WITH RESPECT TO CERTAIN PORTIONS HEREOF DENOTED WITH “***”
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
(1)
THE BUYER
(2)
THE SHAREHOLDERS
(3)
THE SHAREHOLDERS
REPRESENTATIVE
and
(4)
THE MANAGEMENT WARRANTORS
SALE
AND PURCHASE
AGREEMENT
Date: March
17, 2010
|
Xxxxxxx
Place, New Xxxxxx Xxxx,
Xxxxxxxxxx,
Xxxxx XX0 0XX
Tel
00000 000000 Fax 00000 000000
DX
89703 Chelmsford xxx.xxxxxxxxxx.xx.xx
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
THIS AGREEMENT is dated March
17, 2010
PARTIES
|
(1)
|
ELEPHANT TALK COMMUNICATIONS,
INC. incorporated and registered in the State of California whose
registered office is at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxxxx 00000, Xxxxxx Xxxxxx (the "Buyer");
|
|
(2)
|
The
persons whose names and addresses are set out in Schedule 1 (the "Shareholders"), as shareholders of
VALIDSOFT LIMITED
incorporated and registered in the Republic of Ireland with company
number 377068 whose registered office is at Xxxxxx Xxxxxxxxx, Xxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx (the "Company");
|
|
(3)
|
Xxxxxxx
Xxxxxxx, a person with an address at c/o ValidSoft (UK) Limited, 0
Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX (the "Shareholders
Representative");
and
|
|
(4)
|
Xxxxxxx
Xxxxxxx, Xxxxxx Xxxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxx
Xxxxxxx and Xxxxx Xxxxxxxxx, persons with an address at c/o ValidSoft (UK)
Limited, 0 Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX (collectively, the "Management
Warrantors").
|
BACKGROUND
OF THE PURCHASE AND SALE OF SHARES
|
(A)
|
The
Company is a private company limited by shares, particulars of which are
set out in Schedule 2.
|
|
(B)
|
At
Completion, the Buyer shall purchase, and the Shareholders agree to sell,
transfer, assign, convey and deliver to the Buyer, all of the outstanding
shares in the capital of the Company on, and subject to, the terms of this
Agreement.
|
AGREED
TERMS
|
1
|
Interpretation
|
|
|
1.1
|
The
definitions and rules of interpretation in this clause apply in this
Agreement.
|
|
Acquisition
Consideration
|
the
consideration for the acquisition of the Sale Shares, consisting of the
Buyer Shares and the Buyer Warrants;
|
|
Articles
|
the
articles of association of the Company;
|
|
Board
|
the
board of directors of the Company as constituted from time to
time;
|
|
Business
Day
|
|
|
Buyer
Revenues
|
has
the meaning as set out in clause 3.5.2;
|
|
Buyer
Shares
|
9,894,673
shares of the Common Stock of the Buyer;
|
|
Buyer
Warrants
|
the
warrants to purchase 3,701,884 shares of the Common Stock of the
Buyer;
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
Collaboration
Agreement
|
the
joint marketing and sales agreement between the Company and the Buyer,
dated June 17, 2009, and as may be amended from time to
time;
|
|
Common
Stock
|
the
shares of common stock, no par value, of the Buyer;
|
|
Company
Revenues
|
has
the meaning as set out in clause 3.5.2;
|
|
Completion
|
completion
by the parties of their respective obligations pursuant to the Purchase
pursuant to clause 3;
|
|
Completion
Date
|
the
date on which Completion occurs;
|
|
Conditions
|
the
conditions to Completion set out in clause 3.1;
|
|
Contingent
Consideration
|
has
the meaning as set out in clause 3.5.1;
|
|
Disclosure
Schedule
|
Schedule
5 to this Agreement, which sets out the facts and circumstances which are
or may be inconsistent with the representations, warranties and
undertakings referred to in clause 5.3 of this Agreement or which
otherwise give or may give rise to a claim under this Agreement by the
Buyer, such facts and circumstances being deemed to qualify
representations, warranties and undertakings referred to in clause 5.3
accordingly;
|
|
Eligible
Activity
|
the
production of products for export or products of an advanced technological
nature for supply to internationally trading or skilled sub-supply firms
within the island of Ireland (excluding Northern Ireland) or products for
sectors of the Irish market that are subject to international competition,
such production comprising part of the technical enhancement of the
Company's authentication security solution, or an activity covered by the
Industrial Development (Service Industries) Order 2003 (including any
amendment or variation of this Order);
|
|
Employment
Agreements
|
the
new employment agreements in the agreed form to be entered into between
(1) the Company and (2) each of the Key Employees
respectively;
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
Encumbrance
|
any
mortgage, charge, security interest, lien, pledge, assignment by way of
security, equity claim, right of pre-emption, option, covenant,
restriction, reservation, lease, trust, order, decree, judgment, title
defect (including retention of title claim), conflicting claim of
ownership or any other encumbrance of any nature whatsoever (whether or
not perfected);
|
|
Financial
Statements
|
has
the meaning as set out in clause 14.3.19;
|
|
GAAP
|
the
U.S. generally accepted accounting principles consistently
applied;
|
|
Independent
Auditors
|
an
independent firm of accountants, with sufficient experience for the
purposes of this Agreement, mutually agreed upon by the Buyer and the
Shareholders Representative;
|
|
Key
Employees
|
Xxxxxxx
Xxxxxxx and Xxxxxx Xxxxxxx;
|
|
Lock-Up
Agreements
|
the
agreements in the agreed form set out in Schedule 7 restricting the sale,
transfer and disposition of the unregistered Common Stock (i) for a period
of 2 years from Completion with respect to the Shareholders who
participate in the management of the Company and who receive the
Acquisition Consideration (in the case of Xxxxxxx Xxxxxxx, in respect of
50 per cent. of his shareholding only) and (ii) for a period of 1 year
from Completion or 6 months from the completion of the Buyer’s rights
offering, whichever is earlier, with respect to the non-management
Shareholders (and Xxxxxxx Xxxxxxx, in respect of 50 per cent. of his
shareholdings only) who receive the Acquisition
Consideration;
|
|
Management
Warrantors
|
Xxxxxxx
Xxxxxxx, Xxxxxx Xxxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxx
Xxxxxxx and Xxxxx Xxxxxxxxx;
|
|
material
adverse effect
|
any
change or effect that, individually or in the aggregate, has, or would
reasonably be expected to have, a material adverse effect upon the assets,
liabilities, business, financial condition or operating results of the
Company and the Subsidiaries, taken as a whole;
|
|
Material
Agreement
|
an
agreement or arrangement to which the Company or any of the Subsidiaries
is a party or is bound by and which is of material importance to the
business, profits or assets of the Company or any of the
Subsidiaries;
|
|
Purchase
|
the
sale and purchase of the Sale Shares pursuant to this
Agreement;
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
Relevant
Claim
|
a
claim by the Buyer against the Shareholders and/or the Management
Warrantors (or any of them) for breach of any representation, warranty or
covenant under this Agreement;
|
|
Sale
Shares
|
the
ordinary shares of €1 each in the share capital of the Company to be sold
by the Shareholders to the Buyer, as set out opposite their respective
names in column 3 of Schedule 1;
|
|
Securities
Act
|
the
U.S. Securities Act of 1933, as amended;
|
|
Settled
Claim
|
a
Relevant Claim that is either (i) agreed in writing by the Buyer, on one
hand, and the Management Warrantors and/or the Shareholders (or any one of
them), on the other hand, or (ii) determined or awarded by any court of
competent jurisdiction or in any arbitration from which there is no
further appeal, the time period for appeal has lapsed or the right to
appeal has been waived;
|
|
Shareholders
|
a
holder of shares in the Company who is a party to this
Agreement;
|
|
Shareholders
Representative
|
Xxxxxxx
Xxxxxxx;
|
|
Subsidiaries
|
the
subsidiaries of the Company, brief particulars of which are set out in
Part 2 of Schedule 2, and "Subsidiary" shall mean
any one of them;
|
|
Taxation
|
all
forms of taxation and statutory, governmental, state, federal, provincial,
local, government or municipal charges, duties, imposts, contributions,
levies, withholdings or liabilities wherever chargeable; and any penalty,
fine, surcharge, interest, charges or costs relating
thereto;
|
|
Xxxxxx
Xxxxxx Matter
|
the
negotiation and settlement of an amount (if any) payable by the Company to
Beresford Ltd pursuant to the Memorandum of Understanding between the
Company and Beresford Ltd (as attached at Appendix J to Schedule
5).
|
|
|
1.2
|
A
reference to "restricted
shares" or "unregistered shares"
means that such shares of Common Stock of the Buyer which are not freely
tradeable without registration with the U.S. Securities and Exchange
Commission, and such shares may become unrestricted (i.e. freely
tradeable) pursuant to Rule 144 promulgated under the Securities
Act.
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
1.3
|
Clause,
schedule and paragraph headings shall not affect the interpretation of
this Agreement.
|
|
|
1.4
|
A
person includes a
natural person, corporate or unincorporated body (whether or not having
separate legal personality) and that person's legal and personal
representatives, successors and permitted
assigns.
|
|
|
1.5
|
The
schedules form part of this Agreement and shall have effect as if set out
in full in the body of this Agreement. Any reference to this
Agreement includes the schedules.
|
|
|
1.6
|
Words
in the singular shall include the plural and vice
versa.
|
|
|
1.7
|
A
reference to one gender shall include a reference to the other
genders.
|
|
|
1.8
|
A
reference to a statute, statutory provision or subordinated legislation is
a reference to it as it is in force as at the date of this Agreement,
taking account of any amendment or re-enactment and includes any statute,
statutory provision or subordinate legislation which it amends or
re-enacts.
|
|
|
1.9
|
A
reference to writing or written excludes faxes
and e-mail.
|
|
|
1.10
|
All
documents in the agreed
form are documents agreed by the Buyer, the Shareholders and the
Shareholders Representative, the Escrow Representative (and, in the case
of the Employment Agreements and Lock-Up Agreements, and the relevant
employees and directors) and initialled by or for and on behalf of them
for identification.
|
|
|
1.11
|
Any
obligation in this Agreement on a person not to do something includes an
obligation not to agree or allow that thing to be
done.
|
|
|
1.12
|
Any
phrase introduced by the terms including,
include,
in
particular or any similar expression shall be construed as
illustrative and shall not limit the sense of the words preceding those
terms.
|
|
|
1.13
|
References
to clauses and schedules are to the clauses and schedules of this
Agreement; references to paragraphs are to paragraphs of the relevant
schedule.
|
|
|
1.14
|
|
|
1.15
|
Where
any statement in clause 5.3 is qualified by the expression "so far as the
Management Warrantors are aware" or any similar expression it shall be
deemed to include an additional statement that it has been made after due
and careful enquiry of the Management Warrantors (and for the avoidance of
doubt no enquiry has been made of any third party, including but not
limited any customer, supplier or contract
counterparty).
|
|
|
1.16
|
Where
any obligation or liability of the Management Warrantors is expressed to
be given "severally" or "on a several basis” or similar, this shall mean
that (as it relates to clause 5.3 and clause 6 and subject to the
provisions of Schedule 6) each Management Warrantor shall only be liable
for a proportion of any Relevant Claim by the Buyer in respect of such
obligation or liability which is the percentage set out opposite his/her
name in paragraph 1 of Schedule
6.
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
2
|
Sale and
Purchase
|
Subject
to the terms and conditions of this Agreement, each of the Shareholders agrees
to sell, and the Buyer agrees to purchase, with full title guarantee free from
all Encumbrances and with all rights attached to them the number of Sale Shares
set out opposite his or its name in Schedule 1 for the consideration set out
opposite his or its name in Schedule 1 (amounting in aggregate to the
Acquisition Consideration payable to the Shareholders as a whole).
|
3
|
Completion
|
|
|
3.1
|
Completion
shall be conditional on the
following:
|
|
|
3.1.1
|
all
representations and warranties of the Management Warrantors and the
Shareholders in this Agreement are true and correct subject to Schedule 5
(Disclosure Schedule);
|
|
|
3.1.2
|
the
Management Warrantors and Shareholders shall have performed and complied
with all of their respective covenants or agreements to be performed prior
to or at Completion;
|
|
|
3.1.3
|
the
Company, the Key Employees and the Shareholders, as applicable, shall have
executed the Employment Agreements and/or Lock-Up
Agreements;
|
|
|
3.1.4
|
the
Buyer receiving agreements (in the form reasonably satisfactory to the
Buyer) executed by the Company and employees of the Company who are
entitled to receive from the Company, by contract or otherwise, any
compensation in addition to base salaries and normal benefits whereby such
employees agree to waive, forgo and forfeit such employees’ right and
entitlement to such additional compensation (to include, without
limitation, bonuses, stock options, commissions and awards) in
consideration for such employees right to participate in the Buyer’s
benefit plans and the Buyer’s employee stock ownership plan;
and
|
|
|
3.1.5
|
Enterprise
Ireland entering into a separate share sale and purchase agreement in the
agreed form for the purpose of selling to the Buyer all of the share in
the Company held by Enterprise Ireland (the “Irish
SPA”).
|
|
|
3.2
|
The
following events shall occur on the Completion
Date:
|
|
|
3.2.1
|
subject
to clauses 3.3 and 4, the Buyer shall issue and deliver to each
Shareholder certificates for the number of Buyer Shares set out opposite
his or its name in Schedule 1;
|
|
|
3.2.2
|
subject
to clause 3.3, the Buyer shall issue and deliver to each Shareholder
certificates, in the agreed form set out in Schedule 10, for the number of
Buyer Warrants set out opposite his or its name in Schedule
1;
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
3.2.3
|
The
Buyer Warrants shall have a maximum term of 3 years from the date of issue
and an exercise price of US$0.63 per share. The Buyer Warrants
shall set forth that the warrants must be immediately exercised in the
event the average sales prices of the Common Stock of Buyer during the
preceding 20 trading day period equals or exceeds US$3.75 per
share. The exercise price of the Buyer Warrants may be paid in
cash or through a cashless exercise. If there is a variation of
the share capital of the Buyer following the date of issue of the Buyer
Warrants (including without limitation a capitalisation issue,
consolidation or sub-division), the number and description of Buyer
Warrants shall be adjusted in an appropriate manner in line with such
variation (though the total amount payable on exercise shall not be
increased);
|
|
|
3.2.4
|
the
Company, the Key Employees and the Shareholders, as applicable, shall
deliver to the Buyer the executed Employment
Agreements and/or Lock-Up
Agreements;
|
|
|
3.2.5
|
Enterprise
Ireland shall deliver the executed Irish
SPA;
|
|
|
3.2.6
|
the
Company and the Shareholders shall deliver to the Buyer the executed deed
of termination for the agreements set forth in clauses 14.1.1 through
14.1.4;
|
|
|
3.2.7
|
the
Buyer shall take all necessary actions and execute all necessary documents
to effect the allotment of the Buyer Shares and shall appropriately notify
the relevant regulatory authorities and/or share registry which is
responsible for the same;
|
|
|
3.2.8
|
the
Buyer shall take all necessary actions and execute all necessary documents
to effect the grant of the Buyer Warrants and shall appropriately notify
the relevant regulatory
authorities;
|
|
|
3.2.9
|
the
Shareholders shall deliver their respective share certificate(s) or other
evidence of title to their respective Sale Shares to the Buyer or, in the
event of failure to do so, each of them hereby agrees to indemnify the
Buyer and the Company from and against all actions, proceedings, claims
and demands, losses, charges, costs, damages and expenses which the Buyer
or the Company may incur as a result of the loss or destruction of the
certificate(s) for their respective Sale Shares, and further undertakes to
return the original certificate to the Company for cancellation if
found;
|
|
|
3.2.10
|
each
Shareholder shall execute (or procure the execution of) a stock transfer
form for the transfer of their Sale Shares to the Buyer and in the event a
Shareholder fails to execute relevant stock transfer forms or other
documentation for the purposes of making such transfer, such Shareholder
hereby appoints any director of the Company as his or its lawful attorney
for the purposes of executing all such documents as may be required in
connection with any such transfer against delivery of the relevant
consideration as prescribed by this Agreement (and in the event that such
Shareholder shall not take delivery of such consideration, the Buyer may
discharge its obligation to pay such consideration by paying it to the
Company, which shall hold it in trust to the order of such Shareholder);
and
|
|
|
3.2.11
|
a
meeting of the Board shall be held at which the Company
shall:
|
|
|
3.2.11.1
|
approve,
subject to stamping, the transfer of the Sale Shares from the Shareholders
to the Buyer pursuant to the Purchase and the registration of the Buyer as
the holder of the Sale Shares transferred pursuant to the Purchase;
and
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
3.2.11.2
|
subject
to stamping, execute and deliver to the Buyer a share certificate for the
shares transferred to it pursuant to the
Purchase.
