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EXHIBIT 2.1
THIS AGREEMENT dated July 2000
PARTIES:
(1) THE PERSONS whose names and addresses are set out in Column (1) of Schedule
1 (the "VENDORS");
(2) BLUESTONE SOFTWARE EUROPE LIMITED a company registered in England and Wales
with registered number 3944350 and having its registered office at Central
House, Upper Woburn Place, London WC1H 0QA ("EUROPE");
(3) BLUESTONE SOFTWARE, INC. a company registered in the State of Delaware and
having its principal address at 300 Stevens Drive, Philadelphia PA
19113-1597 USA ("BLUESTONE")
RECITALS:
(A) Arjuna Solutions Limited (the "COMPANY") is a private company limited by
shares. Further details of the Company and its Subsidiary are set out in of
Schedule 2 and 3 respectively.
(B) The Vendors are the registered holders and beneficial owners of the numbers
of Sale Shares shown opposite their respective names in Column (2) of
Schedule 1 such numbers of Sale Shares comprising in aggregate the entire
issued and allotted share capital of the Company.
(C) The Vendors have agreed to sell and Bluestone has agreed to purchase the
Sale Shares for the consideration and upon the terms and conditions set out
in this Agreement.
(D) Europe is a wholly-owned subsidiary of Bluestone which is a party to this
Agreement for the purposes of receiving the benefit of the Warranties.
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
1.1.1 In this Agreement unless the context requires otherwise:-
"ACCOUNTING DATE" means in respect of the Company, 31st December 1999, and
in respect of the Subsidiary, 18 April 2000;
"ACCOUNTS" means:-
(a) the balance sheet of the Company and the audited balance sheet of the
Subsidiary as at the Accounting Date; and
(b) the profit and loss account of the Company and the audited profit and
loss accounts of the Subsidiary for the accounting reference period
ending on the Accounting Date; and
(c) the cash flow statements (if any) and the directors' reports relating
to (a) and (b) above;
including all notes to such accounts and all documents required by law to
be annexed to such accounts and to be sent or made available to
shareholders in any relevant financial year (as defined in section 223 of
the 1985 Act);
"AGREEMENT" means this agreement including the Schedules and the Recitals;
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"ASSOCIATE" means:
a) in relation to a person, an associated company of that person or a
person who is connected with that person (and whether a person is an
associated company or is so connected shall be determined in
accordance with Sections 416 and 839 of the Taxes Act save that in
construing Section 839 the term 'control' shall have the meaning given
by Section 840 or Section 416 of that Act so that there shall be
control wherever either of the said Sections would so require); and
b) in relation to a company, any subsidiary or subsidiary undertaking or
holding company of such company and any other subsidiary or subsidiary
undertaking of any holding company of such company;
"BLUESTONE'S SOLICITORS" means McGrigor Donald, Solicitors, 63 Queen
Victoria Street, London EC4A 4ST;
"BLUESTONE STOCK" means such of the Common Stock issued to the Vendors in
accordance with clause 3;
"BUSINESS" means any business carried on by the Company or the Subsidiary
at the Completion Date or at any time within the period of 12 months ending
on the Completion Date;
"COMMON STOCK" means the common stock of $0.001 par value of Bluestone;
"COMPANIES ACTS" means the 1985 Act, the Business Names Act 1985, the
Companies Consolidation (Consequential Provisions) Act 1985, the Company
Directors Disqualification Act 1986, the 1989 Act and Part V of the
Criminal Justice Act 1993, and any other statute from time to time in force
regulating companies, together;
"COMPLETION" means completion of the sale and purchase of the Sale Shares
by virtue of the performance by the Vendors and Bluestone of the
obligations assumed by them respectively under clause 4;
"COMPLETION CONSIDERATION" means the Consideration payable at Completion as
specified in clause 4;
"COMPLETION DATE" means the date hereof;
"CONFIDENTIAL INFORMATION" means all confidential information of the
Company and the Subsidiary (in whatever medium stored) including but
without limitation, all business, financial, operational, customer and
marketing information and trade secrets in relation to the Business and
including all information which is received or obtained as a result of
entering into or performing, or supplied by or on behalf of a party in the
negotiations leading to, this Agreement and which relates to:-
(a) the Company, the Subsidiary and their respective Associates;
(b) any aspect of the Business;
(c) the provisions of this Agreement;
(d) the negotiation of this Agreement; or
(e) the subject matter of this Agreement;
and any information in respect of which any member of the Group is bound by
an obligation of confidence to a third party;
"CONSIDERATION" means the consideration payable for the Sale Shares as
specified in clause 3;
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"COPYRIGHT" means copyright, design rights, topography rights and database
rights whether registered or unregistered (including any applications for
registration of any such thing) and any similar or analogous rights to any
of the foregoing whether arising or granted under the law of England or of
any other jurisdiction;
"CRITICAL EMPLOYEE" means Steven Caughey, David Ingham, Mark Little, Stuart
Wheater, Peter Furniss and Alastair Green;
"DEFERRED BLUESTONE STOCK" means an aggregate of 82,725 shares of Common
Stock conditionally issuable to the Warrantors in the amounts set out in
Column 6 of Schedule 1 pursuant to clause 3.1.2;
"DEFERRED CONSIDERATION PERIOD" means the period commencing on the
Completion Date and terminating on the date that the final instalment of
the Restricted Bluestone Stock is issued;
"DELIVERY REQUIREMENTS" means the compliance with the terms of Schedule 10;
"DEPARTING EMPLOYEES" means Grainne Marie Walshe, Rosie Woodward and John
Barry Hodgson;
"DETERMINED CLAIM" means all claims under this Agreement or the Taxation
Undertaking (each a "CLAIM") which (i) has been agreed or settled between
the Vendors and Bluestone and/or Europe (as the case may be) in writing; or
(ii) in respect of which a judgment has been given by a court of competent
jurisdiction with no right of appeal or the time limit within which any
appeal may be made has expired (and includes the costs forming part of such
settlement or judgment);
"DIRECTORS" means the directors of the Company and/or the Subsidiary named
in Schedules 2 and 3;
"DISCLOSURE LETTER" means a letter described as such of even date from the
Warrantors delivered to, and acknowledged in writing with specific
reference to this Agreement by, Bluestone prior to Bluestone's execution
hereof;
"EMPLOYEES" means all of the current employees of the Company and/or the
Subsidiary;
"ENCUMBRANCE" means in respect of any property, asset or right, any
interest or equity of any person (including but without limitation any
right to acquire, option or right of pre-emption) or any mortgage, charge,
pledge, lien, assignment, hypothecation, security interest, title retention
or other security or third party agreement or arrangement of whatsoever
nature over or in that property, asset or right;
"ESCROW STOCK" means the number of the Bluestone Stock listed in Column 7
of Schedule 1;
"ESCROW CASH" means the sum of US$575,921 retained by the Purchaser from
the Consideration payable to the Vendors at Completion pursuant to the
provisions of clause 5.1.3 as reduced in accordance with clause 5;
"FINANCIAL CAP" means the sum of L8,745,084;
"FSA" means the Financial Services Act 1986;
"FUNDAMENTAL REPRESENTATIONS" means the statements and representations in
Parts 1, 3 and 4 of Schedule 5 to this Agreement;
"GROUP" means together the Company and the Subsidiary;
"INITIAL BLUESTONE STOCK" means an aggregate of 277,803 shares of Common
Stock to be issued to the Warrantors in the amounts set out in Column 4 of
Schedule 1 at Completion;
"INTELLECTUAL PROPERTY" means such of the following as may be owned, used
or enjoyed by the Company or the Subsidiary:-
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(a) Patents;
(b) Trade Marks;
(c) Know How;
(d) Copyright; and
(e) IP Matter;
"IP MATTER" means all documents, records, tapes, discs, diskettes and any
other material whatsoever containing Copyright works, Know-How or Software;
"KNOW-HOW" means trade secrets and confidential business information
including details of supply arrangements, customer lists and pricing
policy; sales targets, sales statistics, market share statistics, marketing
surveys and reports; marketing research; unpatented technical and other
information including inventions, discoveries, processes and procedures,
ideas, concepts, formulae, specifications, procedures for experiments and
tests and results of experimentation and testing; information comprised in
Software; together with all common law or statutory rights protecting the
same including by any action for breach of confidence and any similar or
analogous rights to any of the foregoing whether arising or granted under
the law of England or any other jurisdiction;
"KNOWLEDGE WARRANTY" means the representations given by each of the
Non-participating Warrantors in clause 5.1.2(b);
"LEAVER" means any Vendor who is employed by or provides consulting
services to the Company or another member of the Group and who dies or who
ceases to be an employee of the Group. In this definition any reference to
the date of cessation of employment (or similar) shall be the date upon
which the relevant Vendor's contract of employment terminates;
"LONGSTOP DATE" means 15 February 2001;
"NASDAQ" means the National Market of The Nasdaq Stock Market, Inc.;
"NON-PARTICIPATING WARRANTORS" means Grainne Marie Walshe and Hannes
Wolfgang Miller;
"1985 ACT" means the Companies Act 1985;
"1989 ACT" means the Companies Act 1989;
"PATENTS" means patent applications or patents, author certificates,
inventor certificates, utility certificates, improvement patents and models
