenda) and allow the Purchaser (and its advisers or representatives) to fully participate in any such oral communication or meeting (or such part thereof as relates to the relevant proceedings); |
| (c) | promptly provide the Purchaser with copies of or extracts from all material documents (including copies of any notes relating to any oral communication or meeting in paragraph (b) above) and material correspondence insofar as they relate to the relevant proceedings; |
| (d) | at least 10 Business Days prior to the date of any intended submission, provide to the Purchaser for prior review any material document or correspondence related to the relevant proceedings which is to be submitted to the relevant Tax Authority and make such amendments to such documents or correspondence as the Purchaser may require; and |
| (e) | subject to prior approval by the Purchaser, be entitled to appoint (having particular regard to any regulatory and/or reporting requirements to the Company and/or other member of the Purchaser Group may be subject) such tax counsel (of at least ten (10) years’ experience) to deal directly with the relevant Tax Authority. |
7.5 | In circumstances where the Sellers’ Representative has exercised his rights under paragraph 7.3 and, in accordance with the provisions of this paragraph 7, the Company is contesting any Tax Authority Claim before any court or other appellate body: |
| (a) | subject to the prior approval by the Purchaser, the Sellers’ Representative shall be entitled to appoint (at the Sellers’ expense and having particular regard to any regulatory and/or reporting requirements to which the Company and/or other member of the Purchaser Group may be subject) such tax counsel (of at least ten years' experience) as the Sellers’ Representative shall decide to conduct such contest before the court or other appellate body; |
| (b) | the Sellers’ Representative shall provide the Purchaser and the Company with a reasonable opportunity to review any draft instructions to tax counsel, any submissions or other documents to be filed with the court or other appellate body and shall make such amendments to such instructions, submissions or other documents as the Purchaser may request; |
| (c) | the Sellers’ Representative shall promptly notify the Purchaser and the Company of any intended material oral communication or any meeting with the tax counsel and shall allow the Purchaser or its representatives to participate in any such communication or meeting; |
| (d) | the Sellers’ Representative shall promptly provide the Purchaser and the Company with copies of: (i) any advice received from tax counsel; and (ii) any correspondence with, or documentation from, the relevant court or appellate body; and |
| (e) | if the relevant court or appellate body is sitting in private, the Sellers’ Representative shall allow the Purchaser and/or its representatives to attend such court or appellate proceedings. |
91
7.6 | In the case of a Tax Authority Claim relating to any taxable period that commences on or prior to, but ends after, the date of Closing, the Purchaser shall have the right to control any proceedings (including without limitation the right to deal directly with the relevant Tax Authority) taken in connection with such action. If the Sellers could be required to make a payment under this Schedule in respect of all or a portion of such Tax Authority Claim: |
| (a) | the Sellers’ Representative (or his representatives) shall be permitted to listen to any material oral communication and attend any meeting with a relevant Tax Authority in relation to the relevant proceedings (insofar as they relate to the relevant proceedings); |
| (b) | the Sellers’ Representative shall in any event be kept informed of all actual or proposed material developments relating to the relevant proceedings, and shall be provided with copies of all material correspondence and material documentation (insofar as they relate to the relevant proceedings) and be provided with notice of any intended material oral communication or any meeting with a relevant Tax Authority in relation to the relevant proceedings; and |
| (c) | the Purchaser shall, at least 10 Business Days prior to the date of any intended submission, provide to the Sellers’ Representative for prior review any material document or correspondence (in so far as such document or correspondence relates to the relevant proceedings) which is to be submitted to the relevant Tax Authority and shall take into account in settling such documents or correspondence any reasonable comments made by the Sellers’ Representative. |
7.7 | Nothing in this paragraph 7 shall require the Purchaser to, or procure that the Company shall, and no Seller shall, in connection with any Tax Claim: |
| (a) | do anything which is not true and accurate in all material respects; and/or |
| (b) | do anything which could reasonably be expected to either give rise to or increase a liability to Tax or result in a loss, reduction, non-availability or deferral of any Purchaser’s Relief for or by any member of the Purchaser’s Group; and/or |
| (c) | do anything which could reasonably be expected to have the effect that a Tax Liability arises: (i) in a post-Closing period rather than a pre-Closing period; or (ii) in a post-Closing Date period rather than a pre-Closing Date period; and/or |
| (d) | take any action to the extent that it could reasonably be expected to involve the Company contesting any Tax Authority Claim before any court or other appellate body (excluding the Tax Authority which has made the Tax Authority Claim) unless tax counsel (of at least ten years' experience) appointed by agreement between the Sellers’ Representative and the Purchaser and instructed by the Purchaser opines, in writing, that such appeal is more likely to succeed than not. The fees of such tax counsel shall be paid by the Sellers. |
| 5.9 | The Sellers shall be bound to accept for the purposes of any Tax Claim which could result in a liability for any Seller under this Schedule any admission, compromise, settlement or discharge of any such Tax Claim and the outcome of any proceedings relating thereto made or arrived at in accordance with the provisions of this Schedule. |
92
8.2 | After the period of eighteen (18) months described in paragraph 8.1 above or in the event amounts in the Escrow Account have been exhausted, any sums required to be paid by the Sellers pursuant to a Tax Claim shall be paid (in cleared funds): |
| (b) | in respect of a Deemed Tax Liability, on the later of: |
| (i) | the date five Business Days after the date on which the Sellers receive written details of the amount of the Tax Liability from the Purchaser; |
| (c) | for anything else, on the date five Business Days following the date on which notice giving written details of the amount due is received by the Sellers’ Representative from the Purchaser. |
8.3 | Nothing in this paragraph 8 applies to a Tax Claim that arises or is delayed as a result of fraud, or fraudulent misrepresentation by any of the Sellers or any of their respective Agents, in which case any sums payable pursuant to such Tax Claim shall be paid directly by the relevant Seller who committed the fraud or fraudulent misrepresentation to the Purchaser within five (5) Business Days following a final and binding decision by a court of competent jurisdiction regarding the occurrence of an instance of fraud, or fraudulent misrepresentation (with all rights of appeal having been exhausted). |
93