SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 20, 1995
Xylogics, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-15487 04-2669596
(Commission File Number) (IRS Employer Identification
No.)
53 Third Avenue, Burlington, Massachusetts 01803
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,including area code: (617) 272-8140
N/A
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On April 20, 1995 (the "Closing"), Xylogics, Inc. (the
"Registrant") acquired (the "Acquisition") all of the issued
capital stock (the "Shares") of Scorpion Logic Limited ("Scorpion")
and its wholly owned subsidiary, Infinite Networks Limited, each a
private company limited by shares and incorporated in England and
Wales. The Acquisition took place pursuant to a Share Purchase
Agreement, dated as of April 13, 1995 (the "Purchase Agreement"),
between the Registrant, Scorpion and all of the shareholders of
Scorpion. Under the terms of the Purchase Agreement and in
exchange for the shares of Scorpion, the Registrant agreed to pay
to the Scorpion shareholders an aggregate of (i) 2,814,229 pounds
sterling in cash (approximately $4,529,500 as of April 13, 1995),
and (ii) 244,000 shares of common stock, par value $0.10, of the
Registrant, which had a value on April 13, 1995 of $4,392,000.
Such consideration for the Shares was determined by arms length
negotiation between the parties as to the fair market value of Scorpion
as a going concern, and was paid in full at the Closing. The funds were paid
out of the Registrant's cash reserves. The Registrant has agreed
to register the shares of its common stock issued in the
Acquisition at the request of the holders of such shares subject to
certain conditions.
Scorpion is located in Watford, Herts, and is in the business
of designing and developing high-speed, multiprotocol ISDN bridging
and on-demand routing systems that provide wide-area connectivity
for enterprise networks.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired. Not filed
herewith; to be filed by amendment. Pursuant to Item 7(a)(4) of
Form 8-K, the Registrant hereby indicates that the filing of such
financial statements is impracticable and undertakes to file such
information as soon as it is available on a Form 8-K/A to this
Report, and in any event on or before July 4, 1995.
(b) Pro forma financial information. Not filed herewith; to
be filed by amendment. Pursuant to Item 7(a)(4) of Form 8-K, the
Registrant hereby indicates that the filing of such financial
information is impracticable and undertakes to file such
information as soon as it is available on a Form 8-K/A to this
Report, and in any event on or before July 4, 1995.
(c) Exhibits. See Exhibit Index.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
XYLOGICS, INC.
(Registrant)
Maurice L. Castonguay
Vice President, Finance
Date
Exhibit Index
Page No.
2(A) Share Purchase Agreement dated as of April
13, 1995 by and among the Registrant,
Scorpion and the shareholders of Scorpion.
For a list of omitted Exhibits and
Schedules, see pages (iv) and (v) of the
Table of Contents to the Share Purchase
Agreement. The Registrant will furnish a
copy of any omitted Exhibit or Schedule to
the Securities and Exchange Commission upon
request.
2(B) Shelf Registration Rights Agreement dated
as of April 20, 1995 by and between the
Company and the shareholders of Scorpion.
Exhibit 2(A)
SHARE PURCHASE AGREEMENT
among
XYLOGICS, INC.
THE SHAREHOLDERS LISTED ON
SCHEDULE A ATTACHED HERETO
and
SCORPION LOGIC LIMITED
TABLE OF CONTENTS
Section
Page
1. Definitions
1
2. Purchase and Sale of the Shares
5
2.1 Purchase of the Shares from the
Shareholders 5
2.2 Further Assurances
5
2.3 Purchase Price for the Shares; Post-
Closing
Adjustments
6
2.4 Shelf Registration Rights Agreement
8
2.5 Shareholders' Representative
8
2.6 Completion
10
3. Representations of the Shareholders Regarding
the Shares
11
4. Representations of the Shareholders Regarding
the Issuance to Them of the Buyer Shares
12
5. Representations of the Shareholders Regarding
the Company and Sister
13
5.1 Organization
13
5.2 Capitalization of the Company and
Sister 13
5.3 Subsidiaries
14
5.4 Authorization
14
5.5 Financial Statements
15
5.6 Absence of Undisclosed Liabilities
16
5.7 Litigation
16
5.8 Insurance
17
5.9 Assets
17
5.10 Intellectual Property Rights
18
5.11 Real Property Leases
19
5.12 Stock
20
5.13 Debtors
20
5.14 Tax Matters
21
5.15 Books and Records
21
5.16 Contracts and Commitments
22
5.17 Compliance with Agreements and Laws
24
5.18 Employee Relations
26
5.19 Pensions
27
5.20 Absence of Certain Changes or Events
27
5.21 Customers
28
5.22 Suppliers
28
5.23 Warranty and Product Liability Claims
29
5.24 Inter-Company Indebtedness; Indebtedness
to and from Directors and Shareholders
29
5.25 Banking Facilities
29
5.26 Powers of Attorney and Suretyships
29
5.27 Conflicts of Interest
29
5.28 Regulatory Approvals
30
5.29 Disclosure
30
5.30 Scope of Representations and Warranties
30
5.31 Continued Truth of Representations
and Warranties of the Shareholders
31
6. Representations and Warranties of the Buyer
31
6.1 Organization and Authority
31
6.2 Capitalization of the Buyer
32
6.3 Authorization
32
6.4 Compliance with Regulation S
32
6.5 Disclosure
33
6.6 No Reliance on Warranties Other than
Those Set Forth in This Agreement
33
6.7 Indemnity for Acts of Buyer
33
6.8 Books and Records
33
6.9 Continued Truth of Representations
and Warranties of the Buyer; Compliance
with Covenants and Obligations
34
7. Public Announcements
34
8. Pre-Closing Covenants of the Shareholders
and the Company
34
8.1 Conduct of Business
34
8.2 Absence of Material Changes
34
8.3 Communications with Customers
36
8.4 Compliance with Laws
36
8.5 Continuing Obligation to Inform
36
8.6 Exclusive Dealing
36
8.7 Reports, Taxes
37
9. Best Efforts to Obtain Satisfaction of
Conditions
37
10. Conditions to Obligations of the Buyer
37
10.1 Performance of Obligations
37
10.2 Acquisition of Sister Shares by the
Company 37
10.3 Corporate Proceedings
38
10.4 Consent of Lenders, Lessors and Other
Third Parties
38
10.5 Adverse Proceedings
38
10.6 Employment Contracts
38
10.7 Closing Deliveries
38
11. Conditions to Obligations of the
Shareholders 39
11.1 Performance of Obligations
39
11.2 Corporate Proceedings
40
11.3 Consents of Lenders, Lessors and Other
Third Parties
40
11.4 Adverse Proceedings
40
11.5 Completion Deliveries
40
12. Indemnification
41
12.1 By the Shareholders
41
12.2 Claims for Indemnification
41
12.3 Defense by the Shareholders
41
12.4 Advance Warning of Claims
42
12.5 Limitations on Liability
42
12.6 No Right of Rescission after Completion
47
13. Post-Closing Agreements
47
13.1 Buyer Share Options
47
13.2 Reimbursement of Certain Costs of
Sister Acquisition
47
13.3 Repayment of Shareholder Loan
48
14. Termination of Agreement; Option to Proceed;
Damages
48
14.1 Termination by Agreement of the Parties
48
14.2 Termination
48
14.3 Availability of Remedies at Law
48
15. Brokers
49
15.1 For the Shareholders and the Company
49
15.2 For the Buyer
49
16. Dispute Resolution
49
16.1 General
49
16.2 Consent of the Parties
49
16.3 Arbitration
49
17. Notices
50
18. Successors and Assigns
51
19. Entire Agreement; Amendments; Attachments
51
20. Severability
52
21. Investigation of the Parties
52
22. Legal and Advisory Fees
52
23. Governing Law
52
24. Section Headings
53
25. Counterparts
53
Exhibits
Exhibit A Part I - The A Share Restriction
Agreement
Exhibit A Part II - The B Share Restriction
Agreement
Exhibit B - Shelf Registration Rights Agreement
Exhibit C - Form of Release Language from
Shareholders of Sister
Schedules
Schedule A - Shareholders and Shares
Schedule B - Apportionment of Purchase Price
Schedule C - Definition of U.S. Person under
Regulation S
Schedule 5.1 - Organization
Schedule 5.2.1 - Capitalization of the Company
Schedule 5.2.2 - Capitalization of the Sister
Schedule 5.4 - Authorization
Schedule 5.5.1 - Financial Statements
Schedule 5.6 - Absence of Undisclosed
Liabilities
Schedule 5.7 - Litigation
Schedule 5.8 - Insurance
Schedule 5.9 - Assets Register
Schedule 5.10 - Intellectual Property Rights
Schedule 5.12 - Stock
Schedule 5.13 - Debtors
Schedule 5.14 - Tax Matters
Schedule 5.16 - Contracts and Commitments
Schedule 5.17 - Compliance with Agreements and
Laws
Schedule 5.18 - Employee Relations
Schedule 5.19 - Pensions
Schedule 5.20 - Absence of Certain Changes or
Events
Schedule 5.21 - Customers
Schedule 5.22 - Suppliers
Schedule 5.23 - Warranty and Product Liability
Claims
Schedule 5.24 - Inter-Company Indebtedness to and
from
Directors and Shareholders
Schedule 5.25 - Banking Facilities
Schedule 5.26 - Powers of Attorney and
Suretyships
Schedule 5.27 - Conflicts of Interest
Schedule 5.28 - Regulatory Approvals
Schedule 5.30 - Documents Delivered to the
Buyer's Solicitors
Schedule 6.3 - Authorization
Schedule 13.1 - Share Option Splits
SHARE PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of
the 13th day of April, 1995 by and among Xylogics,
Inc., a company with its principal office at 53
Third Avenue, Burlington, MA 01803 (the "Buyer"),
and Scorpion Logic Limited a private company
limited by shares and incorporated in England and
Wales with its registered office at 33 Watford
Metro Centre, Tolpits Lane, Watford, Herts WD1 8SB
(the "Company"), and the Shareholders listed on
Schedule A attached hereto (individually, a
"Shareholder" and collectively, the
"Shareholders"), who own all of the issued and
outstanding share capital of the Company.
Preliminary Statement
1. Each of the Shareholders owns the
number of the issued and outstanding ordinary
shares, nominal value 1.00 pounds sterling per share, redeemable
ordinary shares, nominal value 1.00 pounds sterling per share and
preference shares, nominal value 1.00 pounds sterling per share,
in the Company (collectively, the "Shares") set
forth opposite his or its name on Schedule A
attached hereto, which Shares, in the aggregate,
represent all of the issued and outstanding share
capital of the Company.
2. Simultaneously with or prior to
Completion, the Company intends to purchase all of
the issued and outstanding share capital of
Infinite Networks Limited ("Sister").
3. The Buyer desires to purchase, and
the Shareholders desire to sell, the Shares for the
consideration set forth below, subject to the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual
promises hereinafter set forth and other good and
valuable consideration, the receipt of which is
hereby acknowledged, the parties hereby agree as
follows:
I.. Definitions
A. "Adjustment" shall have the meaning
set forth in Section 2.3.3.
B. "Assets" shall have the meaning set
forth in Section 5.9.
C. "Audited Company Balance Sheet"
shall have the meaning set forth in Section 5.5.1.
D. "A Escrow Instructions" shall have
the meaning set forth in Section 2.3.1.
E. "Audited Financial Statements" shall
have the meaning set forth in Section 5.5.1.
F. "Audited Sister Balance Sheet" shall
have the meaning set forth in Section 5.5.1.
G. "B Escrow Instructions" shall have
the meaning set forth in Section 2.3.1.
H. "Base Share Price" shall have the
meaning set forth in Section 2.3.3.
I. "Buyer" means Xylogics, Inc.
J. "Buyer Shares" shall have the
meaning set forth in Section 2.3.1.
K. "Buyer's Accountants" shall have the
meaning set forth in Section 2.3.2.
L. "Buyer's Solicitors" means Brobeck
Hale and Dorr of Veritas House, 125 Finsbury
Pavement, London EC2A 1NQ.
M. "Claim Date" shall have the meaning
set forth in Section 12.5.3.
N. "Company" means Scorpion Logic
Limited.
O. "Completion" means the completion of
the transactions contemplated by this Agreement.
P. "Completion Balance Sheet" shall
have the meaning set forth in Section 2.3.2.
Q. "Completion Date" shall have the
meaning set forth in Section 2.6.
R. "Components" shall have the meaning
as set forth in Section 5.16.2 (viii).
S. "Consolidated Net Book Value" shall
have the meaning set forth in Section 2.3.2.
T. "Contracts" shall have the meaning
set forth in Section 5.16.1.
U. "Debtors" shall have the meaning set
forth in Section 5.13
V. "Employees" shall have the meaning
set forth in Section 5.18.2.
W. "Employment Act" shall have the
meaning set forth in Section 5.18.2.
X. "Employment Agreements" shall have
the meaning set forth in Section 10.6.
Y. "Fair Trading Act" shall have the
meaning set forth in Section 5.17.3(b).
Z. "Indemnification Amount" shall have
the meaning set forth in Section 12.5.3.
AA. "Independent Valuation" shall have
the meaning set forth in Section 10.2.2.
AB. "Insurance Policies" shall have the
meaning set forth in Section 5.8.
AC. "Intellectual Property Rights" shall
have the meaning set forth in Section 5.10.1.
AD. "Leases" shall have the meaning set
forth in Section 5.11.1.
AE. "Loss" shall have the meaning set
forth in Section 12.1(b).
AF. "Losses" shall have the meaning set
forth in Section 12.1(b).
AG. "Material Adverse Effect" means any
change in, or effect on, the Company or Sister
which is materially adverse to the business,
operations, assets, condition (financial or
otherwise) or prospects of the Company and Sister,
taken as a whole.
AH. "Mr Harding" shall have the meaning
set forth in Section 2.5.1.
AI. "Offshore Transaction" shall have
the meaning set forth in Section 4.1
AJ. "Permits" shall have the meaning set
forth in Section 5.17.1.
AK. "Proforma Balance Sheet Date" shall
have the meaning set forth in Section 5.5.1.
AL. "Proforma Consolidated Balance
Sheet" shall have the meaning set forth in Section
5.5.1.
AM. "Proforma Consolidated Financial
Statements" shall have the meaning set forth in
Section 5.5.1.
AN. "Proforma Financial Statements"
shall have the meaning set forth in Section 5.5.1.
AO. "Proforma Non-Consolidated Balance
Sheets" shall have the meaning set forth in Section
5.5.1.
AP. "Proforma Non-Consolidated Financial
Statements" shall have the meaning set forth in
Section 5.5.1.
AQ. "Proforma Profit and Loss Statement"
shall have the meaning set forth in Section 5.5.1.
AR. "Purchase Price" shall have the
meaning set forth in Section 2.3.1.
AS. "Regulation S" means Regulation S
under the Securities Act.
AT. "Restricted Period" shall have the
meaning set forth in Section 4.4.
AU. "Release" shall have the meaning set
forth in Section 10.2.3.
AV. "Securities Act" means the
Securities Act of 1933 as amended.
AW. "Shares" shall have the meaning set
forth in the Preliminary Statement Paragraph 1.
AX. "Shareholder" means those
individuals listed on Schedule A who own all of the
issued shares in the capital of the Company and A
Shareholder means those with an (A) after their
name therein and B Shareholders means those with a
(B) after their name therein.
AY. "Shareholders Accountants" shall
mean Messrs KPMG of Norfolk House, 499 Silbury
Boulevard, Central Milton Keynes, MK9 2HA.
AZ. "Shareholders' Representative" shall
have the meaning set forth in Section 2.5.1.
BA. "Shareholders' Solicitors" shall
mean Taylors of Rawlings House, Exchange Street,
Blackburn, Lancashire BB1 7JN.
BB. "A Share Restriction Agreement" and
"B Share Restriction Agreement" shall have the
meaning set forth in Section 2.3.1.
BC. "Shelf Registration Rights
Agreement" shall have the meaning set forth in
Section 2.4.
BD. "Sister" means Infinite Networks
Limited.
BE. "Sister Acquisition" shall have the
meaning set forth in Section 10.2.1.
BF. "Sister Shares" shall have the
meaning set forth in Section 5.2.2.
BG. "Stock" shall have the meaning set
forth in Section 5.12.
BH. "U.K. GAAP" shall have the meaning
set forth in Section 5.5.1.
BI. "U.S. Person" shall have the meaning
set forth in Section 4.1.
BJ. "Xylogics Group" shall mean the
Buyer and any wholly owned "subsidiary" of the
Buyer as that term is defined in Section 736 of the
Companies Act 1985.
II. Purchase and Sale of the Shares
A. Purchase of the Shares from the
Shareholders. Subject to and upon the terms and
conditions of this Agreement, at Completion each
Shareholder shall as beneficial owner sell,
transfer, convey, assign and deliver to the Buyer,
and the Buyer shall purchase, acquireand accept
from each Shareholder, all the Shares owned by such
Shareholder, as set forth opposite such
Shareholder's name on Schedule A attached hereto.
At Completion each Shareholder shall deliver to the
Buyer certificates evidencing the Shares owned by
such Shareholder together with share transfer forms
duly executed by such Shareholder in favor of the
Buyer.
B. Further Assurances. At any time and
from time to time after Completion, at the Buyer's
request and without further consideration, each of
the Shareholders shall promptly execute and deliver
such instruments of sale, transfer, conveyance,
assignment and confirmation, and take all such
other action as the Buyer may at its cost
reasonably request, more effectively (i) to
transfer, convey and assign to the Buyer, and to
confirm the Buyer's title to, all of the Shares
owned by such Shareholder, (ii) to transfer, convey
and assign to the Company, and to confirm the
Company's title to, all of the issued and
outstanding share capital of Sister, (iii) to put
the Buyer in actual possession and operating
control of the assets, properties and business of
the Company and Sister, (iv) to assist the Buyer in
exercising all rights with respect thereto and (v)
to carry out the purpose and intent of this
Agreement.
C. Purchase Price for the Shares; Post-
Closing Adjustments.