|
|
|
3.3
|
Contingent
Consideration
|
|
|
3.3.1
|
2,473,668
of the Buyer Shares and 925,471 of the Buyer Warrants will be withheld
from the Acquisition Consideration (the “Contingent
Consideration”), which shall be allocated on a pro rata basis among
the Shareholders, and held in escrow by the
Buyer.
|
|
|
3.3.2
|
In
the event that the Company achieves actual cumulative gross revenues (the
"Company
Revenues") of a percentage of the actual cumulative gross revenues
achieved by the Buyer (including landline & customized mobile
services) over the calendar periods 1 April 2010 to 1 April 2013 (the
“Buyer Revenues”)
as set out on the x-axis of the graph set out on Schedule 3, then the
amount of the Contingent Consideration set out on the y-axis of the graph
set out on Schedule 3 which intersects with the relevant x-axis value on
the graph line shall be released to the Shareholders. For the
avoidance of doubt, the existing high revenue, low margin telephone PRS
land line business will only be included at 15 per cent. of the cumulative
gross revenue generated by the
Buyer.
|
|
|
3.3.2.1
|
In
addition, for the avoidance of doubt, in respect of revenues generated
under the Collaboration Agreement ***, the revenues earned
by the Company and the Buyer will be in accordance with the net revenue
percentage split as per the Collaboration Agreement *** save that the party
introducing the business will be additionally entitled to the "Marketing
& Commissions" revenue. By way of example only of the
revenue calculations in respect of revenue generated under the
Collaboration Agreement, and referring to the table set out in Schedule 8,
then in Year 1 if the revenue is generated from business introduced by the
Company, the relevant revenues for the Company would be the aggregate sum
of Euros ***
(highlighted in light blue as "Marketing & Commissions") and Euros
*** (highlighted
in light blue as "Net Revenue – ValidSoft"), and the relevant revenues for
the Buyer would be Euros *** (highlighted in
yellow as "Net Revenue – ET"). Revenues as reflected will be
determined as per audited GAAP statements;
and
|
|
|
3.3.2.2
|
in
the event that the Company Revenues exceed *** at any time between
Completion and 1 April 2013, then the whole of the Contingent
Consideration shall immediately be released to the
Shareholders.
|
|
|
3.3.3
|
In
the event none of the performance criteria set forth in clause 3.3.2 has
been achieved at 1 April 2013, the Contingent Consideration shall be
forfeited by the Shareholders, released from escrow to the Buyer and
cancelled.
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
3.3.4
|
While
in escrow, the Buyer Shares included in the Contingent Consideration and
in escrow pursuant to paragraph 2 of Schedule 6 shall be deemed to be
issued and outstanding and the Shareholders shall have all the rights and
privileges as though such shares were not in escrow (including without
limitation all dividend and distribution rights and the right to vote the
Buyer Shares at any meeting of the shareholders of
Buyer).
|
|
|
3.3.5
|
In
the event of a change of control of the Buyer at any time after Completion
and prior to 1 April 2013, the Contingent Consideration will vest as
follows:
|
|
|
3.3.5.1
|
subject
to clause 3.3.5.2, the Company Revenues between the date of Completion and
the date on which the change of control becomes unconditional shall be
assessed as a percentage of the Buyer Revenues in accordance with clause
3.3.2 and the result shall be increased pro rata as though such levels of
performance of the Company and the Buyer over such period had continued to
be achieved over the full calendar periods 1 April 2010 to 1 April
2013. The resulting percentage shall be multiplied by 1.5, and
the result of that calculation shall be applied to the x-axis in the graph
set out on Schedule 3, and there shall be released to the Shareholders the
amount of Contingent Consideration shown on the y-axis of the graph set
out on Schedule 3, which intersects with such x-axis
value;
|
|
|
3.3.5.2
|
in
the event of a change of control of the Buyer within the first 12 months
from the date of Completion, a minimum of half of the Contingent
Consideration shall be promptly released to the Shareholders (where that
is greater than would otherwise be released pursuant to clause
3.3.5.1).
|
Notwithstanding
the foregoing, in no event will the more than the 2,473,668 Buyer Shares and
925,471 Buyer Warrants that constitute the Contingent Consideration vest upon a
change of control of the Buyer. For purposes of this clause and
paragraph 1 of Schedule 4, "change of control" means: (i) the sale, transfer,
assignment or other disposition (including by merger or consolidation, but
excluding any sales by shareholders made as part of an underwritten public
offering of the Common Stock of the Buyer) by the shareholders of the Buyer, in
one transaction or a series of related transactions, of more than 50 per cent.
of the voting power represented by the then outstanding capital stock of the
Buyer to one or more persons; or (ii) the sale of substantially all the assets
of the Buyer (other than a transfer of financial assets made in the ordinary
course of business for the purpose of securitization).
|
|
3.3.6
|
The
Company Revenues and the Buyer Revenues shall be calculated by the
Independent Auditors pursuant to the procedures set forth on Schedule
4.
|
|
4
|
***
|
|
|
4.1
|
***
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
4.2
|
***
|
|
5
|
Representations and
Warranties
|
|
|
5.1
|
Each
party represents and warrants to each of the other parties as of the date
of this Agreement that:
|
|
|
5.1.1
|
as
relevant, it is duly organized, validly existing and in good standing
under the laws of its place of
organization;
|
|
|
5.1.2
|
he,
she or it has the power and authority to enter into and perform his, her
or its obligations under this
Agreement;
|
|
|
5.1.3
|
when
executed, his, her or its obligations under this Agreement will be binding
on him, her or it;
|
|
|
5.1.4
|
execution
and delivery of, and performance by him, her or it of his, her or its
obligations under this Agreement will not result in any breach of such
party’s organizational documents, as relevant, and under applicable
law;
|
|
|
5.1.5
|
no
consent, approval, order or authorization of, or filing with, any
government agency or person is required on the part of such party in
connection with the transactions contemplated by this
Agreement;
|
|
|
5.1.6
|
such
party is not subject to or bound by any currently existing judgment,
order, writ, injunction or decree that would prevent the consummation of
the transactions contemplated by this
Agreement;
|
|
|
5.1.7
|
such
party has not incurred any liability for brokerage, finder’s fees or any
similar fee or commission in connection with the transactions contemplated
by this Agreement for which the Company or Parent shall be liable for;
and
|
|
|
5.1.8
|
none
of the information, documents or other matters supplied or to be supplied
by or on behalf of him, her or it in connection with his, her or its
representations and warranties in clause 5.1, taken as a whole, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
|
|
|
5.2
|
Unless
such representation and warranty refers to a specific Shareholder (to
which only such Shareholder shall be deemed to be making such
representation and warranty), each Shareholder represents and warrants to
the Buyer as of the date of this Agreement
that:
|
|
|
5.2.1
|
such
Shareholder is the legal and beneficial owner of the number of Sale Shares
set out opposite his or its name in column 3 of Schedule
1;
|
|
|
5.2.2
|
there
are not any Encumbrances over or in respect of any of such Sale Shares
held by such Shareholder;
|
|
|
5.2.3
|
except
for the transactions contemplated by this Agreement and the agreements set
forth in clauses 14.1.1 through 14.1.4 (to be terminated pursuant to
clause 3.2.5), there are no contracts, commitments or agreements relating
to voting, purchase or sale of any such Sale Shares held by such
Shareholder;
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
5.2.4
|
except
for this Agreement and the agreements set forth in clauses 14.1.1 through
14.1.4 (to be terminated pursuant to clause 3.2.5), such Shareholder is
not a party to any agreement, arrangement, option, warrant or other
agreement in respect of or affecting any such Sale Shares or rights in or
to them;
|
|
|
5.2.5
|
with
respect to such Shareholder, the consummation of the transactions
contemplated under this Agreement will not conflict with or result in the
breach of any material term or provision of, require consent or violate or
constitute a material default under, any agreement relating to the Sale
Shares or result in the creation of any Encumbrance on the Sales
Shares;
|
|
|
5.2.6
|
there
are currently no pending or threatened lawsuits, regulatory or
administrative proceedings, arbitrations, reviews or formal or informal
complaints or investigations by any person against or relating to such
Shareholder in respect of his or its Sale
Shares;
|
|
|
5.2.7
|
none
of the information, documents or other matters supplied or to be supplied
by or on behalf of him or it in connection with his or its representations
and warranties in clause 5.2, taken as a whole, contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not
misleading;
|
|
|
5.2.8
|
Xxxx
Xxxxxx is an “accredited investor” as defined by Rule 501 of Regulation D
under the Securities Act;
|
|
|
5.2.9
|
such
Shareholder (save for Xxxx Xxxxxx) is a not a “U.S. Person” as defined by
Regulation S under the Securities Act and is not acquiring the Acquisition
Consideration for the account or benefit of any “U.S.
Person”;
|
|
|
5.2.10
|
such
Shareholder acknowledges and understands that the Acquisition
Consideration is being acquired for investment purposes and not with a
view to distribution or resale, nor with the intention of selling,
transferring or otherwise disposing the Acquisition Consideration except
selling, transferring, or disposing in compliance with all applicable
provisions of the Securities Act, the rules and regulations promulgated
thereunder, and applicable state securities laws, and that the Acquisition
Consideration is not liquid;
|
|
|
5.2.11
|
such
Shareholder understands that the Acquisition Consideration is not
presently registered under the Securities Act or applicable state
securities law and that no government agency has recommended or endorsed
the acquisition of the Acquisition Consideration and such Shareholder is
not acquiring the Acquisition Consideration as a result of or subsequent
to any advertisement, article, notice or other communication published in
any newspaper, magazine or similar media or broadcast over the Internet,
television or radio or presented at any seminar or
meeting;
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
5.2.12
|
such
Shareholder has such business and financial experience as is required to
give him, her or it the capacity to protect his, her or its interests in
the Acquisition Consideration and has had the opportunity to perform due
diligence and ask questions of, and receive answers from, the Buyer
concerning the Buyer and its business and, in determining whether to
acquire the Acquisition Consideration, such Shareholder has relied solely
on the representations and warranties of the Buyer set forth in this
Agreement; and
|
|
|
5.2.13
|
such
Shareholder acknowledges and understands that the Buyer is relying on such
Shareholder’s representations in this clause 5.2 in issuing the
Acquisition Consideration.
|
|
|
5.3
|
Subject
to Schedule 6 (Limitations on Liability), each of the Management
Warrantors severally represents and warrants to the Buyer as of the date
of this Agreement that (save as set out in Schedule 5 (Disclosure
Schedule)):
|
|
|
5.3.1
|
the
Company and each Subsidiary is qualified and licensed to do business and
is in good standing in all jurisdictions in which its business and
operations make such qualification
necessary;
|
|
|
5.3.2
|
set
forth in the Disclosure Schedule is a list of all jurisdictions in which
the Company and the Subsidiaries in which specific permits or licenses to
do business have been obtained;
|
|
|
5.3.3
|
except
for the Subsidiaries, the Company does not own, directly or indirectly,
securities or other ownership interests in any other
person;
|
|
|
5.3.4
|
Schedule
1 lists all of shareholders of the Company, as of the Completion Date, and
their respective holdings of shares of capital securities of the Company,
options to purchase capital securities of the Company and securities
convertible into capital securities of the
Company;
|
|
|
5.3.5
|
all
of the shares of capital securities of the Company, including the Sale
Shares, are duly authorized, validly issued, fully paid and non-assessable
and are not subject to pre-emptive rights, conversion price adjustment
rights or rights of first refusal;
|
|
|
5.3.6
|
all
of the shares of capital securities of the Company, including the Sale
Shares, are issued in compliance, in all material respects, with the
Company’s governing documents and all applicable
laws;
|
|
|
5.3.7
|
except
for the transactions contemplated by this Agreement, there are no
contracts, commitments or agreements relating to voting, purchase or sale
of any shares of the Company’s capital
stock;
|
|
|
5.3.8
|
there
are no securities, options, warrants, calls, rights, commitments or
agreements of any character to which the Company is obligated to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of the Company’s capital stock
and the Company is not obligated to grant, extend, accelerate the vesting
of, change the price of, or otherwise amend or enter into any such
security, option, warrant, call, right, commitment or
agreement;
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
5.3.9
|
the
consummation of the transactions contemplated under this Agreement will
not conflict with or result in the breach of any material term or
provision of, require consent or violate or constitute a material default
under, or result in the creation of any Encumbrance on the capital stock
or the assets of the Company, or relieve any person of any obligation to
the Company or give any person the right to terminate or accelerate any
obligation of the Company under, any charter provision, organizational
document, agreement, permit or applicable
law;
|
|
|
5.3.10
|
there
are currently no pending or (to the knowledge of the Management
Warrantors) threatened lawsuits, regulatory or administrative proceedings,
arbitrations, reviews or formal or informal complaints or investigations
by any person against or relating to the Company or its shareholder,
director, officer or to which any assets of the Company are
subject;
|
|
|
5.3.11
|
true
and complete copies of all agreements and instruments relating to or
issued under any Company stock option plan or otherwise relating to the
issuance of Company options or securities convertible into shares of the
Company’s capital stock which remain outstanding have been provided or
made available to the Buyer;
|
|
|
5.3.12
|
as
of the Completion Date and after taking into effect the Purchase, the
capital stock of the Company owned by the Buyer shall constitute 100% of
all the issued and outstanding shares of the Company’s capital stock, both
on a fully-diluted and as-converted
basis;
|
|
|
5.3.13
|
title
to the Sale Shares are registered in the Company’s books and records as
owned by no other person except for the
Shareholders;
|
|
|
5.3.14
|
the
Company has good and marketable title to all of the assets it purports to
own, and owns all of such assets free and clear of any Encumbrances and
the Company holds a valid leasehold interest in or otherwise has a valid
and enforceable license or right to use, all of the assets used in
connection with its business that it does not
own;
|
|
|
5.3.15
|
all
assets of the Company, including any assets held under leases or licenses,
are (i) in reasonably good condition and repair, ordinary wear and tear
excepted, and (ii) in good working order, ordinary wear and tear excepted,
and have been properly and regularly
maintained;
|
|
|
5.3.16
|
the
real property owned or leased by the Company is zoned for a classification
that permits the continued use of such real property in the manner
currently used by the Company and improvements included in such real
property were constructed in compliance with, and remain in compliance
with, all applicable laws;
|
|
|
5.3.17
|
there
are no actions pending or (to the knowledge of the Management Warrantors)
threatened that would alter the current zoning classification of the
Company’s real property (owned or leased) or alter any applicable laws
that would adversely affect the use of such real property in the Company’s
business;
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
5.3.18
|
attached
in the Disclosure Schedule are true and complete copies of (i) the
unaudited management accounts of the Company as of January 31, 2010;
(ii) the audited accounts of the Company as of March 31, 2009; and
(iii) the audited accounts of the Company as of March 31, 2008,
March 31, 2007 and March 31, 2006 (collectively, the “Financial
Statements”);
|
|
|
5.3.19
|
the
Financial Statements have been prepared in accordance with generally
accepted accounting principles in the Republic of Ireland, consistently
applied, present fairly the financial condition of the Company at the
dates specified and the results of its operations for the periods
specified, accurately and fairly reflect the transactions of, acquisitions
and dispositions of assets by, and incurrence of liabilities by the
Company, and since the date of the 31 January 2010 unaudited management
accounts, no material adverse effect has occurred with respect to the
Company;
|
|
|
5.3.20
|
the
Company has no liabilities of any nature, whether absolute, accrued,
contingent, liquidated or otherwise, except for: (i) liabilities
reflected in the Company’s current balance sheet delivered to the Buyer;
or (ii) current liabilities incurred in the ordinary course of
business and consistent with past practice, provided, however, ordinary
course shall exclude any liabilities under any agreement or otherwise that
result from any breach or default, tort, infringement or violation of
applicable law by the Company;
|
|
|
5.3.21
|
the
Company has made its statutory books and records available to the Buyer at
the premises of the Company and/or the Subsidiaries for its inspection and
such books and records are accurate, complete, and
authentic;
|
|
|
5.3.22
|
the
Company has filed on a timely basis all tax returns that are or were
required to be filed by it and has timely paid all Taxation that have
become due and payable save for Taxation contested in good faith and as to
which adequate reserves have been provided in the Company’s current
balance sheet;
|
|
|
5.3.23
|
all
tax returns filed by the Company are complete, true and
accurate;
|
|
|
5.3.24
|
the