and certificates of addition including any divisions, renewals,
continuations, refilings, confirmations-in-part, substitutions,
registrations, confirmations, additions, extensions or reissues thereof and
any similar or analogous rights to any of the foregoing whether arising or
granted under the law of England or any other jurisdiction;
"PRE-COMPLETION PERIOD" means the period commencing on the Accounting Date
and ending on the Completion Date (both days inclusive);
"PROPERTY" means the property held by the Company and/or the Subsidiary on
leasehold title, a brief description of which, including rent and
commencement, review and expiry dates, is set out in Schedule 4;
"PROPERTY AND ENVIRONMENTAL WARRANTIES" means the statements and
representations set out in Part 4 of Schedule 5;
"PROTECTED BUSINESS" means the business of developing software products and
components in whole or in part, designed to provide transacting servers or
services as carried on by the Group at the date hereof;
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"RESTRICTED PERIOD" means 24 months from the Completion Date or, in the
event that a general offer is made for Bluestone as a result of which
Bluestone becomes a wholly-owned subsidiary of a third party or the
business of Bluestone is acquired in its entirety by a third party other
than as a result of a corporate reconstruction of Bluestone and its
Associates, 12 months from the Completion Date;
"REGISTERED INTELLECTUAL PROPERTY" means the registered Intellectual
Property listed Schedule 6;
"RESTRICTED BLUESTONE STOCK" means the number of shares of Common Stock
calculated and issuable in accordance with clause 3.4;
"SALE SHARES" means the 75,000 'A' Ordinary Shares of 1p each and 32,406
'B' Ordinary Shares of 1p each in the capital of the Company;
"SECURITIES ACT" means the US Securities Act of 1933; as amended;
"SERVICE CONTRACTS" means the terms and conditions at employment and
employee confidentiality agreements in the agreed form;
"SOFTWARE" means any and all computer programs in both source and object
code form, including all modules, routines and sub-routines thereof and all
source and other preparatory materials relating thereto, including use
requirements, functional specifications and programming specifications,
ideas, principles, programming languages, algorithms, flow charts, logic,
logic diagrams, orthographic representations, file structures, coding
sheets, coding and including any manuals or other documentation relating
thereto and computer generated works identified, categorised and briefly
described in Schedule 7;
"SUBSIDIARY" means the subsidiary of the Company named in Schedule 3;
"TAXATION" has the meaning ascribed in the Taxation Undertaking;
"TAXES ACT" means the Income and Corporation Taxes Act 1988;
"TAXATION UNDERTAKING" means the taxation undertaking, in the agreed form,
granted by the Vendors to Bluestone at Completion;
"TAX WARRANTIES" means the statements and representations set out in Part 3
of Schedule 5;
"THIRD PARTY CLAIM" means a claim by a person who is not a party to this
Agreement for damages or an injunction or any other relief or remedy;
"TITLE WARRANTIES" means the statements and representations set out in Part
1 of Schedule 5;
"TRADE MARKS" means trade or service mark applications or registered trade
or service marks, registered protected designations or origin, registered
protected geographic origins, refilings, renewals or reissues thereof,
unregistered trade or service marks, get-up and company names in each case
with any and all associated goodwill and all rights or forms of protection
of a similar or analogous nature including rights which protect goodwill
whether arising or granted under the law of England or of any other
jurisdiction;
"TRADE UNION" means as defined in section 1, TULCRA;
"TULCRA" means the Trade Union and Labour Relations (Consolidation) Act
1992;
"US" means the United States of America;
"VENDORS' SOLICITORS" means Toller Hales & Collcutt Solicitors, of 53-57
High Street, Corby, Northants NN17 1UY;
"WARRANTIES" means the statements and representations set out in Parts 2
and 5 of Schedule 5;
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"WARRANTORS" means all of the Vendors other than the Non-Participating
Warrantors;
1.1.2 Further definitions are set out elsewhere in this Agreement and in Parts
2, 3, 4 and 5 of Schedule 5.
1.2 INTERPRETATION
In this Agreement, unless otherwise specified or the context otherwise
requires:-
1.2.1 words importing the singular only and shall include the plural and VICE
VERSA;
1.2.2 words importing any gender shall include all other genders;
1.2.3 reference to a clause or Recital is to a clause or recital of this
Agreement;
1.2.4 reference to a Schedule or a specific Part thereof is to the schedule to
this Agreement or the relevant part thereof;
1.2.5 reference to a paragraph is to a paragraph in a Schedule;
1.2.6 words importing natural persons shall include companies, corporations,
unincorporated associations and partnerships and in each case vice versa;
1.2.7 words importing the whole shall be treated as including a reference to any
part thereof; and
1.2.8 subject to clause 5.10.9, reference to any statute, regulation,
directive, treaty or part thereof shall be construed as reference
thereto as amended or re-enacted or as the application thereof is
modified by other provisions from time to time (whether before or after
the date of this Agreement) and shall be construed as including
references to any order, instrument, regulation or other subordinate
legislation made pursuant thereto.
1.3 SUBSIDIARY
In Schedule 5 the expression "THE COMPANY" shall, unless otherwise
specified or the context otherwise requires, mean the Company and the
Subsidiary severally so that each Warranty is given with respect to
each such company individually.
1.4 EXCLUSION OF RULES
In construing this Agreement:-
1.4.1 the CONTRA PROFERENTEM rule will not apply; and
1.4.2 the EJUSDEM GENERIS rule shall not apply and accordingly the
interpretation of general words shall not be restricted by being
preceded by words indicating a particular class of acts, matters or
things or being followed by particular examples.
1.5 HEADINGS
In this Agreement the Table of Contents and the headings to clauses,
Paragraphs and Parts of the Schedule are inserted for convenience only
and shall not affect the construction or interpretation of this
Agreement.
1.6 OTHER REFERENCES
1.6.1 Words and expressions defined in the Taxation Undertaking shall to the
extent not inconsistent bear the same meaning in this Agreement.
1.6.2 References to any English legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, court, official or
any legal concept, state of affairs or thing shall in respect of any
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jurisdiction other than England be deemed to include that which most
approximates in that jurisdiction to the English legal term.
1.6.3 A reference to "WRITING" or "WRITTEN" includes faxes and any
non-transitory form of visible reproduction or words but excludes
electronic mail.
1.6.4 A reference to a "BUSINESS DAY" means a day, other than a Saturday or
a Sunday, on which clearing banks are open for commercial business in
London and New York.
1.6.5 A reference to a document being "IN THE AGREED FORM" means that it
shall be either:-
(a) in the form agreed by the Vendors' Solicitors and Bluestone's
Solicitors and for identification signed, prior to Bluestone's
execution hereof, by or on behalf of Bluestone and the Vendors as
listed in Schedule 11; or
(b) granted, entered into or delivered and accepted at Completion.
1.6.6 A reference to a "SUBSIDIARY" means a subsidiary within the meaning
ascribed to such expression by sections 736 and 736A, of the 1985 Act.
1.6.7 A reference to a "SUBSIDIARY UNDERTAKING" means a subsidiary
undertaking within the meaning ascribed to such expression by section
258, of the 1985 Act.
1.6.8 A reference to a "PERSON" includes any individual, firm, company,
corporation, body corporate, government, state or agency of state,
trust or foundation, or any association, partnership or unincorporated
body (whether or not having separate legal personality) of two or more
of the foregoing;
1.6.9 References to times of the day are to London time and references to a
day are to a period of 24 hours running from midnight.
1.6.10 The Schedule and Recitals form part of this Agreement and have the
same full force and effect as if expressly set out in their entirety
in the operative part of this Agreement.
1.6.11 Words and phrases defined in any part of this Agreement bear the same
meanings throughout this Agreement.
1.6.12 Obligations and liabilities assumed by more than one person in this
Agreement are assumed jointly and severally unless otherwise specified.
2 SALE AND PURCHASE
2.1 OBLIGATION TO SELL AND PURCHASE
Each Vendor shall sell with full title guarantee, and Bluestone shall
purchase, the number of Sale Shares set opposite the name of such
Vendor in column (2) of Schedule 1 free from any Encumbrance and with
all rights attached thereto.
2.2 WAIVER OF RIGHTS
Each of the Vendors hereby waives or agrees to procure the waiver of
any pre-emption rights which may exist in relation to the Sale Shares
pursuant to the Articles of Association of the Company or otherwise.
2.3 SALE OF ALL SALE SHARES
On the Completion Date, Bluestone shall not be obliged to complete the
purchase of any of the Sale Shares unless the purchase of all the Sale
Shares is completed simultaneously but completion of the purchase of
some of the Sale Shares shall not affect the rights of Bluestone with
respect to the others.
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2.4 IMPLIED COVENANTS
The Law of Property (Miscellaneous Provisions) Act 1994 (LPMPA)
applies to all dispositions of property made under or pursuant to this
Agreement save that the word "reasonably" shall be deleted from the
covenant set out in Section 2(1)(b), LPMPA, and the covenant set out
in Section 3(1), LPMPA shall not be qualified by the words "other than
any charges, encumbrances or rights which that person does not and
could not reasonably be expected to know about".