1. The aggregate purchase price (the
"Purchase Price") to be paid by the Buyer for the
Shares shall be (i) Two Million Eight Hundred
Fourteen Thousand Two Hundred Twenty Nine Pounds
(2,814,229 pounds sterling) payable in cash, by telegraphic
transfer to the Shareholders' Solicitors; client
account number 95586571, sort code 01-67-14 or such
other account as may be designated by the
Shareholders' Representative (as hereinafter
defined) and (ii) 244,000 shares of Buyer common
stock, par value US$0.10 per share, (the "Buyer
Shares") to be issued at Completion, delivered into
escrow, and, in the case of the A Shareholders held
pursuant to the terms and conditions of a share
restriction agreement in the form attached hereto
as Exhibit A Part 1 (the "A Share Restriction
Agreement") and in accordance with the terms of the
escrow instructions attached thereto ("A Escrow
Instructions") and in the case of the B
Shareholders held pursuant to the terms of a share
restriction agreement in the form attached hereto
as Exhibit A Part 2 (the "B Share Restriction
Agreement") and in accordance with the terms of the
escrow instructions attached thereto ("B Escrow
Instructions"). Each Shareholder shall receive, in
payment of the Purchase Price for his or her shares
the amount of cash and/or the number of whole Buyer
Shares set forth opposite his or her name on
Schedule B attached hereto.
2. As promptly as possible following
the Completion Date, the Buyer shall cause Arthur
Anderson & Co, its independent chartered
accountants (the "Buyer's Accountants"), to conduct
an audit of the books and records of the Company
and Sister as of the Completion Date. Not later
than ninety (90) days after the Completion Date,
the Buyer shall cause the Buyer's Accountants to
deliver a consolidated balance sheet of the Company
and Sister as of the Completion Date (the
"Completion Balance Sheet") to the Shareholders'
Representative and the Shareholders' Accountants.
The Completion Balance Sheet shall be prepared
according to the practices and principles adopted
in preparation and audit respectively of the
Financial Statements and in accordance with UK
GAAP, without anyadjustments applicable solely as a
result of the acquisition of the Shares by the
Buyer on the Completion Date and without taking
into account the costs or liabilities in acquiring
the Sister pursuant to the Sister Acquisition. The
Buyer's Accountant shall certify in writing without
qualification the consolidated net book value of
the assets of the Company and Sister as of the
Completion Date representing the sum of assets
minus liabilities set out in the Completion Balance
Sheet (the "Consolidated Net Book Value"). The
Completion Balance Sheet shall be accompanied by a
statement prepared by the Buyer's Accountants
setting forth the basis for the determination of
the items and values reflected on the Completion
Balance Sheet. The Shareholders' Representative
shall work in good faith and cooperate with the
Buyer and the Buyer's Accountants in the
preparation of the Completion Balance Sheet. If
the Shareholders' Accountants have not within 28
days of receipt of the Completion Balance Sheet
made any objection in writing to the Buyer's
Accountants regarding the amount of the
Consolidated Net Book Value of the assets of the
Company and Sister as shown on the Completion
Balance Sheet and specified the nature of and given
reasons for such objection and specified the amount
which the Shareholder's Accountants shall consider
to be the Consolidated Net Book Value, the
Consolidated Net Book Value as set forth in the
Completion Balance Sheet prepared by the Buyer's
Accountants shall be final and binding save in the
case of manifest error. In certifying the
Consolidated Net Book Value as set forth in the
Completion Balance Sheet, the Buyer's Accountants
shall act as experts not arbitrators. The fees of
the Buyer's Accountants incurred in preparing the
Completion Balance Sheet (and in respect of any
dispute relating thereto) shall be paid by the
Buyer and no provision shall be made in the
Completion Balance Sheet in respect of those costs.
The Buyer shall procure that all records, working
papers and other information as may be reasonably
required by the Buyer's Accountants and the
Shareholders' Accountants for any review of the
matters covered by the Completion Balance Sheet
shall be made available upon request therefor and
shall generally render (and the Buyer shall procure
that the Company and Sister render) all assistance
reasonably necessary for the preparation of the
Completion Balance Sheet and any review of the
matters covered by the Completion Balance Sheet by
the Shareholders' Accountants. Any dispute with
respect to the calculation of the Consolidated Net
Book Value shall be referred for final settlement
to a firm of chartered accountants nominated
jointly by the Buyer and the Shareholders'
Representative or failing such nomination within 14
days after request by either the Buyer or the
Shareholders' Representative nominated by the
President for the time being of the Institute of
Chartered Accountants in England and Wales. The
firm shall act as experts and not as arbitrators
and their decision shall (in the absence of
manifest error) be final and binding on all
parties. Their fees shall be payable by the Buyer
and the Shareholders in such proportions as the
firm determines.
3. The Purchase Price shall be
adjusted as follows: if the Consolidated Net Book
Value, as reflected on the Completion Balance
Sheet, is less than the consolidated net book value
of the assets of the Company and Sister as
reflected on the Proforma Consolidated Balance
Sheet, then the Purchase Price shall be reduced by
the amount of such deficiency (the "Adjustment").
Notwithstanding the foregoing, no Adjustment shall
be made unless the aggregate deficiency exceeds
100,000 pounds sterling (in which case the amount of the
Adjustment shall be the full amount of such
deficiency and not just the excess over 100,000 pounds sterling).
For the avoidance of doubt, the Adjustment shall
also include any amount inexcess of 200,000 pounds sterling paid
by the Company as purchase price in the Sister
Acquisition, which amount shall not in any event be
subject to the limitation set forth in the previous
sentence. The Adjustment, if any, shall be made
solely by the repurchase by the Buyer from the
Shareholders, for a purchase price of US$0.01 per
share, of that number of Buyer Shares (rounded
downward to the nearest whole share) which is
determined by (i) converting the Adjustment into US
Dollars using the Sterling/Dollar exchange rate in
the currency cross-rate table in the Wall Street
Journal Europe on the date prior to the date on
which the amount of the Adjustment is determined
and (ii) dividing the resultant US Dollar sum by
the greater of (A) the closing price of the Buyer's
common stock on the NASDAQ National Market on the
date the Adjustment is determined or (B) $21.50
("Base Share Price"). For purposes of the
foregoing calculation, the Base Share Price shall
be proportionately adjusted upwards or downwards,
as appropriate, in the event of any stock split,
reverse stock split, stock dividend, stock
distribution or other reclassification of the
Buyer's common stock, including the Buyer Shares.
For the avoidance of doubt, the Shareholders shall
have absolutely no liability to pay in cash any
portion of the Adjustment. Any repurchase by the
Buyer of Buyer Shares pursuant to this Section
2.3.3 shall be made pro rata from each Shareholder
in proportion to the number of Buyer Shares
received by each of them at Completion as follows:
where a repurchase of Shares takes place pursuant
to this Section 2.3.3, the number of Shares which,
at the date of such repurchase, remain to be
released from escrow on each Annual Release Date
(as defined in the A and B Share Restriction
Agreements) following such repurchase, shall be
reduced pro rata by reference to the number of
Shares repurchased pursuant to this Section 2.3.3.
D. Shelf Registration Rights Agreement.
The Shareholders and Buyer shall enter into a Shelf
Registration Agreement at Completion, in the form
attached as Exhibit B ("Shelf Registration Rights
Agreement") pursuant to which the Shareholders will
receive certain registration rights, under the
circumstances described therein, with respect to
their Buyer Shares.
E. Shareholders' Representative.
1. In order to efficiently
administer (i) the waiver of any condition to the
obligations of the Shareholders to consummate the
transactions contemplated hereby, and (ii) the
defense and/or settlement of any claims for which
the Shareholders may be required to indemnify the
Buyer or the Company pursuant to Section 12 hereof,
and (iii) the provisions of the Shelf Registration
Rights Agreement, the A and B Share Restriction
Agreements and the A and B Joint Escrow
Instructions, the Shareholders hereby designate
Sean Stuart Harding ("Mr Harding") of 19 Brookside
Road, Oxhey, Watford England WD1 4BW as their
representative (the "Shareholders'
Representative").
2. The Shareholders hereby appoint
and authorize the Shareholders' Representative as
their agent and attorney in fact (i) to take any
and all action necessary in connection with the
waiver of any condition to the obligations of the
Shareholders to consummate the transactions
contemplated hereby, or the defense and/or
settlement of any claims for which the Shareholders
may be required to indemnify the Buyer or the
Company pursuant to Section 12 hereof, (ii) to take
any and all additional action (including,
withoutlimitation, the execution on behalf of any
Shareholder of any agreement, certificate,
instrument or other document required to be
delivered by such Shareholder hereunder) as is
contemplated to be taken by or on behalf of the
Shareholders by the terms of this Agreement and
(iii) to take any and all action necessary to
enforce the rights of the Shareholders under the
Shelf Registration Rights Agreement as he thinks
appropriate and (iv) to take any and all actions
vested in the Shareholders' Representative pursuant
to the terms of the Shelf Registration Rights
Agreement, the A and B Share Restriction Agreement
and the A and B Joint Escrow Instructions.
3. In the event that the
Shareholders' Representative dies, becomes unable
to perform his responsibilities hereunder or
resigns from such position, Shareholders holding,
prior to Completion, a majority of the Shares as
set forth on Schedule A attached hereto shall
select another representative to fill such vacancy
and such substituted representative shall be deemed
to be the Shareholders' Representative for all
purposes of this Agreement.
4. All decisions and actions by the
Shareholders' Representative, including, without
limitation the exercise of the Shareholders' rights
pursuant to the Shelf Registration Rights Agreement
and any agreement between the Shareholders'
Representative and the Buyer relating to the
defense or settlement of any claims for which the
Shareholders may be required to indemnify the Buyer
and/or the Company pursuant to Section 12 hereof,
shall be binding upon all of the Shareholders, and
no Shareholder shall have the right to object,
dissent, protest or otherwise contest the same.
In order to efficiently
administer the giving or the receiving of notices
or other communications required under the terms
hereof, the Shareholders hereby designate and
appoint the Shareholders' Solicitors as the agent
of each Shareholder for the sole purpose of giving
and receiving notices. Such appointment shall be
revocable by the Shareholders' Representative and
shall be effective when the Buyer has been notified
of the revocation and the appointment of an
alternative firm of Solicitors in England and
Wales.
5. By their execution of this
Agreement, the Shareholders agree that:
(i) the Buyer shall be able to
rely conclusively on the instructions and decisions
of the Shareholders' Representative as to the
settlement of any claims for indemnification by
the Buyer or the Company pursuant to Section 12
hereof or any other actions required to be taken by
the Shareholders hereunder (including, without
limitation, the execution and delivery by the
Shareholders' Representative of any agreement,
certificate, instrument or other document required
hereunder on behalf of any Shareholder), and no
party hereunder shall have any cause of action
against the Buyer for any action taken by the Buyer
in reliance upon the instructions or decisions of
the Shareholders' Representative;
(ii) all actions, decisions and
instructions of the Shareholders' Representative
(including, without limitation, the execution and
delivery by the Shareholders' Representative of any
agreement, certificate, instrument or other
document required hereunder on behalf of any
Shareholder) shall be conclusive and binding upon
all of the Shareholders and no Shareholder shall
have any cause of action against the
Shareholders'Representative for any action taken,
decision made or instruction given by the
Shareholders' Representative under this Agreement,
except for fraud or willful breach of this
Agreement by the Shareholders' Representative;
(iii) the provisions of this
Section 2.5.6 are independent and severable, are
irrevocable and coupled with an interest and shall
be enforceable notwithstanding any rights or
remedies that any Shareholder may have in
connection with the transactions contemplated by
this Agreement;
(iv) remedies available at law
for any breach of the provisions of this
Section 2.5.6 are inadequate; therefore, the Buyer
and the Company shall be entitled to temporary and
permanent injunctive relief without the necessity
of proving damages if either the Buyer or the
Company brings an action to enforce the provisions
of this Section 2.5.6; and
(v) the provisions of this
Section 2.5.6 shall be binding upon the executors,
heirs, legal representatives and successors of each
Shareholder, and any references in this Agreement
to a Shareholder or the Shareholders shall mean and
include the successors to the Shareholders' rights
hereunder, whether pursuant to testamentary
disposition, the laws of descent and distribution
or otherwise.
F. Completion. Completion shall take
place at the offices of Brobeck Hale and Dorr,
Veritas House, 125 Finsbury Pavement, London EC2A
1NQ, at 10:00 a.m., London Time, on 20 April 1995
or at such other place, time or date as may be
mutually agreed upon in writing by the parties (the
"Completion Date"). The transfer of the Shares by
the Shareholders to the Buyer shall be deemed to
occur at 9:00 a.m., London Time, on the Completion
Date.
III. Representations of the Shareholders
Regarding the Shares
Each Shareholder severally but not jointly
represents and warrants to the Buyer as follows:
A. Such Shareholder has good and
marketable title to the Shares which are to be
transferred to the Buyer by such Shareholder
pursuant hereto, free and clear of any and all
covenants, conditions, restrictions, voting trust
arrangements, liens, charges, encumbrances, options
and adverse claims or rights whatsoever.
Schedule A attached hereto sets forth a true and
correct description of all Shares owned by such
Shareholder.
B. Such Shareholder has the full legal
capacity, right, power and authority to enter into
this Agreement and to transfer, convey and sell to
the Buyer at Completion the Shares to be sold by
such Shareholder hereunder and, upon consummation
of the purchase contemplated hereby, the Buyer will
acquire from such Shareholder good and marketable
title to such Shares, free and clear of all
covenants, conditions, restrictions, voting trust
arrangements, liens, charges, encumbrances, options
and adverse claims or rights whatsoever.
C. Such Shareholder is not a party to,
subject to or bound by any agreement or any
judgment, order, writ, prohibition, injunction or
decree of any court or other governmental body
which would prevent the execution or delivery of
this Agreement by such Shareholder or the transfer,
conveyance and sale of the Shares to be sold by
such Shareholder to the Buyer pursuant to the terms
hereof.
D. This Agreement has been duly
executed by the Shareholders. This Agreement and
all other agreements and obligations entered into
and undertaken in connection with the transactions
contemplated hereby to which any of the
Shareholders is a party constitute the valid and
legally binding obligations of the Shareholders,
enforceable against them in accordance with their
respective terms. The execution, delivery and
performance by the Shareholders of this Agreement
and the agreements provided for herein, and the
consummation by the Shareholders of the
transactions contemplated hereby and thereby, will
not, with or without the giving of notice or the
passage of time or both, (a) violate the provisions
of any law, rule or regulation applicable to the
any of the Shareholders; or (b) violate any
judgment, decree, order or award of any court,
governmental body or arbitrator.
E. Except as set forth in Section 15
hereof, no broker or finder has acted for such
Shareholder in connection with this agreement or
the transactions contemplated hereby, and no broker
or finder is entitled to any brokerage or finder's
fee or other commissions in respect of such
transactions based upon agreements, arrangements
or understandings made by or on behalf of such
Shareholder.
IV. Representations of the Shareholders Regarding
the Issuance to Them of the Buyer Shares.
A. Each Shareholder understands and
acknowledges that (a) the Buyer Shares have not
been registered under the Securities Act, and may
not be offered or sold in the United States or to,
or for the account or benefit of, any "U.S. person"
(as defined in Regulation S, which definition is
set out in Schedule C hereto, a "U.S. person"),
unless such securities are registered under the
Securities Act or such offer or sale is made
pursuant to an exemption from the registration
requirements of the Securities Act and (b) the
Buyer Shares are being offered and sold by the
Buyer pursuant to the terms of Regulation S which
permits securities to be sold to non-"U.S. persons"
in "offshore transactions" (as those terms are
defined in Regulation S herein "U.S. Person" and
"Offshore Transaction"), subject to certain terms
and conditions.
B. No Shareholder is a U.S. Person.
Each Shareholder has executed this Agreement
outside the United States. The offer to each
Shareholder and sale of the Buyer Shares has
occurred outside the United States.
C. Each Shareholder acknowledges that:
(a) he has considered all information he deems
relevant in making a decision to execute this
Agreement and to purchase the Buyer Shares, (b) he
is capable of evaluating the merits and risks of an
investment in the Buyer Shares, (c) he is acquiring
the Buyer Shares for his own account and for
investment purposes only, (d) the Buyer has made
available to him the opportunity to ask questions
and receiveanswers concerning the Buyer Shares and
the Buyer, the terms and conditions of the issuance
to him of the Buyer Shares and (e) the Buyer has
given him the opportunity to obtain any additional
information that the Buyer possesses or can acquire
without unreasonable effort or expense that is
necessary to verify the accuracy of the information
furnished in accordance herewith.
D. Each Shareholder acknowledges that
for a period of forty one (41) days following the
Completion Date (the "Restricted Period"), he shall
not (a) engage in any activity for the purpose of,
or which may reasonably be expected to have the
effect of, conditioning the market in the United
States for the Buyer Shares or (b) offer, sell or
transfer the Buyer Shares to any person.
E. Each Shareholder understands that
the Buyer Shares or any interest therein are only
transferable on the books and records of the
transfer agent and registrar of the common stock of
the Company. Each Shareholder further understands
that the transfer agent and registrar will not
register any transfer of the Buyer Shares which
the Company in good faith believes violates the
restrictions set forth in this Section 4.
F. Each Shareholder will not, directly
or indirectly, voluntarily offer, sell, pledge,
transfer or otherwise dispose of (or solicit any
offers to buy, purchase or otherwise acquire or
take a pledge of) its rights under this Agreement
or the Buyer Shares otherwise than in compliance
with the Securities Act, any applicable state
securities or blue sky laws and any applicable
securities laws of jurisdictions outside the United
States, and the rules and regulations promulgated
thereunder.
V. Representations of the Shareholders Regarding
the Company and Sister
Each of the Shareholders, acknowledges that
they have made warranties and representations set
out in this Agreement and that the Buyer has
entered into this Agreement in reliance upon such
warranties and representations and in consideration
of the Buyer entering into this Agreement each of
the Shareholders hereby severally but not jointly,
represents and warrants to the Buyer subject
generally to the provisions of Sections 5.30, 8.5
and 12 hereof that all statements of fact contained
in this Agreement and any exhibits or schedules
attached hereto are correct and in the following
terms:
A. Organization. Each of the Company
and Sister is a private company limited by shares,
validly existing under the laws of the England and
Wales, and has all requisite power and authority
(corporate and other) to own its properties, to
carry on its business as now being conducted, (in
the case of the Company) to execute and deliver
this Agreement and the agreements contemplated
herein, and to consummate the transactions
contemplated hereby and thereby. Certified copies
of the Memorandum and Articles of Association of
the Company and Sister, as amended to date, have
been previously delivered to the Buyer, are
complete and correct, and no amendments have been
made thereto or have been authorized since the date
thereof.
B. Capitalization of the Company and
Sister.