charges, accruals, and reserves with respect to Taxation included within
the Financial Statements are
accurate;
|
|
|
5.3.25
|
there
exists no proposed Taxation assessment against the Company except as
disclosed in the Company’s current balance sheet and, as far as the
Management Warrantors are aware, there is no threat of any increase in the
rates of Taxation;
|
|
|
5.3.26
|
all
Taxation that the Company is or was required to withhold or collect have
been duly withheld or collected and, to the extent required, have been
paid;
|
|
|
5.3.27
|
no
audit, examination or similar proceeding is pending or (to the knowledge
of the Management Warrantors) threatened in regard to any
Taxation due from the Company;
|
|
|
5.3.28
|
the
Company is in material compliance with each law applicable to it or its
assets;
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
5.3.29
|
the
Company owns or possesses from each appropriate government agency all
right, title and interest in and to all permits, licenses, authorizations,
approvals, quality certifications, franchises or rights necessary to
conduct its business and no loss or expiration of any such permit is
pending or (to the knowledge of the Management Warrantors) threatened or
so far as the Management Warrantors are aware reasonably
foreseeable;
|
|
|
5.3.30
|
the
Company has complied with and is in compliance in all material respects
with all applicable environment laws in effect in any and all
jurisdictions in which the Company owns or leases property or conducts its
business, and no proceeding is pending or (to the knowledge of the
Management Warrantors) threatened alleging any failure by it to so
comply;
|
|
|
5.3.31
|
the
Company has no union or labour agreements or other arrangements with any
group of employees, labour union or employee representative and so far as
the Management Warrantors are aware there is no organization effort
currently being made or threatened by or on behalf of any labour union
with respect to employees of the
Company;
|
|
|
5.3.32
|
the
Company has not experienced, and so far as the Management Warrantors are
aware there is no basis for, any strike, material labour trouble, work
stoppage, slow down or other interference with or impairment of the
Company’s business;
|
|
|
5.3.33
|
each
Company employee benefit plan is and has been operated in compliance in
all material respects with the documents governing them and all applicable
laws;
|
|
|
5.3.34
|
neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will: (i) result in any payment
becoming due to any director, officer or any employee of the Company under
any Company employee benefit plan; (ii) increase any benefits
otherwise payable under any Company employee benefit plan; or
(iii) result in any acceleration of the time of payment or vesting of
any benefits under any Company employee benefit
plan;
|
|
|
5.3.35
|
all
accrued obligations of the Company applicable to its employees, whether
arising by operation of law, by contract, by past custom or otherwise, for
payments by the Company to trusts, other funds or to any government agency
with respect to unemployment compensation benefits or any other benefits
for its employees and with respect to the employment of said employees
have been paid or adequate accruals have been made on the Company’s
current balance sheet;
|
|
|
5.3.36
|
subject
to applicable bankruptcy, insolvency, reorganisation, moratorium,
preferential transfer, fraudulent conveyance, equitable subordination,
usury or similar laws and doctrines affecting rights of creditors
generally, and general equitable principles, or as may be held to be
unconscionable or void as a matter of law or as against public
policy, all of the Company’s Material Agreements are valid,
binding and in full force and effect and enforceable in accordance with
their terms and the Company has performed in all material respects all of
its obligations under every material agreement to which it is a
party;
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
5.3.37
|
no
consent from, approval from, order from or authorization of, or filing
with, any party to the Material Agreements is required in connection with
the transactions contemplated by this Agreement and the transactions
contemplated hereby will not trigger, accelerate or grant such other party
the right to terminate such Material Agreements or reduce its business
under such Material Agreements;
|
|
|
5.3.38
|
there
exists no breach or default on the part of Company or so far as the
Management Warrantors are aware on the part of any other person under any
of the Company’s Material Agreements and there has been no termination or
notice of default received or made by the Company under any such Material
Agreement;
|
|
|
5.3.39
|
no
customer of the Company that accounted for more than €25,000 of the
Company’s revenues for the past fiscal year has threatened to, or notified
the Company of any intention to, terminate or materially alter its
relationship with the Company;
|
|
|
5.3.40
|
the
Disclosure Schedule sets forth a true and complete list of all
intellectual property that is owned by the Company (the “Owned Intellectual
Property”) and all licenses, sublicenses and other agreements
pertaining to such Owned Intellectual Property and all intellectual
property owned by another person and used by the Company in its business
(collectively, “Licensed
Intellectual Property”);
|
|
|
5.3.41
|
the
Owned Intellectual Property and Licensed Intellectual Property include all
of the intellectual property used in the ordinary day-to-day conduct of
the Company’s business, and there are no other items of intellectual
property that are material to such ordinary day-to-day conduct of the
business;
|
|
|
5.3.42
|
the
Company is the owner of the entire and unencumbered right, title and
interest in and to each Owned Intellectual
Property;
|
|
|
5.3.43
|
the
Company has the right to use by license or otherwise the Licensed
Intellectual Property and so far as the Management Warrantors are aware
such right is subsisting, valid and
enforceable;
|
|
|
5.3.44
|
the
Company’s ownership and use of the Owned Intellectual Property and so far
as the Management Warrantors are aware the use of the Licensed
Intellectual Property does not infringe upon or misappropriate the valid
intellectual property rights, privacy rights or right of publicity of any
person;
|
|
|
5.3.45
|
no
claims or legal proceedings have been asserted against the Company or are
pending or, so far as the Management Warrantors are aware, threatened
against the Company: (i) based upon or challenging or seeking to deny or
restrict the use by the Company of any of the Owned Intellectual Property
or Licensed Intellectual Property; (ii) alleging that the Owned
Intellectual Property or Licensed Intellectual Property infringe upon or
misappropriate any intellectual property right of any person; or (iii)
challenging the Company’s ownership of the Owned Intellectual Property or
use of any Licensed Intellectual
Property;
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
5.3.46
|
so
far as the Management Warrantors are aware no person is engaged in any
activity that infringes upon the Owned Intellectual
Property;
|
|
|
5.3.47
|
the
Company has delivered or made available to the Buyer correct and complete
copies of all documents relating to Owned Intellectual
Property;
|
|
|
5.3.48
|
the
Company has taken reasonable steps to maintain the confidentiality of its
trade secrets and other confidential intellectual property and (i) so far
as the Management Warrantors are aware there has been no misappropriation
of any material trade secrets or other material confidential intellectual
property of the Company by any person; (ii) so far as the Management
Warrantors are aware no employee, independent contractor or agent of the
Company has misappropriated any trade secrets of any other person in the
course of his or her performance as an employee, independent contractor or
agent of the Company; and (iii) so far as the Management Warrantors are
aware no employee, independent contractor or agent of the Company is in
default or breach of any term of any agreement with the Company relating
in any way to the protection, ownership, development, use or transfer of
the Owned Intellectual Property or Licensed Intellectual
Property;
|
|
|
5.3.49
|
all
accounts receivable of the Company arose in the ordinary course of
business and represent bona fide revenues of the Company and are fully
collectible without right of recourse, defence, deduction, return of
goods, counterclaim or offset;
|
|
|
5.3.50
|
so
far as the Management Warrantors are aware the Company or any officer,
director or employee of the Company has not: (i) used any funds of
the Company for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; or (ii) made any
payment in violation of applicable law to any foreign or domestic
government official or employee or to any foreign or domestic political
party or campaign;
|
|
|
5.3.51
|
the
Company maintains customary insurance policies typically carried by other
businesses engaged in same businesses and such policies provide insurance
coverage to the Company and its business, assets, directors, officers,
employees and agents;
|
|
|
5.3.52
|
all
of the foregoing insurance policies are in full force and effect and the
Company has not received any notice of default or written notice of any
pending or threatened termination or cancellation, coverage limitation or
reduction, or material premium increase with respect to any such
policy;
|
|
|
5.3.53
|
the
Disclosure Schedule sets out the identity of the issuers of the Company’s
insurance policies;
|
|
|
5.3.54
|
no
officer or director of the Company and no relative, spouse or affiliates
of any of the foregoing has or has had, directly or indirectly: (i) a
material economic interest in any person that has furnished or sold, or
furnishes or sells, services or products that the Company furnishes or
sells, or proposes to furnish or sell, (ii) a material economic interest
in any person that purchase from or sells or furnishes to the Company, any
goods or services, (iii) a beneficial interest in any Material Agreement
of the Company, or (iv) holds any indebtedness of the
Company;
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
5.3.55
|
none
of the Shareholders or any affiliates of any Shareholder: (i) own,
directly or indirectly, in whole or in part, any tangible or intangible
property (including intellectual property rights) that the Company uses,
or (ii) have engaged in any material transaction with the
Company;
|
|
|
5.3.56
|
the
Company is currently engaged in the Eligible Activity and has no current
intention of ceasing to do so;
|
|
|
5.3.57
|
except
as provided in the Disclosure Schedule, the Company has not incurred any
liability for brokerage, finder’s fees or any similar fee or commission in
connection with the transactions contemplated by this Agreement for which
the Company or Parent shall be liable for;
and
|
|
|
5.3.58
|
none
of (i) the information, documents or other matters supplied or to be
supplied by or on behalf of the Management Warrantors and/or the Company
in connection with his or her representations and warranties in clause
5.3, taken as a whole, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not
misleading.
|
|
|
5.3.59
|
After
taking into consideration the 539,348 Euros raised by the Company from the
Shareholders in the Company’s recent rights offering, the consolidated net
asset value position of the Company and the Subsidiaries on January 31,
2009 is no less than zero.
|
|
|
5.4
|
All
representations and warranties shall survive after Completion and are
subject to the provisions of Schedule 6 (Limitations on
liability).
|
|
|
5.5
|
The
Buyer represents and warrants to the other parties at the date of this
Agreement that:
|
|
|
5.5.1
|
having
made due and careful review of the Material Agreements that the Company
has made available to the Buyer and/or its advisors, as at the date of
this Agreement it is not aware of any fact or matter which might lead to
the triggering, acceleration or granting to another party the right to
terminate any Material Agreement or reduce such party's business under
such Material Agreement;
|
|
|
5.5.2
|
Schedule
9 sets out accurately on a normalised basis (i) the issued and outstanding
Common Stock of the Buyer, (ii) the number of Common Stock the subject of
warrants and (iii) the number of Common Stock of the Buyer the subject of
options, as at 1 February 2009;
|
|
|
5.5.3
|
Schedule
9 sets out accurately on a normalised basis (i) the issued and outstanding
Common Stock of the Buyer, (ii) the number of Common Stock the subject of
warrants and (ii) the number of Common Stock of the Buyer the subject of
options, as at Completion;
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
5.5.4
|
less
the 400,000 shares of Common Stock issued to Beijing Chinawind
Telecommunications Information Technology Company Limited and the 113,900
shares of Common Stock issued to New Times Navigation Limited, the
aggregate number of Buyer Shares set out opposite the names of the
Shareholders in Schedule 1 comprises 20 per cent. of the issued and
outstanding Common Stock of the Buyer (on a normalised basis) as at 1
February 2009;
|
|
|
5.5.5
|
the
aggregate number of Buyer Warrants set out opposite the names of the
Shareholders in Schedule 1 comprises 20 per cent. of the issued and
outstanding warrant and options over Common Stock in the Buyer (on a
normalised basis) as at 1 February
2009;
|
|
|
5.5.6
|
except
for warrants and options to purchase the Common Stock of the Buyer, the
Common Stock of the Buyer is the only class of shares, stocks or
securities of the Buyer;
|
|
|
5.5.7
|
having
regard to the existing banking and other facilities available to it, the
Buyer has a very good level of comfort that it will have sufficient
working capital for the purposes of (i) continuing to carry on its
business and that of the Company as a going concern in their present form
and at their present levels of turnover for the next twelve months and
(ii) executing, carrying out and fulfilling in accordance with their
respective terms all orders, projects and contractual obligations which
have been placed with or undertaken by the Buyer and the Company;
and
|
|
|
5.5.8
|
the
Buyer is entering into this Agreement in reliance
on:
|
|
|
5.5.8.1
|
the
representation and warranty in clause 5.2.8 from Xxxx Xxxxxx only for the
purposes of issuing his Acquisition Consideration pursuant to Rule 501 of
Regulation D of the Securities Act;
and
|
|
|
5.5.8.2
|
the
representation and warranty in clause 5.2.9 from each of the Shareholders
other than Xxxx Xxxxxx for the purposes of issuing their Acquisition
Consideration pursuant to Regulation S of the Securities
Act,
|
and the
Acquisition Consideration issued to the Shareholders shall bear the relevant
legend as appropriate.
|
|
5.6
|
The
Buyer covenants to each of the Shareholders that during the period from
Completion through 1 April 2013, the Buyer shall at all
times:
|
|
|
5.6.1
|
operate
the Company as a stand-alone entity within the Buyer's
Group;
|
|
|
5.6.2
|
act
in good faith towards the Company and shall not knowingly do (or omit to
do) anything with the intention of frustrating the achievement of Company
Revenues or diminishing, distorting or reducing any amount of revenues of
the Company that may fall to be considered in calculating the Company
Revenues; and
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
5.6.3
|
observe
the terms and provisions of the Collaboration Agreement (excepting minor
or immaterial breaches which do not in any way negatively affect the
Company Revenues),
|
and to
the extent a dispute arises with respect to clause 5.6 with regard to the effect
on the Company Revenues of any breach by the Buyer of its provisions, the
parties agree that such dispute shall be settled by the Independent Auditors
pursuant to Schedule 4.
|
|
5.7
|
***
|
|
|
5.8
|
If
it is determined that the normalisation of the (i) issued and outstanding
Common Stock of the Buyer, (ii) number of Common Stock the subject of
warrants, and (iii) number of Common Stock of the Buyer the subject of
options, as at 1 February 2009, was done in error, either (x) the Buyer
shall further issue to the Shareholders and Enterprise Ireland the number
of Common Stock and/ or warrants (on the same terms and conditions as the
Buyer Warrants) to purchase Common Stock necessary for the Shareholders
and Enterprise Ireland, collectively and in the aggregate, to hold 20 per
cent. of the Common Stock, warrants or options determined to be actually
issued and outstanding as at 1 February 2009 and shall take all necessary
actions and execute all necessary documents to effect the allotment of any
such further Common Stock and/ or warrants, or (y) the Shareholders agree
to deliver to the Buyer for cancellation the number of Buyer Shares and/
or Buyer Warrants necessary for the Shareholders and Enterprise Ireland,
collectively and in the aggregate, to hold 20 per cent. of the Common
Stock, warrants or options determined to be actually issued and
outstanding as at 1 February 2009 and execute all necessary documents
to cancel such Buyer Shares and/ or Buyer
Warrants.
|
|
|
5.9
|
Without
prejudice to the provisions of clause 3 and Schedule 4, the accounts of
the Company shall be consolidated with the accounts of the Buyer with
effect from 1 April 2010.
|
|
6
|
Covenants
|
|
|
6.1
|
From
and after Completion, each Shareholder agrees to defend, indemnify and
hold the Buyer and its directors, shareholders, officers, employees and
agents (the “Buyer
Indemnified Parties”) harmless from and against any and all
damages, liabilities, losses, claims, obligations, liens, assessments,
judgments, Taxation, fines, penalties, reasonable costs and expenses
(including, without limitation, reasonable fees of counsel and costs), as
the same are incurred, of any kind or nature whatsoever (whether or not
arising out of third-party claims and including all amounts paid in
investigation, defence or settlement of the foregoing) (“Losses”) which may be
sustained or suffered by any Buyer Indemnified Party based upon, arising
out of, or by reason of (A) any breach of any representation or
warranty made by such Shareholder in this Agreement, and (B) any breach of
any covenant or agreement made by such Shareholder in this
Agreement.
|
|
|
6.2
|
Subject
to the provisions of Schedule 6 (Limitations on Liability), from and after
Completion, the Management Warrantors severally agree to defend, indemnify
and hold the Buyer Indemnified Parties harmless from and against any and
all Losses which may be sustained or suffered by any Buyer Indemnified
Party based upon, arising out of, or by reason of (A) any breach of
any representation or warranty made by the Management Warrantors in this
Agreement, and (B) any breach of any covenant or agreement made by the
Management Warrantors in this
Agreement.
