UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 1, 1995
3Com Corporation
(Exact name of registrant as specified in its charter)
California 0-12867 94-2605794
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
5400 Bayfront Plaza 95052
Santa Clara, California (Zip
Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (408) 764-5000
Item 2. Acquisition or Disposition of Assets
(a) On May 1, 1995, pursuant to an Acquisition and Exchange
Agreement dated March 22, 1995 (the "Agreement") among 3Com
Corporation (the "Company") and all the holders of Ordinary
Shares and options of Sonix Communications Limited ("Sonix"), a
United Kingdom corporation, the Company acquired all the
outstanding shares of Sonix stock (the "Acquisition"). Under the
terms of the Agreement, the shareholders of Sonix transferred all
of the outstanding stock of Sonix to the Company, in exchange for
which they received an aggregate of approximately 1.2 million
shares of 3Com common stock with an aggregate value of
approximately $68.9 million. The exchange ratio for the
conversion into the Company's common stock was 2.0138 shares per
share of Sonix stock. The Acquisition was accounted for as a
pooling of interests.
The consideration paid by the Company for the Sonix stock
was the result of arms-length negotiations between the Company
and Sonix. Sonix had calendar year 1994 revenues of
approximately $20 million. Sonix survives the merger as a
wholly-owned subsidiary of the Company.
Under the terms of the Agreement, a portion of such stock
issued by the Company was deposited into an escrow account as
security for the indemnification of the Company by Sonix for
breaches of the representations, warranties and covenants of
Sonix set forth in the Agreement. Except with respect to
breaches of certain representations and warranties, such account
is the sole and exclusive source of any claim or remedy by the
Company against Sonix or its shareholders in connection with the
Acquisition. Subject to reduction based on outstanding or
resolved claims, the stock in such account will be distributed to
the Sonix shareholders.
Prior to the Acquisition, no material relationship existed
between the Company and Sonix or any of its affiliates, any
director or officer of the Company, or any associate of any such
director or officer.
Sonix is engaged in the business of developing,
manufacturing and marketing internetworking equipment. The
Company intends to continue such business.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
(a) Not applicable.
(b) The pro forma financial information of Sonix required
pursuant to Article 11 of Regulation S-X is
incorporated herein by reference to the Company's
Registration Statement on Form S-4 as filed on March
23, 1995, and as amended.
(c) The following exhibit is attached hereto and filed
herewith:
7.1* Acquisition and Exchange Agreement dated March 22,
1995 among 3Com Corporation and all the holders of
Ordinary Shares and options of Sonix
Communications Limited.
7.2* Escrow Agreement dated March 22, 1995 among 3Com
Corporation, the shareholders of Sonix
Communications Limited and the Escrow Agent.
* Confidential treatment has been requested
as to a portion of this Exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
3COM CORPORATION
May 16, 1995 By: /s/ Christopher B. Paisley
-----------------------------
Christopher B. Paisley
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit Document
7.1* Aquisition and Exchange Agreement dated March 22, 1995
among 3Com Corporation and all the holders of Ordinary
Shares and options of Sonix Communications Limited
7.2* Escrow Agreement dated March 22, 1995 among 3Com
Corporation, the shareholders of Sonix Communications
Limited and the Escrow Agent.
* Confidential treatment has been requested as to a
portion of this Exhibit.
Exhibit 7.1
ACQUISITION AND EXCHANGE AGREEMENT
DATED MARCH 22, 1995
BY AND AMONG
BUYER
AND SELLERS
* Confidential treatment requested. Confidential portion has
been filed separately with the Securities and Exchange
Commission.