1. The Company's authorized share
capital consists of 2,239 pounds sterling, divided into 604
Redeemable Preference Shares of 1.00 pounds sterling each, 135
Redeemable Ordinary Shares of 1.00 pounds sterling each and 1500
Ordinary Shares of 1.00 pounds sterling each, all of which Shares
are issued and outstanding on the date hereof and
held of record and beneficially by the Shareholders
as set forth on Schedule A. All such issued and
outstanding Shares have been and on the Completion
Date will be duly and validly issued and are, or
will be on such date, fully paid and not subject to
any call for further capital. Except as set forth
in Schedule 5.2.1, attached hereto, there are not,
and on the Completion Date there will not be,
outstanding (i) any options, warrants or other
rights to purchase from the Company any share
capital of the Company; (ii) any securities
convertible into or exchangeable for share capital;
or (iii) any other commitments of any kind for the
issuance of additional share capital.
2. Sister's authorized share capital
consists of 1,000 pounds sterling divided into 1,000 shares of
1.00 pounds sterling each of which 200 shares have been issued,
which constitute all of the issued and outstanding
shares of Sister (the "Sister Shares"). On the
Completion Date all of the issued and outstanding
Sister Shares will be held beneficially and of
record by the Company. Except as set forth in
Schedule 5.2.2, there are not, and on the Closing
Date there will not be, outstanding any
(i) options, warrants or other rights with respect
to the share capital of Sister, (ii) any securities
convertible into or exchangeable for such share
capital, or (iii) any other commitments of any kind
for the issuance of additional shares of capital
share or options, warrants or other securities of
any of them.
C. Subsidiaries. On the date hereof,
the Company owns no shares in the capital of, nor
any equity interest in, any company, partnership,
joint venture or other entity. At the Completion
Date, the Company will own no shares in the capital
of, nor any equity interest in any company,
partnership, joint venture or other entity other
than Sister.
D. Authorization. The execution and
delivery by the Company of this Agreement and the
agreements provided for herein, and the
consummation by the Company of all transactions
contemplated hereunder and thereunder by the
Company (including, without limitation, the
completion by the Company of the Sister Acquisition
(as hereinafter defined), have been duly authorized
by all requisite corporate action. This Agreement
has been duly executed by the Company. This
Agreement and all other agreements and obligations
entered into and undertaken in connection with the
transactions contemplated hereby to which the
Company is a party (including, without limitation,
any agreements or obligations of the Company in
connection with the Sister Acquisition) constitute
valid and legally binding obligations of the
Company, enforceable against it in accordance with
their respective terms. The execution, delivery and
performance by the Company of this Agreement and
the agreements provided for herein (including,
without limitation, any agreements or obligations
of the Company in connection with the Sister
Acquisition), and the consummation by the Company
of the transactions contemplated hereby and
thereby, will not, with or without the giving of
notice or the passage of time or both, (a) violate
the provisions of any law, rule or regulation
applicable to the Company or Sister; (b) violate
the provisions of the Memorandum or Articles of
Association of the Company or Sister; (c) violate
any judgment, decree, order or award of any court,
governmental body or arbitrator; or (d) conflict
with or result in the breach or termination of any
term or provision of, or constitute a defaultunder,
or cause any acceleration under, or cause the
creation of any lien, charge or encumbrance upon
the properties or assets of the Company or Sister
pursuant to, any indenture, mortgage, deed of trust
or other instrument or agreement to which the
Company or Sister is a party or by which the
Company or Sister or any of their respective
properties is or may be bound. Schedule 5.4
attached hereto sets forth a true, correct and
complete list of all consents and approvals of
third parties that are required in connection with
the consummation by the Company or Sister of the
transactions contemplated by this Agreement.
E. Financial Statements.
1. The Company has previously
delivered to the Buyer the audited balance sheet of
the Company as of 31 October 1994 (the "Audited
Company Balance Sheet") and the audited balance
sheet of Sister as of 31 July 1994 (the "Audited
Sister Balance Sheet") and the related statements
of profit and loss of the Company and Sister for
the respective fiscal years ended on such dates
(collectively, the "Audited Financial Statements"),
true and correct copies of which are attached
hereto as Schedule 5.5.1. The Company has also
previously delivered to the Buyer the proforma
unaudited consolidated balance sheet of the Company
and Sister as of 31 March 1995 (the "Proforma
Consolidated Balance Sheet") and the Company will
provide on or prior to Completion the related
unaudited consolidated statement of profit and loss
of the Company and Sister (the "Proforma Profit and
Loss Statement") for the five (5) month period then
ended (collectively the "Proforma Consolidated
Financial Statements"). The Company has also
previously delivered to the Buyer the proforma
unaudited non-consolidated balance sheets of each
of the Company and Sister as of 31 March 1995 (the
"Proforma Non-Consolidated Balance Sheets") and the
related unaudited non-consolidated statements of
profit and loss of the Company for the five (5)
month period then ended and Sister for the eight
(8) month period then ended (collectively, the
"Proforma Non-Consolidated Financial Statements").
The Proforma Consolidated Financial Statements and
the Proforma Non-Consolidated Financial Statements
are sometimes referred to herein collectively as
the "Proforma Financial Statements". The Audited
Financial Statements and the Proforma Financial
Statements are sometimes referred to herein
collectively as the "Financial Statements". The
Audited Financial Statements have been prepared in
accordance with generally accepted accounting
principles in the U.K. ("U.K. GAAP") and in
accordance with (in so far as such exist(ed))
previous accounting practices and principles. The
Proforma Financial Statements have been prepared in
accordance with UK GAAP and (in so far as is
practicable) in accordance with previous accounting
practices and principles. The date of the Proforma
Consolidated Balance Sheet is hereinafter referred
to as the "Proforma Balance Sheet Date."
2. The Financial Statements fairly
present, as of their respective dates, the
financial condition, retained earnings, assets and
liabilities of the Company and Sister and the
results of operations of the Company's and Sisters'
business for the periods indicated. With respect to
contracts and commitments for the sale of goods or
the provision of services by the Company and
Sister, the Financial Statements contain and
reflect adequate reserves, which are consistent
with previous reserves taken, for all reasonably
anticipated material losses and costs and expenses.
The amounts shown as accrued for current and
deferred income and other taxes in the Financial
Statements are sufficient for the payment of
allaccrued and unpaid income taxes, interest,
penalties, assessments or deficiencies applicable
to the Company or Sister, whether disputed or not,
for the applicable period then ended and periods
prior thereto.
3. The book value of Stock, as
defined in Section 5.12 hereof, reflected on the
Proforma Consolidated Balance Sheet basis is fairly
stated.
F. Absence of Undisclosed Liabilities.
Except as and to the extent (a) reflected and
reserved against in the Proforma Consolidated
Balance Sheet, (b) set forth on Schedule 5.6
attached hereto, or (c) incurred in the ordinary
course of business after the Proforma Balance Sheet
Date either individually or in the aggregate,
neither the Company nor Sister has at the date
hereof any liability or obligation, secured or
unsecured, whether accrued, absolute, contingent,
unasserted or otherwise, which is material to the
condition (financial or otherwise) of the assets,
properties, business or prospects of the Company
and Sister taken as a whole. For purposes of this
Section 5.6, "material" means any amount in excess
of 5,000 pounds sterling.
G. Litigation. Except as set forth on
Schedule 5.7 attached hereto (a) there is no
ongoing action, suit or proceeding to which the
Company or Sister is a party (either as a plaintiff
or defendant) or, in so far as the Shareholders are
aware, threatened before any court or governmental
agency, authority, body or arbitrator and, in so
far as the Shareholders are aware, there is no
reasonable justification or basis for any such
action, suit or proceeding; (b) neither the Company
nor Sister, nor, in so far as the Shareholders are
aware, any officer, director or employee of any of
the foregoing, has been permanently or temporarily
enjoined by any order, judgment or decree of any
court or any governmental agency, authority or body
from engaging in or continuing any conduct or
practice in connection with the business, assets,
or properties of the Company or Sister; and
(c) there is not in existence on the date hereof
any order, judgment or decree of any court,
tribunal or agency enjoining or requiring the
Company or Sister to take any action of any kind
with respect to its business, assets or properties.
H. Insurance. Schedule 5.8 attached
hereto sets forth a true, correct and complete list
of all fire, theft, casualty, general liability,
workers compensation, business interruption,
environmental impairment, product liability,
automobile and other insurance policies maintained
by the Company or Sister and of all life insurance
policies maintained on the lives of any of their
employees, specifying the type of coverage, the
amount of coverage, the premium, the insurer and
the expiration date of each such policy
(collectively, the "Insurance Policies") and all
claims made under such Insurance Policies since 19
August 1993. True, correct and complete copies of
all Insurance Policies have been previously
delivered by the Company to the Buyer. The
Insurance Policies are in full force and effect.
All premiums due on the Insurance Policies or
renewals thereof have been paid, and there is, in
so far as the Shareholders are aware, no default
under the Insurance Policies. Except as set forth
on Schedule 5.8, neither the Company nor Sister has
received any notice or other communication from any
issuer of the Insurance Policies since 19 August
1993 canceling or materially amending any of the
Insurance Policies, materially increasing any
deductibles or retained amounts thereunder, or
materially increasing the annual or other premiums
payablethereunder, and, in so far as the
Shareholders are aware, no such cancellation,
amendment or increase of deductibles, retainages or
premiums is threatened. Except as set forth on
Schedule 5.8, neither the Company nor Sister has
any outstanding claims or any dispute with any
insurance carrier regarding claims, settlements or
premiums and neither the Company nor Sister has
failed to give any notice or present any claim
under any Insurance Policy in due and timely
fashion. There are no outstanding requirements or
recommendations by any issuer of the Insurance
Policies or by any underwriters or other similar
body exercising similar functions or by any
governmental authority exercising similar functions
which requires or recommends any changes in the
conduct of the business of, or any repairs or other
work to be done on or with respect to any of the
properties or assets of, the Company or Sister.
I. Assets. Schedule 5.9 attached
hereto sets forth a true, correct and complete list
of all of the assets owned by the Company or Sister
as of the date hereof having either a net book
value per unit or an estimated fair market value
per unit in excess of 5,000 pounds sterling; or not owned by the
Company or Sister but in the possession of or used
or useful in the business of the Company or Sister
and having rental payments therefor in excess of
100 pounds sterling per month or 1,200 pounds sterling per year
(collectively, the "Assets"). Except as disclosed in
Schedule 5.9:
1. the Company or Sister, as the
case may be, has good and marketable title to all
of the Assets free and clear of all liens, leases,
encumbrances, claims under bailment and storage
agreements, equities, conditional sales contracts,
security interests, charges and restrictions,
except for liens, if any, for personal property
taxes not due or liens, the existence of which
would not have a Material Adverse Effect;
2. no officer, director, shareholder
or employee of the Company or Sister, nor any
spouse, child or other relative or affiliate
thereof, owns directly or indirectly, in whole or
in part, any of the Assets described in
Schedule 5.9;
3. except as would not have a
Material Adverse Effect, each of the Assets not
owned by the Company or Sister is in such condition
that upon the return of such property to its owner
in its present condition at the end of the relevant
lease term or as otherwise contemplated by the
applicable agreement between the Company or Sister,
as the case may be, and the owner or lessor
thereof, the obligations of the Company or the
Subsidiary, as the case may be, to such owner or
lessor will be discharged;
4. except as would not have a
Material Adverse Effect, the Assets, in the
aggregate, are in reasonable operating condition
and repair, normal wear and tear excepted, are
currently used by either the Company or Sister in
the ordinary course of its business and normal
maintenance has been consistently performed with
respect to the Assets; and
5. except as would not have a
Material Adverse Effect, the Company and Sister own
or otherwise have the right to use all of the
Assets now used in the operation of their business
or the use of which is reasonably necessary in the
performance of any material contract, letter of
intent or proposal to which any of them is now a
party.
J. Intellectual Property Rights.
1. Except as otherwise disclosed in
Schedule 5.10, all patents, trade marks, registered
designs, design rights, applications for any of the
foregoing, copyrights, trade or business names,
inventions, processes, know-how and other
industrial property rights purported to be used or
required by the Company or Sister in the course of
their business ("Intellectual Property Rights") are
in full force and effect and are vested in and
beneficially owned by the Company or Sister free
from encumbrances.
2. Except as otherwise
disclosed in Schedule 5.10, the Company or Sister
has the right and authority to use, and to continue
to use after Completion, the Intellectual Property
Rights, including any of the Intellectual Property
Rights licensed from third parties or available in
the public domain, in connection with the conduct
of its respective business in the manner presently
conducted, and such use or continuing use,
including any use after Completion by the Buyer or
any member of the Xylogics Group, does not and
will not conflict with, infringe upon or violate
any rights of any other person, company or entity;
3. Schedule 5.10 lists all
Intellectual Property Rights in respect of which
the Company or Sister has been registered as
proprietor or in respect of which application for
registration has been made. Except as otherwise
disclosed in Schedule 5.10 and in so far as
Shareholders are aware none of the Intellectual
Property Rights is being used, claimed, opposed or
attacked by any other person nor in so far as the
Shareholders are aware does the use of such
Intellectual Property Rights or any part of them
infringe the Intellectual Property Rights owned or
enjoyed by any third party.
4. Except as otherwise disclosed in
Schedule 5.10, and in so far as the Shareholders'
are aware none of the Intellectual Property Rights
owned or used by the Company or Sister is the
subject of any claim opposition attack assertion or
other arrangement of whatever nature which does or
may impinge upon their use, validity,
enforceability or ownership by the Company or
Sister and in so far as the Shareholders are aware
there are no grounds or other circumstances which
may give rise to the same.
5. Except as otherwise disclosed in
Schedule 5.10, no licenses or registered user or
other rights have been granted or agreed to be
granted to any third party in respect of such
Intellectual Property Rights.
6. Except as otherwise disclosed in
Schedule 5.10, and in so far as the Shareholders
are aware no disclosure has been made to any person
other than the Buyer of any of the industrial know-
how or the financial or trade secrets of the
Company or Sister except properly and in the
ordinary course of business and on the basis that
such disclosure is to be treated as being of a
confidential nature.
7. Except as otherwise disclosed in
Schedule 5.10, no officer, director, shareholder or
employee of the Company or Sister, nor any spouse,
child or otherrelative or affiliate thereof, owns
directly or indirectly, in whole or in part, any of
the Intellectual Property Rights.
K. Real Property Leases.
1. Neither the Company nor Sister
owns any real property. Schedule 5.11 attached
hereto sets forth a true, correct and complete list
as of the date hereof of all leases of real
property, identifying separately each ground lease,
to which the Company or Sister is a party
(collectively, the "Leases"). True, correct and
complete copies of all Leases and all amendments,
modifications and supplemental agreements thereto,
have previously been delivered to the Buyer. The
Leases are in full force and effect, are binding
and enforceable against each of the parties thereto
in accordance with their respective terms and,
except as set forth on Schedule 5.11, have not been
modified or amended since the date of delivery to
the Buyer. No party to any Lease has sent written
notice to the other claiming that such party is in
default thereunder and that such default remains
uncured.
2. Except as set forth on
Schedule 5.11, there has not occurred any event
which would constitute a breach of or default in
the performance of any covenant, agreement or
condition contained in any Lease, nor in so far as
the Shareholders are aware has there occurred any
event which with the passage of time or the giving
of notice or both would constitute such a breach or
material default. There are no rent reviews under
the Leases in progress. Neither the Company nor
Sister is obligated to pay any leasing or brokerage
commission relating to any Lease and, except as set
forth on Schedule 5.11, will not have any
obligation to pay any leasing or brokerage
commission upon the renewal of any Lease.
3. Except as set forth on
Schedule 5.11, no construction, alteration or other
leasehold improvement work with respect to any of
the Leases remains to be paid for or to be
performed by the Company or Sister. Except as set
forth in Schedule 5.11 there is no obligation to
reinstate, or pay for dilapidations with respect
to, any of the properties subject to the Leases by
removing or dismantling any alteration made to them
by the Company or Sister or any predecessor-in-
title to the Company or Sister.
L. Stock. Schedule 5.12 attached
hereto sets forth a true, correct and complete list
of the finished goods, work in progress and
Components of the Company and Sister (the "Stock")
as of the Proforma Balance Sheet Date. The Stock
consists of items of a quality and quantity which,
in the aggregate, net of reserves, are usable or
saleable without material discount in the ordinary
course of the business conducted by the Company and
Sister.
M. Debtors. Schedule 5.13 attached
hereto sets forth a true, correct and complete list
of the debtors of the Company and Sister (the
"Debtors"), including the aging thereof, as of the
Proforma Balance Sheet Date. All Debtors arose out
of the sales of Stock or services in the ordinary
course of business and except as detailed in
Schedule 5.13 the Shareholders are not aware of any
reason as to why the Debtors should not be
collectible in the face value thereof, net of the
reserve for doubtful Debtors contained in the
Proforma Balance Sheet, within an average of ninety
(90) days after the date of invoice, using
normalcollection procedures. The Proforma Balance
Sheet contains a reserve for doubtful Debtors,
which reserve (in so far as the Shareholders are
aware) is adequate.
N. Tax Matters.
1. Except as set forth on
Schedule 5.14 attached hereto:
(i) within the times and in the
manner prescribed by law, the Company and Sister
have filed all tax returns for governmental
authorities having jurisdiction to levy taxes upon
them which are required to be filed;
(ii) except as would not have a
Material Adverse Effect, the Company and Sister
have paid all taxes, interest, penalties,
assessments and deficiencies which have become due
or which have been claimed to be due, including
without limitation income, franchise, property,
value added, and withholding taxes and other
employee benefits, taxes and imposts;
(iii) in so far as the
Shareholders are aware and except as would not have
a Material Adverse Effect, all tax returns filed by
the Company and Sister for each of the taxable
years ending since the inception of the Company or
Sister constitute complete and accurate
representations of the respective tax liabilities
of the Company and Sister for such years and except
as would not have a Material Adverse Effect
accurately set forth all items (to the extent
required to be included or reflected in such
returns) relevant to their future tax liabilities,
including the tax bases of their properties and
assets;
(iv) neither the Company nor
Sister has waived or extended any applicable
statute of limitations relating to the assessment
of local or foreign taxes; and
(v) in so far as the
Shareholders are aware no examination of the tax
returns of the Company or Sister is currently in
progress nor, in so far as the Shareholders are
aware threatened and, except as would not have a
Material Adverse Effect, no deficiencies have been
asserted or assessed against either the Company or
Sister as a result of any investigation by the
Inland Revenue or any local taxing authority and in
so far as the Shareholders are aware no such
deficiency has been proposed or threatened.
O. Books and Records. Except as would
not have a Material Adverse Effect, the general
ledgers and books of account of the Company and
Sister are complete and correct and have been
maintained in accordance with good business
practice and in accordance with all procedures
required by applicable laws and regulations.