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
6.3
|
From
and after Completion, the Buyer agrees to defend, indemnify and hold the
Shareholders harmless from and against any and all Losses which may be
sustained or suffered by the Shareholders based upon, arising out of, or
by reason of (A) any breach of any representation or warranty made by the
Buyer to the Shareholders in this Agreement, and (B) any breach of any
covenant or agreement made by the Buyer to the Shareholders in this
Agreement.
|
|
|
6.4
|
Any
party entitled to receive indemnification under clauses 6.1, 6.2 or 6.3
(the “Indemnified
Party”) agrees to give prompt written notice to the relevant party
required to provide such indemnification (the “Indemnifying Party”)
upon the occurrence of any indemnifiable Loss or the assertion of any
Relevant Claim or the commencement of any Relevant Claim in respect of
which such a Loss may reasonably be expected to occur, but the Indemnified
Party’s failure to give such notice will not affect the obligations of the
Indemnifying Party under this clause 6.4 except to the extent that the
Indemnifying Party is materially prejudiced thereby. If the
Indemnifying Party assumes and controls the defence of a Relevant Claim,
then (x) the Indemnifying Party may not settle any Relevant Claim without
the consent of the Indemnified Party (such consent not to be unreasonably
withheld or delayed), and (y) the Indemnified Party may employ separate
counsel and participate in the defence thereof, but the Indemnified Party
will be responsible for the fees and expenses of such counsel
(unless the Indemnifying Party has failed to adequately assume and
actively conduct the defence of such Relevant Claim or to employ counsel
with respect thereto or, in the reasonable opinion of the Indemnified
Party, a conflict of interest exists between the interests of the
Indemnified Party and the Indemnifying Party that requires representation
by separate counsel, in which case the fees and expenses of such separate
counsel will be paid by the Indemnifying Party). If the
Indemnifying Party does not assume and control the defence of a Relevant
Claim to which the Indemnified Party is entitled to indemnification under
this Agreement, the Indemnified Party may assume and control the defence
of such Relevant Claim at the Indemnifying Party’s costs. In
the event of the foregoing sentence, the Indemnifying Party shall not be
bound to any settlement without its prior consent (not to be unreasonably
withheld or delayed).
|
|
|
6.5
|
For
purposes of this Agreement:
|
|
|
6.5.1
|
subject
to clause 6.5.2 below, the Shareholders Representative shall be deemed to
be appointed as the representative of all the Shareholders, as the
attorney-in-fact for and on behalf of each such Shareholder, and the
taking by the Shareholders Representative of any and all actions and the
making of any decisions required or permitted to be taken by him under
this Agreement, including the exercise of the power to (i) agree to,
negotiate, enter into settlements and compromises of and comply with
orders of courts with respect to any indemnification claims, (ii) resolve
any indemnification claims, and (iii) take all actions necessary in the
judgment of the Shareholders Representative for the accomplishment of the
other terms, conditions and limitations of this Agreement. The
Shareholders will be bound by all actions taken by the Shareholders
Representative in connection with this Agreement, and Buyer shall only be
required to acknowledge or act upon written communication signed by the
Shareholders Representative;
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
6.5.2
|
the
Management Warrantors shall be deemed to appoint Xxxxxxx Xxxxxxxx (the
"Escrow
Representative") as the representative of all the Management
Warrantors, as the attorney-in-fact for and on behalf of each such
Management Warrantor, and the taking by the Escrow Representative of any
and all actions and the making of any decisions required or permitted to
be taken by him in relation to the escrow arrangements set out in Schedule
6 (the "Escrow
Arrangements"), including the exercise of the power to (i) agree
to, negotiate, enter into settlements and compromises of and comply with
orders of courts with respect thereof, (ii) resolve any claims in respect
thereof, and (iii) take all actions necessary in the judgment of the
Escrow Representative for the accomplishment of the terms, conditions and
limitations of the Escrow Arrangements. The Management
Warrantors will be bound by all actions taken by the Escrow Representative
in connection with the Escrow Arrangements, and Buyer shall only be
required to acknowledge or act upon written communication signed by the
Escrow Representative.
|
|
|
6.6
|
Each
Shareholder agrees not to sell, transfer or otherwise dispose the
Acquisition Consideration except in compliance with all applicable
provisions of the Securities Act, the rules and regulations promulgated
thereunder, and applicable state securities laws, to include, for purposes
of Shareholders who are not “U.S. Persons” (as defined by Regulation S
under the Securities Act), the sale, transfer or disposition of the
Acquisition Consideration to “U.S. Person” during the twelve (12) month
period after receipt of such Acquisition Consideration. Each
Shareholder agrees not to engage in hedging transactions with regard to
the Acquisition Consideration unless in compliance with the Securities
Act. Each Shareholder acknowledges that instruments or
certificates for the Acquisition Consideration shall contain a legend
setting forth the foregoing restrictions and that, in the event the sale,
transfer or disposition of the Acquisition Consideration is in violation
of the Securities Act, the Buyer shall not be under any obligation to
register any such Acquisition Consideration sold, transferred or disposed
of in contravention of the Securities Act or acknowledge such sale,
transfer or disposition.
|
|
|
6.7
|
The
Shareholder Representative shall (on behalf of the Shareholders and
Enterprise Ireland) have sole conduct of the Xxxxxx Xxxxxx Matter, with
the sole discretion to compromise, settle, negotiate, defend or dispute
such matter. In the event that settlement of the Xxxxxx Xxxxxx
Matter can be achieved by the granting of warrants over Common Stock, the
Shareholder Representative shall inform the Buyer in writing and the Buyer
shall satisfy such grant by forfeiting such number of Buyer Warrants as
are held by the Shareholders (on a pro rata basis) as are required to
satisfy such grant to Beresford Ltd (or as it shall
direct). Notwithstanding the foregoing, the Buyer is not
required to issue any warrants to purchase Common Stock to Beresford Ltd
if such issuance is not under the same terms and conditions as the
issuance of the Buyer Warrants, such terms and conditions to include,
without limitation, the same form of warrant as the Buyer Warrants and
Beresford Ltd representing, warranting, agreeing and covenanting in
writing to the matters set forth in clause 1.2, 3.1.3, 3.2.3, 3.2.4, 5.2.9
through 5.2.13, 5.4, 5.5.8 and 6.6.
|
|
7
|
Confidentiality and
Announcements
|
|
|
7.1
|
Subject
to clause 7.3, and excluding any information which is in the public domain
(other than through the wrongful disclosure of any party), or which any
party is required to disclose by law or by the rules of any regulatory
body to it is subject, each party agrees to keep secret and confidential
and not to use, disclose or divulge to any third party (other than a
party's professional advisers)
any:
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
|
7.1.1
|
confidential
information relating to the Company or any Subsidiary (including
intellectual property, customer lists, reports, notes, memoranda and all
other documentary records pertaining to the Company or any Subsidiary or
its business affairs, finances, suppliers, customers or contractual or
other arrangements); or
|
|
|
7.1.2
|
information
relating to the negotiation, provisions or subject matter of this
Agreement (or any document referred to in it);
or
|
|
|
7.1.3
|
information
concerning the Buyer or any
Shareholder.
|
|
|
7.2
|
Except
in accordance with clause 7.3, the parties shall not make any public
announcement or issue a press release or respond to any enquiry from the
press or other media that concerns or relates to this Agreement or its
subject matter (including, but not limited to, the Buyer's investment in
the Company) or any ancillary
matter.
|
|
|
7.3
|
Notwithstanding
clauses 7.1 and 7.2, any party may make or permit to be made a disclosure
of information or an announcement concerning or relating to this
Agreement, or its subject matter or any ancillary matter if and to the
extent required by:
|
|
|
7.3.1
|
law;
or
|
|
|
7.3.2
|
any
securities exchange on which such party's securities are listed or traded;
or
|
|
|
7.3.3
|
any
regulatory or governmental or other authority with relevant powers to
which either party is subject or submits, whether or not the requirement
has the force of law.
|
|
8
|
Assignment
|
|
|
8.1
|
This
Agreement is personal to the parties and no party
shall:
|
|
|
8.1.1
|
assign
any of its rights under this Agreement;
or
|
|
|
8.1.2
|
transfer
any of its obligations under this Agreement;
or
|
|
|
8.1.3
|
charge
or deal in any other manner with this Agreement or any of its rights or
obligations.
|
|
|
8.2
|
Any
purported assignment, transfer, charging or dealing in contravention of
clause 8.1 shall be ineffective.
|
|
9
|
Third Party
Rights
|
This
Agreement is not intended to and does not confer any rights on any person that
is not a party to this Agreement, whether pursuant to statute common law or
otherwise.
|
10
|
Agreement Survives
Completion
|
This
Agreement (other than the obligations that have already been performed) remains
in full force after Completion.
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
11
|
Shareholder Obligations and
Status of this Agreement
|
|
|
11.1
|
Each
Shareholder shall exercise all voting rights and other powers of control
available to him or it in relation to the Company so as to procure (so far
as is reasonably possible) that, at all times during the term of this
Agreement, the provisions of this Agreement are promptly observed and
given full force and effect according to its spirit and
intention.
|
|
|
11.2
|
If,
at any time, any provisions of the memorandum of association of the
Company or the Articles conflict with any provision of this Agreement, the
provisions of this Agreement shall prevail as between the Shareholders. In
such circumstances the Shareholders shall procure (so far as their
shareholding shall allow) that such modifications as are necessary are
made to the Articles and/or the Company's memorandum of
association.
|
|
12
|
Severance
|
|
|
12.1
|
If
any provision of this Agreement (or part of a provision) is found by any
court or administrative body of competent jurisdiction to be invalid,
unenforceable or illegal, the other provisions shall remain in
force.
|
|
|
12.2
|
If
any invalid, unenforceable or illegal provision would be valid,
enforceable or legal if some part of it were deleted or modified, that
provision shall apply with whatever modification is necessary to give
effect to the commercial intention of the
parties.
|
|
13
|
Variation
|
A
variation of this Agreement shall only be valid if it is in writing and signed
by the Shareholders, the Buyer, the Shareholders Representative, the Escrow
Representative and by the Management Warrantors, in which event such change
shall be binding against all of the parties hereto.
|
14
|
Whole
Agreement
|
|
|
14.1
|
This
Agreement and the documents referred to or incorporated in it or executed
contemporaneously with it, constitute the whole agreement between the
parties relating to the subject matter of this Agreement, and supersede
any previous arrangement, understanding or agreement between them relating
to the subject matter that they cover, including for the avoidance of
doubt as between the Shareholders and the
Company:
|
|
|
14.1.1
|
the
subscription and shareholders agreement dated 10 February 2004 between,
inter alia, certain of the Shareholders and the
Company;
|
|
|
14.1.2
|
the
supplemental shareholders agreement dated 15 December 2004 between, inter
alia, certain of the Shareholders and the
Company;
|
|
|
14.1.3
|
the
subscription and shareholders agreement dated 23 February 2006 between,
inter alia, certain of the Shareholders and the Company;
and
|
|
|
14.1.4
|
the
supplemental subscription and shareholders agreement dated 16 February
2007 between, inter alia, certain of the Shareholders and the
Company,
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
and, as
between the Shareholders, the Company and the Buyer, the heads of terms dated 23
February 2009 and 2 November 2009.
|
|
14.2
|
Nothing
in this clause 14 operates to exclude or limit any liability for
fraud.
|
|
15
|
Notices
|
|
|
15.1
|
Except
as expressly provided in this Agreement, a notice, consent or
communication given under this
Agreement:
|
|
|
15.1.1
|
shall
be in writing in the English language (or be accompanied by a properly
prepared translation into English);
|
|
|
15.1.2
|
shall
be sent for the attention of the person, and to the address given in this
clause 15 (or such other address or person as the relevant party may
notify to the other party); and
|
|
|
15.1.3
|
shall
be:
|
|
|
15.1.3.1
|
delivered
personally; or
|
|
|
15.1.3.2
|
sent
by pre-paid first-class post or recorded delivery;
or
|
|
|
15.1.3.3
|
(if
the notice is to be served by post outside the country from which it is
sent) sent by internationally recognised overnight
courier.
|
|
|
15.2
|
The
addresses for service of notice
are:
|
|
|
15.2.1
|
Shareholders
and/or Shareholders Representative
|
Address:
ValidSoft (UK) Limited, 0 Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX
For the
attention of: Xxxxxxx Xxxxxxx
With a
copy to: Xxxxxxxxxx XXX, Xxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx XX0 0XX,
XX, attention: Xxxx Xxxxxxx/Xxxx Xxxxx
|
|
15.2.2
|
Buyer
|
Address:
Xxxxxxxx Xxxxxxxxx 000, 0000 XX Xxxxxxxxxx Xxxxxxxx, Xxxxxxxxxxx
For the
attention of: Xxxx Xxxxxxxxx
With a
copy to: Ellenoff Xxxxxxxx & Schole LLP, 000 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 XXX, attention: Xxxxx X. Xxxxxxxx,
Esq.
|
|
15.2.3
|
Management
Warrantors
|
Address:
ValidSoft (UK) Limited, 0 Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX
For the
attention of: Xxxxxxx Xxxxxxx
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
With a
copy to: Xxxxxxxxxx XXX, Xxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx XX0 0XX,
XX, attention: Xxxx Xxxxxxx/Xxxx Xxxxx
|
|
15.2.4
|
Escrow
Representative
|
Address:
Hembury Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx XX00 0XX
For the
attention of: Xxxxx Xxxxxxxx
With a
copy to: Xxxxxxxxxx XXX, Xxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx XX0 0XX,
XX, attention: Xxxx Xxxxxxx/Xxxx Xxxxx
|
|
15.3
|
A
notice is deemed to have been
received:
|
|
|
15.3.1
|
if
delivered personally or sent by internationally recognised overnight
courier, at the time of delivery;
or
|
|
|
15.3.2
|
in
the case of pre-paid first-class post or recorded delivery, 3 days from
the date of posting; or
|
|
|
15.3.3
|
if
deemed receipt under the previous paragraphs of this clause 15.3 is not
within business hours (meaning 9.00 am to 5.30 pm Monday to Friday on a
day that is a Business Day), when business next starts in the place of
deemed receipt.
|
|
|
15.4
|
To
prove service, it is sufficient to prove that the envelope containing the
notice was properly addressed and
posted.
|
|
16
|
Further
Assurance
|
Each
party shall promptly execute and deliver all such documents, and do all such
things, as the other party may from time to time reasonably require for the
purpose of giving full force and effect to the provisions of this
Agreement.
|
17
|
Counterparts
|
This
Agreement may be executed in any number of counterparts, each of which is an
original and which, when executed, shall be an original and which together shall
have the same effect as if each party had executed the same
document.
|
18
|
No
Partnership
|
Nothing
in this Agreement is intended to or shall be construed as establishing or
implying a partnership of any kind between the parties.
|
19
|
Governing Law and
Jurisdiction
|
|
|
19.1
|
This
Agreement and any dispute or claim arising out of or in connection with it
or its subject matter (including non-contractual disputes or claims) shall
be governed by and construed in accordance with the laws of the State of
New York without giving
effect to the principles of conflicts of
law.
|
|
|
19.2
|
The
parties irrevocably agree that the US federal courts situated in New York
City, New York, shall have exclusive jurisdiction to settle any dispute or
claim that arises out of or in connection with this Agreement or its
subject matter (including non-contractual disputes or
claims). The parties further agree that service of process
shall be proper if served by the methods set forth in clause
15.