3 CONSIDERATION
3.1 CONSIDERATION
The Consideration for the Sale Shares shall be the aggregate of the
following:
3.1.1 the aggregate cash sum of L1,829,085 and US$575,921 to the Vendors and
the issue to the Warrantors of the Initial Bluestone Stock (the
"INITIAL CONSIDERATION");
3.1.2 subject to Delivery Requirements being satisfied in full on or before
the Longstop Date (but not otherwise), the further cash sum of
L247,877/ and the issue to the Warrantors of the Deferred Bluestone
Stock (the "DEFERRED CONSIDERATION"); and
3.1.3 subject always to the provisions of clause 3.4 the issue to the
Warrantors (other than Santosh Shrivastava) of the Restricted
Bluestone Stock in accordance with clause 3.4.
3.2 BLUESTONE STOCK TO RANK PARI PASSU
The Bluestone Stock shall be issued credited as fully paid up and
shall rank pari passu in all respects with the existing Common Stock
at the date of issue.
3.3 ENTITLEMENT TO CONSIDERATION
The Consideration shall be divided amongst the Vendors in the
proportions set opposite their respective names in Column (3), (4),
(5) and (6) of Schedule 1.
3.4 RESTRICTED BLUESTONE STOCK
3.4.1 On each of the four anniversaries of the Completion Date, and subject
always to the provisions of clause 3.4.3, each of the Vendors who
shall be entitled, at any time during the Exercise Period, to give
notice to Bluestone to have issued to him all, but not some only of,
the number of shares of Restricted Bluestone Stock (if any) calculated
as follows:
C X (A - B)
RS = ----------
A
where:
A = the closing price of Common Stock on the relevant Anniversary (or if
such day is not a business day then the next following business day)
as reported by NASDAQ.
B = the closing price of Common Stock on the Completion Date as reported
by NASDAQ.
C = the reference number set against the relevant Warrantor's name in
Column 9 of Schedule 1.
RS = the number of shares of Restricted Bluestone Stock to be issued;
provided that, if RS is a negative number, then no shares of
Restricted Bluestone Stock shall be issued.
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3.4.2 For the purposes of this clause 3.4:
(i) "EXERCISE PERIOD" in respect of each relevant Anniversary means
the period commencing on the relevant Anniversary and terminating
on the tenth anniversary of the Completion Date; and
(ii) the calculation of RS shall be adjusted in such manner as the
auditors of Bluestone shall, in their absolute discretion
determine, consider necessary or desirable to take account of any
changes in the constitution of Bluestone (including, but not
limited to, any consolidation or sub-division of the Common Stock
or any re-organisation or buy back of Common Stock) without
impairing the intent of this clause 3.4.
3.4.3 Each of the Warrantors hereby agrees that if he becomes a Leaver
during the Deferred Consideration Period he shall cease to be entitled
to and he hereby irrevocably and unconditionally waives any right to
receive any Restricted Bluestone Stock which he is not already
entitled to give notice to have issued to him. Subject thereto, if a
Leaver retains the right to receive Restricted Bluestone Stock he
shall be entitled to exercise the option referred to in clause 3.4.1
in respect thereof at any time during the period referred to therein.
4 COMPLETION
4.1 TIME AND PLACE
Completion shall take place at the offices of Bluestone's Solicitors
on the Completion Date.
4.2 VENDORS' OBLIGATIONS
At Completion the Vendors shall deliver to Bluestone:-
(a) SHARE TRANSFERS: transfers of the Sale Shares duly executed by the
registered holders thereof in favour of Bluestone, or such nominee
of Bluestone as Bluestone may nominate, together with the
definitive certificates in respect thereof in the names of such
registered holders;
(b) POWERS OF ATTORNEY: a certified copy of any power of attorney
under which this Agreement or any document referred to herein or
executed in pursuance hereof is executed on behalf of any of the
parties thereto and such other evidence as Bluestone may
reasonably require of the authority of any person executing on
behalf of any of the Vendors;
(c) WAIVERS AND CONSENTS TO TRANSFER: such waivers, consents or
documents which may reasonably be required by Bluestone to vest in
Bluestone the full beneficial ownership of the Sale Shares and
enable Bluestone to procure them to be registered in the name of
Bluestone or its nominees;
(d) WAIVER OF CLAIMS: a written waiver in the agreed form from the
Vendors and the Departing Employees of the Group in respect of any
claims which the Vendors or the Departing Employees of the Group
may have against the Company and the Subsidiary as at Completion
and releasing the Company and the Subsidiary from all and any
liabilities which may be owing to the Vendors or the Departing
Employees of the Group by the Company or the Subsidiary;
(e) CONSTITUTIONAL DOCUMENTS: the certificate of incorporation, any
certificate of incorporation on change of name, common seal (which
failing a certificate in the agreed form from the Warrantors
certifying that there is no common seal), statutory registers and
minute and other record books (fully written up to the time
immediately prior to Completion) and share certificate books of
the Company and each of the Subsidiary together with all unused
forms of share certificates of the Company and each of the
Subsidiary;
(f) SUBSIDIARY SHARE CERTIFICATES: definitive certificates in respect
of all the shares beneficially owned by the Company and any of its
nominees in the Subsidiary together with duly executed transfers
in blank, or, as Bluestone may require, in favour of Bluestone or
its nominee, in respect of all shares in the Subsidiary not
registered in the name of the Company;
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(g) BANK CERTIFICATES ETC: a statement from each bank at which the
Company and the Subsidiary maintains an account of the amount
standing to the credit or debit of all accounts of the Company and
the Subsidiary as at close of business on the latest available
business day prior to the Completion Date together with the cash
book balances of the Company and the Subsidiary at Completion and
statements reconciling such cash book balances and relevant cheque
books with the balances on each such bank account;
(h) BANK MANDATES: copies of all bank mandates of the Company and the
Subsidiary together with appropriate forms to amend the mandate in
respect of each bank account maintained by the Company and each of
the Subsidiary;
(i) CHEQUE BOOKS ETC: the cheque books relating to all bank accounts
of the Company and each of the Subsidiary together with
confirmation that no cheques have been written by the Company or
the Subsidiary since preparation of the statements referred to in
clause 4.2(g) above;
(j) SATISFACTION OF INDEBTEDNESS: evidence in the agreed form that all
debts and accounts between any member of the Group or any
Associate of any member of the Group (of the one part) and the
Vendors and any Associate of any of the Vendors (of the other
part) have been fully paid and settled;
(k) DEEDS AND PROPERTY TITLE DOCUMENTS: all deeds and documents of
title to or otherwise relating to the Property;
(l) TITLE TO REGISTERED INTELLECTUAL PROPERTY: original certificates
evidencing title of the Company and the Subsidiary to the
Registered Intellectual Property (if any);
(m) STATEMENTS OF RENT AND SERVICE CHARGE: the latest statements of
and receipts for rent and service charge paid in respect of the
Property each to be given in an unqualified form;
(n) RESIGNATION OF OFFICERS: a written resignation (executed as a
deed) in the agreed form of all of the directors and the secretary
of the Company and of the Subsidiary in each case taking effect
from Completion and confirming that he/she has no claim against
the relevant company for remuneration, fees or expenses or
compensation including, without prejudice to the generality of the
foregoing, any payment under the ERA or damages for loss of office
or otherwise, save in respect of the terms of the new employment
contracts;
(o) RESIGNATION OF AUDITORS: a written resignation (in duplicate) in
the agreed form to take effect from Completion from the auditors
of the Subsidiary which shall contain the statement required to be
made pursuant to section 394(1) of the 1985 Act and confirming
that:-
(i) they shall deposit such statement in accordance with section
394 (2) of the 1985 Act; and
(ii) as at Completion no sums are due to such auditors by the Company
or the Subsidiary in respect of outstanding invoices or in
respect of work carried out but not invoiced;
(p) THE TAXATION UNDERTAKING: the Taxation Undertaking duly executed
by the Vendors;
(q) NEW EMPLOYMENT CONTRACTS: the Service Contracts duly executed by
each of the parties thereto;
(r) DEED OF TERMINATION OF SHAREHOLDERS AGREEMENT: the deed of
termination in the agreed form duly executed by each of the
Vendors.
4.3 MEETING
At Completion the Vendors shall procure the transaction of the
following business to Bluestone's satisfaction at a duly convened and
quorate meeting of the board of directors of the Company and, where
appropriate, the Subsidiary:
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4.3.1 approval for registration (subject only to their being re-presented
duly stamped) of the transfers of the Sale Shares and the entry in the
register of members of the Company of Bluestone;
4.3.2 appointment of such directors, secretary and auditors as Bluestone may
nominate;
4.3.3 revocation of all existing bank mandates and instructions for the
operation of bank accounts and the issue of new bank mandates and
instructions giving authority to persons nominated by Bluestone;
4.3.4 change of the registered office of the Company and of the Subsidiary
to such address as Bluestone may nominate;
4.3.5 change of the accounting reference date of the Company and of each of
the Subsidiary to such date as Bluestone may nominate;
and shall deliver to Bluestone duly signed Minutes of all such
meetings together with duly completed forms 288b, 287 and 225 in the
prescribed form for filing with the Registrar of Companies.