P. Contracts and Commitments.
1. Schedule 5.16 attached hereto
contains a true, complete and correct list and
description of the following contracts and
agreements, whether written or oral (collectively,
the "Contracts"):
(i) all loan agreements,
indentures, mortgages and guarantees to which the
Company or Sister is a party or by which the
Company or Sister or any of their respective
property is bound;
(ii) all pledges, conditional
sale or title retention agreements, security
agreements, equipment obligations, personal
property leases and lease purchase agreements to
which the Company or Sister is a party or by which
the Company or Sister or any of their respective
property is bound;
(iii) all contracts, agreements,
commitments, purchase orders or other
understandings or arrangements to which the Company
or Sister is a party or by which the Company or
Sister or any of their respective property is bound
which involve payments or receipts by the Company
or Sister of more than 25,000 pounds sterling in the case of any
single contract, agreement, commitment,
understanding or arrangement under which full
performance (including payment) has not been
rendered by all parties thereto;
(iv) all collective bargaining
agreements, employment and consulting agreements,
executive compensation plans, bonus plans, deferred
compensation agreements, pension schemes,
retirement schemes, employee share option or share
purchase schemes and group life, health and
accident insurance and other non-governmental
employee benefit schemes, agreements, arrangements
or commitments to which the Company or Sister is a
party or by which the Company or Sister or any of
their respective property is bound;
(v) all agency, distributor,
sales representative, original equipment
manufacturer, value added reseller, franchise or
similar agreements to which the Company or Sister
is a party or by which the Company or Sister or any
of their respective property is bound;
(vi) all contracts, agreements
or other understandings or arrangements between the
Company and Sister (including, but not limited to,
any tax sharing arrangements) or between the
Company or Sister and any of the Shareholders or
their affiliates;
(vii) all leases, whether
operating, capital or otherwise, under which the
Company or Sister is lessor or lessee, the breach
or termination of which would have a Material
Adverse Effect;
(viii) all contracts, agreements
and other documents or information relating to past
disposal of waste (whether or not hazardous);
(ix) all contracts, agreements
or other arrangements imposing a non-competition or
non-solicitation obligation on the Company or
Sister;
(x) all contracts, agreements
or other arrangements pursuant to which the Company
of Sister license intellectual property from a
third party; and
(xi) any other agreements or
contracts entered into by the Company or Sister,
the breach or termination of which would have a
Material Adverse Effect.
2. Except as set forth on
Schedule 5.16:
(i) each Contract is a valid and
binding agreement of the Company or Sister,
enforceable against the Company or Sister in
accordance with its terms, and the Shareholders
have no reason to believe that any Contract is not
a valid and binding agreement of the other parties
thereto;
(ii) in so far as the
Shareholders are aware the Company or Sister has
fulfilled all material obligations required
pursuant to the Contracts to have been performed by
the Company or Sister, as the case may be, on its
part prior to the date hereof, and the Shareholders
have no reason to believe that the Company or
Sister, as the case may be, will not be able to
fulfill, when due, all of its obligations under the
Contracts which remain to be performed after the
date hereof provided the business of the Company
and Sister continue to be conducted in accordance
with previous practice and funding;
(iii) neither the Company nor
Sister is in breach of or default under any
Contract, and no event has occurred which with the
passage of time or giving of notice or both would
constitute such a default, result in a loss of
rights or result in the creation of any lien,
charge or encumbrance, thereunder or pursuant
thereto;
(iv) in so far as the
Shareholders are aware there is no existing breach
or default by any other party to any Contract, and
in so far as the Shareholders are aware no event
has occurred which with the passage of time or
giving of notice or both would constitute a default
by such other party, result in a loss of rights or
result in the creation of any lien, charge or
encumbrance thereunder or pursuant thereto;
(v) there are not and, since 1
January 1994 have not been, any claims of a
non-routine nature relating to the Company or
Sister received from customers of the Company or
Sister under any warranties, whether express or
implied;
(vi) the Company and Sister are
not restricted by any Contract from carrying on
their business anywhere in the world;
(vii) neither the Company nor
Sister has any written or oral contracts to sell
products or perform services which are expected to
be performed at, or to result in, a loss;
(viii) Schedule 5.16 contains a
complete list of all parts and materials
("Components") currently used in producing the
current products of the Company and Sister.
(ix) neither the completion of
this transaction nor the change in control of the
Company and Sister either as a result of this
transaction or (in the case of Sister) as a result
of the Sister Acquisition will, with or without the
giving of notice or thepassage of time or both,
result in any default under any Contract or
otherwise require the consent of any other party to
any Contract.
3. True, correct and complete copies
of all written Contracts have previously been
delivered to the Buyer.
Q. Compliance with Agreements and Laws.
1. Except as would not have a
Material Adverse Effect, the Company and Sister
each have in so far as the Shareholders are aware
all requisite licenses, permits and certificates,
including environmental, health and safety permits,
which are required from governmental and local
authorities and which are necessary to conduct
their respective business and own and operate their
respective assets (collectively, the "Permits").
Schedule 5.17 attached hereto sets forth a true,
correct and complete list of all such Permits.
Except as would not have a Material Adverse Effect,
in so far as the Shareholders are aware, neither
the Company nor Sister is in violation of any law,
regulation or ordinance (including, without
limitation, laws, regulations or ordinances
relating to building, zoning, land use or similar
matters) relating to its properties. In so far as
the Shareholders are aware, the business of the
Company and Sister as conducted since 19
August 1993 has not violated, and on the date
hereof does not violate, any laws, regulations or
orders (including, but not limited to, any of the
foregoing relating to employment discrimination, or
occupational safety), the enforcement of which
would have a Material Adverse Effect. Except as
set forth on Schedule 5.17, neither the Company nor
Sister has had notice or communication from any
governmental or regulatory authority or otherwise
since 19 August 1993 of any such violation or
noncompliance.
2. In so far as the Shareholders are
aware, neither the Company nor Sister is in
violation of any governmental or local authority
law, ruling, order, decree, regulation, permit, or
other requirement applicable to the Company,
Sister, or any of their respective properties, or
any part thereof, relating to public health, public
safety, pollution, hazardous waste, environmental
or other similar matters, which has not been
entirely corrected or which violation has or may
have a Material Adverse Effect. Neither the
Company nor Sister has received notice from any
governmental or local authority alleging any such
violation.
3. Neither the Company or Sister is
or has been a party to any agreement, practice or
arrangement which in whole or in part:
(a) contravenes or is subject to
registration under the Restrictive Trade Practices
Act 1976 and 1977;
(b) contravenes the provisions of
Part IX of the Fair Trading Act 1973 (the "Fair
Trading Act");
(c) would or might result in a
reference of a "consumer trade practice" within the
meaning of Section 13 of the Fair Trading Act, or
be liable to reference to the Consumer Protection
Advisory Committee under Part II of the Fair
Trading Act;
(d) contravenes the provisions of
the Trade Descriptions Act 1968 and 1972;
(e) contravenes any provisions of
the Treaty of Rome or any other competition
legislation or regulations; or
(f) contravenes the provisions of
the Consumer Credit Act 1974.
4. Neither the Company nor Sister is
or has engaged in any anti-competitive practice, as
defined in the Competition Act 1980.
5. In so far as the Shareholders are
aware, no investigations or enquiries by or on
behalf of any governmental or other body in
respect of the Company or Sister is pending or in
existence which investigations or enquiries could
give rise to any fine, penalty, default,
proceedings or other liability in relation to the
Company or Sister which would have a Material
Adverse Effect.
6. In so far as the Shareholders are
aware neither the Company nor Sister nor any
employee of the Company or Sister (during the
course of their duties in relation to the Company
or Sister) has committed or omitted to do any act
or thing the commission or omission of which is or
could be in contravention of any act, order,
regulation or the like giving rise to any fine,
penalty, default, proceedings or other liability in
relation to the Company or Sister which would have
a Material Adverse Effect.
R. Employee Relations.
1. The Company and Sister are in
compliance with all laws respecting employment and
employment practices, terms and conditions of
employment, and wages and hours, and is not engaged
in any unfair labor practice, and except for (i)
the current monthly salaries, bonuses and expenses
to be paid in arrears at the end of the current
month (ii) any bonus due to Mr Harding in respect
of the accounting period of the Company ended 31
October 1994, which was accounted for in the
Financial Statements, but is as yet unpaid, there
are no arrears in the payment of wages, national
insurance contributions or social security taxes.
2. Schedule 5.18.2 sets forth a
true, correct and complete list of the current
payroll of the Company and Sister, including the
salary or wage rates of each of their employees
(the "Employees"), showing separately for each such
person who received an annual salary in excess of
15,000 pounds sterling the maximum amounts paid or payable as
salary and bonus payments for the fiscal year ended
31 October 1994 (in the case of the Company) and 31
July 1994 (in the case of Sister), and the date of
commencement of continuous employment (within the
meaning of the Employment Protection
(Consolidation) Act 1978 (the "Employment Act")).
3. The contract of employment of
each Employee (except for Mr Harding) may be
terminated by the Company or Sister without damages
or compensation (other than that payable by
statute) by giving at any time the minimum period
of notice applicable to that contract which is
specified in Section 49 of the Employment Act.
4. No Employee has given notice
terminating his contract of employment or is under
notice of dismissal or has made or threatened any
claim in connection with or arising from his
employment and there is no obligation or amount due
to or in respect of any Employee in connection with
or arising from his employment which is in arrear
or unsatisfied other than his normal salary for the
part of the month current at the date hereof.
5. Except as would not have a
Material Adverse Effect, there is no due and
undischarged liability to pay to any governmental
or regulatory authority in any jurisdiction any
contribution, taxation or other impost arising in
connection with the employment or engagement of the
Employees by the Company or Sister.
S. Pensions. Except as detailed in
Schedule 5.19, neither the Company nor Sister is
under any legal or moral liability or obligation to
make any ex gratia payments or to pay pensions,
gratuities, superannuation allowances or the like
to any of the Employees. Except as detailed in
Schedule 5.19, neither the Company nor Sister
maintains any private, non-governmental health,
welfare, pension, retirement or other benefit
schemes.
T. Absence of Certain Changes or
Events.
1. Except as set forth on
Schedule 5.20 or as would not have a Material
Adverse Effect, since the Proforma Balance Sheet
Date, neither the Company nor Sister has entered
into any transaction which is not in the ordinary
course of business, and, without limiting the
generality of the foregoing, neither the Company
nor Sister has, other than in the ordinary course
of business:
(i) incurred any obligation or
liability for borrowed money;
(ii) discharged or satisfied any
lien or encumbrance or paid any obligation or
liability other than current liabilities reflected
in the Proforma Consolidated Balance Sheet;
(iii) mortgaged, pledged or
subjected to lien, charge or other encumbrance any
of their respective properties or assets;
(iv) sold or purchased, assigned
or transferred any of its tangible or intangible
assets or cancelled any debts or claims, except for
Stock sold and Components purchased in the ordinary
course of business;
(v) made any material amendment
to or termination of any Contract or done any act
or omitted to do any act which would cause the
breach of any Contract;
(vi) suffered any losses of
Assets or real property, whether insured or
uninsured, and whether or not in the control of the
Company or Sister, as the case may be, in excess of
15,000 pounds sterling in the aggregate, or waived any rights of
any value;
(vii) authorized any declaration
or payment of dividends by the Company or Sister,
or paid any such dividends, or authorized any
transfer of assets of any kind whatsoever by the
Company or Sister to any of their respective
shareholders with respect to any share capital;
(viii) authorized or issued
recall notices for any of its products or initiated
any safety investigations;
(ix) received notice of any
litigation, warranty claim or products liability
claims;
(x) engaged any new employee for
a salary in excess of 10,000 pounds sterling per annum;
(xi) made, or committed to make,
any changes in the compensation payable to any
officer, director, employee or agent of the Company
or Sister, or any bonus payment or similar
arrangements made to or with any of such officers,
directors, employees or agents;
(xii) incurred any capital
expenditure in excess of 5,000 pounds sterling in any instance or
50,000 pounds sterling in the aggregate;
(xiii) made any alteration in
the manner of keeping the books, accounts or
records of the Company or Sister, or in the
accounting practices therein reflected; or
U. Customers. Schedule 5.21 attached
hereto sets forth a true, correct and complete list
of the names and addresses of each material
reseller, distributor, value added reseller,
original equipment manufacturer and other major
customer of the Company and Sister as of the date
hereof. Except as set forth on Schedule 5.21, the
Company and Sister have no disputes ongoing with
their respective distributors, value added
resellers, original equipment manufacturers and
other customers and none of such persons has
notified the Company or Sister, as the case may be,
that it intends to discontinue its relationship
with the Company or Sister.
V. Suppliers. Schedule 5.22 attached
hereto sets forth a true, correct and complete list
of (i) the names and addresses of the ten largest
suppliers of the Company and Sister by sterling
volume of purchases by the Company and Sister, on a
consolidated basis, for the period from 1st October
1994 to the Proforma Balance Sheet Date, and
(ii) the present sole source suppliers of
significant goods or services, other than
utilities, for any product with respect to which
practical alternative sources of supply are not
available on comparable terms and conditions.
Except as set forth on Schedule 5.22, (a) the
Company and Sister have no disputes ongoing with
their respective suppliers, and (b) neither
theCompany nor Sister is more than 30 days in
arrears in any trade accounts payable or other
payments owing to any supplier.
W. Warranty and Product Liability
Claims. Schedule 5.23 attached hereto contains a
true, correct and complete list of all warranty and
product liability claims made against the Company
or Sister which may have a Material Adverse Effect
for the fifteen month period ended 31 January 1995,
the current status of all such claims and the costs
of all actions taken in satisfaction of such
claims.
X. Inter-Company Indebtedness;
Indebtedness to and from Directors and
Shareholders. Except as set forth on Schedule 5.24
attached hereto, there is no intercompany
indebtedness payable between the Company and
Sister. Except as set forth on Schedule 5.24
attached hereto, there is no debt owed by Sister or
the Company to any Shareholder save for outstanding
salaries and expenses due to those Shareholders who
are also employees of the Company or Sister.
Y. Banking Facilities. Schedule 5.25
attached hereto sets forth a true, correct and
complete list of:
(i) each bank, building society or
similar financial institution in which the Company
or Sister has an account or safety deposit box and
the numbers of the accounts or safety deposit boxes
maintained by the Company or Sister thereat; and
(ii) the names of all persons
authorized to draw on each such account or to have
access to any such safety deposit box facility,
together with a description of the authority (and
conditions thereof, if any) of each such person
with respect thereto.
Z. Powers of Attorney and Suretyships.
Except as set forth on Schedule 5.26 attached
hereto, neither the Company nor Sister has any
general or special powers of attorney outstanding
(whether as grantor or grantee thereof) or has any
obligation or liability (whether actual, accrued,
accruing, continent or otherwise) as guarantor,
surety, co-signer, endorser, co-maker, indemnitor
or otherwise in respect of the obligation of any
person, corporation, partnership, joint venture,
association, organization or other entity, except
as endorser or maker of checks or letters of
credit, respectively, endorsed or made in the
ordinary course of business.
AA. Conflicts of Interest. Except as
set forth on Schedule 5.27 attached hereto, no
director or shareholder of the Company or Sister
nor, to the best knowledge of the Shareholders, any
affiliate of any such person, now has or within the
last 24 months had, either directly or indirectly:
(i) an equity or debt interest in
any company, partnership, joint venture,
association, organization or other person or entity
which furnishes or sells or during such period
furnished or sold services or products to the
Company or Sister, or purchases or during such
period purchased from the Company or Sister any
goods or services, or otherwise does nor during
such period did business with the Company or
Sister; or
(ii) a beneficial interest in any
contract, commitment or agreement to which the
Company or Sister is or was a party or under which
any of them is or was obligated or bound or to
which any of their respective properties may be or
may have been subject, other than share options and
other contracts, commitments or agreements between
the Company or Sister and such persons in their
capacities as employees or directors of the Company
or Sister.
AB. Regulatory Approvals. All consents,
approvals, authorizations or other requirements
prescribed by any law, rule or regulation which
must be obtained or satisfied by the Shareholders,
the Company or Sister and which are necessary for
the execution and delivery by the Shareholders and
the Company of this Agreement or any documents to
be executed and delivered by the Shareholders or
the Company in connection herewith (including,
without limitation, any agreements, instruments or
other documents to be executed in connection with
the Sister Acquisition) are set forth on
Schedule 5.28 attached hereto and have been, or
prior to the Closing Date will be, obtained and
satisfied.
AC. Disclosure. The information
concerning the Company and Sister set forth in this
Agreement, and any Schedules attached hereto is
true and accurate in all material respects. Copies
of all documents heretofore or hereafter delivered
or made available to the Buyer pursuant to this
Agreement were or will be complete and accurate
copies of such documents.
AD. Scope of Representations and
Warranties. The Buyer shall not be entitled to
claim that any fact, matter or circumstance
constitutes a breach of any of the representations
and Warranties contained in this Agreement to the
extent that:-
(i) such fact, matter or
circumstance has been disclosed in writing:
(A) in this Agreement or
pursuant to Section 8.5
hereof; or
(B) in any Schedule to this
Agreement or pursuant to
Section 8.5 hereof; or
(C) in any document disclosed
to any Director or Senior
Manager of or
professional adviser to
the Buyer (including but
without limitation the
Buyer's Solicitors and
Broadview Associates in
relation to this
Agreement and its
associated transactions),
and documents which have
been disclosed to the
Buyer's Solicitors are
set out in Schedule 5.30
hereof; or
(D) in the Financial
Statements; or
(E) to the extent of any
fact, matter or
circumstance which would
be disclosed by a search
against the Company and
Sister at the Companies
Registry in England as at
the date hereof; or
(ii) a provision or reserve in
respect thereof has been
made in the Financial
Statements; or
(iii) the amount of such
liability is covered by a
policy of insurance
effected by the Company
or the Sister which is
validly in force at
Completion or would have
been so covered had the
policies ofinsurance
validly in force at
Completion been
maintained in force by
the Buyer following
Completion.
AE. Continued Truth of Representations
and Warranties of the Shareholders. The
representations and warranties of the Shareholders
shall be deemed to be repeated as of the Completion
Date as though such representations and warranties
were made on and as of such date (even though they
purport to have been given on a date prior to the
Completion Date), except that such representations
and warranties shall be deemed to be given subject
to the matters set forth in the updated Schedules
delivered to the Buyer in accordance with Section
8.5.
VI. Representations and Warranties of the Buyer
The Buyer represents and warrants to
each Shareholder as follows:
A. Organization and Authority. The
Buyer is a duly organized company, validly existing
and in good standing under the laws of the State of
Delaware, and has all requisite power and authority
(corporate and other) to own its properties and to
carry on its business as now being conducted. The
Buyer has full power to execute and deliver this
Agreement and the agreements contemplated herein,
and to consummate the transactions contemplated
hereby and thereby. Certified copies of the
Certificate of Incorporation of the Buyer, as
amended to date, have been previously delivered to
the Shareholders, are complete and correct, and no
amendments have been made thereto or have been
authorized since the date thereof.