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
20
|
Expenses
|
Subject
to clause 6 and this clause 20, the Shareholders shall respectively bear their
own expenses (it being agreed that any excess over and above zero of the net
asset value position of the Company as at January 31, 2009 shall be for the
account of the Shareholders and only available for this purpose), and the Buyer
shall bear its own expenses, in connection with the negotiation, execution,
delivery and performance of this Agreement and the transactions contemplated
herein.
|
21
|
Waivers
|
The
failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver of
any such provision nor the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver shall be
effective unless set forth in a written instrument executed by the party or
parties against whom or which enforcement of such waiver is sought and no waiver
of any breach, non-compliance or non-fulfilment shall be construed or deemed to
be a waiver of any other or subsequent breach, non-compliance or
non-fulfilment.
This
Agreement has been entered into on the date stated at the beginning of
it.
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
SCHEDULE
1
The
Shareholders
In this
Schedule 1, "CC" means
Contingent Consideration.
|
Name of Shareholder
|
Address
|
Number of
Sale Shares
(and %)
|
Number of
Buyer Shares
|
Number of
Buyer Warrants
|
||||||||||
|
Xxxxxxx
Xxxxxxx
|
403
Altmore House,
|
7,732 | 1,378,529 | 515,748 | ||||||||||
|
Xxxx
Street,
|
(13.47 | )% |
(CC=
344,632
|
) |
(CC=
128,937
|
) | ||||||||
|
Tullamore,
Co Offaly
|
||||||||||||||
|
Xxxxxx
Xxxxxxx
|
00
Xxxxxxxx Xxxxx,
|
1,242 | 221,435 | 82,845 | ||||||||||
|
Clondalkin,
Xxxxxx 00
|
(2.16 | )% |
(CC=
55,359
|
) |
(CC=
20,711
|
) | ||||||||
|
Xxxxxx
Xxxxx
|
Dun
Dalgan, Ross
|
411 | 73,277 | 27,415 | ||||||||||
|
Road,
Screggan,
|
(0.72 | )% |
(CC=
18,319
|
) |
(CC=
6,854
|
) | ||||||||
|
Tullamore,
Co. Offaly.
|
||||||||||||||
|
Xxxxxxx
Xxxxxxx Shovell
|
64
Xxxx & Eve Mews,
|
500 | 89,144 | 33,352 | ||||||||||
|
Xxxxxx
X0 0XX, XX
|
(0.87 | )% |
(CC=
22,286
|
) |
(CC=
8,338
|
) | ||||||||
|
Xxxxxxx
Xxxxx Xxxxxx
|
Xxxx
House, Link
|
376 | 67,037 | 25,080 | ||||||||||
|
Lane,
Bentley, Suffolk,
|
(0.65 | )% |
(CC=
16,759
|
) |
(CC=
6,270
|
) | ||||||||
|
1PQ
2DP, UK
|
||||||||||||||
|
Xxxxxxx
Xxxxx Peddlesden
|
000
Xxxxxx Xxxx,
|
000 | 22,286 | 8,338 | ||||||||||
|
Leytonstone,
London
|
(0.22 | )% |
(CC=
5,572
|
) |
(CC=
2,084
|
) | ||||||||
|
X00
0XX UK
|
||||||||||||||
|
Xxxx
Xxxxxx Xxxxxxxx
|
00
Xxxxxxxx Xxxxxx,
|
59 | 10,519 | 3,935 | ||||||||||
|
Xxxxxx
XX00 0XX
|
(0.10 | )% |
(CC=
2,630
|
) |
(CC=
984
|
) | ||||||||
|
Xxxxxxxx
Xxxx Xxxxxx
|
1
Xxxx End, Orpington,
|
71 | 12,659 | 4,736 | ||||||||||
|
Xxxx
XX0 0XX
|
(0.12 | )% |
(CC=
3,165
|
) |
(CC=
1,184
|
) | ||||||||
|
Xxxxxxxx
Xxxx Xxxxxx
|
Belcamp
Xxxxxxxxxx
|
50 | 8,914 | 3,335 | ||||||||||
|
Xxxx’x
Xxxx
|
(0.09 | )% |
(CC=
2,229
|
)
|
(CC=
834
|
) | ||||||||
|
Xxxxxxxxxx
|
||||||||||||||
|
Xxxxxx
00
|
||||||||||||||
|
Xxxxxxx
Xxxx Xxxxx
|
00
Xxxxxxxxx Xxxx,
|
00 | 8,914 | 3,335 | ||||||||||
|
Ratoath,
Co Meath
|
(0.09 | )% |
(CC=
2,229
|
)
|
(CC=
834
|
) | ||||||||
|
Xxxxxx
Xxxx
|
Holmshill,
Blueball,
|
11,363 | 2,025,896 | 757,946 | ||||||||||
|
Tullamore,
Co Offaly
|
(19.79 | )% |
(CC=
506,474)
|
(CC=
189,487
|
) | |||||||||
|
Xxxx
Xxxxxxxx
|
Spollenstown,
|
11,363 | 2,025,896 | 757,946 | ||||||||||
|
Tullamore,
Co Offaly
|
(19.79 | )% |
(CC=
506,474
|
)
|
(CC=
189,487
|
) | ||||||||
|
Xxxxxxx
Xxxxxxxx
|
Xxxxxxx
Mount
|
10,694 | 1,906,621 | 713,322 | ||||||||||
|
Avenue,
Shenfield,
|
(18.63 | )% |
(CC=
476,655
|
)
|
(CC=
178,331
|
) | ||||||||
|
Xxxxx
XX00 0XX
|
||||||||||||||
|
Xxxx
Xxxxxx
|
321
Upper Mountain
|
10,325 | 1,840,832 | 688,709 | ||||||||||
|
Ave,
Montclair New
|
(17.98 | )% |
(CC=
460,208
|
)
|
(CC=
172,177
|
) | ||||||||
|
Xxxxxx
00000 XXX
|
||||||||||||||
|
Xxxxxxx
Neo Xxx Xxxxx
|
00
Xxxxxxxx Xxxxxx,
|
000 | 28,526 | 10,672 | ||||||||||
|
Xxxxxxxxx
000000
|
(0.28 | )% |
(CC=
7,132
|
)
|
(CC=
2,668
|
) | ||||||||
|
Xxxxxx
Xxxxxxx
|
27
Peaks Hill, Purley,
|
847 | 151,011 | 56,497 | ||||||||||
|
Xxxxxx
XX0 0XX
|
(1.48 | )% |
(CC=
37,753
|
)
|
(CC=
14,124
|
) | ||||||||
|
Xxxxx
Xxxxxxxxx
|
00
Xxxxxxx Xxxxxx,
|
80 | 14,263 | 5,336 | ||||||||||
|
Malabar,
New South
|
(0.14 | )% |
(CC=
3,566
|
)
|
(CC=
1,334
|
) | ||||||||
|
Xxxxx
0000, Xxxxxxxxx
|
||||||||||||||
|
Donall
O’Suilleabhain
|
36,
Bromley Park,
|
50 | 8,914 | 3,335 | ||||||||||
|
Donnybrook,
Co. Cork
|
(0.09 | )% |
(CC=
2,229
|
)
|
(CC=
834
|
) | ||||||||
|
Total
|
55,498 | 9,894,673 | 3,701,884 | |||||||||||
| (96.67 | )%* |
(CC=
2,473,668
|
) |
(CC=
925,471
|
) | |||||||||
*
Together with the 1,913 shares in the Company held by Enterprise Ireland,
comprises 100%.
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
SCHEDULE
2
The
Company
Part
1 – Particulars of the Company
|
Registered
number:
|
377068
|
|
|
Status:
|
Private
limited company
|
|
|
Registered
office:
|
Xxxxxx
Xxxxxxxxx, Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx
|
|
|
Directors:
|
Xxxxxxx
Xxxxxxx
Xxxx
Xxxxxxx
Xxx
Xxxxxxx
Xxxxxx
Xxxx
Xxxxx
Xxxxxxxx
Xxxx
Xxxxxx
|
|
|
Secretary:
|
Xxx
Xxxxxxx
|
|
|
Accounting
reference date:
|
31
March
|
|
|
Auditors:
|
Xxxxx
& Associates
|
|
|
Authorised
share capital:
|
€4,000,000
(consisting of 3,988,622 ordinary shares of €1each and 11,378 redeemable
deferred ordinary shares of €1 each)
|
|
|
Issued
share capital:
|
|
57,411
ordinary shares of €1each.
|
Part
2 – Particulars of the Subsidiaries
|
Validsoft
UK Limited:
|
||
|
Registered
number:
|
4023940
|
|
|
Status:
|
Private
limited company
|
|
|
Registered
office:
|
0
Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX
|
|
|
Directors:
|
Xxxxxxx
Xxxxxxx
Xxx
Xxxxxxx
|
|
|
Secretary:
|
Xxx
Xxxxxxx
|
|
|
Accounting
reference date:
|
31
March
|
|
|
Auditors:
|
AEL
Partners LLP
|
|
|
Authorised
share capital:
|
£500,000
(divided into 500,000 ordinary shares of £1 each
|
|
|
Issued
share capital:
|
394,346
ordinary shares of £1
each.
|
|
CONFIDENTIAL TREATMENT
REQUESTED
|
Exhibit
2.1
|
|
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
|
|
|
DENOTED WITH “***”
|
|
Validsoft
(Australia) Pty Limited:
|
||
|
Registered
number:
|
ABN
53 115 480 003
|
|
|
Status:
|
Private
Limited Company
|
|
|
Registered
office:
|
Xxxxx
00, Xxxxxxxxx Xxxxxx, 0 Xxxx Xxxxxx, Xxxxxx XXX 0000
|
|
|
Directors:
|
Xxxxxxx
Xxxxxxx
Xxxxx
Xxxxxxxxx
|
|
|
Secretary:
|
Xxxxx
Xxxxxxxxx
|
|
|
Accounting
reference date:
|
31
March
|
|
|
Auditors:
|
Masselos
Pty Limited, Xxxxx 00, 00 Xxxxxx Xxxxxx, Xxxxxx, XXX 0000,
Xxxxxxxxx
|
|
|
Authorised
share capital:
|
A$1.00
|
|
|
Issued
share capital:
|
|
A$1.00
|
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
SCHEDULE
3
Graph
y-axis
***
x-axis
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
SCHEDULE
4
Calculation
of Revenues
|
1
|
The
Buyer shall procure that the Independent Auditors shall within 30 days of
1 April 2013 or the date of the change of control of the Company deliver
to the Shareholders Representative and the Buyer (the "Report"):
|
|
|
1.1
|
a
draft Company Revenues report in respect of the period from 1 April 2010
through 1 April 2013 (or the Completion Date to the date of the change of
control of the Company, as the case may be), prepared pursuant to the
terms of the Agreement; and
|
|
|
1.2
|
a
draft Buyer Revenues report in respect of the period from 1 April 2010
through 1 April 2013 (or the Completion Date to the date of the change of
control of the Company, as the case may be), prepared pursuant to the
terms of the Agreement.
|
|
2
|
The
Buyer shall procure that the Independent Auditors shall be given full
access in a timely fashion to the accounts and records of the Company and
the Subsidiaries and shall be permitted to take copies of the same and
generally be provided with such other information and assistance as they
may reasonably require to prepare the
Report.
|
|
3
|
Upon
the preparation the Report, such Report shall be delivered to the
Shareholders Representative and the
Buyer.
|
|
4
|
During
the period of 21 days following receipt of the Report (the "Review Period"), the
Buyer and Shareholders Representative shall be entitled to submit
questions in writing to the Independent Auditors concerning the Report for
the Independent Auditors to answer. If requested by either the Buyer or
the Shareholders Representative, the Buyer and Shareholders Representative
shall use all reasonable endeavours to meet and discuss any issues or
questions with respect to the Report. The Buyer and
Shareholders Representative shall be entitled to access to the working
papers of the Independent Auditors that are relevant to their production
of the Report.
|
|
5
|
The
Report shall be prepared in accordance with
GAAP.
|
|
6
|
In
the event a dispute arises with respect to clause 5.6 of the Agreement
that is not resolved by the parties in good faith, the aggrieved party
shall submit to the Independent Auditors such dispute for
resolution. The parties agree that in such event, the
Independent Auditors shall determine (acting as experts and not
arbitrators) whether a breach of clause 5.6 has occurred and, if so, the
amount of revenues lost due to such breach. All amounts of
revenues lost due to the breach of clause 5.6, as determined by the
Independent Auditors, shall be included in the calculation of Company
Revenues.
|
|
7
|
The
costs of the Independent Auditors in relation to all matters arising from
this schedule shall be borne equally by the Buyer and the
Shareholders.
|
|
8
|
The
determination of the Independent Auditors shall be binding on the parties
(save in the case of manifest error). Save where the contrary
is expressly stated, the agreement of the Report does not constitute or
operate as a waiver of any other rights, powers or remedies of the parties
or of any other provision of this Agreement and does not preclude the
exercise of any other right, power of remedy of the parties arising under
this Agreement or otherwise.
|
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
SCHEDULE
5
Disclosure
Schedule
|
5.3.2
|
The
members of the Group are incorporated in Republic of Ireland, United
Kingdom and Australia. As far as the Management Warrantors are
aware the Group may do business in any jurisdiction, subject to the rules
and regulations of such jurisdiction. It operates through
Partners and Distributers in Hong Kong and
Singapore.
|
|
5.3.5,
5.3.7
|
The
Sale Shares are subject to the provisions of the Articles of Association
of the Company, and also the agreements listed in clauses 14.1.1 to 14.1.4
(inclusive) until the same are terminated pursuant to clause
3.2.6.
|
|
5.3.10
|
Xxxxxxx
Xxxxxx, a former employee of the company has commenced legal proceedings
for the recovery of salary and expenses totalling £22,056.10 (approx).
|
See
attached (at Appendix A) document setting out outstanding payroll taxes of the
group, including discussion with tax authorities in UK and Australia regarding
payment plans. Details of Research & Development tax reclaim in
the UK are attached as Appendix B.
|
5.3.12
|
It
is possible that Xxxx Xxxxxx (MS) and Donall O’Suilleabhain (DS) may not
sign the SPA in a timely manner due to the issues that the Company has had
over salary entitlement due on leaving the company. MS has commenced legal
proceedings whilst DS has been through a process of mediation and has
received his settlement. Both MS and DS are minority shareholders who have
respectively 0.65% and 0.10%. In the case of DS his shares are
non-voting Ordinary shares. The selling shareholders will be able to
exercise their Drag Along Rights (contained in the existing shareholders
agreements), or the Buyer may be able to avail itself of the "squeeze out"
provisions under Irish company law to enforce 100% sale of the
issued share capital from MS and
DS.
|
In
addition, Xxxxxxxx Xxxxxx (0.09%) has requested to be dragged along pursuant to
the Drag Along Rights in view of his employment with Hewlett Packard, with whom
the Company is currently negotiating a contract.
|
5.3.18,
5.3.19
|
Please
find attached the following
documents:
|
|
|
·
|
draft
unaudited management accounts as at December 31, 2009 and January 31, 2010
(at Appendix C) and supplier balance summaries for Ireland, UK and
Australia as at January 31, 2010 (at Appendix
D)
|
|
|
·
|
audited
accounts as at March 31, 2009 (at Appendix
E)
|
|
|
·
|
audited
accounts as at March 31, 2008 (as Appendix
F)
|
|
|
·
|
audited
accounts as at Xxxxx 00, 0000 (xx Xxxxxxxx
X)
|
|
|
·
|
audited
accounts as at March 31, 2006 (at Appendix
H)
|
|
5.3.20
|
Xxxxxx
Xxxxxx was responsible for the introduction of ValidSoft to Elephant Talk.