4.4 BLUESTONE'S OBLIGATIONS
4.4.1 At Completion, and subject to the compliance by the Vendors with the
obligations incumbent on them under clauses 4.2 and 4.3, Bluestone
shall procure that there shall be delivered to the Vendors' Solicitors
(who are hereby irrevocably authorised to receive the same and whose
receipt therefor shall be a sufficient discharge to Bluestone who
shall not be concerned with the distribution thereof to and among the
Vendors or be answerable for the loss or misapplication of such sum)
the sum of L1,829,085 by electronic transfer for same day value to the
following bank account:
Name of account: Toller, Hales & Collcutt client account
Name and address of bank: Lloyds TSB, 2 Market Square, Kettering,
Northants
Account number: 00134407
Sort Code: 30-94-68.
4.4.2 Following Completion, Bluestone undertakes with the Vendors not to
give instructions to the Company's bankers to stop any of the payments
made by cheque listed in the bank reconciliation statement referred to
in clause 4.2 (g) provided that nothing in this clause 4.4.2 shall
oblige Bluestone to ensure that the Company has sufficient funds at
Completion to enable such bank to honour such cheques.
5 WARRANTIES AND FUNDAMENTAL REPRESENTATIONS
5.1 EXTENT OF THE WARRANTIES AND FUNDAMENTAL REPRESENTATIONS
In consideration of Bluestone agreeing to purchase the Sale Shares on
the terms of this Agreement:-
5.1.1 the Warrantors jointly and severally warrant, represent and undertake
to Bluestone and separately to Europe that each of the Fundamental
Representations (other than the Title Warranties) and the Warranties
is, when read in conjunction with the information disclosed in
accordance with clause 5.2 in the Disclosure Letter, and each of the
Title Warranties is true and accurate in all respects and not
misleading; and
each of the Non-participating Warrantors separately warrants,
represents and undertakes to Bluestone and separately to Europe
that:
(a) each of the Title Warranties is true and accurate in all respects
and not misleading; and
(b) having made a full and diligent review of each of the statements
set out in Parts 2, 4, and 5 of Schedule 5 (the "NON-TITLE
STATEMENTS") he/she is not actually aware of any fact, matter or
information which may constitute an exception to the Non-Title
Statements which is not
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set out in full in the Disclosure Letter and has not wilfully
withheld any such fact, matter or information from Europe or
Bluestone.
5.2 DISCLOSURES
Each disclosure in the Disclosure Letter shall:-
5.2.1 be made with specific reference to and shall provide full, fair and
precise details of the nature and extent of the particular exception
to the Fundamental Representations (other than the Title Warranties)
or the Warranties the subject thereof;
5.2.2 (if it refers to any separate documents) identify precisely the nature
of such document and the terms of or provisions in such document which
are relied upon and a copy of the relevant document shall be attached
to the Disclosure Letter; and
5.2.3 constitute a warranty that the matters set forth or referred to
therein are true and accurate in all material respects and give a true
and fair view of the nature and extent of the exceptions to the
Fundamental Representations (other than the Title Warranties) or
Warranties.
5.3 WARRANTORS' KNOWLEDGE
Where any of the Fundamental Representations or Warranties are
qualified by the expression "TO THE BEST OF THE KNOWLEDGE, INFORMATION
AND BELIEF OF THE WARRANTORS" or "SO FAR AS THE WARRANTORS ARE AWARE"
or any similar expressions or otherwise qualified by the knowledge of
the Warrantors or any of them, each of the Warrantors shall be deemed
to have, in addition to his own, the knowledge, information and belief
of each of the other Warrantors and the Non-participating Warrantors
but the knowledge of a Warrantor shall be qualified in the manner
stated only to the extent that all of the Warrantors can establish on
the balance of probabilities that they made all reasonable enquiries
to establish the truth and accuracy of the relevant Fundamental
Representations or Warranties.
5.4 INFORMATION SUPPLIED BY THE COMPANY AND SUBSIDIARY
Any information supplied by or on behalf of the Company or on behalf
of the Subsidiary (or by any officer, employee or agent of any of
them) to the Vendors or their advisers in connection with the
Warranties, the Fundamental Representations or the Taxation
Undertaking or the information disclosed in the Disclosure Letter
shall not constitute a warranty, representation or guarantee as to the
accuracy of such information in favour of the Vendors and the Vendors
hereby undertake to Bluestone and to Europe to waive any and all
claims which they might otherwise have against the Company or the
Subsidiary or against any officer, employee or agent of any of them in
respect of such claims but so that this shall not preclude any Vendor
from claiming against any other Vendor under any right of contribution
or indemnity to which he may be entitled.
5.5 NO COUNTERCLAIM OR SET-OFF
Each of the Vendors hereby irrevocably and unconditionally undertakes
not to exercise any right of counterclaim or set-off or any other
claim or right of recovery against the Company or the Subsidiary or
any of their respective officers, employees, agents or advisers in
relation to any claim which may be made in respect of this Agreement,
the Fundamental Representations, the Warranties, the Knowledge
Warranty or the Taxation Undertaking. Nothing in this clause 5.5 shall
prevent any Vendor from claiming against any other Vendor for a
contribution in respect of any liability under a Claim as a result of
the Vendors' joint and several liability under clause 5.1.
5.6 SEPARATE AND INDEPENDENT WARRANTIES AND FUNDAMENTAL REPRESENTATIONS
Each of the Fundamental Representations and the Warranties shall be
separate and independent and save as expressly otherwise provided in
this Agreement shall not be limited by reference to any other such
Warranty or Fundamental Representation or by anything in this
Agreement or the Taxation Undertaking.
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5.7 RELIANCE
The Vendors acknowledge that Bluestone has entered into this Agreement
upon the basis of and in reliance upon the Warranties, the Fundamental
Representations, the Taxation Undertaking and the Disclosure Letter
(and the documents referred to therein) but on no other information
provided by the Vendors.
5.8 BUSINESS OUTSIDE THE UK
Each of the Vendors agrees that the Fundamental Representations and
the Warranties shall (MUTATIS MUTANDIS) apply to any business of the
Company carried on outside the United Kingdom and for the purpose of
construction the references to any statutory provision enacted, or
accounting principles applying, in the United Kingdom shall include
references to any corresponding provision in the local legislation and
(where relevant) to generally accepted accounting principles, and the
references to any governmental or administrative authority or agency
shall include references to the equivalent local governmental or
administrative authority or agency.
5.9 RECOVERY
5.9.1 Without restricting the rights of Bluestone or Europe or the ability
of Bluestone or Europe to claim damages on any basis available to it,
if after Completion it shall be agreed or determined that any of the
Fundamental Representations or the Warranties was, when read in
conjunction with the information disclosed in the Disclosure Letter,
not true and accurate or was misleading on the date when given or when
repeated when read in conjunction with the information disclosed in
the Disclosure Letter, then the Warrantors shall, in such event, pay
to Bluestone and/or Europe on demand (at Bluestone's and Europe's
option):
(a) the cash amount sufficient to compensate Bluestone and Europe
against all loss suffered by it in consequence of the Fundamental
Representations or the Warranties not being true and accurate or
being misleading taking into account, in particular, the resulting
diminution as at Completion in the value of the Sale Shares; or
(b) by way of indemnity the cash amount necessary to put the Company
and/or Bluestone and/or Europe, as the case may be, into the
position which would have existed if the Fundamental
Representations or the Warranties, when read in conjunction with
the information disclosed in accordance with clause 5.2 in the
Disclosure Letter had been true and accurate and not misleading or
had the matter or thing which occurred not occurred;
provided that any amount so payable shall be increased so as to
ensure that the net amount received by Bluestone and Europe shall
after Taxation be equal to that which would have been received had
the payment and any increased payment not been subject to Taxation.
5.9.2 Without restricting the rights of Bluestone and/or Europe or the
ability of Bluestone and/or Europe to claim damages on any basis
available to it, if after Completion it shall be agreed or determined
that any of the Title Warranties or the Knowledge Warranty given by
one of the Non-Participating Warrantors was not true and accurate or
was misleading on the date when given or when repeated, then that
Non-Participating Warrantor shall, in such event, pay to Bluestone and
Europe on demand (at Bluestone's and Europe's option):
(a) the cash amount sufficient to compensate Bluestone and Europe
against all loss suffered by it in consequence of the Title
Warranties or the Knowledge Warranty not being true and accurate
or being misleading taking into account, in particular, the
resulting diminution as at Completion in the value of the Sale
Shares; or
(b) by way of indemnity the cash amount necessary to put the Company
and/or the Subsidiary and/or Bluestone and/or Europe, as the case
may be, into the position which would have existed if the Title
Warranties or the Knowledge Warranty had been true and accurate
and not misleading or had the matter or thing which occurred not
occurred;
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provided that any amount so payable shall be increased so as to
ensure that the net amount received by Bluestone and Europe shall
after Taxation be equal to that which would have been received had
the payment and any increased payment not been subject to Taxation.
5.10 LIMITATIONS ON VENDORS' LIABILITY
5.10.1 No liability shall attach to the Vendors in respect of claims under
the Fundamental Representations, Warranties, the Knowledge Warranty
or the Taxation Undertaking unless the aggregate amount of the
liability of the Vendors in respect of all such claims shall exceed
L52,880, in which event the Vendors shall be liable for the whole of
such liability and not merely the excess; Provided that such
limitation shall not apply to:
(a) any claim under the Fundamental Representations, the
Warranties, the Knowledge Warranty or the Taxation Undertaking
which arises as a result of the fraud or wilful neglect or
wilful default of any of the Vendors; or
(b) any claim under the Fundamental Representations, the
Warranties, the Knowledge Warranty or the Taxation Undertaking
which arises out of a matter of which any of the Vendors were
actually aware at the date hereof and which was not disclosed
in the Disclosure Letter.