Definitions 2
1.1 "Acquisition" 2
1.2 "Acquisition Consideration" 2
1.3 "Affiliate" 2
1.4 "Aggregate Purchase Price" 2
1.5 "Business Day" 2
1.6 "Closing" and "Closing Date" 2
1.7 "Closing Time" 2
1.8 "Commission" 2
1.9 "Confidential Information" 2
1.10 "Connected Person" 2
1.11 "Exchange Act" 2
1.12 "Exchange Ratio" 2
1.13 "Loan Stock" 2
1.14 "Optionholders" 2
1.15 "Proprietary Rights" 3
1.16 "Securities" 3
1.17 "Securities Act" 3
1.18 "Sellers' Solicitors" 3
1.19 "Sonix" 3
1.20 "Sonix Disclosure Schedule" 3
1.21 "Sonix Products" 3
1.22 "Sonix Stock" 3
1.23 "Surviving Corporation" 3
1.24 "Transaction Documents" 3
1.25 3
2. Acquisition and Exchange 3
2.1 Acquisition and Aggregate Purchase Price 3
2.2 Exchange Ratio 4
2.3 Fractional Shares 5
2.4 Escrow Agreement 5
2.5 The Closing 5
2.6 5
2.7 5
3. Representations and Warranties of Sellers 6
3.1 Organization 6
3.2 Capitalization 6
3.3 Power, Authority and Validity 7
3.4 Financial Statements 7
3.5 Tax Matters 8
3.6 Absence of Certain Changes or Events 9
3.7 Title and Related Matters 11
3.8 Proprietary Rights 11
3.9 Bank Accounts 14
3.10 Contracts 14
3.11 Orders, Commitments and Returns 16
3.12 Compliance With Law 17
3.13 Controlled Foreign Corporation 17
3.14 Labor Difficulties; No Discrimination 17
3.15 Pension Warranties 18
3.16 Trade Regulation 20
3.17 Insider Transactions 20
3.18 Employees, Independent Contractors and Consultants
20
3.19 Insurance 21
3.20 Litigation 21
3.21 Governmental Authorizations and Regulations 21
3.22 Subsidiaries 21
3.23 Compliance with Environmental Requirements 21
3.24 Corporate Documents 22
3.25 Residence and Domicile of Sellers 22
3.26 No Brokers 22
3.27 Pooling of Interests 22
4. Representations and Warranties of Buyer 23
4.1 Organization and Good Standing 23
4.2 Power, Authorization and Validity 23
4.3 No Violation of Existing Agreements 23
4.4 Compliance With Other Instruments and Laws 23
4.5 Litigation 23
4.6 SEC Documents 24
4.7 Securities Act 24
4.8 No Brokers 24
4.9 Pooling of Interests 24
4.10 Buyer Common Stock. 24
5. Preclosing Covenants of Sellers 25
5.1 25
5.2 Advice of Changes 25
5.3 Conduct of Business 25
5.4 Access to Information 27
6. Preclosing Covenants of Buyer 27
6.1 Advice of Changes 27
6.2 Reservation of Buyer Common Stock 27
7. Mutual Covenants 27
7.1 Confidentiality 27
7.2 No Public Announcement 28
7.3 Other Negotiations 29
7.4 Pooling Accounting 29
7.5 Pooling Accounting 30
7.6 Legends 30
7.7 Further Assurances 31
8. Closing. 31
8.1 31
8.2 31
8.3 32
8.4 33
8.5 33
8.6 34
8.7 34
8.8 34
9. Registration of Acquisition Consideration. 35
9.1 Registrable Shares. 35
9.2 Required Registration. 34
9.3 Effectiveness; Trading Windows. 35
9.4 Trading Clearance Procedure. 35
9.5 Administration. 36
9.6 Expenses. 36
9.7 Indemnification. 36
10. Termination of Agreement 38
10.1 Termination 38
10.2 Certain Effects of Termination 38
11. Agreement to Indemnify 39
12. Restriction of certain Sellers. 39
12.1 39
12.2 39
12.3 40
12.4 40
12.5 42
12.6 42
13. Miscellaneous 42
13.1 Governing Law. 42
13.2 Binding upon Successors. 43
13.3 Severability 43
13.4 Entire Agreement 43
13.5 Counterparts 43
13.6 Expenses 44
13.7 Amendment and Waivers 44
13.8 Survival of Agreements 44
13.9 No Waiver 44
13.10 Notices 44
13.11 Time 46
13.12 Construction of Agreement 46
13.13 No Joint Venture 46
13.14 Pronouns 46
13.15 Absence of Third Party Beneficiary Rights
46
SCHEDULE 1 LIST OF SHAREHOLDERS 1
SCHEDULE 2 LIMITATION OF LIABILITY 1
SCHEDULE 3 LIST OF EMPLOYEES ENTERING INTO AMENDED EMPLOYMENT
AGREEMENTS 1
EXHIBIT C - Taxation Warranties 1
EXHIBIT D - Property Warranties 1
ACQUISITION AND EXCHANGE AGREEMENT
This ACQUISITION AND EXCHANGE AGREEMENT (the
"Agreement") is entered into this 22nd day of March, 1995, by and
among 3Com Corporation of 5400 Bayfront Plaza, M/S 1410 Santa
Clara, CA 95052 - 8145 USA, a California corporation ("Buyer"),
and each of the persons whose names are set out in Schedule 1
being all the holders of "A", "B" and "C" Ordinary Shares of
Sonix and, in the case of those listed in part II of Schedule 1,
all the holders of options over A Ordinary Shares of Sonix
(individually a "Shareholder" or collectively "Shareholders", and
also referred to as "Seller" or "Sellers").
RECITAL
A. The Shareholders are the owners of all of the
outstanding "A," "B" and "C" Ordinary Shares (the "Sonix Stock")
of Sonix. "A," "B" and "C" Ordinary Shares are the only
outstanding classes of share capital of Sonix. The Sonix Stock
is sometimes referred to herein as the "Securities".
B. The persons listed in part II of Schedule 1 (the
"Optionholders") are the holders of all outstanding options over
any Sonix Stock.