His duties and remuneration were covered by a memorandum of understanding
(see attached at Appendix J). Discussions are continuing with
Xxxxxx Xxxxxx in terms of reaching an agreement for
settlement.
|
|
5.3.22
to
5.3.27
|
See
attached (at Appendix A) document setting out outstanding payroll taxes of
the group, including discussion with tax authorities in UK and Australia
regarding payment plans.
|
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
|
5.3.40
|
Owned Intellectual
Property:
|
|
|
·
|
Trademark
– VALid (registered number 2312075) (next renewal date 1 October
2012)
|
|
|
·
|
Trademark
– VALid-POS (registered number 2506924) (next renewal date 21 January
2019)
|
|
|
·
|
Patent
Protected (GB2397731) – VALid – UK Patent for authenticating a user access
request to a secured service utilizing both a primary and secondary
channel. Title “Authentication System”. The
inventors are shown as Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxx. The
next renewal date is 22 January
2011.
|
|
|
·
|
Patent
Pending (Application GB0901407.7) - Card False Positive
Prevention – CFPP System – concerning a method where mathematically
derived probability data determined from transaction feeds and telemetry
services is used to identify a false positive
transaction. Title “False-Positive Prevention”. The
application lodged 28 January 2009, and for the avoidance of doubt patent
pending status means that there is no guarantee that a Patent will be
granted.
|
|
|
·
|
Patent
Pending (Application GB0904874.5) – Anonymous Correlation System – ACS
System – concerning a method where data determined from transaction feeds
and telemetry services is used to anonymously identify a fraudulent or
false positive transaction. Title “Smartcard Security
System”. The application lodged 20 March 2009, and for the
avoidance of doubt patent pending status means that there is no guarantee
that a Patent will be granted.
|
|
|
·
|
***
|
|
|
·
|
Domain
names:
|
|
xxxxxxxxx.xx
|
renewal
date 22/12/2009
|
|
xxxxxxxxx.xx
|
renewal
date 25/01/2010
|
|
xxxxxxxxx.xxxx
|
renewal
date 19/02/2011
|
|
xxx-xx.xxx
|
renewal
date 01/07/2010
|
|
xxx-xx.xx.xx
|
renewal
date 01/07/2010
|
|
xxx-xx.xxxx
|
renewal
date 01/07/2010
|
|
xxx-xx.xxx
|
renewal
date 01/07/2010
|
|
xxx-xx.xxx
|
renewal
date 27/07/2010
|
|
xxxxxxxxx.xx.xx
|
renewal
date 25/09/2010
|
|
xxxxxxxxx.xxx
|
renewal
date 25/09/2010
|
|
xxxxxxxxx.xx
|
renewal
date 13/12/2010
|
|
xxxxxxxxx.xx.xx
|
renewal
date 19/12/2010
|
|
xxxxxxxxx.xxx.xx
|
renewal
date 01/01/2011
|
|
xxxxxxxxx.xxx.xx
|
renewal
date 01/01/2011
|
|
xxxxxxxxx.xx
|
renewal
date 01/01/2011
|
|
xxxxx.xx.xx
|
renewal
date 25/01/2011
|
|
xxxxxxxxx.xx
|
renewal
date 25/01/2011
|
|
xxxxxxxxx.xx.xx
|
renewal
date 25/01/2011
|
|
xxxxxxxxx.xxx.xx
|
renewal
date 25/01/2011
|
|
xxxxxxxxx.xx
|
renewal
date 25/01/2011
|
|
xxxxxxxxx.xx
|
renewal
date 25/01/2011
|
|
xxxxxxxxx.xxx
|
renewal
date 31/01/2011
|
|
xxxxx.xx
|
renewal
date 08/02/2011
|
|
xxxxxxxxx.xx
|
renewal
date 08/02/2011
|
|
xxxxxxxxx.xxx.xx
|
renewal
date 15/12/2011
|
|
xxxxxxxxx.xxx.xx
|
renewal
date 15/12/2011
|
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
Licensed
Intellectual Property:
***
|
5.3.41
|
· ValidSoft
uses Open Source software and toolkits in its products, where
appropriate.
|
***
|
5.3.49
|
The
Group seeks to recover its book debts in the normal way, sometimes having
to resort to legal action (e.g. the Company is currently taking legal
action against NextGen).
|
***
|
5.3.51,
5.3.53
|
The
Group has used Xxxxx & XxXxxxxx as insurance brokers over the past 5
years (for Ireland and UK) and Xxxxx Pacific Insurance Brokers (for
Australia). The following insurance companies have issued the
policies of the Group:
|
|
|
·
|
Royal
Sun Alliance (Office All In Insurance), policy number SO 92852263/07
(Renewal Date 1 April 2009). Cover
provided:
|
|
|
·
|
Premises
– Xxxxxx Xxxxxxxxx & Xxxxx Xxxxxxxx
Xxxx
|
|
|
·
|
General
contents - €53,500 (61,525)
|
|
|
·
|
Consequential
Loss – Gross Revenue €871,000 (Indemnity period 12
months
|
|
|
·
|
Employers
Liability Insurance - €13m for any one
event
|
|
|
·
|
Public/Product
Liability - €1.3m
|
|
|
·
|
Money
- €100,000
|
|
|
·
|
Computer
Insurance - €214,000
|
|
|
·
|
Royal
Sun Alliance (Office All In Insurance), policy number SO 92699448/06
(Renewal date 1 April 2009). Cover
provided:
|
|
|
·
|
Premises
– Victoria House London (lapsed replaced with one for Devonshire Sq –
awaiting details from Xxxxx)
|
|
|
·
|
General
contents €7,350
|
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
|
|
·
|
Tenant
Improvements €163,798
|
|
|
·
|
Consequential
Loss – stg£250,000
|
|
|
·
|
Employers
Liability stg£10m
|
|
|
·
|
Public/Product
Liability – Public stg£2.6m, Product
stg£2.0m
|
|
|
·
|
Money
stg£6,500
|
|
|
·
|
Computer
Insurance stg£86,000 approx
|
|
|
·
|
Chubb
Insurance Company of Australia Limited (Electronics and Information
Technology Liability Insurance)
|
|
|
·
|
Xxxxxxx
at Lloyds (Professional Indemnity Insurance), policy number W1026N08PNBV
(Renewal date 15 April 2010). Limit of indemnity
€1.3m.
|
|
|
·
|
Chartis
(Directors and Officers Insurance), policy number FCG34950 (Renewal date 1
April 2010). Limit €500,000 in
aggregate.
|
|
|
·
|
AIG
(Group Travel Insurance), policy number XXX 00000 (Xxxxxxx date 1 April
2009). Aggregate limit €650,000. Travel abroad –
personal liability €7.5m.
|
|
5.3.54,
5.2.55
|
The
counterparties to the lease of the Tullamore property (Office Xxxxx 0,
Xxxxxx Xxxxxxxxx, Xxxx Xxxxxx, Xxxxxxxxx, Xx Offaly) are Xxxxxx Xxxx and
Xxxx Xxxxxxxx, directors and shareholders of the Company.
Castle Buildings is Section 98 classified for commercial purposes
and special tax incentives. All leases in the building must be Section 98
compliant, i.e. minimum 21 years with a Break Clause after 12
years. There exists however an unsigned Side Letter which gives
ValidSoft the Option to break the lease after 5 years. This Side Letter
was overseen by the solicitors involved in the deal and has been filed
with the original lease
documentation.
|
|
5.3.57
|
Xxxxxx
Xxxxxx was responsible for the introduction of ValidSoft to Elephant Talk.
His duties and remuneration were covered by a memorandum of understanding
(see attached at Appendix J). Discussions are continuing with
Xxxxxx Xxxxxx in terms of reaching an agreement for
settlement.
|
|
5.3.59
|
539,348
Euros was raised by the Company from the Shareholders in the Company’s
recent rights offering. 234,954 Euros of the rights offering has been
received in cash and 304,556 Euros of the rights offering has been offset
against debts of the Company. The remaining balance of 162 Euros is still
outstanding.
|
The
Company's NAV calculation at 31 January 2009 amounts to circa. 513,748
Euros.
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
|
Appendix
A
|
details
of outstanding payroll taxes of the group
|
|
Appendix
B
|
details
of Research & Development tax reclaim in the UK –
2008/09
|
|
Appendix
C
|
draft
unaudited management accounts as at December 31, 2009 and January 31,
0000
|
|
Xxxxxxxx
X
|
supplier
balance summaries for Ireland, UK and Australia as at January 31,
0000
|
|
Xxxxxxxx
X
|
audited
accounts as at March 31, 2009
|
|
Appendix
F
|
audited
accounts as at March 31, 0000
|
|
Xxxxxxxx
X
|
audited
accounts as at March 31, 2007
|
|
Appendix
H
|
audited
accounts as at March 31, 2006
|
|
Appendix
I
|
[Not
used]
|
|
Appendix
J
|
Memorandum
of Understanding between Validsoft (UK) Ltd and Beresford Ltd (Xxxxxx
Xxxxxx)
|
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
SCHEDULE
6
Limitations
on Liability
|
1
|
The
aggregate maximum liability of the Management Warrantors for any breaches
of clause 5.3 of this Agreement shall not in any circumstances exceed the
then current market value (at the time the applicable Relevant Claim is
made) of
the Acquisition Consideration which is held in escrow pursuant to
paragraph 2.1 below (or, where the Relevant Claim for breach of clause 5.3
of this Agreement is brought after the period of 18 months following
Completion, the market value, as at the date of the expiry of such 18
month period, of the Acquisition Consideration which is held in escrow
pursuant to paragraph 2.1 below). The Buyer shall have no
recourse against any Management Warrantor in respect of any Relevant Claim
for any breaches of clause 5.3 of this Agreement save pursuant to this
Schedule 6, and the aggregate maximum liability of each of the Management
Warrantors for any breaches of clause 5.3 of this Agreement shall not (in
respect of any Relevant Claims that are validly notified within 18 months
of Completion pursuant to paragraph 4 below) in any circumstances
exceed:
|
|
|
1.1
|
the
market value at the time such Relevant Claims are made of the amount of
his/her Acquisition Consideration which is held in escrow pursuant to
paragraph 2.1 below; and
|
|
|
1.2
|
for
purposes of calculating the individual liability of each Management
Warrantor (subject to the limitation set forth in paragraph 1.1 above),
each Management Warrantor shall be liable only for a percentage of the
liability as follows:
|
|
Management Warrantor
|
Aggregate percentage of liability of each
Management Warrantor in respect of a
Relevant Claim
|
|
Xxxxxxx
Xxxxxxx
|
19.80
per cent.
|
|
Xxxxxx
Xxxxxxx
|
3.18
per cent.
|
|
Xxxxxx
Xxxx
|
26.20
per cent.
|
|
Xxxxx
Xxxxxxxx
|
24.65
per cent.
|
|
Xxxx
Xxxxxx
|
23.80
per cent.
|
|
Xxxxxx
Xxxxxxx
|
2.17
per cent.
|
|
Xxxxx
Xxxxxxxxx
|
0.20
per cent.
|
|
Total
|
100
per cent.
|
For the
avoidance of doubt, nothing in this Schedule 6 shall be construed to increase or
otherwise remove the limitation of each Management Warrantor's individual
liability per Relevant Claim, or the calculation thereof, as it is set forth in
clause 1.16 of this Agreement.
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
2
|
|
2.1
|
Notwithstanding
the provisions of clause 3 of this Agreement, the Buyer shall arrange for
the following amounts of the Acquisition Consideration to be held in
escrow for the period of 18 months from the Completion
Date:
|
|
2.1.1
|
in
respect of Xxxxxxx Xxxxxxx 75 per cent. of his Acquisition
Consideration only (being the 100 per cent. that is subject to a
management 2 year lock-up period under his Lock-Up Agreement and the 100
per cent. that is subject to a non-management lock-up period under his
Lock-Up Agreement) (comprising 1,033,897 vested Buyer Shares and 386,811
vested Buyer Warrants);
|
|
2.1.2
|
in
respect of Xxxxxx Xxxxxxx, 100 per cent. of his vested Acquisition
Consideration (comprising 166,076 vested Buyer Shares and 62,134 vested
Buyer Warrants);
|
|
2.1.3
|
in
respect of Xxxxxx Xxxx, 67.55% of his
Acquisition Consideration (comprising 1,368,493 vested Buyer Shares and
511,993 vested Buyer
Warrants);
|
|
2.1.4
|
in
respect Xxxxx Xxxxxxxx 67.55% of his
Acquisition Consideration (comprising 1,287,922 vested Buyer Shares,
481,849 vested Buyer
Warrants);
|
|
2.1.5
|
in
respect of Xxxx Xxxxxx, 67.55% of his
Acquisition Consideration (comprising 1,243,482 vested Buyer Shares,
465,223 vested Buyer
Warrants);
|
|
2.1.6
|
in
respect of Xxxxxx Xxxxxxx, 100% of his vested Acquisition Consideration
(comprising 113,258 vested Buyer Shares, 42,373 vested Buyer
Warrants);
|
|
2.1.7
|
in
respect of Xxxxx Xxxxxxxxx, 100% of her vested Acquisition Consideration
(comprising 10,697 vested Buyer Shares, 4,002 vested Buyer
Warrants),
|
the total
numbers of consideration Buyer Shares and Buyer Warrants in escrow under this
paragraph 2 being:
|
vested
Buyer Shares
|
5,223,825 | |||
|
vested
Buyer Warrants
|
1,954,385 |
as
follows: the certificate, warrants or other documentation evidencing title to
such Acquisition Consideration shall be held in escrow by the Buyer’s
solicitors, Ellenoff Xxxxxxxx & Schole LLP, acting as escrow agent (the
"Escrow
Agent").
|
2.2
|
In
the event that there is a Settled Claim for any breach of clause 5.3 of
this Agreement:
|
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
|
|
2.2.1
|
within
the period of 18 months following Completion, the Buyer and the Escrow
Representative (on behalf of himself and the other Management Warrantors)
shall instruct the Escrow Agent in writing to release to the Buyer such
Acquisition Consideration as is held in escrow under paragraph 2.1 above
as is required to satisfy the liability of each of the Management
Warrantors (on a several basis) in respect of such claim and, in case of
the Buyer Shares, this will mean such Buyer Shares can be sold by the
Buyer in the open market at the then current trading price in order to
realise an amount (net of the costs of sale) to satisfy such Settled
Claim;
|
|
|
2.2.2
|
after
the period of 18 months following Completion, the Buyer
shall:
|
|
|
2.2.2.1
|
as
first recourse, be required to satisfy such claim by forfeiting such
number of Buyer Shares as are held by each Management Warrantor (on a
several basis) as are required to satisfy the liability of that Management
Warrantor in respect of such claim, and this will mean such Buyer Shares
can be sold by the Buyer in the open market at the then current trading
price in order to realise an amount (net of the costs of sale) to satisfy
such Settled Claim; and
|
|
|
2.2.2.2
|
only
following exhaustion of the provisions of paragraph 2.2.2.1 above as
regards a Management Warrantor's Buyer Shares shall the Buyer be entitled
to claim for recovery of monies from such Management Warrantor
.
|
|
2.3
|
Upon
the expiry of 18 months from Completion, the Buyer shall instruct the
Escrow Agent to release any remaining Acquisition Consideration which is
held in escrow by them to Xxxxxxx Xxxxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxxxxx,
Xxxxx Xxxxxxxxx, Xxxxxx Xxxx, Xxxxx Xxxxxxxx and/or Xxxx Xxxxxx (as
appropriate). For the avoidance of doubt, such release shall
not operate to limit in any way the provisions of any Lock-Up Agreement
that may apply to any such persons or
shares.
|
|
2.4
|
The
Management Warrantors hereby indemnify (on a several basis as between the
Management Warrantors pro rata to their number of Buyer Shares) the Escrow
Representative against all costs, charges, losses, expenses and
liabilities incurred by him in connection with the performance by him of
his duties as the Shareholder Representative dealing with the Escrow Agent
and the Buyer as regards the Acquisition Consideration which is held in
escrow pursuant to this paragraph
2.
|
|
3
|
No
Relevant Claim for any breach of clause 5.3 of this Agreement shall be
brought and the Buyer shall not be entitled to make any recovery in
respect of such Relevant Claim
unless:
|
|
3.1
|
the
amount of the Relevant Claim exceeds Euros 25,000;
and
|
|
3.2
|
the
amount in respect of which all such Relevant Claims as are not excluded by
virtue of paragraph 3.1 above, when aggregated with any other Relevant
Claims exceeds Euros 150,000 in which case the Buyer shall be able to
claim for both the initial Euros 25,000 and the excess of such amount
under this paragraph 3.2.