B. Capitalization of the Buyer. On the
date hereof, the Buyer's authorized capital
consists of 25,000,000 shares of common stock,
$0.10 par value per share, of which 5,108,080
shares were issued and outstanding as of 12 April
1995. All of the outstanding shares of common
stock of the Buyer have been duly and validly
issued and are, fully paid and not subject to any
call. All of the Buyer Shares will be, when issued
pursuant to this Agreement, duly authorized,
validly issued, fully paid, not subject to any call
for further payment and free of any pre-emptive
rights, claims, equity, liens, charges and
encumbrances whatsoever. The Buyer Shares, when
issued pursuant to this Agreement, will be issued
in compliance with the Securities Act, the U.K.
Companies Act 1985, the U.K. Financial Services Act
1986 and all other applicable rules and regulations
of the United States, the United Kingdom, or any
political subdivision thereof.
C. Authorization. Except as set forth
in Schedule 6.3 attached hereto, the execution and
delivery of this Agreement by the Buyer, and the
agreements provided for herein, and the
consummation by the Buyer of the transactions
contemplated hereby and thereby, have been duly
authorized by all requisite corporate action. This
Agreement and all such other agreements and written
obligations entered into and undertaken in
connection with the transactions contemplated
hereby and thereby constitute the valid and legally
binding obligations of the Buyer, enforceable
against the Buyer in accordance with their
respective terms. The execution, delivery and
performance of this Agreement and the agreements
provided for herein, and the consummation by the
Buyer of the transactions contemplatedhereby and
thereby, will not, with or without the giving of
notice or the passage of time or both, (a) violate
the provisions of any law, rule or regulation
applicable to the Buyer; (b) violate the provisions
of the Buyer's Certificate of Incorporation;
(c) violate any judgment, decree, order or award of
any court, governmental body or arbitrator; or
(d) conflict with or result in the breach or
termination of any term or provision of, or
constitute a default under, or cause any
acceleration under, or cause the creation of any
lien, charge or encumbrance upon the properties or
assets of the Buyer pursuant to, any indenture,
mortgage, deed of trust or other agreement or
instrument to which the Buyer is a party or by
which the Buyer is or may be bound. Schedule 6.3
attached hereto sets forth a true, correct and
complete list of all consents and approvals of
third parties that are required in connection with
the consummation by the Buyer of the transactions
contemplated by this Agreement.
D. Compliance with Regulation S. The
Buyer is a "reporting issuer" (as defined in
Regulation S). The Buyer, its affiliates and any
person acting on behalf of, or as agent of, any of
the foregoing, whether as principal or agent, (a)
has offered and sold the Buyer Shares to the
Shareholders or will do so only in an "offshore
transaction" (as defined in Regulation S), (b) has
not engaged or will not engage with respect to the
Buyer Shares in any "directed selling efforts"
(as defined in Regulation S) in or directed toward
the United States, (c) has complied or will comply
with all "offering restrictions" (as defined in
Regulation S) in respect of the Buyer Shares, (d)
has not made or will not make any offers or sales
of any of the Buyer Shares or any interest therein
in the United States or to, or for the account or
benefit of, any "U.S. Person" (as defined in
Regulation S), and (e) has not made or will not
make any sales of any of the Buyer Shares or any
interest therein to any person other than the
Shareholders.
E. Disclosure. The information
covering the Buyer set forth in this Agreement and
any Schedule attached hereto is true and accurate
in all material respects.
F. No Reliance on Warranties Other than
Those Set Forth in This Agreement. The Buyer
declares that it has not relied on any warranties,
representations, covenants, undertakings,
indemnities or other statements whatsoever from the
Shareholders whether relating to the Company or
Sister or to the Shares or to the Company's or
Sister's assets or liabilities other than those
contained in this Agreement and the Buyer
acknowledges that the Shareholders have not given
any other such warranties, representations,
covenants, undertakings or indemnities.
G. Indemnity for Acts of Buyer. The
Buyer hereby undertakes with each of the
Shareholders to indemnify him/her and at all times
keep him/her (or as the case may be of them) fully
and effectually indemnified against any taxation or
other liability (including all costs and expenses
incurred) which may arise or accrue (whether alone
or in conjunction with other events, circumstances,
acts, omissions or transactions) directly or
indirectly in consequence of or in connection with
or by reference to:
(a) the payment by the Company
or Sister after Completion of an abnormal amount by
way of dividend (as defined in section 709(4)
Income and Corporation Taxes Act 1988); or
(b) the distribution or the
appropriation of or any other dealing with the
whole or part of the assets of the Company or
Sister after Completion otherwise than for bona
fide commercial reasons or otherwise than in the
ordinary course of the Company's or Sister's
existing businesses.
H. Books and Records. The Buyer hereby
agrees that it will after the Completion Date give
to the Shareholders and their representatives
reasonable facilities to inspect the books and
records of the Company and Sister and (at the
Shareholders' cost) to take copies and extracts
from them at all reasonable times and on reasonable
advance notice within the period of 6 years after
the Completion Date.
I. Continued Truth of Representations
and Warranties of the Buyer; Compliance with
Covenants and Obligations. The representations and
warranties of the Buyer in this Agreement shall be
deemed to be repeated as of the Completion Date,
except for any changes consented to in writing by
the Shareholders' Representative.
VII.. Public Announcements. The parties
agree that prior to the Completion Date any and all
general public pronouncements or other general
public communications concerning this Agreement and
the purchase of the Shares by the Buyer, and the
timing, manner and content of such disclosures,
shall be subject to the mutual agreement of the
Shareholders and the Buyer.
VIII.. Pre-Closing Covenants of the
Shareholders and the Company
From and after the date hereof and until the
Completion Date:
A. Conduct of Business. Company shall,
and the Shareholders shall procure that Sister
shall, carry on their business diligently and
substantially in the same manner as heretofore and
shall not make or institute any unusual or new
methods of manufacture, purchase, sale, shipment or
delivery, lease, management, accounting or
operation, and shall not ship or deliver any
quantity of products in excess of normal shipment
or delivery levels, except as agreed to in writing
by the Buyer. The Shareholders shall procure that
all of the property of the Company and Sister shall
be used, operated, repaired and maintained in a
normal business manner consistent with past
practice.
B. Absence of Material Changes. The
Company shall not, and the Shareholders shall
procure that Sister shall not, without the prior
written consent of the Buyer:
1. take any action to amend its
Memorandum or Articles of Association;
2. issue any share, bonds or other
corporate securities or grant any option or issue
any warrant to purchase or subscribe for any of
such securities or issue any securities convertible
into such securities;
3. knowingly incur any obligation or
liability (absolute or contingent), except current
liabilities incurred and obligations under
contracts entered into in the ordinary course of
business or save as would not have a Material
Adverse Effect;
4. declare or make any payment or
distribution to its shareholders with respect to
its share or purchase or redeem any share capital;
5. mortgage, pledge, or subject to
any lien, charge or any other encumbrance any of
their respective assets or properties;
6. except in ordinary course of
business, sell, assign, or transfer any of its
assets;
7. cancel any debts or claims,
except in the ordinary course of business;
8. merge or consolidate with or into
any company or other entity;
9. make, accrue or become liable for
any bonus, profit sharing or incentive payment, or
increase the rate of compensation payable or to
become payable by it to any of its directors or
employees;
10. make any election or make
any termination, revocation or cancellation of any
such election or any consent or compromise or
settle any claim for past or present tax due;
11. waive any rights of
material value;
12. modify, amend, alter or
terminate any of its executory contracts of a
material value or which are material in amount;
13. take or permit any act or
omission constituting a breach or default under any
contract, indenture or agreement by which it or its
properties are bound;
14. fail to, in so far as is
reasonably practicable, (i) preserve the possession
and control of its assets and business, (ii) keep
in faithful service its present key employees,
(iii) preserve the goodwill of its consumers,
suppliers, agents, brokers and others having
business relations with it, and (iv) keep and
preserve its business existing on the date hereof
until the Completion Date;
15. fail to operate its
business and save as would not have a Material
Adverse Effect maintain its books, accounts and
records in the customary mannerand in the ordinary
and regular course of business and maintain in good
repair its business premises, fixtures, machinery,
furniture and equipment;
16. enter into any lease,
contract, agreement or understanding, other than
those entered into in the ordinary course of
business calling for payments which in the
aggregate do not exceed 10,000 pounds sterling for each such
lease, contract, agreement or understanding;
17. incur any capital
expenditure in excess of 10,000 pounds sterling in one instance or
50,000 pounds sterling in the aggregate;
18. engage any new employee
for a salary in excess of 20,000 pounds sterling per annum;
19. enter into any original
equipment manufacturer, reseller or Intellectual
Property Rights license agreement; or
20. commit or agree to do any
of the foregoing in the future.
C. Communications with Customers.
Unless instructed otherwise by the Buyer in
writing, the Company shall and the Shareholders
shall procure that Sister shall, continue to accept
customer orders in the ordinary course of business
and consistent with past practice for all products
offered by the Company and Sister but expected to
be shipped after the Completion Date.
D. Compliance with Laws. The Company
shall, and the Shareholders shall procure that
Sister shall, comply with all laws and regulations
which are applicable to it or to the conduct of its
business and will perform and comply with all
contracts, commitments and obligations by which
they are bound.
E. Revised Schedules and Continuing
Obligation to Inform. Prior to completion the
Shareholders will deliver revised Schedules which
in as far as practicable list documents or refer to
such documents as having been previously been
provided to the Buyers Solicitors and detailed in a
revised Schedule 5.30 and such revised Schedules
shall replace those delivered at the time of
exchange and also from time to time prior to
Completion, the Shareholders will deliver or cause
to be delivered to the Buyer supplemental
information and updated disclosure Schedules
concerning events subsequent to the date hereof
which would render any statement, representation or
warranty in this Agreement or any information
contained in any Schedule attached hereto
inaccurate or incomplete in any material respect at
any time after the date hereof until the Completion
Date. For the avoidance of doubt, the indemnities,
representations and warranties of the Shareholders
hereunder shall, at the Completion Date, be deemed
to have been given subject to the disclosure
Schedules, as updated pursuant to this Section 8.5.
F. Exclusive Dealing. From the date
hereof until the Completion Date, neither the
Company nor any Shareholders nor any employee or
agent of the Company, directly or indirectly,
shall; (i) solicit proposals or offers or take part
in any discussions of any naturewith any other
person with regard to investment in the Company or
Sister; (ii) solicit proposals or offers or take
part in any discussions of any nature with any
person with regard to any exchange whatsoever in
the shareholding of the Company or Sister; (iii)
furnish any confidential information to any person
or information in connection with respect to any
matter relating to discussions between the Company
and the Buyer; or (iv) enter into any agreement or
understanding with or commitment to any other
person with respect to any matter relating to
discussions between the Company and the Buyer. The
Shareholders who are also shareholders of Sister,
each in their individual capacities, agree that
they will not, from the date hereof until the
Completion Date, accept any offer from any party,
other than the Company, for their shares in Sister.
G. Reports, Taxes. The Company and
Sister will duly and timely file all reports or
returns required to be filed during this period
with local and foreign authorities and will
promptly pay all local and foreign taxes,
assessments and governmental charges levied or as-
sessed upon them or any of their properties (unless
contesting such in good faith and adequate
provision has been made therefor).
IX. Best Efforts to Obtain Satisfaction of
Conditions
The Shareholders, the Company, and
the Buyer covenant and agree to use their best
efforts to obtain the satisfaction of the
conditions specified in this Agreement.
X. Conditions to Obligations of the Buyer
The obligations of the Buyer to complete under
this Agreement are subject to the fulfillment, at
the Completion Date, of the following conditions
precedent, each of which may be waived in writing
in the sole discretion of the Buyer:
A. Performance of Obligations. The
Shareholders and the Company shall have (and the
Shareholders shall have procured that Sister has)
performed and complied with all terms, conditions,
covenants, obligations, agreements and restrictions
required by this Agreement to be performed or
complied with by each of them prior to or at the
Completion Date.
B. Acquisition of Sister Shares by the
Company.
1. The Company shall have purchased
all of the issued and outstanding share capital of
Sister (the "Sister Acquisition") and shall be the
owner, beneficially and of record, of such share
capital free and clear of all liens, charges,
encumbrances, equities or adverse claims.
2. The Company has delivered to the
Buyer a written valuation (the "Independent
Valuation") of Sister prepared by Richard Tarr &
Co, independent auditors of the Company and Sister
which is in form and substance satisfactory to the
Buyer. The purchase price paid by the Company for
all of the issued and outstanding share capital of
Sister shall be not less than the value of Sister
as set forth in the Independent Valuation.
3. In connection with the Sister
Acquisition, the Company and the directors of
Sister shall have received a written release from
the shareholders of Sister for any future claims
(the "Release") in the form of language attached
hereto as Exhibit C. The Release is in form and
substance satisfactory to the Buyer.
C. Corporate Proceedings. All
corporate or other proceedings required to be taken
on the part of the Company or Sister to authorize
or carry out the transactions contemplated by this
Agreement (including, without limitation, the
Sister Acquisition) shall have been taken.
D. Consent of Lenders, Lessors and
Other Third Parties. The Shareholders, the Company
and Sister shall have received all requisite
consents and approvals of all lenders, lessors and
other third parties whose consent or approval is
required in order for the Shareholders, the Company
and Sister to consummate the transactions
contemplated by this Agreement (including, without
limitation, the completion of the Sister
Acquisition, including without limitation, those
consents or approvals set forth on Schedule 5.4
attached hereto.
E. Adverse Proceedings. No action or
proceeding by or before any court or other
governmental body shall have been instituted or
threatened by any governmental body or person
whatsoever which shall seek to restrain, prohibit
or invalidate the transactions contemplated by this
Agreement (including, without limitation, the
Sister Acquisition) or which might affect the right
of the Buyer to own the Shares.
F. Employment Contracts. On or prior
to the Completion Date, the Buyer (or, the Company
or Sister as the case may be) shall have executed
new employment agreements with Mr. Harding and John
Birbeck (the "Employment Agreements") upon terms
and in a form which is satisfactory to the Buyer.
G. Closing Deliveries. The Buyer shall
have received at or prior to the Closing such
documents, instruments or certificates as the Buyer
may reasonably request including, without
limitation:
(i) the share certificates
representing the Shares, together with
corresponding stock transfer forms duly endorsed in
accordance with Section 2.1 of this Agreement;
(ii) such resolutions of the
Company's directors and of the Shareholders and
such other documents evidencing satisfaction of the
conditions specified in this Section 10 as the
Buyer shall reasonably request;
(iii) certificates of the Company
Secretary of the Company and of Sister attesting to
the incumbency of the Company's and Sister's
directors, the authenticity of the resolutions
authorizing the transactions contemplated by this
Agreement, and the authenticity and continuing
validity of the Memorandum and Articles of
Association delivered pursuant to Section 5.1;
(iv) written resignations of
all members of the Company's and Sister's Board of
Directors other than Mr. Harding;
(v) the original corporate
minute books of the Company and Sister and all
corporate seals; and
(vi) a cross receipt executed
by the Buyer and the Shareholders.
(vii) the Shelf Registration Rights
Agreement executed by the Shareholders;
(viii) the A Share Restriction Agreement
executed by the A Shareholders, together with
attached A Joint Escrow Instructions executed by
the A Shareholders and the Escrow Agent;
(ix) the B Share Restriction
Agreement executed by the B Shareholders, together
with the attached B Joint Escrow Instructions
executed by the B Shareholders and the Escrow
Agent; and
(x) the Employment Agreements,
executed by Mr. Harding and John Birbeck; and
(xi) a copy of the Proforma
Profit and Loss Statement.
Conditions to Obligations of the Shareholders
The obligations of the Shareholders to
complete under this Agreement are subject to the
fulfillment, at the Completion Date, of the
following conditions precedent, each of which may
be waived in writing in the sole discretion of the
Shareholders' Representative, who shall have the
power and authority to bind all of the
Shareholders:
A. Performance of Obligations. The
Buyer shall have performed and complied with all
terms, conditions, covenants, obligations,
agreements and restrictions required by this
Agreement to be performed or complied with by it
prior to or at the Completion Date.
B. Corporate Proceedings. All
corporate and other proceedings required to be
taken on the part of the Buyer to authorize or
carry out this Agreement and the transactions
contemplated hereby shall have been taken.
C. Consents of Lenders, Lessors and
Other Third Parties. The Buyer shall have received
all requisite consents and approvals of all
lenders, lessors and other third parties whose
consent or approval is required in order for the
Buyer to consummate the transactions contemplated
by this Agreement, including, without limitation,
those set forth on Schedule 6.3 attached hereto.
D. Adverse Proceedings. No action or
proceeding by or before any court or other
governmental body shall have been instituted or
threatened by any governmental body orperson
whatsoever which shall seek to restrain, prohibit
or invalidate the transactions contemplated by this
Agreement or which might affect the right of the
Buyer to purchase the Shares or issue the Buyer
Shares.
E. Completion Deliveries. The
Shareholders shall have received at or prior to the
Closing such documents, instruments or certificates
as the Buyer may reasonably request including,
without limitation:
(i) such certificates of the
Buyer's directors and such other documents
evidencing satisfaction of the conditions specified
in this Section 11 as the Shareholders shall
reasonably request;
(ii) a certificate of the Company
Secretary of the Buyer attesting to the incumbency
of the Buyer's directors, the authenticity of the
resolutions authorizing the transactions
contemplated by this Agreement, and the
authenticity and continuing validity of the charter
documents delivered pursuant to Section 6.1;
(iii) the Purchase Price;
(iv) evidence of the valid issue of
the Buyer Shares and the effective deposit of the
share certificates representing the Buyer Shares
into escrow pursuant to the Escrow Instructions;
(v) a cross receipt executed by the
Buyer and the Shareholders.
(vi) the Shelf Registration Rights
Agreement, executed by the Buyer;
(vii) the A and B Share Restriction
Agreements, executed by the Buyer, together with
attached A and B Escrow Instructions executed by
the Buyer and the Escrow Agent;
(viii) the Employment Agreements,
each executed by the Buyer, the Company or Sister
(as the case may be); and
XII. Indemnification
A. By the Shareholders. The
Shareholders severally but not jointly, hereby
indemnify the Buyer from and against all claims,
damages, losses, liabilities, costs and expenses
arising out of or in connection with:
(a) any breach of any
representation or warranty made by the Shareholders
in this Agreement and
(b) the Sister Acquisition;
but for the avoidance of doubt the indemnity
contained in this Section 12.1(b) shall only apply
to the Sister Acquisition i.e. the purchase of
share capital and not to any other matter relating
to or in connection with Sister, otherthan the
matters referred to in Section 12.1(a),
(individually a "Loss" and collectively "Losses").