C. Buyer wishes to acquire (the "Acquisition") the
Sonix Stock in exchange for Common Stock of Buyer (the "Buyer
Common Stock") pursuant to the terms of this Agreement and each
of the Shareholders wishes to sell all Sonix Stock he, she or it
will hold at Closing to Buyer pursuant to the terms of this
Agreement.
D. Following the Acquisition, Sonix will be a wholly
owned subsidiary of Buyer (the "Surviving Corporation") and each
of the Shareholders will be a shareholder of Buyer.
E. The Acquisition is intended by the Buyer to be
treated as a "pooling of interests" transaction for U.S.
accounting purposes and a taxable reorganisation.
F. The parties hereto desire to set forth certain
representations, warranties and covenants made by each to the
other as an inducement to the consummation of the Acquisition.
AGREEMENT
NOW, THEREFORE, in and for the consideration and
mutual covenants set forth herein, the parties agree as follows:
1. Definitions.
1.1 "Acquisition" shall have the meaning set forth in
the Recitals.
1.2 "Acquisition Consideration" shall have the meaning
set forth in Section 2.2(b).
1.3 "Affiliate" shall have the meaning set forth in the
rules and regulations promulgated by the Commission pursuant to
the Securities Act.
1.4 "Aggregate Purchase Price" shall have the meaning
set forth in Section 2.1.
1.5 "Business Day" means a day (other than a Saturday or
Sunday) on which banks are open for business in both London and
California.
1.6 "Closing" and "Closing Date" shall have the meanings
set forth in Section 2.5 [The Closing].
1.7 "Closing Time" shall have the meaning set forth in
Section 2.5.
1.8 "Commission" shall mean the United States Securities
and Exchange Commission.
1.9 "Confidential Information" shall mean any
information not in the public domain and relating to Sonix or to
a party to this Agreement ("Disclosing Party") and which is
disclosed to another party to this Agreement ("Receiving Party")
and shall include, but not be limited to, trade secrets, know-
how, inventions, techniques, processes, algorithms, software
programs, schematics, designs, contracts, customer lists,
financial information, sales and marketing plans and business
information.
1.10 "Connected Person" has the meaning given to that
expression in Section 839 of the Income and Corporation Taxes Act
1988.
1.11 "Exchange Act" shall mean the United States
Securities Exchange Act of 1934, as amended.
1.12 "Exchange Ratio" shall mean the number of shares of
Buyer Common Stock to be issued for a share of Sonix Stock
pursuant to Section 2.2.
1.13 "Loan Stock" shall mean the PS 1,560,000 22.2%
unsecured subordinated loan notes 1997 created by an instrument
dated 12 June 1992.
1.14 "Optionholders" shall mean the persons listed in
part II of Schedule 1.
1.15 "Proprietary Rights" shall have the meaning set
forth in Section 3.8(a) [Proprietary Rights].
1.16 "Securities" shall mean the Sonix Stock.
1.17 "Securities Act" shall mean the United States
Securities Act of 1933, as amended.
1.18 "Sellers' Solicitors" shall mean Clifford Chance of
200 Aldersgate Street, London EC1A 4JJ.
1.19 "Sonix" shall mean Sonix Communications Limited, a
company registered in England under No. 2711561 whose registered
office is at Merchant's House, Wilkinson Road, Cirencester,
Gloucestershire GL7 1YT.
1.20 "Sonix Disclosure Schedule" means the disclosure
letter referred to in Section 3 [Representations and Warranties
of Sellers].
1.21 "Sonix Products" shall mean all versions and
implementations of any product which has been or is being
manufactured, sold, distributed or marketed by Sonix or currently
is under development, and all patents, patent applications,
design rights, trade secrets, copyrights, trademarks, trade names
and other proprietary rights related thereto.
1.22 "Sonix Stock" shall have the meaning set forth in
the Recitals.
1.23 "Surviving Corporation" shall mean Sonix immediately
following the Acquisition.
1.24 "Transaction Documents" shall mean all documents or
agreements required to be delivered by any party hereunder
including the Escrow Agreement.
1.25 A document expressed to be "in the agreed form"
shall mean a document the terms of which have been approved by or
on behalf of the parties and a copy of which has been signed for
the purposes of identification by or on behalf of the parties.
2. Acquisition and Exchange.
2.1 Acquisition and Aggregate Purchase Price
(a) Subject to the terms and conditions of this
Agreement, each of the Shareholders shall sell as beneficial
owner or otherwise as stated in Schedule 1 the number of shares
of Sonix Stock set out opposite such Shareholder's name in Column
(b) of Schedule I and the Buyer shall purchase, and thereafter
hold, such Sonix Stock, free from all options, liens, charges and
encumbrances.