|
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
|
4
|
No
Relevant Claim shall be brought against an Indemnifying Party, and an
Indemnified Party shall not be entitled to make any recovery in respect of
any Relevant Claim, unless notice in writing of such Relevant Claim
(specifying in reasonable detail the nature of the breach and so far as is
practicable the amount claimed in respect of it) has been given to the
Indemnifying Party by the Indemnified Party not later than 18 months from
the date of Completion. Notwithstanding the foregoing,
(i) the representations and warranties set forth in clauses 5.1.2,
5.1.8, 5.2.1, 5.2.2, 5.2.7, 5.3.12 and 5.3.58 will survive indefinitely,
(ii) the representations and warranties set forth in clauses 5.3.22
through 5.3.27 and 5.3.30 will survive until the applicable statute of
limitations, and (iii) any representation or warranty the violation
of which is made the basis of a claim for indemnification pursuant to
clause 6 will survive until such Relevant Claim is finally resolved if the
Indemnified Party notifies the Indemnifying Party of such Relevant Claim
prior to the date on which such representation or warranty would otherwise
expire hereunder.
|
|
5
|
A
Relevant Claim notified in accordance with paragraph 4 and not satisfied,
settled or withdrawn shall be unenforceable against the recipient party on
the expiry of the period of 6 months starting on the date of receipt or
deemed receipt of such notice unless proceedings in respect of such
Relevant Claim shall have been both issued and validly served on the
recipient party within that 6 month period. For the avoidance
of doubt, if proceedings have been issued and served within such time
period, such Relevant Claim shall continue until satisfied, settled or
withdrawn (whenever that may be).
|
|
6
|
A
party shall not be entitled to recover any Loss in respect of any Relevant
Claim or otherwise obtain reimbursement or restitution more than once in
respect of the same Loss.
|
|
7
|
No
liability (whether in contract, tort or otherwise) shall attach to the
Company and/or any Management Warrantor in respect of any Relevant Claim
to the extent that:
|
|
|
7.1
|
the
Relevant Claim or the events giving rise to the Relevant Claim would not
have arisen but for an act, omission or transaction of the Buyer or the
Buyer's Group after Completion;
|
|
|
7.2
|
the
claim occurs wholly or partly out of or the amount thereof is increased as
a result of:
|
|
|
7.2.1
|
any
changes in the accounting principles or practices introduced or having
effect after the date of Completion, unless the same is introduced to
bring the accounting principles and practices of the Company into line
with generally accepted accounting principles and practise in the relevant
jurisdiction of incorporation of the Company or any Subsidiary in relation
to a business of the type carried on by them;
or
|
|
|
7.2.2
|
(assuming
there has been no breach of clause 5.3.25) any increase in the rates of
Taxation made after the date
hereof;
|
|
|
7.2.3
|
any
change in law or regulation after Completion or in its interpretation or
administration after Completion by any judicial, fiscal, monetary or
regulatory authority (whether or not having the force of
law).
|
|
8
|
Nothing
in this Schedule 6 applies to a Relevant Claim that arises or is delayed
as a result of dishonesty, fraud or wilful concealment by any party or
their agents or advisers.
|
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
SCHEDULE
7
Form
of Lock-Up Agreement
(for
management Shareholders)
[ ]
__, 200[ ]
Elephant
Talk Communications, Inc.
Xxxxxxxx
Xxxxxxxxx 000
0000 XX
Xxxxxxxx
The
Netherlands
Re: Elephant Talk
Communications, Inc.
Ladies
and Gentlemen:
This
letter agreement (this “Agreement”) relates to the
acquisition agreement (the “Acquisition Agreement”) by and
between Elephant Talk Communications, Inc., a California corporation (the “Company”), the shareholders
(the “Shareholders”) of
ValidSoft Limited, an Irish corporation (“ValidSoft”), the Shareholders
Representative and the Management Warrantors, pursuant to which the Shareholders
shall receive shares of the Company’s common stock, no par value per share (the
“Shares”) and shall
receive warrants (the “Warrants”) to purchase shares
of common stock (the “Warrant
Shares”).
In
connection with the Acquisition Agreement, the undersigned hereby agrees that,
during the Lock-Up Period (as defined below), the undersigned shall not directly
or indirectly, offer, sell, agree to offer or sell, transfer, assign, pledge,
hypothecate or subject to hedging, short sale, derivative, put or call
transaction, the Shares, the Warrants or the Warrant Shares [In the case of Xxx Xxxxxxx, this to
be 50 per cent. only of his Acquisition Consideration].
As used
herein, the term “Lock-Up
Period” means the period beginning on the date hereof and ending on the
date which is two (2) years after the Completion Date, as defined in the
Acquisition Agreement.
This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without regard to the conflicts of laws principles
thereof. Delivery of a signed copy of this letter by facsimile
transmission shall be effective as delivery of the original hereof.
|
Very
truly yours,
|
|
|
|
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
Form
of Lock-Up Agreement
(for
non-management Shareholders)
[ ]
__, 200[ ]
Elephant
Talk Communications, Inc.
Xxxxxxxx
Xxxxxxxxx 000
0000 XX
Xxxxxxxx
The
Netherlands
Re: Elephant Talk
Communications, Inc.
Ladies
and Gentlemen:
This
letter agreement (this “Agreement”) relates to the
acquisition agreement (the “Acquisition Agreement”) by and
between Elephant Talk Communications, Inc., a California corporation (the “Company”), the shareholders
(the “Shareholders”) of
ValidSoft Limited, an Irish corporation (“ValidSoft”), the Shareholders
Representative and the Management Warrantors, pursuant to which the Shareholders
shall receive shares of the Company’s common stock, no par value per share (the
“Shares”) and shall
receive warrants (the “Warrants”) to purchase shares
of common stock (the “Warrant
Shares”).
In
connection with the Acquisition Agreement, the undersigned hereby agrees that,
during the Lock-Up Period (as defined below), the undersigned shall not directly
or indirectly, offer, sell, agree to offer or sell, transfer, assign, pledge,
hypothecate or subject to hedging, short sale, derivative, put or call
transaction, the Shares, the Warrants or the Warrant Shares [In the case of Xxx Xxxxxxx, this to
be 50 per cent. only of his Acquisition Consideration].
As used
herein, the term “Lock-Up
Period” means whichever is the earlier of (x) the period beginning on the
date hereof and ending on the date which is one (1) year after the Completion
Date, as defined in the Acquisition Agreement, or (y) six (6) months from the
completion of the Company’s rights offering.
This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without regard to the conflicts of laws principles
thereof. Delivery of a signed copy of this letter by facsimile
transmission shall be effective as delivery of the original hereof.
|
Very
truly yours,
|
|
|
|
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
SCHEDULE
8
Sample
Revenues Table
***
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
SCHEDULE
9
Issued
and outstanding Common Stock, warrants and options of the Buyer
as
at 1 February 2009 and as at Completion (on a normalised basis)
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
SCHEDULE
10
Form
of Warrant Certificate
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE AND THE UNDERLYING SHARES OF COMMON
STOCK HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES
ACT”), AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH
SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR
THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE COMPANY STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT. IN THE EVENT THE
SECURITIES EVIDENCE BY THIS CERTIFICATE ARE ISSUED PURSUANT TO REGULATION S OF
THE SECURITIES ACT, THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE
EXERCISED BY A NON-“U.S. PERSON” AS DEFINED BY REGULATION S, EXERCISED WITHIN
THE UNITED STATES, OR DELIVERED WITHIN THE UNITED STATES, UNLESS SUCH SECURITIES
ARE REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE.
|
Warrant
No. ____
|
Number
of Shares: ________
|
|
(subject
to adjustment)
|
|
|
Date
of Issuance: __________
|
ELEPHANT
TALK COMMUNICATIONS, INC.
Common Stock
Warrant
Elephant Talk Communications,
Inc. (the “Company”), for value
received, hereby certifies that _______________ or his, her or its registered
assigns (the “Registered Holder”),
is entitled, subject to the terms of this Common Stock Warrant (the “Warrant”) set forth
below, to purchase from the Company, at any time after the date hereof and on or
before 3 years from date of issue (the “Expiration Date”), up
to _____shares (as adjusted from time to time pursuant to the provisions of this
Warrant) of common stock of the Company, no par value per share (the “Common Stock”), at a
per share exercise price equal to Sixty Three Cents ($0.63) (subject to
adjustment as set forth in Section 2).
The
shares of Common Stock purchasable upon exercise of this Warrant and the
exercise price per share, as adjusted from time to time pursuant to the
provisions of this Warrant, are hereinafter referred to as the “Warrant Stock” and
the “Exercise
Price,” respectively.
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
1. Exercise.
(a) Method of
Exercise. This Warrant may be exercised by the Registered
Holder, in whole or in part, by surrendering this Warrant, with the form
appended hereto as Exhibit A duly
executed by such Registered Holder or by such Registered Holder’s duly
authorized attorney, at the principal office of the Company, or at such other
office or agency as the Company may designate in writing prior to the date of
such exercise, accompanied by payment in full of the Exercise Price payable with
respect to the number of shares of Warrant Stock purchased upon such
exercise. Except as provided in 1(c), below, the Exercise Price must
be paid by cash, check or wire transfer in immediately available funds or, where
permitted by law and provided that a public market for the Common Stock exists,
(a) through a "same day sale" commitment from the Warrant Holder and a
broker-dealer that is a member of the Financial Industry Regulatory Authority of
Securities Dealers (a "FINRA Dealer"),
whereby the Warrant Holder irrevocably elects to exercise this Warrant and to
sell a portion of the Shares so purchased to pay for the Exercise Price and
whereby the FINRA Dealer irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company.
(b) Effective
Time of Exercise. Each exercise of
this Warrant shall be deemed to have been effected immediately prior to the
close of business on the day on which this Warrant shall have been surrendered
to the Company (the “Exercise Date”) as
provided in this Section 1; provided however, the mandatory exercise date (the
“Mandatory Exercise
Date”) shall be fifteen (15) days after the date upon which the Company
notifies the Registered Holder of a Mandatory Exercise (hereinafter
defined). At such time, the person or persons in whose name or names
any certificates for Warrant Stock shall be issuable upon such exercise as
provided in Section 1(d) below shall be deemed to have become the holder or
holders of record of the Warrant Stock represented by such
certificates.
(c) Cashless
Exercise. Notwithstanding
any provisions herein to the contrary, in lieu of exercising this Warrant in the
manner set forth in Section 1(a), the Registered Holder may elect to exercise
this Warrant, or a portion hereof, and to pay for the Warrant Stock by way of
cashless exercise (a “Cashless
Exercise”). If the Registered Holder wishes to effect a
cashless exercise, the Registered Holder shall surrender this Warrant, with the
form appended hereto as Exhibit A duly
executed by such Registered Holder or by such Registered Holder’s duly
authorized attorney, at the principal office of the Company, or at such other
office or agency as the Company may designate in writing prior to the date of
such exercise, in which event the Company shall issue to the Registered Holder
the number of shares of Warrant Stock computed according to the following
equation:
X = the
number of shares of Warrant Stock to be issued to the Registered
Holder.
Y = the
Warrant Stock purchasable under this Warrant or, if only a portion of the
Warrant is being exercised, the portion of the Warrant Stock being
exercised.
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
A = the
Fair Market Value (defined below) of one share of Common Stock (on the Exercise
Date or the Mandatory Exercise Date, as applicable).
B = the
Exercise Price (as adjusted pursuant to the provisions of this
Warrant).
For
purposes of this Section 1(c), the “Fair Market Value” of
one share of Common Stock on the Exercise Date or the Mandatory Exercise Date,
as applicable, shall have one of the following meanings:
(1) if
the Company’s Common Stock is traded on a national securities exchange, the Fair
Market Value shall be deemed to be the average of the Closing Prices over a five
trading day period ending on the Mandatory Exercise Date or the Exercise Date,
as applicable. For the purposes of this Warrant, “Closing Price” means
the final price at which one share of Common Stock is traded during any trading
day; or
(2) if
the Company’s Common Stock is actively traded over-the-counter, the Fair Market
Value shall be deemed to be the average of the closing sales price over the
thirty (30) day period ending three (3) days before the Mandatory Exercise Date
or the Exercise Date, as applicable; or
(3) if
neither (1) nor (2) is applicable, the Fair Market Value
shall be at the highest price per share which the Company could obtain on the
date of the Mandatory Exercise Date or the Exercise Date, as applicable, from a
willing buyer (not a current employee or director) for shares of Common Stock
sold by the Company, from authorized but unissued shares, as determined in good
faith by the Company’s Board of Directors.
(d) Delivery
to Holder. As soon as
practicable after the exercise of this Warrant in whole or in part, and in any
event within five (5) business days thereafter (the “Warrant Stock Delivery
Date”), the Company at its expense will cause to be issued in the name
of, and delivered to, the Registered Holder, or as such Registered Holder (upon
payment by such Registered Holder of any applicable transfer taxes) may
direct:
(i) a
certificate or certificates for the number of shares of Warrant Stock to which
such Registered Holder shall be entitled, and
(ii) in
case such exercise is in part only, a new warrant or warrants (dated the date
hereof) of like tenor, calling in the aggregate on the face or faces thereof for
the number of shares of Warrant Stock equal (giving effect to any adjustment
therein) to the number of such shares called for on the face of this Warrant
minus the number of such shares purchased by the Registered Holder upon such
exercise as provided in Section 1(a) or Section 1(c) above.
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
(e) Mandatory
Exercise. This Warrant will be mandatorily exercisable at the
option of the Company and upon fifteen (15) days prior written notice to the
Registered Holder (the “Mandatory Exercise”),
at the Warrant Exercise Price, in the event that the average of the last closing
sale price of the Common Stock on the OTC Bulletin Board, or a national
securities exchange, trading market or inter-dealer electronic quotation system,
exceeds $3.75 for twenty (20) consecutive trading days. If the
Registered Holder fails to exercise this Warrant prior to the Mandatory Exercise
Date, the Registered Holder shall receive such number of Warrant Shares as the
Registered Holder would be entitled to pursuant to a Cashless
Exercise.
2. Adjustments.
(a) Stock
Splits and Dividends. If the outstanding shares of
the Company’s Common Stock shall be subdivided into a greater number of shares
or a dividend in Common Stock shall be paid in respect of Common Stock, the
Exercise Price in effect immediately prior to such subdivision or at the record
date of such dividend shall simultaneously with the effectiveness of such
subdivision or immediately after the record date of such dividend be
proportionately reduced. If outstanding shares of Common Stock shall
be combined into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall, simultaneously with the
effectiveness of such combination, be proportionately increased. When
any adjustment is required to be made in the Exercise Price, the number of
shares of Warrant Stock purchasable upon the exercise of this Warrant shall be
changed to the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately prior to
such adjustment, multiplied by the Exercise Price in effect immediately prior to
such adjustment, by (ii) the Exercise Price in effect immediately after
such adjustment.
(b) Merger
Sale, Reclassification, Etc. In case of any (i)
consolidation or merger (including a merger in which the Company is the
surviving entity), (ii) sale or other disposition of all or substantially all of
the Company’s assets or distribution of property to shareholders (other than
distributions payable out of earnings or retained earnings), or
reclassification, change or conversion of the outstanding securities of the
Company or of any reorganization of the Company (or any other corporation the
stock or securities of which are at the time receivable upon the exercise of
this Warrant) or any similar corporate reorganization on or after the date
hereof, then and in each such case the holder of this Warrant, upon the exercise
hereof at any time thereafter shall be entitled to receive, in lieu of the stock
or other securities and property receivable upon the exercise hereof prior to
such consolidation, merger, sale or other disposition, reclassification, change,
conversion or reorganization, the stock or other securities or property to which
such holder would have been entitled upon such consummation if such holder had
exercised this Warrant immediately prior thereto, all subject to further
adjustment as provided in Section 2(a) or 2(b); and in each such case, the terms
of this Section 2 shall be applicable to the shares of stock or other
securities properly receivable upon the exercise of this Warrant after such
consolidation, merger, sale or other disposition, reclassification, change,
conversion or reorganization.