5.10.2 The aggregate liability of the Vendors in respect of all claims
under the Warranties shall not exceed 50 per cent of the Financial
Cap.
5.10.3 The aggregate liability of the Vendors in respect of all claims
under the Fundamental Representations or the Taxation Undertaking
shall not exceed the Financial Cap.
5.10.4 Without prejudice to the joint and several liability of each of the
Warrantors hereunder the individual liability of each of the Vendors
in respect of all Determined Claims shall not exceed the aggregate
of the Deemed Value (as defined below) of the Bluestone Stock issued
to him (if any) and the cash Consideration payable to him pursuant
to this Agreement.
5.10.5 Claims against the Vendors under the Warranties shall be wholly
barred and unenforceable unless written particulars thereof (giving
all reasonably available details of the specific matter or claim in
respect of which such claim is made) shall have been given to each
of the Vendors within a period of one year from the Completion Date;
Provided that such time limits shall not apply where the claim in
question arises as a result of the fraud or wilful neglect or wilful
default of the Vendors, the Company or the Subsidiary or any of them.
5.10.6 Claims against the Vendors under the Knowledge Warranty, the
Taxation Undertaking or the statements set out in Parts 3 and 4 of
Schedule 5 shall be wholly barred and unenforceable unless written
particulars thereof (giving all reasonably available details of the
specific matter or claim in respect of which such claim is made)
shall have been given to each of the Vendors within a period of four
years from the Completion Date; Provided that such time limits shall
not apply where the claim in question arises as a result of the
fraud or wilful neglect or wilful default of the Vendors, the
Company or the Subsidiary or any of them.
5.10.7 Claims against the Vendors in respect of the Title Warranties shall
be wholly barred and unenforceable unless written particulars
thereof (giving all reasonably available details of the specific
matter or claim in respect of which such claim is made) shall have
been given to each of the Vendors within a period of six years from
the Completion Date; Provided that such time limits shall not apply
where the claim in question arises as a result of the fraud or
wilful neglect or wilful default of the Vendors, the Company or the
Subsidiary or any of them.
5.10.8 In the event that the Vendors pay to Bluestone and/or Europe any
amount in respect of a breach of any of the Warranties, the
Knowledge Warranty or the Fundamental Representations and Bluestone
and/or Europe specifically recovers from a third party a sum in
respect of such breach, Bluestone and/or Europe shall as soon as is
reasonably practicable inform the Vendors in writing of such
recovery and shall repay to such Vendors in proportion to the amount
each Vendor paid to Bluestone and/or Europe in respect of such
breach the net amount so recovered (less the actual cost of
recovery) provided
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nevertheless that the amount so repaid shall not exceed the amount
previously paid to Bluestone and/or Europe by the Vendors in respect
of such breach.
5.10.9 Any Claim shall (if it has not previously been settled or withdrawn)
be deemed to have been withdrawn on the date which is twelve months
after it has been notified unless prior to that date a notice of
reference to arbitration or notice of the issue of court proceedings
shall have been served upon the Vendors.
5.10.10 The Vendors shall not be liable to Bluestone and/or Europe under the
Warranties, the Knowledge Warranty, the Fundamental Representations
or under the Taxation Undertaking to the extent that the Claim
arises or is increased as the result of the passing of any
legislation (or the making of any subordinate legislation) with
retrospective effect which is announced after the Completion Date.
5.10.11 If any claim is made against the Group or Bluestone and/or Europe by
a third party in respect of which the Vendors shall be liable to
Bluestone and/or Europe for a breach of any of the Warranties, the
Knowledge Warranty or the Fundamental Representations Bluestone
and/or Europe shall:-
(a) not knowingly make any admission of liability, agreement or
compromise with any person, body or authority in relation
thereto without the prior consent of the Vendors (such consent
not to be unreasonably withheld or delayed); and
(b) give the Vendors and their professional advisers reasonable
confidential access to any documents and records of the Group
to enable the Vendors and their professional advisors to
examine such documents and records and to take copies thereof
at their own expense; and
(c) take such action as the Vendors shall reasonably require to
avoid dispute, resist appeal, compromise or defend the matter
which gives rise to any claim provided that the Vendor shall
have secured Bluestone and/or Europe to its reasonable
satisfaction and fully indemnified it as to all liabilities,
costs, damages and expenses which it may reasonably incur by
reason of such action.
If the Vendors shall not request Bluestone and/or Europe to take any
such action, or shall fail to indemnify and secure the liabilities,
costs, damages and expenses as aforesaid within 14 days after
written notice shall have been given to the Vendors then Bluestone
and/or Europe shall be free to pay or settle the claim on such terms
as it shall, in its absolute discretion, think fit.
5.10.12 In the event that Bluestone and/or Europe is entitled to claim under
more than one of the Warranties, the Knowledge Warranty, Fundamental
Representations or under the Taxation Undertaking in respect of the
same subject matter, Bluestone and/or Europe may choose to claim
under more than one of the Warranties, the Knowledge Warranty,
Fundamental Representations or under the Taxation Undertaking but
shall not be entitled to recover more than once in respect of the
same loss.
5.10.13 Bluestone shall not, following Completion, be entitled to treat the
Vendors as having repudiated this Agreement or be entitled to
rescind this Agreement.
5.11 SATISFACTION OF CLAIMS
5.11.1 Bluestone and Europe shall be entitled, without prejudice to any
other rights or remedies available to them, to satisfy the amount of
any outstanding Determined Claims by the disposal of or cancellation
of any or all of the Escrow Stock and/or by set off against the
Escrow Cash and (to the extent not satisfied therefrom) to set-off
against the amount of the Deferred Consideration any amounts due to
it from the Vendors, or any of them, the amount of any outstanding
Determined Claims.
5.11.2 Bluestone and Europe shall, subject to clauses 5.11.3 and 5.11.4 be
entitled without prejudice to any other rights or remedies available
to it (including the right of set-off set out in clause 5.11.1) to
withhold payment of the Escrow Cash and Deferred Consideration to
the extent of any claims which are outstanding in respect of any
breach of the Fundamental Representations, the Warranties, the
Knowledge Warranty or the Taxation Undertaking provided that the
opinion of Counsel has been obtained indicating that on the basis of
the information known to Bluestone and/or Europe made available to
such Counsel,
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Bluestone and/or Europe would have a reasonable prospect of making a
valid claim under the Fundamental Representations, the Warranties,
the Knowledge Warranty or the Taxation Undertaking until such claims
become Determined Claims or the Vendors cease to have liability in
respect of such claims pursuant to the terms of this Agreement or
the Taxation Undertaking.
5.11.3 In the event Bluestone intends to withhold payment of the Escrow
Cash and/or Deferred Consideration, it shall forthwith notify the
Vendors accordingly in writing, providing all reasonable details of
its reasons for such withholding and, in such event:
(a) the Vendors shall be entitled to refer the matter in question to
a member of Counsel agreed between the Vendors and Bluestone
(failing such agreement as appointed by the President of the Bar
Association from time to time) requesting such Counsel to
provide within 40 Business Days his opinion as to whether
Bluestone and/or Europe has a reasonable prospect of making a
valid claim under the Fundamental Representations, the
Warranties, the Knowledge Warranty or the Taxation Undertaking;
(b) Counsel shall be entitled to consult with the Vendors'
Solicitors and Bluestone's Solicitors and/or any other party
which he deems appropriate for the purposes of giving his
opinion;
(c) in giving his opinion, Counsel shall act as expert and not
arbitrator and any costs or expenses incurred in connection with
the obtaining of Counsel's opinion shall be borne by:
(i) in the event the matter of the opinion becomes a Determined
Claim, the Vendors; or
(ii) otherwise, by Bluestone or as Counsel may otherwise direct;
and
(d) each of the Vendors and Bluestone hereby agree and undertake to
provide or procure as provided, access to all books, records,
accounts, information and personnel as Counsel may deem
necessary for the purposes of giving his opinion.
5.11.4 Any monies which Bluestone and/or Europe intends to withhold in
accordance with clause 5.11.2 shall be deposited in an interest
bearing deposit account held in the joint names of Bluestone's
Solicitors and the Vendors' Solicitors; such amount to be released:
(a) to the extent the matter the subject of Counsel's opinion does not
become a Determined Claim within 2 years of the date hereof, to
the Vendors; and
(b) to the extent the matter the subject of Counsel's opinion becomes
a Determined Claim within 2 years of the date hereof, to Bluestone
in which event the Vendors hereby waive any entitlement they may
have to receive the relevant part of the Deferred Consideration.
Interest on any amounts held in such joint account shall follow, and
be released, with the principal monies to which such interest
relates.