B. Claims for Indemnification.
Whenever any claim shall arise for indemnification
under this Section 12, the Buyer shall promptly
notify the Shareholders' Representative of the
claim and, as and when known by the Buyer, all the
facts constituting the basis for such claim. In
the event of any such claim for indemnification
hereunder resulting from or in connection with any
claim or legal proceedings by a third party, the
notice shall specify, if known, the amount or an
estimate of the amount of the liability arising
therefrom. The Buyer shall not itself and shall
procure that neither the Company nor Sister shall
not settle or compromise any claim by a third party
for which the Buyer is entitled to indemnification
hereunder without the prior written consent, which
shall not be unreasonably withheld or delayed, of
the Shareholders' Representative, who shall have
the power and authority to bind all of the
Shareholders; provided, however, that if suit shall
have been instituted against the Buyer, the Company
or Sister and the Shareholders' Representative
shall not have taken control of such suit after
notification thereof as provided in Section 12.3 of
this Agreement, the Buyer shall have the right to
settle or compromise such claim upon giving notice
to the Shareholders' Representative as provided in
Section 12.3.
C. Defense by the Shareholders. In
connection with any claim which may give rise to
indemnity hereunder resulting from or arising out
of any claim or legal proceeding by a person other
than the Buyer, the Company or Sister, the
Shareholders' Representative, at the sole cost and
expense of the Shareholders, may, upon written
notice to the Buyer, assume the defense of any such
claim or legal proceeding if the Shareholders'
Representative notifies the Buyer in writing of
this intent and acknowledges the obligation of the
Shareholders to indemnify the Buyer with respect to
all costs of such claim. If the Shareholders'
Representative assumes the defense of any such
claim or legal proceeding, the Shareholders'
Representative shall select counsel reasonably
acceptable to the Buyer (such acceptance not to be
unreasonably withheld or delayed) to conduct the
defense of such claims or legal proceedings and at
the sole cost and expense of the Shareholders shall
take all steps necessary in the defense or
settlement thereof. The Shareholders'
Representative shall not consent to a settlement
of, or the entry of any judgment arising from any
such claim or legal proceeding, without the prior
written consent of the Buyer (which consent shall
not be unreasonably withheld or delayed) and the
Buyer shall make available or procure to be made
available, to the Shareholders or their duly
authorized representatives all relevant books of
account, records and correspondence of the Company
and Sister for the purpose of enabling the
Shareholders to ascertain or extract any relevant
information. The Buyer shall be entitled to
participate in (but not control) the defense of any
such action, with its own counsel and at its own
expense. If the Shareholders' Representative does
not assume the defense of any such claim or
litigation resulting therefrom within thirty (30)
days after the date such claim is made: (i) the
Buyer may defend against such claim or litigation
in such manner as it may deem appropriate,
including, but not limited to, settling such claim
or litigation, after giving notice of the same to
the Shareholders' Representative, on such terms as
the Buyer may deem appropriate, and (ii) the
Shareholders' Representative shall be entitled to
participate in (but not control) the defense of
such action, with its counsel and at its own
expense. If the Shareholders or the Shareholders'
Representative thereafter seek to question the
manner inwhich the Buyer defended such third party
claim or the amount or nature of any such
settlement, the Shareholders or the Shareholders'
Representative shall have the burden to prove by a
preponderance of the evidence that the Buyer did
not defend or settle such third party claim in a
reasonably prudent manner.
D. Advance Warning of Claims. Upon
the Buyer, the Company or Sister becoming aware of
any matter or event which might give rise to a
claim under the warranties, representations,
undertakings or indemnities contained in this
Agreement, the Buyer shall forthwith give notice of
such matter or event to the Shareholders.
E. Limitations on Liability.
1. Notwithstanding anything to the
contrary contained by way of warranty, indemnity
covenant, representation or undertaking in this
Agreement, all such warranties, indemnities,
covenants, representations or undertakings shall be
qualified by the provisions of this Section 12.5
and in the event of any inconsistency between the
provisions of this Section 12.5 and any other
Section of this Agreement, this Section shall
prevail.
2. No claim shall accrue to the
Buyer or to the Company or to Sister against the
Shareholders under this Agreement or arising as a
result of a breach of the terms hereof:-
(i) unless the liability in
respect of any single
claim exceeds 10,000 pounds
sterling; and
(ii) unless the total
liability in respect of
all single claims which
are greater than the
amount specified in
Subsection 12.5.2.(i)
exceeds 100,000 pounds sterling
in which case the Shareholders
shall be liable for the
total aggregate of claims
not just the amount in
excess of 100,000 pounds sterling.
3. The total liability of the
Shareholders under this Section 12 in respect of
Losses (the "Indemnification Amount") shall be
satisfied solely, exclusively and absolutely when
the claim has been agreed between the Buyer and the
Shareholders' Representative or (in the event they
are unable to agree the claim within 30 days after
it has been presented) determined by binding
arbitration pursuant to Section 16 hereof (the
"Claim Date"), by the repurchase by the Buyer for a
price of US$0.01 per share of that number of Buyer
Shares (rounded down to the nearest whole share)
held in escrow pursuant to the Primary or Secondary
Escrow Instructions on the Claim Date which is
obtained by dividing (i) the Indemnification Amount
(converted in US Dollars using the Sterling/Dollar
exchange rate in the currency cross-rate table in
the Wall Street Journal Europe on the date prior to
the Claim Date) by (ii) the greater of (A) the
closing price of the Buyer Shares on the NASDAQ
National Market on the Claim Date or the (B) Base
Share Price. For purposes of the foregoing
calculation, the Base Share Price shall be
proportionately adjusted, upwards or downwards, as
appropriate, in the event of any stock split,
reverse stock split, stock dividend, stock
distribution or other reclassification of the
Buyer's common stock, includingthe Buyer Shares.
Such Buyer Shares shall be repurchased by the Buyer
from the Shareholders pro rata in proportion to the
number of Buyer Shares held in escrow by way of
full and final settlement of each Shareholder's
(and all Shareholders') liability in respect of
such breach and resultant claim. Where a
repurchase of Shares takes place pursuant to the
provisions of this Section 12.5.3, the number of
Shares which, at the date of such repurchase,
remain to be released from escrow on each Annual
Release Date (as defined in the A and B Share
Restriction Agreements) following such repurchase,
shall be reduced pro rata by reference to the
number of Shares repurchased pursuant to this
Section 12.3.
4. All representations and
warranties made by the Shareholders in this
Agreement, shall survive Completion but only for a
period of one (1) year. All liability whatsoever
pursuant to such representations and warranties
shall expire on the first anniversary of the
Completion Date, except for bona fide claims, if
any, (i) asserted in writing prior to such first
anniversary and identified as a claim for
indemnification pursuant to this Section 12, (ii)
relating to taxes (which shall expire upon the
expiration of any applicable statute of limitation
for adjustments by relevant taxing authorities), or
(iii) which are based upon fraud by any of the
Shareholders, which shall survive until finally
resolved and satisfied in full.
5. The Shareholders shall not be
liable under or pursuant to any warranty,
indemnity, representation or undertaking contained
in this Agreement in respect of any claim based on
a liability which is contingent only unless and
until such contingent liability becomes an actual
liability and is due and payable. This subclause
shall not operate to avoid any claim made with
reasonable particularity in respect of a contingent
liability within the applicable time limit
specified in Section 12.5.4. For the avoidance of
doubt, in the event that a claim is submitted with
reasonable particularity within the applicable time
limit, the Shares still held in escrow pursuant to
the Share Restriction Agreements shall be subject
to the Indemnification Option, as that term is
defined therein.
6. The Shareholders shall not be
liable (or such liability shall be reduced) for
such claims as may arise after the date hereof in
relation to any of the warranties, representations
indemnities or undertakings contained in this
Agreement as would not have arisen but for a
voluntary act, omission or transaction carried out
after the date hereof by the Buyer (or persons
deriving title from the Buyer), the Company or
Sister, or to the extent that such claims arise as
a result of the Buyer, the Company or Sister
disclaiming the benefit of any capital or other
allowances against taxation claimed or proposed to
be claimed as at the date hereof.
7. The Shareholders shall not be
liable (or such liability shall be reduced) for
claims pursuant to any of warranties,
representations, indemnities or undertakings
contained in this Agreement either in respect of
all and any matters resulting from a change in
accounting or in taxation policy or practice of the
Buyer, the Company or Sister including the method
of submission of taxation returns introduced since
(or having effect after) 21 March 1995, (other than
changes made to bring such policies or practices
into compliance with UK GAAP or applicable UK tax
legislation), or if and to the extent that such
claim relates to a liability for taxation which
would not have arisen but for any windingup or
cessation after the Completion Date of any trade or
business carried on by the Company or Sister.
8. The Shareholders shall not be
liable in respect of any claim relating to a breach
of the warranties, representations, indemnities and
undertakings contained in this Agreement or such
liability shall be reduced:-
(a) if and to the extent any
liability in the
Financial Statements has
been discharged or
satisfied below the
amount attributed to it
or included in respect of
it in the Financial
Statements;
(b) if and to the extent any
contingency or other
matters provided for in
the Financial Statements
has in the event been
over-provided for;
(c) if and to the extent that
such claim is
attributable to any
voluntary act or omission
of or transaction or
arrangement carried out
by the Buyer or the
Company or Sister after
the Completion Date
otherwise than in the
ordinary course of
business.
9. The amount of any claim for
breach of the warranties, representations,
undertakings and indemnities contained in this
Agreement shall take into account the amount of any
relief from taxation arising by virtue of the loss
or damage in respect of which the claim was made.
10. Nothing in this Agreement
shall derogate from the Buyer's obligation to
mitigate any loss which it suffers in consequence
of a breach of any warranty, indemnity,
representation or undertaking.
11. No claim whatsoever on the
part of the Buyer shall lie in respect of any
breach of the warranties, indemnities, undertakings
and representations contained in this Agreement if
and to the extent such breach has arisen in respect
of any act or omission stipulated to be carried out
or omitted pursuant to the terms of this Agreement.
12. For the avoidance of any
doubt, the Buyer shall not be entitled to recover
damages in respect of any claim for breach of
warranty, representation, undertaking or indemnity
contained in this Agreement where to do so would
involve recovery more than once in respect of the
same loss or damage.
13. The warranties,
representations, undertakings and indemnities are
given on the assumption and on the basis of the
Company and Sister continuing to carry on the
businesses as going concerns after the Completion
Date.
14. Any amount payable by the
Shareholders to the Buyer in satisfaction of any
claim pursuant to any warranty, undertaking,
representation or indemnity contained in this
Agreement shall be treated by the Shareholders as a
reduction in the Purchase Price.
15. The Shareholders shall not
be liable under the warranties, representations,
indemnities and undertakings contained in this
Agreement to the extent that any breach thereof or
liability thereunder occurs as a result of or is
otherwise attributable to any legislation not in
force at the date hereof or any change of law or
administrative practice which takes effect
retroactively.
16. Any liability of the
Shareholders under the warranties, representations,
undertakings and indemnities given or made by the
Shareholders in this Agreement shall be actionable
only by the Buyer or its permitted assigns within
the Xylogics Group and no other party shall be
entitled to make any claim or take any action
whatsoever against the Shareholders under or
arising out of or in connection therewith.
17. A breach of any warranty,
indemnity or representation or undertaking which is
capable of remedy shall not entitle the Buyer to
compensation or damages unless the Shareholders are
given written notice of such breach and such breach
is not remedied within 30 days after the date on
which such notice is served on the Shareholders.
18. If the Shareholders
indemnify the Buyer by means of Buyer's repurchase
of shares pursuant to Section 12.5.3 hereof for a
breach of any of the said warranties,
representations, indemnities and undertaking and
the Buyer, the Company or Sister subsequently
recovers from a third party a sum which relates to
that breach, the Buyer shall forthwith reimburse to
the Shareholders so much of the amount recovered
from the third party, less all reasonable costs,
charges and expenses incurred by the Buyer, the
Company or Sister (as the case may be) in obtaining
that payment and in recovering that sum from the
third party. Notwithstanding the value attributed
to any Buyer Shares (calculated in accordance with
Section 12.5.3 hereof) which have been repurchased
to satisfy a claim, in no event shall the amount
reimbursed to the Shareholders under this Section
12.5.18 exceed the market value of the Shares
repurchased from the Shareholders on the date of
repurchase (calculated at a per share price equal
to the closing price of the Buyer's Common Stock on
the NASDAQ National Market on the date of such
repurchase.
19. Any claim against the
Shareholders pursuant to the warranties,
representations, indemnities and undertakings
contained in this Agreement shall be deemed to have
been irrevocably withdrawn and lapsed (if not
having been previously settled or withdrawn) if the
matter has not been agreed by the parties or
submitted to binding arbitration pursuant to
Section 16 of this Agreement in the manner and
within the time periods specified therein.
20. The Shareholder shall not
be liable under the warranties, representations,
undertakings or indemnities contained in this
Agreement in respect of an obligation of either the
Company or Sister to pay advance corporation tax if
the Company or Sister (as the case may be) obtains
the benefit or reduction in liability to mainstream
corporation tax by reason of such payment when the
Buyer shall procure that the Company or Sister (as
the case may be) shall make all such claims and
elections as will result in such benefit or
reduction being obtained as soon as reasonably
practicable.
F. No Right of Rescission after
Completion. Any breach of any of the said
warranties, representations or undertakings or any
other breach of this Agreement by the Shareholders
shall give rise only to an action by the Buyer for
damages or indemnity and shall not entitle the
Buyer to rescind this Agreement after Completion.
XIII. Post-Closing Agreements
A. Buyer Share Options.
Buyer shall grant to the existing
employees of the Company and Sister options to
purchase an aggregate of 20,000 shares of Buyer's
common stock, par value $0.10 per share, pursuant
to, and subject to the terms of, Buyer's 1992 Stock
Option Plan. The number of Share Options to be
granted to each such employee is set forth opposite
such employee's name on Schedule 13.1 attached
hereto. The Share Options shall be granted at the
next regularly scheduled meeting of Buyer's Board
of Directors following Completion. The exercise
price of the Share Options shall be the closing
price of Buyer's common stock on the NASDAQ
National Market on the date of grant (or, if such
grant occurs after the closing of the NASDAQ
National Market on a given date, on the next
business day).
B. Reimbursement of Certain Costs of
Sister Acquisition. Simultaneous with
Completion, the Buyer shall make available to the
Company a sum sufficient to reimburse the Company
for the purchase price paid by the Company in the
Sister Acquisition. The amount of any
reimbursement made pursuant to this Section 13.2
shall in no event exceed 200,000 pounds sterling. The Purchase
Price will be reduced pursuant to Section 2.3.3, on
a pound for pound basis, by the amount of any
excess above such 200,000 pounds sterling maximum. For the
avoidance of doubt, any legal or other advisory
expenses of the Company in connection with the
Sister Acquisition shall be borne by the
Shareholders and not the Company. The transactions
contemplated by this Section 13.2 shall be deemed
to have occurred immediately after Completion.
C. Repayment of Shareholder Loan.
Simultaneous with Completion, the Buyer shall make
available to the Company cash in the aggregate
amount of 51,771 pounds sterling and the Company with use such sum
to repay in full the principal and accrued interest
due to one of the Shareholders pursuant to a
Shareholder loan, the terms of which have
previously been disclosed to the Buyer. The
transactions contemplated by this Section 13.3
shall be deemed to have occurred immediately after
Completion.
XIV. Termination of Agreement; Option to Proceed;
Damages
A. Termination by Agreement of the
Parties. This Agreement may be terminated by the
mutual written agreement of the parties hereto. In
the event of such termination by agreement, the
Buyer shall have no further obligation or liability
to the Shareholders or the Company under this
Agreement, and the Shareholders shall have no
further obligation or liability to the Buyer under
this Agreement.
B. Termination. To terminate this
Agreement
(i) The Buyer and the
Shareholders shall each have the right to terminate
this Agreement at any time after 31 May 1995 by
delivery of written notice to the other party if
Completion has not taken place by that date.
(ii) the Buyer shall have the
right to terminate this Agreement by delivery of
written notice to the Shareholders' Representative,
if at any time prior to Completion but after the
date hereof there shall occur an event, or there
shall be disclosed to the Buyer a fact, which would
have a material and fundamental adverse effect on
the financial condition of the Company and
Scorpion, taken as a whole;
(iii) any event giving the Buyer the right
to terminate this Agreement pursuant to this
Section 14.2 shall be referred to herein as a
"Pre-Completion Termination Event").
C. Availability of Remedies at Law. In
the event this Agreement is terminated by the Buyer
or by agreement of the parties, pursuant to the
provisions of this Section 14, the parties hereto
shall have available to them all remedies afforded
to them by applicable law.
XV. Brokers.
A. For the Shareholders and the
Company. Each of the Shareholders and the Company
represent and warrant that, no person firm or
corporation has acted in the capacity of broker or
finder on its behalf to bring about the negotiation
of this Agreement or the transactions contemplated
hereby (including the Sister Acquisition). The
Shareholders jointly and severally agree to
indemnify and hold harmless the Buyer (and, after
Completion, the Company and Sister) against any
claims or liabilities asserted against it by any
person acting or claiming to act as a broker or
finder on behalf of the Shareholders, the Company
or Sister.
B. For the Buyer. The Buyer agrees to
pay all fees, expenses and compensation owed to any
person, firm or corporation who has acted in the
capacity of broker or finder on its behalf to bring
about the negotiation of this Agreement. The Buyer
agrees to indemnify and hold harmless the
Shareholders against any claims or liabilities
asserted against it by any person acting or
claiming to act as a broker or finder on behalf of
the Buyer.
XVI. Dispute Resolution.
A. General. In the event that any
dispute should arise between the parties hereto
with respect to any matter covered by this
Agreement (other than a dispute regarding the
Completion Balance Sheet, which shall be resolved
pursuant to Section 2.3.2), the parties hereto
shall resolve such dispute in accordance with the
procedures set forth in this Section 16.
B. Consent of the Parties. In the
event of any dispute between the parties with
respect to any matter covered by this Agreement,
the parties shall first use their best efforts to
resolve such dispute among themselves. If the
parties are unable to resolve the dispute within
thirty (30) calendar days after the commencement of
efforts to resolve the dispute, the dispute will be
submitted to arbitration in accordance with this
Section 16, which shall be the exclusive remedy for
disputes.