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
(c) Adjustment
Certificate. When any
adjustment is required to be made in the Warrant Stock or the Exercise Price
pursuant to this Section 2, the Company shall promptly mail to the Registered
Holder a certificate setting forth (i) a brief statement of the facts
requiring such adjustment, (ii) the Exercise Price after such adjustment
and (iii) the kind and amount of stock or other securities or property into
which this Warrant shall be exercisable after such adjustment.
3. Intentionally
Omitted.
4. Transfers.
(a) Unregistered
Security. The holder of
this Warrant acknowledges that this Warrant and the Warrant Stock have not been
registered under the Securities Act and agrees not to sell, pledge, distribute,
offer for sale, transfer or otherwise dispose of this Warrant or any Warrant
Stock issued upon its exercise in the absence of (i) an effective
registration statement under the Securities Act as to this Warrant or such
Warrant Stock and registration or qualification of this Warrant or such Warrant
Stock under any applicable U.S. federal or state securities law then in effect
or (ii) an opinion of counsel, reasonably satisfactory to the Company, that
such registration and qualification are not required. Each
certificate or other instrument for Warrant Stock issued upon the exercise of
this Warrant shall bear a legend substantially to the foregoing
effect.
(b) Transferability. Subject to the
provisions of Section 4(a) hereof, this Warrant and all rights hereunder are
transferable, in whole or in part, to (i) any entity controlling, controlled by
or under common control of the Registered Holder, or (ii) to any other proposed
transferee by surrendering the Warrant with a properly executed assignment (in
the form of Exhibit
B hereto) at the principal office of the Company.
(c) Warrant
Register. The Company will
maintain a register containing the names and addresses of the Registered Holders
of this Warrant. Until any transfer of this Warrant is made in the
warrant register, the Company may treat the Registered Holder of this Warrant as
the absolute owner hereof for all purposes; provided, however, that if this
Warrant is properly assigned in blank, the Company may (but shall not be
required to) treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary. Any Registered
Holder may change such Registered Holder’s address as shown on the warrant
register by written notice to the Company requesting such change.
5. No
Impairment. The Company will
not, by amendment of its certificate of incorporation or through reorganization,
consolidation, merger, dissolution, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will (subject to Section 14 below) at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
holder of this Warrant against impairment.
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
6. Termination. This Warrant (and
the right to purchase securities upon exercise hereof) shall terminate on the
Expiration Date.
7. Notices
of Certain Transactions. In
case:
(a) the
Company shall take a record of the holders of its Common Stock (or other stock
or securities at the time deliverable upon the exercise of this Warrant) for the
purpose of entitling or enabling them to receive any dividend or other
distribution, or to receive any right to subscribe for or purchase any shares of
stock of any class or any other securities, or to receive any other right, to
subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right, or
(b) of
any capital reorganization of the Company, any reclassification of the capital
stock of the Company, any consolidation or merger of the Company, any
consolidation or merger of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the surviving entity), or
any transfer of all or substantially all of the assets of the Company,
or
(c) of
the voluntary or involuntary dissolution, liquidation or winding-up of the
Company,
then, and
in each such case, the Company will mail or cause to be mailed to the Registered
Holder of this Warrant a notice specifying, as the case may be, (i) the date on
which a record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right, or (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such other stock or securities at the
time deliverable upon such reorganization, reclassification, consolidation,
merger, transfer, dissolution, liquidation or winding-up) are to be
determined.
8. Reservation
of Stock. The Company
covenants that it shall at all times have authorized, reserve and keep
available, solely for the issuance and delivery upon the exercise of this
Warrant, such shares of Warrant Stock and other stock, securities and property,
as from time to time shall be issuable upon the exercise of this
Warrant. The Company covenants that all Warrant Stock that may be
issued upon the exercise of the purchase rights represented by this Warrant
will, upon exercise of the purchase rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such
issue). The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights
under this Warrant by the Holder. The Company will take all such
reasonable action as may be necessary to assure that such Warrant Stock may be
issued as provided herein without violation of any applicable law or regulation,
or of any requirements of the OTC Bulletin Board, exchange, trading market or
other inter-dealer electronic quotation system upon which the Common Stock may
be listed.
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
9. Exchange
of Warrants. Upon the
surrender by the Registered Holder of any Warrant or Warrants, properly
endorsed, to the Company at the principal office of the Company, the Company
will, subject to the provisions hereof, issue and deliver to or upon the order
of such Registered Holder, at the Company’s expense, a new Warrant or Warrants
of like tenor, in the name of such Registered Holder or as such Registered
Holder (upon payment by such Registered Holder of any applicable transfer taxes)
may direct, calling in the aggregate on the face or faces thereof for the number
of shares of Common Stock called for on the face or faces of the Warrant or
Warrants so surrendered.
10. Replacement
of Warrants. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and (in the case of loss, theft or destruction)
upon delivery of an indemnity agreement (with surety if reasonably required) in
an amount reasonably satisfactory to the Company, or (in the case of mutilation)
upon surrender and cancellation of this Warrant, the Company will issue, in lieu
thereof, a new Warrant of like tenor.
11. Notices. Any notice
required or permitted by this Warrant shall be in writing and shall be deemed
duly given upon receipt, when delivered personally or by courier, overnight
delivery service or confirmed facsimile, or 48 hours after being deposited in
the regular mail as certified or registered mail (airmail if sent
internationally) with postage prepaid, addressed (a) if to the Registered
Holder, to the address of the Registered Holder most recently furnished in
writing to the Company and (b) if to the Company, to the address set forth on
the signature page of this Warrant or as subsequently modified by written notice
to the Registered Holder.
12. No Rights
as Stockholder. Until the
exercise of this Warrant, the Registered Holder of this Warrant shall not have
or exercise any rights by virtue hereof as a stockholder of the
Company.
13. No
Fractional Shares. No fractional
shares of Common Stock will be issued in connection with any exercise
hereunder. In lieu of any fractional shares which would otherwise be
issuable, the Company shall round the amount of Warrant Stock issuable to the
nearest whole share.
14. Amendment
or Waiver. Any term of this
Warrant may be amended or waived upon written consent of the Company and the
Registered Holder.
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
15. Headings. The headings in
this Warrant are for purposes of reference only and shall not limit or otherwise
affect the meaning of any provision of this Warrant.
16. Governing
Law. This Warrant and
all acts and transactions pursuant hereto and the rights and obligations of the
parties hereto shall be governed, construed and interpreted in accordance with
the laws of the State of California, without giving effect to principles of
conflicts of law.
17. Representations
and Covenants of the Holder. This Warrant has
been entered into by the Company in reliance upon the following representations
and covenants of the Registered Holder:
(a) Investment
Purpose. The Registered
Holder is acquiring the Warrant and the Common Stock issuable upon exercise of
the Warrant for its own account, not as a nominee or agent and with no present
intention of selling or otherwise distributing any part thereof.
(b) Private
Issue. The Registered
Holder understands: (i) that neither the Warrant nor the Warrant Stock is, nor
will be, registered under the Securities Act or qualified under applicable state
securities laws on the ground that the issuance contemplated by this Warrant
will be exempt from the registration and qualifications requirements thereof
pursuant to Section 4(2) of the Securities Act and any applicable state
securities laws, and (ii) that the Company’s reliance on such exemption is
predicated on the representations set forth in this Section 17.
(c) Disposition
of Holder’s Rights. In no event will
the Registered Holder make a disposition of the Warrant or the Common Stock
issuable upon exercise of the Warrant in the absence of (i) an effective
registration statement under the Securities Act as to this Warrant or such
Warrant Stock and registration or qualification of this Warrant or such Warrant
Stock under any applicable U.S. federal or state securities law then in effect
or (ii) an opinion of counsel, reasonably satisfactory to the Company, that
such registration and qualification are not required. Notwithstanding
the foregoing, the restrictions imposed upon the transferability of any of its
rights to acquire Common Stock or Common Stock issuable on the exercise of such
rights do not apply to transfers from the beneficial owner of any of the
aforementioned securities to its nominee or from such nominee to its beneficial
owner, and shall terminate as to any particular share of Common Stock when (i)
such security shall have been effectively registered under the Securities Act
and sold by the holder thereof in accordance with such registration or (ii) such
security shall have been sold without registration in compliance with Rule 144
under the Securities Act, or (iii) a letter shall have been issued to the
Registered Holder at its request by the staff of the Securities
and Exchange Commission or a ruling shall have been issued to the
Registered Holder at its request by the Securities and Exchange Commission
stating that no action shall be recommended by such staff or taken by the
Securities and Exchange Commission, as the case may be, if such security is
transferred without registration under the Securities Act in accordance with the
conditions set forth in such letter or ruling and such letter or ruling
specifies that no subsequent restrictions on transfer are
required. Whenever the restrictions imposed hereunder shall
terminate, as hereinabove provided, the Registered Holder or holder of a share
of common stock then outstanding as to which such restrictions have terminated
shall be entitled to receive from the Company, without expense to such holder,
one or more new certificates for the Warrant or for such shares of Common Stock
not bearing any restrictive legend.
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
(d) Financial
Risk. The Registered
Holder has such business and financial experience as is required to give it the
capacity to protect its own interests in connection with its
investment.
(e) Accredited
Investor or Non-U.S. Person. The Registered
Holder is either (x) an “accredited investor” as defined by Rule 501 of
Regulation D under the Securities Act, as presently in effect or (y) not a “U.S.
Person” as defined by Regulation S under the Securities Act, as presently in
effect, and is not acquiring or exercising this Warrant for the account, benefit
or on behalf of any “U.S. Person”.
18. Representations
and Warranties of the Company. This Warrant has been
entered into by the Registered Holder in reliance upon the following
representations and covenants of the Company:
(a) Authorization. The Warrant has
been duly executed and delivered by the Company and constitutes a legal, valid
and binding obligation of the Company enforceable in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.
(b) Valid
Issuance. The Warrant Stock
is duly authorized and reserved for issuance, and when issued, sold and
delivered in accordance with the terms of this Warrant will be duly and validly
issued, fully paid and nonassessable.
(c) No
Conflict. The execution and
delivery of this Warrant do not, and the consummation of the transactions
contemplated hereby will not, conflict with, or result in any violation of,
breach or default (with or without notice or lapse of time, or both), or give
rise to a right of termination, cancellation or acceleration of any obligation
or to a loss of a material benefit, under, any provision of the Certificate of
Incorporation or bylaws of the Company, any material agreement of the Company
filed with the Commission, or any order, decree, statute, law, ordinance, rule,
listing requirement or regulation applicable to the Company, its properties or
assets, which conflict, violation, default or right would have a material
adverse effect on the business, properties, prospects, financial condition or
operations of the Company.
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
19. Counterparts. This Warrant may
be executed in counterparts, and each such counterpart shall be deemed an
original for all purposes.
[SIGNATURES
TO FOLLOW]
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
IN
WITNESS WHEREOF, the parties have executed this Warrant as of the date first
above written.
|
ELEPHANT
TALK COMMUNICATIONS, INC.
|
||
|
By
|
|
|
|
Name:
|
|
|
|
(print)
|
||
|
Title:
|
|
|
|
Address:
|
||
|
Elephant
Talk Communications, Inc.
|
||
|
Xxxxxxxx
Xxxxxxxxx 000, 0000 XX Xxxxxxxx, Xxx Xxxxxxxxxxx
|
||
|
Attention: Chief
Financial Officer
|
||
|
REGISTERED
HOLDER
|
||
|
If
a natural person:
|
||
|
|
||
|
Name:
|
||
|
If
an entity:
|
||
|
[Name]
|
||
|
By:
|
|
|
|
Name:
|
||
|
Title:
|
||
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
Exhibit
A
WARRANT
EXERCISE FORM
The
undersigned hereby irrevocably elects to exercise the within Warrant to the
extent of purchasing ______ shares of Common Stock of Elephant Talk
Communications, Inc., a California corporation, and hereby makes payment of
$___________ in payment therefore (if a cashless exercise, insert “cashless”),
all in accordance with the terms and conditions of the Warrant dated ________,
20__.
Name: ______________________________________
Signature: ___________________________________
Signature
of joint holder (if applicable):
_____________________________________________
Date: ___________________
INSTRUCTIONS FOR ISSUANCE OF
STOCK
(if other
than to the registered holder of the within Warrant)
Name: ______________________________________
Address: _____________________________________________________________________
Social
Security or Taxpayer Identification Number of
Recipient: _________________________
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
Exhibit
B
ASSIGNMENT
FORM
FOR VALUE
RECEIVED, _____________________ hereby sells, assigns and transfers unto
_______________________ the right to purchase Common Stock of Elephant Talk
Communications, Inc., a California corporation, represented by this Warrant to
the extent of shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint ______________________, Attorney, to transfer
the same on the books of the Company with full power of substitution in the
premises.
Date:
__________
Signature: ______________________________________
Signature
of joint holder (if applicable):
_____________________________________________
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
|
Signed
by XXXXXX VAN DER
VELDEN
|
/s/
XXXXXX VAN DER VELDEN
|
|
for
and on behalf of ELEPHANT
TALK COMMUNICATIONS, INC.
|
Director
|
|
Signed
by XXXXXXX
XXXXXXX
|
|
|
(in
his capacity as a Shareholder, the Shareholders Representative and a
Management Warrantor)
|
/s/
XXXXXXX XXXXXXX
|
|
Signed
by XXXXXX
XXXXXXX
|
|
|
(in
his capacity as Shareholder and a Management Warrantor)
|
/s/
XXXXXX XXXXXXX
|
|
Signed
by XXXXXX
XXXXX
|
/s/
XXXXXX XXXXX
|
|
Signed
by XXXXXXX XXXXXXX
SHOVELL
|
/s/
XXXXXXX XXXXXXX SHOVELL
|
|
Signed
by XXXXXXX XXXXX
XXXXXX
|
/s/
XXXXXXX XXXXX XXXXXX
|
|
Signed
by XXXXXXX XXXXX
PEDDLESDEN
|
/s/
XXXXXXX XXXXX PEDDLESDEN
|
|
Signed
by XXXX XXXXXX
XXXXXXXX
|
/s/
XXXX XXXXXX XXXXXXXX
|
|
Signed
by XXXXXXXX XXXX
XXXXXX
|
/s/
XXXXXXXX XXXX XXXXXX
|
|
Signed
by XXXXXXXX XXXX
XXXXXX
|
/s/
XXXXXXXX XXXX XXXXXX
|
|
Signed
by XXXXXXX XXXX
XXXXX
|
/s/
XXXXXXX XXXX XXXXX
|
|
Signed
by XXXXXX
XXXX
|
|
|
(in
his capacity as a Shareholder and a Management Warrantor)
|
/s/
XXXXXX
XXXX
|
|
CONFIDENTIAL TREATMENT
REQUESTED
WITH RESPECT TO CERTAIN PORTIONS
HEREOF
DENOTED WITH “***”
|
Exhibit
2.1
|
|
Signed
by XXXX
XXXXXXXX
|
/s/
XXXX XXXXXXXX
|
|
Signed
by XXXXXXX
XXXXXXXX
|
|
|
(in
his capacity as a Shareholder, the Escrow Representative and a Management
Warrantor)
|
/s/
XXXXXXX XXXXXXXX
|
|
Signed
by XXXX
XXXXXX
|
|
|
(in
his capacity as a Shareholder and a Management Warrantor)
|
/s/
XXXX XXXXXX
|
|
Signed
by XXXXXXX NEO XXX
XXXXX
|
/s/
XXXXXXX NEO XXX XXXXX
|
|
Signed
by XXXXXX
XXXXXXX
|
|
|
(in
his capacity as a Shareholder and a Management Warrantor)
|
/s/
XXXXXX XXXXXXX
|
|
Signed
by XXXXX
XXXXXXXXX
|
|
|
(in
her capacity as a Shareholder and a Management Warrantor)
|
/s/
XXXXX XXXXXXXXX
|
|
Signed
by DONALL
O’SUILLEABHAIN
|
/s/
DONALL
O’SUILLEABHAIN
|