5.12 ESCROW STOCK
The Vendors agree that Bluestone shall be entitled to retain the
certificates of the Escrow Stock and shall, in its absolute
discretion, and without prejudice to any other rights or remedies
available to it, be authorised and entitled to dispose of or cancel
such stock in or towards satisfaction of any Determined Claim. For
the purposes of calculating the number of shares of Escrow Stock to
be disposed or cancelled the Escrow Stock shall have a fixed deemed
value of L16.98 per share of Escrow Stock (the "DEEMED VALUE") and
the Vendors shall neither be obliged to make up any shortfall nor
have any right to receive any excess in the actual proceeds of the
disposal of the Escrow Stock received by Bluestone. To the extent
that no Claim shall have been made on or before the first
anniversary of Completion, Bluestone undertakes to deliver to the
Vendors certificates for 50 per cent of such Escrow Stock on such
date. In the event that no Claims have been made on or before the
second anniversary of Completion, Bluestone undertakes to deliver to
the Vendors certificates for the balance of the Escrow Stock on such
date. In the event that any Claims are made prior to such period the
Escrow Stock, to the extent not already released and only to the
extent of such Claim, shall be
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retained pending resolution of such Claims and the provision of
clauses 5.11.2, 5.11.3 and 5.11.4 shall apply to such amounts
retained.
5.13 ESCROW CASH
The Vendors agree that Bluestone shall be entitled to retain the
Escrow Cash and shall, in its absolute discretion, and without
prejudice to any other rights or remedies available to it, be
entitled to set off against the Escrow Cash (to the extent possible)
the amount of any Determined Claim. To the extent that no Claim has
been made on or before the first anniversary of Completion,
Bluestone undertakes to remit to the Vendors' Solicitors by
electronic transfer within 3 business days thereof to the account
details set out in this Agreement (whose receipt shall be a
sufficient discharge to Bluestone which shall not be concerned with
the distribution thereof to and among the Vendors or be answerable
for the loss or misapplication of such sum) 50% of the Escrow Cash.
In the event that no Claim has been made on or before the second
anniversary of Completion, Bluestone undertakes to remit to the
Vendors' Solicitors by electronic transfer within 3 business days
thereof to the account details set out in this Agreement (whose
receipt shall be a sufficient discharge to Bluestone which shall not
be concerned with the distribution thereof to and among the Vendors
or be answerable for the loss or misapplication of such sum) the
balance of the Escrow Cash. In the event that any Claims are made
prior to such period the Escrow Cash, to the extent not already
released and only to the extent of such Claim, shall be retained
pending resolution of such Claims and the provision of clauses
5.11.2, 5.11.3 and 5.11.4 shall apply to such amounts retained. Any
payments made by Bluestone to the Vendors pursuant to this clause
5.13 shall be paid together with a further sum calculated as the
amount (less any withholding taxes or other lawfully required
deductions) which could have been earned on such payment if it had
been held on deposit for the period commencing on the Completion
Date and terminating on the date of payment (both dates exclusive)
on an account attracting interest at a rate equivalent to the rate
achieved by Bluestone for deposits of a comparable amount.
5.14 SETTLEMENT OF DETERMINED CLAIMS
In the event of, and to the extent that, Determined Claims have not
being satisfied pursuant to clauses 5.12 and 5.13 the Vendors shall
at their discretion settle any Determined Claims by either the
surrender or transfer of the number of shares of Bluestone Stock
calculated by reference to the Deemed Value or by a payment in cash;
but if any Determined Claim shall remain outstanding for a period in
excess of 30 days and the relevant Vendor holds Bluestone Stock,
then Bluestone shall be entitled, but not obliged, upon written
notice to the relevant Vendor, to cancel such number of shares of
Bluestone Stock as, when valued at the Deemed Value, equal the value
of the Determined Claim outstanding.
6 REGULATION 'S' RESTRICTIONS ON THE BLUESTONE STOCK
6.1 Each of the Vendors acknowledges that the Bluestone Stock has not
been registered under the Securities Act and may not be offered or
sold in the U.S. or to U.S. persons unless the Bluestone Stock is
registered under the Securities Act or an exemption from the
registration requirements is available. Furthermore, hedging
transactions involving the Bluestone Stock may not be conducted
unless in compliance with the Securities Act. Bluestone must refuse
to register any attempted transfer of the Bluestone Stock not made
in accordance with the provisions of Regulation S or not made
pursuant to registration under the Securities Act or an available
exemption therefrom.
6.2 Each of the Vendors represents to Bluestone that he is not a U.S.
person pursuant to Rule 902(k) of Regulation S under the Securities
Act. For this purpose, a U.S. person means:
6.2.1 any natural person resident in the U.S.;
6.2.2 any partnership or corporation organised or incorporated under U.S.
law;
6.2.3 any estate of which any executor or administrator is a U.S. person;
6.2.4 any trust of which any trustee is a U.S. person;
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6.2.5 any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the benefit
or account of a U.S. person;
6.2.6 any discretionary account or similar (other than an estate or trust)
held by a dealer or other fiduciary organised, incorporated, or (if
an individual) resident in the U.S.; and
6.2.7 any partnership or corporation if:
(a) organised or incorporated under the laws of any foreign
jurisdiction; and
(b) formed by a U.S. person principally for the purpose of
investing in securities not registered under the Securities
Act, unless it is organised or incorporated, and owned, by
accredited investors (as defined in regulation D under the
Securities Act) who are not natural persons, estates or trusts.
6.3 Each of the Vendors represents and warrants to Bluestone that (i)
any offer and sales of the Bluestone Stock will be made in
accordance with Regulation S, pursuant to registration of the
securities under the Securities Act, or pursuant to another
available exemption from the registration requirements of the
Securities Act, and (ii) it will not engage in hedging transactions
with regard to the Bluestone Stock prior to the expiration of one
year from the Completion Date.
7 RESTRICTION AS TO DISPOSAL OF BLUESTONE STOCK
Each of the Vendors irrevocably undertakes with Bluestone that he
will not for the Relevant Period transfer, charge or otherwise sell,
transfer or otherwise dispose of any legal or beneficial interest in
any Relevant Bluestone Stock (as hereinafter defined) unless he
receives the prior written consent of Bluestone; Provided that the
foregoing restrictions shall not apply to:-
7.1 any disposal made in acceptance of a general offer for the whole of
the Common Stock that has been recommended by the board of directors
of Bluestone or has become unconditional in all respects; or
7.2 a sale by any Vendor at any time after the first anniversary of the
date of issue of any of the Bluestone Stock to raise monies to
satisfy any claim under the Fundamental Representations, the
Warranties or the Taxation Undertaking;
For the purpose of clause 7.1 "RELEVANT BLUESTONE STOCK" means:
7.2.1.1 in respect of the Initial Bluestone Stock (i) for the purposes of
the 12 months immediately following the Completion Date the number
of Initial Bluestone Stock set out against his name in Column (4) of
Schedule 1; and (ii) for the purpose of the 12 months immediately
following the first anniversary of the Completion Date, 50 per cent
of the number of Initial Bluestone Stock set against his name in
Column (4) Schedule 1; and
7.2.1.2 in respect of the Deferred Bluestone Stock (i) for the purposes of
the 12 months immediately following the date of issuance thereof,
the number of Deferred Bluestone Stock set out against his name in
Column (6) of Schedule 1; and (ii) for the purposes of the 7 months
immediately following the first anniversary of the date of issuance
thereof, 50 per cent of the number of Deferred Bluestone Stock set
against his name in Column (6) of Schedule 1;
7.2.1.3 in respect of the Restricted Bluestone Stock, for the purposes of
the 12 months immediately following the date of issuance thereof,
the entirety of the Restricted Bluestone Stock;
and in each case together with any additional shares of Common Stock
allotted or issued to the Vendor by virtue of the holding of those
shares of Common Stock or any of them other than Common Stock issued
to them pursuant to a subsequent issue by way of rights or like
issue (but not bonus issue) where such stock is paid for by the
application of subscription monies; and
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"RELEVANT PERIOD" means:
(a) in respect of Initial Bluestone Stock, the period commencing on the
Completion Date and ending 24 months from the Completion Date;
(b) in respect of each share of the Deferred Bluestone Stock, the
period commencing on the date of issuance of such stock and
ending 19 months from such date; and
(c) in respect of each share of the Restricted Bluestone Stock, the
period commencing on the date of issuance of such stock and
ending 12 months from such date.