C. Arbitration.
1. Either the Buyer or the
Shareholder's Representative may submit a dispute
not resolved under Section 16.2 above to
arbitration by notifying the other party hereto, in
writing, of such intention. Within ten (10) days
after receipt of such notice, the Buyer and the
Shareholder's Representative shall designate in
writing one arbitrator to resolve the dispute;
provided, that if the parties hereto cannot agree
on an arbitrator within such 10-day period, the
arbitrator shall be selected pursuant to the
UNCITRAL Arbitration Rules. The arbitrator so
designated (i) shall have expertise relevant to the
subject matter of the dispute in particular and
(ii) shall not be an employee, consultant, officer,
director or shareholder of any party hereto or any
affiliate of any party to this Agreement.
2. Within fifteen (15) days after
the designation of the arbitrator, the arbitrator,
the Buyer and the Shareholder's Representative
shall meet, at which time the Buyer and the
Shareholder's Representative shall be required to
set forth in writing all disputed issues and a
proposed ruling on each such issue.
3. The arbitrator shall set a date
for a hearing, which shall be no later than thirty
(30) days after the submission of written proposals
pursuant to Section 16.3.2 above, to discuss each
of the issues identified by the Buyer and the
Shareholder's Representative. Each such party
shall have the right to be represented by counsel.
The arbitration shall be governed by the UNCITRAL
Arbitration Rules; provided, that the arbitrator
shall have sole discretion with regard to the
admissibility of evidence.
4. The arbitrator shall use his best
efforts to rule on each disputed issue within
thirty (30) days after the completion of the
hearings described in Section 16.3.3 above. The
determination of the arbitrator as to the
resolution of any dispute shall be binding and
conclusive upon all parties hereto. All rulings of
the arbitrator shall be in writing and shall be
delivered to the parties hereto.
5. The prevailing party in any
arbitration shall be entitled to an award of
reasonable attorneys' fees and costs incurred in
connection with the arbitration. The non-prevailing
party shall pay such fees and costs, together with
the fees of the arbitrator and the costs and
expenses of the arbitration.
6. Any arbitration pursuant to this
Section 16 shall be conducted in London, England
and under English Law. Any arbitration award may
be entered in and enforced by any court having
jurisdiction thereover and the parties hereby
consent andcommit themselves to the non-exclusive
jurisdiction of the courts of England and Wales for
purposes of the enforcement of any arbitration
award.
XVII. Notices.
Any notices or other communications
required or permitted hereunder shall be
sufficiently given if delivered personally or sent
by, federal express (or similar overnight delivery
service), registered or certified mail, postage
prepaid, addressed as follows or to such other
address of which the parties may have given notice:
To the Buyer: Xylogics, Inc.
53 Third Avenue
Burlington, MA 01803
U.S.A.
attention: Maurice
Castonguay
With a copy to: Donald J. Guiney, Esq.
Brobeck Hale and Dorr
Veritas House
125 Finsbury Pavement
London EC2A 1NQ
To the Shareholders: John Wilson
Taylors Solicitors
Rawlings House
Exchange Street
Blackburn,
Lancs. BB1 7JN
With a copy to: The Shareholders'
Representative
Scorpion Logic Limited
33 Watford Metro Centre
Tolpits Lane
Watford, Herts WD1
Unless otherwise specified herein, such notices or
other communications shall be deemed received (i)
on the date delivered, if delivered personally, or
(ii) three (3) business days after being sent, if
sent by registered or certified mail.
XVIII. Successors and Assigns.
This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their
respective successors and assigns, except that the
Buyer, on the one hand, and the Shareholders and
the Company, on the other hand, may not assign
their respective obligations hereunder without the
prior written consent of the other party; provided,
however, that the Buyer may assign the benefit(s)
of this Agreement to any member of theXylogics
Group. Any assignment in contravention of this
provision shall be void. No assignment shall
release the Buyer, the Shareholders or the Company
or from any obligation or liability under this
Agreement.
XIX. Entire Agreement; Amendments; Attachments.
A. This Agreement, all Schedules and
Exhibits hereto, and all agreements and instruments
to be delivered by the parties pursuant hereto
represent the entire understanding and agreement
between the parties hereto with respect to the
subject matter hereof and supersede all prior oral
and written and all contemporaneous oral
negotiations, commitments and understandings
between such parties (including, without
limitation, that certain Term Sheet dated March 17,
1995). The Buyer, by the consent of its Board of
Directors or officers authorized by such Board, and
the Shareholders holding a majority of the Shares
(who shall have the authority to bind all of the
Shareholders) may amend or modify this Agreement,
in such manner as may be agreed upon, by a written
instrument executed by the Buyer and such majority
of the Shareholders.
B. If the provisions of any Schedule or
Exhibit to this Agreement are inconsistent with the
provisions of this Agreement, the provisions of the
Agreement shall prevail. The Exhibits and
Schedules attached hereto or to be attached
hereafter are hereby incorporated as integral parts
of this Agreement.
XX. Severability.
Any provision of this Agreement which is
invalid, illegal or unenforceable in any
jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity,
illegality or unenforceability, without affecting
in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other
provision of this Agreement invalid, illegal or
unenforceable in any other jurisdiction.
XXI. Investigation of the Parties.
All representations and warranties contained
herein which are made "to the best knowledge" of a
party or "in so far as a party is aware" shall
require that such party make reasonable
investigation and inquiry with respect thereto to
ascertain the correctness and validity thereof.
XXII. Legal and Advisory Fees.
The Buyer shall be responsible for all legal,
accounting and other advisory fees incurred by
Buyer in connection with this Agreement and the
transactions contemplated herein. The
Shareholders, and not the Company or Sister, shall
be responsible for all legal, accounting and other
advisory fees incurred by the Shareholders, the
Company and/or Sister in connection with this
Agreement, the Sister Acquisition and all other
transactions contemplated herein and therein.
XXIII. Governing Law.
This Agreement shall be governed by and
construed in accordance with the laws of England
and Wales, without regard to the conflict of laws
provisions thereof.
XXIV. Section Headings.
The section headings are for the convenience
of the parties and in no way alter, modify, amend,
limit, or restrict the contractual obligations of
the parties.
XXV. Counterparts.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be
an original, but all of which shall be one and the
same document.
IN WITNESS WHEREOF, this Agreement has been
duly executed by the parties hereto as of and on
the date first above written.
SCORPION LOGIC LIMITED XYLOGICS, INC.
By:
By:___________________________
Sean Harding Maurice L.
Castonguay
Managing Director Chief
Financial Officer
SHAREHOLDERS
Sean Harding Peter Lynch
John Birbeck Eve Allaway
Malcolm Richardson Elizabeth
Richardson
Peter Thompson Paula Harding
Denise Waldron June Waldron
Digital Electronica Limited
Name:
Title:
Exhibit 2(B)
SHELF REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is made as of this 20th day of
April, 1995 by and between Xylogics, Inc., a
Delaware Corporation (the "Company") and the
shareholders listed on the signature pages hereof
(the "Shareholders").
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following
terms, as used herein, have the following meanings:
"Affiliate" of any person means any other
person directly or indirectly controlling or
controlled by or under common control with such
person. For the purposes of this definition,
"control" when used with respect to any person,
means the possession, directly or indirectly of the
power to direct or cause the direction of the
management and policies of such person, whether
through the ownership of voting securities, by
contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the
foregoing.
"Business Day" means any day except a
Saturday, Sunday or other day on which commercial
banks in the City of New York are authorized by law
to close.
"Common Stock" means the Common Stock, par
value $0.10, of the Company.
"Earnings Announcement" means, with respect to
any fiscal quarter, a press release or report
issued by the Company during such fiscal quarter
which discloses, among other things, the Company's
results of operations for the previous fiscal
quarter.
"Exchange Act" means the United States
Securities Exchange Act of 1934, as amended.
"Holder" means, the registered holder of
Registrable Securities or any assignee or
transferee of such registrable security unless such
Registrable Securities are acquired (i) pursuant to
a registration statement under the Securities Act
or (ii) pursuant to transactions exempt from
registration under the Securities Act where
securities acquired in such transaction may be
resold without subsequent registration under the
Securities Act.
"Managing Underwriter" with respect to an
Offering means the lead manager or lead managers of
a syndicate of Underwriters of such Offering.
"NASD" means the National Association of
Securities Dealers, Inc.
"Offering" means any offering of Registrable
Securities which are registered pursuant to the
Registration Statement.
"person" means an individual, partnership,
corporation, trust or unincorporated organization,
or a government or agency or political subdivision
thereof.
"Prospectus" means the prospectus included in
any Registration Statement, as amended or
supplemented by any prospectus supplement with
respect to the terms of the offering of any portion
of the Registrable Securities covered by the
Registration Statement and by all other amendments
and supplements to the prospectus, including post-
effective amendments and all exhibits and all
materials incorporated by reference in such
prospectus.
"Registrable Securities" means Common Stock
issued to a Shareholder pursuant to the Share
Purchase Agreement provided that Registrable
Securities shall cease to be Registrable Securities
at such time that (i) a registration statement
covering such Common Stock has been declared
effective by the Commission and such Common Stock
has been disposed of pursuant to such effective
registration statement, (ii) such Common Stock may
be sold under circumstances in which all of the
applicable conditions of Rule 144 (or any similar
provisions then in force) under the Securities Act
are met or under which such Common Stock may be
sold pursuant to Rule 144(k) and such Common Stock
has been disposed pursuant to such Rule or (iii)
such Common Stock has been otherwise transferred.
"Registration Statement" means the
registration statement of the Company under the
Securities Act contemplated by Section 2.1(b),
including the Prospectus, amendments and
supplements to such Registration Statement,
including post-effective amendments, and all
exhibits and all materials incorporated by
reference in such Registration Statement.
"Request Date" means the date on which the
Company may be requested by the Shareholder
Representative to prepare a Registration Statement
pursuant to Section 2.1(a) of this Agreement.
"Request Notice" means a written notice
requiring a Shelf Registration delivered by a
Holder to the Company pursuant to Section 2.1(a)
"SEC" means the United States Securities and
Exchange Commission.
"Securities Act" means the United States
Securities Act of 1933, as amended.
"Selling Holder" with respect to an Offering
means a Holder who is selling Registrable
Securities in such Offering under the Registration
Statement.
"Scorpion" means Scorpion Logic Ltd.
"Shareholder Representative" has the meaning
assigned to it in the Share Purchase Agreement.
"Shelf Registration" means a shelf
registration as defined in Section 2.1.
"Shares" means Common Stock of the Company
issued to a Shareholder pursuant to the Share
Purchase Agreement.
"Share Purchase Agreement" means that certain
Share Purchase Agreement dated as of the date
hereof between the Company and the Shareholders
relating to the acquisition by the Company of all
of the shares of Scorpion.
"Share Restriction Agreement" means that
certain Share Restriction Agreement dated as of the
date hereof between the Company and each of the
Shareholders.
"Suspension Period" means any period during
which an event has occurred which makes a statement
of a material fact made in the Registration
Statement as then amended, the Prospectus, as then
supplemented, or any document incorporated by
reference therein untrue or which results in the
omission of a statement of a material fact required
to be stated therein or necessary to make the
statements therein not misleading until such time
as the Registration Statement and the Prospectus
have been amended to eliminate such misstatement or
omission provided, however, that, with respect to
any Offering, the Suspension Period specified in
this clause shall continue during any period in
which (i) the Company in good faith and for valid
business reasons, including without limitation the
existence of non public discussions regarding
material transactions involving the Company,
concludes that the filing of or amendment to a
Registration Statement would not be in the best
interests of the Company and its shareholders,
provided that the Company, as promptly as
reasonably possible, ends such Suspension Period,
or (ii) the Registration Statement is no longer
effective due to (A) the filing of a post-effective
amendment by the Company, (B) the issuance of a
stop order by the SEC or (C) any other reason,
until such time as the Registration Statement is
declared effective by the SEC or the SEC revokes
such stop order.
"Underwritten registration" or "underwritten
offering" means a registration in which Common
Stock of the Company is being sold to an
underwriter for reoffering to the public.
"Underwriter" with respect to an Offering
means a securities dealer who purchases Registrable
Securities as principal and not as part of such
dealer's market-making activities in such offering.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. Shelf Registration (a) Subject
to the other provisions of this Section 2.1(a), not
less than sixty days prior to an Annual Release
Date (as that term is defined in the Share
Restriction Agreement) the Shareholder
Representative may, by written notice to the
Company (the "Request Notice"), require the Company
to undertake a Shelf Registration (as defined in
Section 2.1(b) with respect to some or all of the
Shareholders' Registrable Securities. For purposes
of this Agreement, the date on which a valid
Request Notice is delivered to the Company is
referred to herein as the "Request Date". Prior to
delivering the Request Notice, the Shareholder
Representative shall consult with U.S. counsel to
confirm that the Registrable Securities may not be
sold or otherwise transferred pursuant to an
exemption from Section 5 of the Securities Act
(other than Rule 144). Such consultation shall not
preclude the Shareholder Representative's right to
deliver a Request Notice to the Company.
(b) The Company shall file no later than 60
days after the Request Date, and the Company shall
use its best efforts to have declared effective no
later than 90 days after the Request Date, a
Registration Statement on any appropriate form
pursuant to Rule 415 (or similar rule that may be
adopted by the SEC) under the Securities Act (a
"Shelf Registration") for the sale of the
Registrable Securities on a continuing basis. The
Company will notify the Shareholders when the
Registration Statement and any amendments thereto
are filed and when the Registration Statement
becomes effective.
(c) The Company agrees to use its best
efforts to keep the Registration Statement
continuously effective and usable for resale of
Registrable Securities for a period of six years
from the effective date of the Share Purchase
Agreement or such shorter period which will
terminate (i) when all the Registrable Securities
covered by such Registration Statement have been
sold pursuant to such Registration Statement, (ii)
when any unsold Registrable Securities otherwise
have been sold pursuant to Rule 144 or have been
otherwise sold pursuant to a registration statement
or an exemption from registration pursuant to the
Securities Act or (iii) three months after the last
termination of employment has occurred for all
Holders of Registrable Securities pursuant to
employment agreements with the Company.
(d) The Company further agrees to use its
best efforts to prevent the happening of any event
that would cause the Registration Statement to
contain a material misstatement or omission or to
be not effective and usable for resale of
Registrable Securities during the period that such
Registration Statement is required to be effective;
provided that the foregoing shall not apply to
actions taken by the Company in good faith and for
valid business reasons, including without
limitation the acquisition or divestiture of
assets, so long as the Company as promptly as
reasonably possible thereafter complies with the
requirements of Section 2.1(d), if applicable.
Notwithstanding any other provisions of this
Agreement to the contrary, the Company agreesthat
it will cause the Registration Statement, amendment
or supplement (i) to comply in all material
respects with the requirements of the Securities
Act and the rules and regulations of the SEC and
(ii) not to contain any untrue statement of a
material fact or omit to state a material fact
required to be stated therein or necessary to make
the statements therein not misleading.
(e) Except as set forth in Subsection (c),
upon the occurrence of any event which makes a
statement of a material fact made in the
Registration Statement, the related Prospectus or
any document incorporated therein by reference
untrue or which results in the omission of a
statement of a material fact required to be stated
therein or necessary to make a statement of a
material fact therein not misleading, the Company
will prepare promptly a supplement or post-
effective amendment to the Registration Statement
or the related Prospectus or any document
incorporated therein by reference delivered to the
purchasers of the Registrable Securities so that
the Registration Statement, the related Prospectus,
and any documentation incorporated therein by
reference will not contain an untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary to make
the statements therein not misleading.
(f) The Company shall use its best efforts to
prevent the issuance of any order suspending the
effectiveness of the Registration Statement or any
order suspending the qualification (or the
exemption from qualification) of any Registrable
Securities for sale in any jurisdiction, and if
such order is issued, to use its best efforts to
obtain promptly the withdrawal of any such order.
(g) The Company agrees to notify each Holder
forthwith of: (i) the commencement of any
Suspension Period, the reasons for such Suspension
Period, and the actions the Company is taking to
amend the Registration Statement and to have the
revised Registration Statement declared effective
or to otherwise cause the Suspension Period to
terminate; (ii) the termination of any Suspension
Period; and (iii) the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Registrable Securities for
sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
(h) The Company agrees to use its best
efforts to (i) register or qualify the Registrable
Securities under such other securities or blue sky
laws of such jurisdictions in the United States as
any Selling Holder reasonably (in light of such
Selling Holders intended plan of distribution)
requests and (ii) cause such Registrable Securities
to be registered with or approved by such other
governmental agencies or authorities as may be
necessary by virtue of the business and operations
of the Company and do such other acts and things
reasonably expected to be performed by an issuer to
enable the Holders to consummate the disposition of
the Registrable Securities owned by such Holders;
provided that the Company will not be required to
(A) register or qualify the Registrable Securities
under the securities or blue sky laws of more than
fifteen states of the United States (excluding
states for which the Registrable Securities are
exempt from registration), (B) qualify generally to
do business in any jurisdiction where it would not
otherwise be required to qualify but for this
paragraph (f), (C) subject itself to taxation inany
jurisdiction where it would not otherwise be
required to subject itself to taxation but for this
paragraph (f) or (D) consent to general service of
process in any jurisdiction where it would not
otherwise be required to consent to general service
of process but for this paragraph (f).
(i) The Company agrees to use its best
efforts to cause the Registrable Securities to be
listed on each securities exchange on which similar
securities of the same class of the Company are
then listed as a result of a listing application
filed by the Company.
(j) The existence of this Agreement shall not
preclude the Registrable Securities from being
included in a registration statement prepared by
the Company in the event that a Registration
Statement hereunder ceases to be effective
rendering it unusable for resale.
ARTICLE III
OFFERING PROCEDURES
SECTION 3.1. Notices. (a) Prior to any
Offering, the Selling Holders in such Offering
shall provide the Company with prior written notice
of such Offering (an "Offering Notice") delivered
either in person or by next day courier service to
the address specified in Section 5.3. Each
Offering Notice shall be delivered within a
reasonable period of time prior to the proposed
date of the Offering and shall in no event be
delivered less than five business days prior to the
proposed date of the Offering. Each Offering
Notice shall specify the number of Registrable
Securities to be sold, the proposed date of the
Offering, the number of copies of the Prospectus
needed to confirm sales and the address to which
notice of any Suspension Period and copies of the
Prospectus should be sent.