8 PROTECTION OF GOODWILL
8.1 UNDERTAKINGS
As further consideration for Bluestone agreeing to purchase the Sale
Shares and with the intent of securing to Bluestone the full benefit
and value of the goodwill and connections of the Company and the
Subsidiary and as an essential part of the agreement for the
purchase and sale of the Sale Shares, each of the Warrantors
severally undertakes to Bluestone that he will not except as
directors or employees of the Company or of the Subsidiary or except
with the prior written consent of Bluestone:
8.1.1 during the Restricted Period:
(a) so as to compete with the Business solicit business from or
canvass any customer or prospective customer in respect of
Protected Business;
(b) so as to compete with the Business accept orders from, act for
or have any business dealings with, any customer or prospective
customer in respect of Protected Business;
(c) so as to compete with the Business, be employed or engaged or at
all interested in a person which is involved in any Protected
Business if that business is or is about to be in competition
with the Business. Nothing contained in this clause 8.1.1 shall
preclude any Warrantor from holding any shares or loan capital
(not exceeding 3% of the shares or loan capital of the class
concerned then in issue) in any company competing with the
Business whose shares are listed or dealt in on a recognised
investment exchange as defined in the Financial Services Act
1986);
(d) solicit or induce or endeavour to solicit or induce a Critical
Employee to cease working for or providing services to the
Company and/or the Subsidiary, whether or not any such person
would thereby commit a breach of contract;
(e) employ or otherwise engage any Critical Employee in any
Protected Business;
(f) solicit or induce or endeavour to solicit or induce any Supplier
to cease to deal with the Company and/or the Subsidiary and
shall not interfere in any way with any relationship between a
Supplier and the Company and/or the Subsidiary; and
8.1.2 following the Completion Date:-
(a) directly or indirectly, divulge or make use of any Confidential
Information or Know How relating or belonging to the Company
and/or any of the Subsidiary, unless ordered to do so by a court
of competent jurisdiction; and
(b) represent himself as being in any way connected with the Company
and/or the Subsidiary nor in any way make use of any corporate,
business or product name which is identical or similar to or
likely to be confused with the corporate name or any business or
product name used by the Company and/or the Subsidiary at
Completion or which might suggest a connection with the Company
and/or the Subsidiary.
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8.2 INDEPENDENCE OF UNDERTAKINGS
Each undertaking contained in clause 8.1 shall be read and construed
independently of the other undertakings in clause 8.1 as an entirely
separable and severable undertaking.
8.3 SEVERABILITY OF UNDERTAKINGS
8.3.1 It is agreed that, whilst the restrictions set out in clause 8.1 are
considered by the parties to be fair and reasonable, having regard
in particular to first, the necessity to protect the goodwill,
secrets and customer connections of the Business and secondly, to
the amount of the consideration payable by Bluestone pursuant to
this Agreement, if it should be found by any competent court that
any of such restrictions is void or unenforceable for any reason and
if by altering or deleting part of the wording or substituting
shorter periods of time or more restricted ranges of activities it
would not be void or unenforceable then there shall be made such
alteration or deletion or be substituted such no less extensive
periods and/or limit and/or activities as shall render the relevant
restriction valid and enforceable.
8.3.2 The Warrantors hereby jointly and severally agree at the request and
at the cost of Bluestone to enter into any further deeds and/or
documents as may be necessary to give effect to the said
restrictions (or any of them) with such modifications as Bluestone
may deem reasonably necessary so to make them valid and effective.
9 ANNOUNCEMENTS
9.1 RESTRICTIONS ON ANNOUNCEMENTS
Subject to clause 9.2, no party to this Agreement shall issue any
press release or other public document containing, or make any
public statement or otherwise disclose to any person who is not a
party, information which relates to or is connected with or arises
out of this Agreement or the matters contained in it, without the
prior written approval of the other parties hereto as to its content
and the manner, timing and extent of its publication. The parties
shall consult together upon the form of any such press release,
document or statement and the other party shall promptly provide
such information and comment as the party issuing such press
release, document or statement may from time to time reasonably
request.
9.2 EXCEPTIONS TO RESTRICTIONS
The provisions of clause 9.1 shall not apply to disclosure of
matters required to be made:
9.2.1 by virtue of the regulations of NASDAQ;
9.2.2 by any court or governmental or administrative authority competent to
require the same; or
9.2.3 by any applicable law or regulation.
9.3 TIME LIMIT
The restrictions contained in this clause 9 shall apply after
Completion without limit in time.
10 ASSIGNMENT
10.1 PERMITTED ASSIGNMENT
Bluestone and Europe shall be entitled, without the consent of or
notice to any other party hereto, to assign or transfer in whole or
in part the benefit of this Agreement and the Taxation Undertaking
or any right of Bluestone or Europe under this Agreement and the
Taxation Undertaking to:
10.1.1 any transferee of the share capital of the Company or the Subsidiary;
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10.1.2 any transferee of the business of the Company or the Subsidiary;
10.1.3 any company or corporate entity with which Bluestone and/or Europe
shall merge;
and such transferee shall be entitled to enforce the same against
the Vendors or any of them as if it were named in this Agreement and
the Taxation Undertaking as Bluestone and/or Europe.
10.2 BAR
Save as provided in clause 10.1, neither party shall be entitled
without the prior written consent of the others to assign or
transfer either the benefit or burden of this Agreement or any right
and/or obligation under this Agreement.
11 FURTHER ASSURANCE
Each of the Vendors jointly and severally undertake to Bluestone
that he shall at the cost of the Vendors do, execute and perform all
such further deeds, documents, assurances, acts and things as
Bluestone may reasonably require to carry the provisions of this
Agreement into full force and effect and for vesting in Bluestone
the Sale Shares and the full benefit of this Agreement.
12 NO PARTNERSHIP OR AGENCY
Nothing in this Agreement is intended to or shall operate to create
a partnership or joint venture of any kind between the parties or
any of them, or to authorise any party to act as agent for any
other, and no party shall have authority to act in the name or on
behalf of or otherwise to bind any other in any way (including but
not limited to the making of any representation or warranty, the
assumption of any obligation or liability and the exercise of any
right or power).
13 SEVERANCE
13.1 If any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:
13.1.1 the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
13.1.2 the legality, validity or enforceability in any other jurisdiction
of that or any other provision of this Agreement.
13.2 If any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any jurisdiction but would be legal, valid and
enforceable if some part of the provision were deleted or modified,
the provision in question shall apply in that jurisdiction with such
modification(s) as may be necessary to make it valid.
13.3 The parties agree, in the circumstances referred to in clause 13.1
and if clause 13.2 does not apply, to attempt to substitute for any
such illegal, invalid or unenforceable provision a legal, valid and
enforceable provision which achieves to the greatest extent possible
the same effect as would have been achieved by the illegal, invalid
or unenforceable provision. The obligations of the parties under any
invalid or unenforceable provision of this Agreement shall be
suspended while an attempt at such substitution is made.
14 AMENDMENTS
No amendment or variation of this Agreement or any of the documents
referred to in it shall be effective unless contained in a written
instrument signed by or on behalf of each of the parties. Such
instrument may consist of several instruments in the like form each
executed by or on behalf of one or more of the parties. References
herein to documents "IN THE AGREED FORM" shall, where appropriate,
be construed as references to such documents as so amended.
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15 SURVIVAL OF OBLIGATIONS
15.1 Notwithstanding Completion each and every right and obligation of
Bluestone, Europe and the Vendors under this Agreement shall, except
in so far as fully performed at Completion, continue in full force
and effect.
15.2 Any provision of this Agreement which is expressed or intended to
have effect on, or to continue in force after, the termination of
this Agreement shall have such effect, or, as the case may be,
continue in force, after such termination.
16 TIME LIMITS
Where any obligation under this Agreement is expressed to require
performance within a specified time limit that obligation shall
continue to be binding and enforceable after the expiry of that time
limit if the party so obliged fails to perform that obligation
within that time limit (but without prejudice to all rights and
remedies available against such party by reason of such party's
failure to perform that obligation within the time limit).
17 CONSENTS
Any consent given by a party under any provision of this Agreement
shall be effective only in the instance and for the purpose for
which it is given and the giving of any such consent in respect of
any act or thing shall not operate as a waiver of any requirement on
the party to whom the consent is given not to do that or any other
act or thing at any time in the future without such consent.
18 POWER OF ATTORNEY
18.1 Each of the Vendors by their execution of this Agreement appoints
Bluestone to be his Attorney from and after Completion granting to
Bluestone full power on his behalf to exercise all voting and other
related rights attaching to the Sale Shares sold by that Vendor
including in particular, but without prejudice to the foregoing
generality, power:
18.1.1 to execute a form of proxy in favour of such person or persons as
Bluestone may think fit to attend and vote as that Vendor's proxy at
any general meeting of the members, or separate class meeting of any
class of members, of the Company in respect of such Sale Shares in
such manner as Bluestone may decide;
18.1.2 to consent to the convening and holding of any such meeting and the
passing of the resolutions to be submitted at any such meeting on
short notice;
18.1.3 to settle the terms of such resolutions; and
18.1.4 generally to procure that Bluestone or its nominees are duly
registered as the holders of all the Sale Shares.
18.2 Each Vendor hereby ratifies and confirms and hereby undertakes to
ratify and confirm all and whatsoever Bluestone shall lawfully do or
cause to be done in pursuance of the power of attorney granted by
clause 18.1.
18.3 Each Vendor hereby declares that the power of attorney granted by
clause 18.1 shall be irrevocable until the later of the date of
registration of the transfer of the Sale Shares sold by the relevant
Vendor in the books of the Company and the expiry of the period of
three months from the Completion Date.
19 WAIVERS AND REMEDIES
19.1 The rights of Bluestone and Europe in respect of a breach of any
provision of this Agreement shall not be affected by Completion nor
by the giving of any time or other indulgence by Bluestone and
Europe to any person nor by any other cause whatsoever except a
specific waiver or release by Bluestone and Europe in writing and
any such waiver or release shall not prejudice or affect any
remaining rights of Bluestone and Europe.
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The rights of each party under this Agreement:
19.1.1 may be exercised as often as necessary;
19.1.2 are cumulative and not exclusive of rights under the general law; and
19.1.3 may be waived only in writing and specifically.
Any delay in exercising or failure to exercise any right shall not
be a waiver of such right.
20 SUCCESSORS
20.1 This Agreement shall be binding on the Vendors and their respective
executors, personal representatives and successors whomsoever and,
unless the context otherwise requires, references to the Vendors
shall include references to such executors, personal representatives
and successors.
20.2 This Agreement shall be binding on, and shall enure for the benefit,
of any person to whom any right and/or obligation is validly
assigned or transferred pursuant to clause 10.
21 COSTS AND STAMP DUTY
21.1 PAYMENT OF COSTS, LOSSES AND EXPENSES
Save as otherwise stated in this Agreement, each party shall pay its
own costs and expenses in relation to the negotiation, preparation,
execution and carrying into effect of this Agreement and the other
agreements forming part of the transaction.
21.2 COMPANY AND SUBSIDIARY TO PAY NO COSTS
For the avoidance of doubt, neither the Company nor the Subsidiary
shall pay any legal or other professional charges and expenses in
connection with any investigation of the affairs of the Group or the
negotiation, preparation, execution and carrying into effect of this
Agreement.
21.3 STAMP DUTY
Bluestone shall be responsible for payment of all stamp duty in
respect of this Agreement and the carrying into effect thereof.
22 CONFIDENTIALITY
22.1 PROHIBITION ON DISCLOSURE
Each of the Vendors undertakes to Bluestone that he will and will
procure that his Associates and any officer or employee of that
Vendor will at all times hereafter preserve the confidentiality of,
and not directly or indirectly reveal, report, publish, disclose or
transfer or use for his own or any other purposes Confidential
Information except:-
22.1.1 in the circumstances set out in clause 22.2 below;
22.1.2 to the extent otherwise expressly permitted by this Agreement; or
22.1.3 with the prior consent in writing of the party to whose affairs such
Confidential Information relates;
and will on demand made by Bluestone at any time deliver up to
Bluestone, or destroy or erase, all notes and records on whatever
media (including copies) containing Confidential Information, in
each case being in that Vendor's custody, control or possession
Provided that nothing in this clause 22 will require any of the
Vendors to deliver up, destroy or erase anything which it or he is
required to retain by law, any court or competent jurisdiction or
any regulatory authority regulating the business of the Vendor in
question.
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22.2 PERMITTED DISCLOSURES
The circumstances referred to in clause 22.1.1 above are:-
22.2.1 where the Confidential Information, before it is furnished to any of
the Vendors, is in the public domain;
22.2.2 where the Confidential Information, after it is furnished to any of
the Vendors, enters the public domain otherwise than as a result of
(i) a breach by any of the Vendors of its obligations in this clause
22 or (ii) a breach by the person who disclosed that Confidential
Information of a confidentiality obligation and any of the Vendors
is aware of such breach; and
22.2.3 if and to the extent the Vendors make disclosure of the Confidential
Information to any person:
(i) in compliance with any requirement of law;
(ii) in response to a requirement of the Stock Exchange or the Panel
on Take-overs and Mergers or any applicable regulatory
authority to which the Vendors are subject where such
requirement has the force of law; or
(iii) in order to obtain tax or other clearances or consents from the
Inland Revenue or other relevant taxing or regulatory
authorities.
Provided that any such information disclosable pursuant to
sub-clauses (i), (ii) or (iii) of clause 22.2.3 shall be disclosed
only to the extent required by law and only after reasonable prior
consultation with Bluestone.
22.3 The restrictions contained in this clause 22 shall continue to apply
after Completion without limit in time.
23 NOTICES
23.1 Any notice or other communication to be given under, or in
connection with the matters contemplated by, this Agreement shall be
in writing and signed by or on behalf of the party giving it and
shall be served by delivering it personally or sending it by
pre-paid recorded delivery or registered post or by facsimile to the
address and for the attention of the relevant party set out in
clause 23.2 (or as otherwise notified by that party hereunder). Any
such notice shall be deemed to have been received:-
23.1.1 if delivered personally, at the time of delivery;
23.1.2 in the case of pre-paid recorded delivery or registered post, 48
hours from the date of posting if the addressee and the addressor
are both in the same country or 5 days if either of them are
overseas in relation to the other; and
23.1.3 in the case of fax, at the time of receipt by the sending party of a
successful fax transmission notice generated by the transmitting fax
machine;
Provided that if deemed receipt occurs before 9am on a business day
the notice shall be deemed to have been received at 9am on that day
and if deemed receipt occurs after 5pm on a business day, or on a
day which is not a business day, the notice shall be deemed to have
been received at 9am on the next business day. For the purpose of
this clause, "BUSINESS DAY" means any day which is not a Saturday, a
Sunday or a public holiday in the place at or to which the notice is
left or sent.
23.2 The addresses and facsimile numbers of the parties for the purposes
of clause 23.1 are:
<TABLE>
<S> <C>
VENDORS as set out in Schedule 1
BLUESTONE AND EUROPE
Address: 300 Stevens Drive, Philadelphia PA 19113-1597 USA
For the attention of: Paul T Porrini
Fax number: 001 610 915 5010
</TABLE>
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<PAGE>
or such other address or facsimile number in the United Kingdom as
may be notified in writing from time to time by the relevant party
to the other parties.
23.3 NO ELECTRONIC SERVICE
For the avoidance of doubt notice given under this Agreement shall
not be validly served if sent by e-mail.
24 UK COMPETITION
The parties shall, at the request of any one of them, jointly notify
the Director General of Fair Trading of this Agreement or of any
agreement or arrangement of which this Agreement forms part under
the Competition Act 1998 and apply to him for guidance and/or a
decision and/or request the grant of an exemption in respect of it
and the parties acting in good faith shall co-operate fully and use
all commercially reasonable endeavours in preparing any such
notification and in making any necessary submission. The parties
shall use all commercially reasonable endeavours in maintaining
and/or renewing and/or defending any such guidance, decision or
exemption. Bluestone shall bear all reasonable and proper costs in
connection with the foregoing unless otherwise agreed.
25 COUNTERPARTS
25.1 EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts and by
the parties on different counterparts, but shall not be effective
until each party has executed at least one counterpart.
25.2 ONE AGREEMENT
Each counterpart shall constitute an original of this Agreement but
all the counterparts shall together constitute one and the same
agreement.
26 GOVERNING LAW AND JURISDICTION
26.1 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the law of England.
26.2 JURISDICTION
The parties hereto submit to the non-exclusive jurisdiction of the
Courts of England as regards any claim, dispute or matter arising
out of or relating to this Agreement and its implementation or
effect.
27 SPECIFIC INDEMNITY
Without restricting the rights of Bluestone or Europe to claim
damages on any basis available to either of them in the event of any
breach or non-fulfilment of any of Fundamental Representations
and/or the Warranties, the Warrantors undertake with each of
Bluestone and Europe (each contracting for itself and as trustee for
the Company and the Subsidiary) to indemnify and keep indemnified
Bluestone, Europe, the Company and the Subsidiary on demand from and
against any and all losses, claims, damages, costs, charges,
expenses, liabilities, demands, proceedings and actions (together
the "LIABILITIES") which Bluestone, Europe the Company or the
Subsidiary may sustain or incur or which may be brought or
established against any of them by any person which in any case
arises out of or in relation to or by reason of the provision by the
Company to X-idra Systems GmbH ("X-IDRA") of a copy of the JTS
Arjuna software pursuant to a verbal development license or
otherwise and the failure of the Company to enter into a formal
written development license establishing with X-idra the terms of
such license and in particular protecting the Company's full and
unencumbered right, title and interest in the Intellectual Property
in the JTS Arjuna software and any taxation payable by Bluestone,
Europe, the Company or the Subsidiary on or in respect of any
payment under this clause 27 PROVIDED THAT no claim shall be made
under this clause 27 unless and until the Liabilities shall
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have exceeded L2,000 (in which case only the excess over L2,000
shall be payable by the Warrantors).
EXECUTED as a deed in three originals the day and year first before
written.
EXECUTED AND DELIVERED AS A DEED by
/s/ Stephen Caughey
-----------------------------------------
EXECUTED AND DELIVERED AS A DEED by
/s/ David Bradley Ingham
-----------------------------------------
EXECUTED AND DELIVERED AS A DEED by
/s/ Stuart Mark Wheater
-----------------------------------------
EXECUTED AND DELIVERED AS A DEED by
/s/ Santosh Kumar Shrivastava
-----------------------------------------
EXECUTED AND DELIVERED AS A DEED by
/s/ Alastair James Green
-----------------------------------------
EXECUTED AND DELIVERED AS A DEED by
/s/ Grainine Marie Walshe
-----------------------------------------
EXECUTED AND DELIVERED AS A DEED by
/s/ Hannes Wolfgang Miller
-----------------------------------------
EXECUTED as a deed
by BLUESTONE SOFTWARE
EUROPE LIMITED acting by
two directors and
the secretary
/s/ Paul T. Porrini
-----------------------------------------
/s/ S. Craig Huke
-----------------------------------------
EXECUTED as a deed by
BLUESTONE SOFTWARE, INC.
acting by a duly authorised officer
/s/ Paul T. Porrini
-----------------------------------------
26