(b) Following receipt of an Offering Notice
the Company shall either (i) notify the Selling
Holders delivering such Offering Notice of the
existence of a Suspension Period (a "Suspension
Notice") or (ii) notify the Selling Holders
delivering such Offering Notice that no Suspension
Period exists and send to such Selling Holders the
number of copies of the Prospectus specified in the
Offering Notice for delivery on or prior to the
proposed date of the Offering. To the extent a
Suspension Notice is delivered to Selling Holders
pursuant to clause (i) above, upon the termination
of the applicable Suspension Period, the Company
shall deliver forthwith an appropriate notice of
such event to such Selling Holders.
(c) No Holder shall have the right to
participate in any Offering of Registrable
Securities unless no Suspension Period exists at
the time of such Offering.
SECTION 3.2. Company Obligations. In
connection with any Offering the Company will:
(a) enter into customary agreements
(including, but not limited to, an underwriting
agreement in customary form, if applicable) with
such modifications or revisions therein as the
Company may reasonably require, and take such other
actions as are reasonably required in order to
expedite or facilitate the disposition of such
Registrable Securities in such Offering, provided
that if the majority of Selling Holders of the
Registrable Securities included in such Offering
determine that such Offering shall be in the form
of an underwritten offering, such Selling Holders
shall select the Managing Underwriter of such
Offering and any additional Underwriters and
investment bankers to be used in connection with
such Offering; provided that the Company has
consented to the selection of such Managing
Underwriter and additional Underwriters and
investment bankers, such consent not to be
unreasonably withheld.
(b) make available for inspection during its
regularly scheduled business hours by any Selling
Holder of such Registrable Securities, any
Underwriter participating in any such Offering and
any attorney, accountant or other professional
retained by any such Selling Holder or Underwriter
(collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and
properties of the Company (collectively, the
"Records") as shall be reasonably necessary to
enable them to exercise their due diligence
responsibility, and cause the Company's officers,
directors and employees to supply all information
reasonably requested by any Inspector in connection
with the Registration Statement. Records which the
Company determines, in good faith, to be
confidential and which it notifies the Inspectors
are confidential shall not be disclosed by the
Inspectors unless (i) following consultation with
the Company and its counsel the disclosure of such
Records is necessary to avoid or correct a material
misstatement or omission in the Registration
Statement or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from
a court of competent jurisdiction. Each Selling
Holder of such Registrable Securities agrees that
information obtained by it as a result of such
inspections shall be deemed confidential and shall
not be used by it as the basis for any market
transactions in the securities of the Company or
its Affiliates unless and until such information is
made generally available to the public. Each
Selling Holder of such Registrable Securities
further agrees that it will, upon learning that
disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company
and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the
Records deemed confidential. Each Selling Holder
shall execute and deliver to the Company a
confidentiality agreement in a form provided by the
Company and agreed to by the Selling Holder(s)
which agreement shall provide for adequate monetary
and equitable remedies against such Selling Holder
in the event of disclosure of confidential
information in violation of such Agreement;
(c) if requested by the Managing Underwriter
of such Offering, if any, or a Selling Holder of
Registrable Securities included in such Offering,
promptly incorporate in a supplement to the
Prospectus or post-effective amendment to the
Registration Statement such informationas the
Company, such Managing Underwriter and the Holders
of the majority of the number of Registrable
Securities included in such Offering reasonably
agree should be included therein relating to the
plan of distribution with respect to such
Registrable Securities, including, without
limitation, information with respect to the number
of Registrable Securities being sold, the purchase
price being paid therefor and information with
respect to any other terms of such Offering; and
make all required filings of such post-effective
amendment or supplement to the Prospectus as soon
as notified of the matters to be incorporated in
such post-effective amendment or supplement to the
Prospectus;
(d) if requested, prior to filing a post-
effective amendment to the Registration Statement
or supplement to the Prospectus, furnish to each
Selling Holder in such Offering and each
Underwriter of such Offering, if any, copies of
such post-effective amendment or supplement to the
Prospectus as proposed to be filed, and thereafter
furnish to such Selling Holder and Underwriter, if
any, such number of copies of post-effective
amendment (in each case including all exhibits
thereto and documents incorporated by reference
therein), the Prospectus as so supplemented and
such other documents a Selling Holder in such
Offering or Underwriter of such Offering may
reasonably request in order to facilitate the
disposition of the Registrable Securities owned by
such Selling Holder being included in such
Offering;
(e) in the case of an Offering in the form of
an underwritten offering, furnish to each Selling
Holder in such Offering and to each Underwriter of
such Offering, if any, a signed counterpart,
addressed to such Selling Holder or Underwriter, of
(1) an opinion or opinions of counsel to the
Company (and local or special counsel as deemed
appropriate by the Company or its counsel) and (2)
a comfort letter or comfort letters from the
Company's independent public accountants, each in
reasonably customary form and covering such matters
of the type customarily covered by opinions or
comfort letters, as the case may be, as the
majority of Holders of the Registrable Securities
included in an Offering or the Managing Underwriter
therefor reasonably request;
(f) comply with all applicable rules and
regulations of the SEC;
(g) cooperate and assist in any filings
required to be made with the NASD in connection
with such Offering and in the performance of any
due diligence investigation by any Underwriters of
such Offering (including any "qualified independent
underwriter" that is required to be retained in
accordance with the rules and regulations of the
NASD);
(h) cooperate with the Selling Holders in
such Offering and the Managing Underwriter of such
Offering, if any, to facilitate the timely
preparation and delivery of certificates (not
bearing any restrictive legends not required by
applicable law) representing Registrable Securities
to be sold in such Offering; and enable such
Registrable Securities to be in such denominations
and registered in such names as such Selling
Holders or such ManagingUnderwriter, if any, may
request at least two business days prior to any
sale of Registrable Securities.
SECTION 3.3. Shareholder Obligations. (a)
Each Selling Holder agrees to promptly furnish in
writing to the Company such information regarding
the distribution of the Registrable Securities as
the Company may from time to time reasonably
request and such other information as may be
legally required in connection with the preparation
of, or maintenance of effectiveness of, the
Registration Statement.
(b) Each Selling Holder agrees that, upon
receipt of any notice from the Company of the
commencement of any Suspension Period delivered
pursuant to Section 2.1(e)(1), such Selling Holder
will forthwith discontinue disposition of
Registrable Securities pursuant to the Registration
Statement until such Selling Holder's receipt of a
notice of the termination of the Suspension Period
delivered pursuant to Section 2.1(e)(2) and of any
supplemented or amended prospectus contemplated by
Section 2.1(d) hereof, and, if so directed by the
Company, such Selling Holder will deliver to the
Company all copies, other than permanent file
copies then in such Selling Holder's possession, of
the most recent prospectus covering such
Registrable Securities at the time of receipt of
any notice delivered pursuant to Section 2.1(e)(1).
SECTION 3.4 Registration Expenses. In
connection with the Registration Statement and any
amendment or post-effective amendments required to
be filed hereunder, the Company shall pay the
following registration expenses incurred in
connection with a registration hereunder (the
"Registration Expenses") by the Company and such
Holders (i) all registration and filing fees, (ii)
fees and expenses of compliance with securities or
blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities),
(iii) internal expenses (including, without
limitation, all salaries and expenses of the
Company's officers and employees performing legal
or accounting duties), (iv) any fees and expenses
incurred in connection with listing of the
Registrable Securities, (v) fees and expenses of
counsel for the Company and fees and expenses for
independent certificated public accountants
retained by the Company (including the expenses of
any comfort letters or costs associated with the
delivery by independent certified public
accountants of a comfort letter or comfort letter
requested pursuant to Section 3.2(e) hereof) and
(vi) the fees and expenses of any special experts
retained by the Company in connection with such
registration. The Company shall have no obligation
to pay any underwriting fees, discounts or
commissions attributable to the sale of Registrable
Securities, or any legal fees or other out-of-
pocket expenses of the Holders (or any agents who
manage their accounts).
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. Indemnification by the
Company. The Company agrees to indemnify and hold
harmless each Selling Holder of Registrable
Securities in an Offering, from and against any and
all losses, claims, damages and liabilities caused
by any untrue statement or alleged untrue statement
of a material fact contained in any registration
statement or prospectus relating to the Registrable
Securities (as amended or supplemented if the
Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus,
or caused by an omission or alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein
not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any
such untrue statement or omission based upon
information relating to a Selling Holder furnished
in writing to the Company by such Selling Holder or
on such Selling Holder's behalf expressly for use
therein and provided that the foregoing indemnity
agreement with respect to any registration
statement or prospectus relating to the Registrable
Securities shall not inure to the benefit of any
Selling Holder in such Offering, (a) if a copy of a
Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or
supplements thereto) furnished pursuant to Section
3.1(b) hereof for such Offering was not sent or
given by or on behalf of such Selling Shareholder
to the person (the "Asserting Person") asserting
any losses, claims, damages or liabilities as a
result of an untrue statement or alleged untrue
statement of a material fact contained in any
registration statement or prospectus relating to
the Registrable Securities (as amended or
supplemented if the Company shall have furnished
any amendments or supplements thereto) or caused by
any omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading and if such Prospectus (as so amended or
supplemented) would have cured the defect giving
rise to such losses, claims, damages or
liabilities, or (b) if such Selling Shareholder
sold Registrable Securities to the Asserting Person
during a Suspension Period. The Company also
agrees to indemnify any Underwriters of the
Registrable Securities, their officers and
directors and each person who controls such
underwriters on substantially the same basis as
that of the indemnification of the Selling Holders
provided in this Section 4.1.
SECTION 4.2. Indemnification by Holders of
Registrable Securities. Each Selling Holder
agrees, severally but not jointly, to indemnify and
hold harmless the Company, its officers, directors
and agents and each person, if any, who controls
the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange
Act (each, a "controlling person") to the same
extent as the foregoing indemnity from the Company
to such Selling Holder, but only with reference to
information relating to such Selling Holder
furnished in writing by such Selling Holder or on
such Selling Holder's behalf expressly for use in
any registration statement or prospectus relating
to the Registrable Securities, or any amendment or
supplement thereto, or any preliminary prospectus.
Each Selling Holder also agrees to indemnify and
hold harmless any Underwriters of the Registrable
Securities, their officers and directors and each
person who controls such Underwriters on
substantially the same basis as that of the
indemnification of the Company provided in this
Section 4.2. The terms of any underwriting
agreement entered into by the Company to effect a
registration of the Holders'Registrable Securities
shall require the Underwriter to indemnify and hold
harmless the Company, its officers, directors,
control persons and agents on substantially the
same basis as that of the indemnification of the
Company by each Selling Holder provided in this
Section 4.2.
SECTION 4.3. Conduct of Indemnification
Proceedings. In case any proceeding (including
any governmental investigation) shall be instituted
involving any person in respect of which indemnity
may be sought pursuant to Section 4.1 or 4.2, such
person (the "Indemnified Party") shall promptly
notify the person against whom such indemnity may
be sought (the "Indemnifying Party") in writing and
the Indemnifying Party shall assume the defense
thereof, including the employment of counsel
reasonably satisfactory to such Indemnified Party,
and shall assume the payment of all fees and
expenses. In any such proceeding, any Indemnified
Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party
unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the
retention of such counsel or (ii) the named parties
to any such proceeding (including any impleaded
parties) include both the Indemnified Party and the
Indemnifying Party and counsel selected by the
Indemnifying Party for the Indemnified Party is
also counsel for the Indemnifying Party, and
representation of both parties by the same counsel
would be in appropriate due to actual or potential
differing interests between them. It is understood
that the Indemnifying Party shall not, in
connection with any proceeding or related
proceedings in the same jurisdiction, be liable for
the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any
local counsel) at any time for all such Indemnified
Parties and that such fees and expenses shall be
reimbursed as they are incurred, provided that the
Indemnifying Party has been furnished with
reasonable documentation to substantiate such fees
and expenses within 30 days after they have been
incurred. In the case of any such separate firm
for the Indemnified Parties, such firm shall be
designated in writing to the Indemnifying Party.
The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its
written consent, but if settled with such consent,
or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold
harmless such Indemnified Parties from and against
any loss or liability (to the extent stated above)
by reason of such settlement of judgment.
Notwithstanding the foregoing sentence, if at any
time an Indemnified Party shall have requested an
Indemnifying Party to reimburse the Indemnified
Party for fees and expenses of counsel as
contemplated by the third sentence of this
paragraph, the Indemnifying Party agrees that
(unless the amount of such fees and expenses is
disputed in good faith by the Indemnifying Party
and the Indemnifying Party shall have transferred
an amount sufficient to cover the fees and expenses
to a third party approved by the Indemnified Party
to be held in trust by such third party pending
resolution of the dispute), it shall be liable for
any settlement of any preceding effected without
its written consent if (i) such settlement is
entered into more than 30 business days after
receipt by such Indemnifying Party of the aforesaid
request and (ii) such Indemnifying Party shall not
have reimbursed the Indemnified Party in accordance
with such request prior to the date of such
settlement. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party,
effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified
party is or could have been a partyand indemnity
could have been sought hereunder by such
Indemnified Party, unless such settlement includes
an unconditional release of such Indemnified Party
from all liability arising out of such proceeding.
SECTION 4.4. Contribution. If the
indemnification provided for in this Article IV is
unavailable to the Indemnified Parties in respect
of any losses, claims, damages or liabilities
referred to herein, then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by
such Indemnified Party as a result of such losses,
claims, damages or liabilities (i) as between the
Company, the Selling Holders and the Underwriters,
in such proportion as is appropriate to reflect the
relative benefits and the relative fault of the
Company, the Selling Holders and the Underwriters
in connection with the offering of the Registrable
Securities and the statements of omissions which
resulted in such losses, claims, damages or
liabilities, as well as any other relevant
equitable considerations, and (ii) as between the
Company on the one hand and each Selling Holder on
the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of
each Selling Holder on the other, in such
proportion as is appropriate to reflect the
relative fault of the Company and of each Selling
Holder in connection with such statements or
omissions, as well as any other relevant equitable
considerations. The relative benefits received by
the Company, the Selling Holders and the
Underwriters shall be deemed to be in the same
proportions as the net proceeds from the offering
received by the Company and the Selling Holders and
the total underwriting discounts and commissions
received by the Underwriters, in each case as set
forth in the table on the cover page of the
prospectus bear to the total proceeds of the
offering, it being understood that the Company
shall be deemed for this purpose to have received
the benefit of the proceeds of the sale of any
Registrable Securities from the account of any
Selling Holders. The relative fault of the Company,
the Selling Holders and the Underwrites shall be
determined by reference to, among other things,
whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission
to state a material fact relates to information
supplied by the Company, the Selling Holders or by
the Underwriters. The relative fault of the
Company and of each Selling Holder shall be
determined by referent to, among other things,
whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission
to state a material fact relates to information
supplied by such party, and the parties' relative
intent, knowledge, access to information and
opportunity to correct or prevent such statement or
omission.
The Company and the Selling Holders agree that
it would not be just and equitable if contribution
pursuant to this Section 4.4. were determined by
pro rata allocation (even if the Selling Holders
were treated as one entity for such purpose) or by
any other method of allocation which does not take
account of the equitable considerations referred to
in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Party as a result
of the losses, claims, damages or liabilities
referred to in the immediately preceding paragraph
shall be deemed to include expenses reasonably
incurred by such Indemnified Party in connection
with investigating or defending any such action or
claim. Notwithstanding the provisions of
thisSection 4.4., no Underwriter shall be required
to contribute any amount in excess of the amount by
which the total price at which the Registrable
Securities underwritten by it and distributed to
the public were offered to the public exceeds the
amount of any damages which such Underwriter has
otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or
alleged omission, and no Selling Holder shall be
required to contribute any amount in excess of the
amount by which the total price at which the
Registrable Securities of such Selling Holder were
offered to the public exceeds the amount of any
damages which such Selling Holder has otherwise
been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of
such fraudulent misrepresentation. The Selling
Holders' obligations to contribute pursuant to this
Section 4.4. are several and not joint.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Participation in Underwritten
Registrations. No Selling Holder may participate in
any Offering in the form of an underwritten
offering hereunder unless such Selling Holder (a)
agrees to sell such Selling Holder's securities on
the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to
approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other
documents reasonably required under the terms of
such underwriting arrangements and this Shelf
Registration Rights Agreement. No Holder may
participate in any Offering hereunder unless such
Holder furnishes the Company with all information
required by the applicable rules and regulations of
the SEC concerning the proposed methods of sale of
such Registrable Securities and such other
information as may reasonably be required by the
Company to prepare and file such registration
statement in accordance with the applicable
provisions of the Securities Act and the Rules and
Regulations promulgated thereunder.
SECTION 5.2. Rule 144. The Company covenants
that during the six year period following the
effective date of the Share Purchase Agreement, it
will file any reports required to be filed by it
under the Securities Act and the Exchange Act or
provide such information as may be reasonably
necessary to enable Holders to sell Registrable
Securities without registration under the
Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from
time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of
any Holder, the Company will deliver to such Holder
a written Statement as to whether it has compiled
with such requirements. The obligations of the
Company under this Section 5.2 shall cease three
months after the lasttermination of employment has
occurred for all Holders of Registrable Securities
pursuant to employment agreements with the Company.
SECTION 5.3. Notices. Any notice or
communication to the Company shall be in writing
and delivered in person or mailed first-class mail
addressed as follows:
Xylogics, Inc.
53 Third Avenue
Burlington, MA 01803
U.S.A.
Attention: Chief Financial Officer
Notices to Shareholders shall be to the
addresses set forth on the signature pages below
with copies to:
John Wilson David
Orlin
Taylors Solicitors Lane &
Mittendorf
Rawlings House 99
Park Avenue
Exchange Street New
York, New York
Blackburn 10016-
3000
Lancashire BB1 7JN
SECTION 5.4. Governing Law. This Agreement
shall be governed, construed and enforced in
accordance with the laws of the Commonwealth of
Massachusetts applicable to contracts made and to
be performed therein.
[The remainder of this page has been intentionally
left blank.]
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the date first set
forth above.
XYLOGICS, INC.
By
Title: Chief Financial Officer
By By
Mrs. Paula Harding Mr. Sean Harding
19 Brookside Road, Oxhey, 19 Brookside Road, Oxhey,
Watford WD1 4BN Watford WD1 4BN
By By
Mrs. Denise Waldron Mr. John Birbeck
27 Colne Avenue, Hill End, 24 Ferndale Close,
Rickmansworth, Herts WD3 2BS Stokenchurch,
High Wycombe HA5 1DE
By By
Mrs. June Waldron Mr. Peter Thompson
No 03-06, Block 20, 20 Woking Road, 7 Andover Avenue,
Singapore 0513, Singapore Alkrington,
Middleton, Manchester M24 1JG