(b) The Optionholders and ___ * acknowledge that
of the _____ * shares of Sonix Stock which are registered in the
name of ____ * an aggregate of _____ * shares are held on trust
by him in favour of the Optionholders in accordance with their
rights under the Sonix Executive Share Option Scheme (the
"Scheme") and that as a result of the signature of this Agreement
by the Buyer such options will become exercisable on _____*
pursuant to paragraph 9(e) of the rules of the Scheme. In
accordance with such rights and in consideration of the agreement
of Buyer to pay the Acquisition Consideration each of the
Optionholders agrees that he will exercise his rights under the
options granted to him to acquire the number of shares of Sonix
Stock set opposite his name in column (b) of Schedule 1 and
_____ * undertakes that on such exercise and prior to Closing he
shall transfer to the relevant Optionholder (or, if instructed by
the Optionholder, to Buyer on Closing) the number of shares of
Sonix Stock required to satisfy the obligations arising on such
exercise. Each of the Optionholders acknowledges that he has no
rights to any shares of Sonix Stock other than those set opposite
his name in Column (b) of Schedule 1.
(c) The Buyer shall not be obliged to complete
the purchase of any of the Sonix Stock hereunder unless the sale
of all of the Sonix Stock is completed simultaneously.
(d) The Sonix Stock shall be sold with the
benefit of all rights which are attached thereto at, or which
have or will become attached thereto after, the Closing Time.
(e) The aggregate consideration for the purchase
of the Sonix Stock by Buyer shall consist of 1,208,279 shares of
Buyer Common Stock having an agreed aggregate value of
$68,864,362 (the "Aggregate Purchase Price"), which shall be
issued to the Sellers at Closing pursuant to Section 8.4 plus
_____* which will be paid pursuant to Section 8.4.
2.2 Exchange Ratio.
(a) The "Exchange Ratio" for the conversion of
the Sonix Stock into Buyer Common Stock shall be 2.0137953:1.
(b) Buyer shall acquire from each Shareholder
such Shareholder's Sonix Stock in exchange for such number of
fully paid and nonassessable shares of Buyer Common Stock which
equals the Exchange Ratio multiplied by the number of shares of
Sonix Stock to be owned at Closing by such Shareholder as set
forth in Column (b) of Schedule I (the aggregate number of shares
of Buyer Common Stock issued to the Shareholders pursuant hereto
shall also be
______
* Confidential Treatment Requested. Confidential
Portion has been filed separately with the Securities
and Exchange Commission.
referred to as the "Acquisition Consideration"). Accordingly,
the number of such shares of Buyer Common Stock to be issued to
each of the Shareholders shall be that number set opposite their
respective name in Column (d) of Schedule 1.
2.3 Fractional Shares. No fractional shares of Buyer
Common Stock will be issued in connection with the Acquisition,
but in lieu thereof, holders of Sonix Stock who would otherwise
be entitled to receive a fraction of a share of Buyer Common
Stock will receive from Buyer at Closing Time, an amount of cash
(in pounds sterling) equal to US$56.99375 (being the issue price
of each share of Buyer Common Stock issued pursuant to this
Agreement) multiplied by the fraction of a share of Buyer Common
Stock to which such holder would otherwise be entitled.
Accordingly, each Shareholder shall receive the amount of cash
set opposite his name in Column (e) of Schedule 1 and the number
of shares referred to in Section 2.1(e) will be reduced by the
number equal to the aggregate of such fractional entitlements.
2.4 Escrow Agreement. (a) At the Closing Time, Buyer
will deposit in escrow certificates representing _______* of the
shares of the Acquisition Consideration issued to the holders of
Sonix Stock in the Acquisition, on a pro rata basis. Such shares
(the "Escrow Shares") shall be held as collateral in accordance
with the provisions of an escrow agreement (the "Escrow
Agreement") in substantially the form of Exhibit B.
2.5 The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place
at the offices of Baker & McKenzie, 100 New Bridge Street, London
EC4V 6JA at 12 noon (UK time) on May 1, 1995, or such earlier
date being a Business Day on or after April 6, 1995, as may be
selected by Buyer on not less than five business days' notice in
writing to the Sellers' Solicitors (the "Closing Time"). The
date of the Closing is hereinafter referred to as the "Closing
Date."
2.6 Without prejudice to the provisions of Sections 8.7
and 10, the parties hereto acknowledge and agree that their
respective obligations hereunder are not in any way conditional
on any matter and this Agreement may not be terminated or
rescinded as a result of any breach by any other party of its
obligations hereunder.
2.7 In the event that any party fails to comply in all
respects with its obligations under this Agreement and, without
limitation, in particular the provisions of Section 8, such party
hereby agrees and acknowledges that indemnification and damages
will not be an adequate remedy for any such breach and,
accordingly, in the event that there is any breach by a party of
its obligations under this Agreement, any other party shall be
entitled to apply to the Courts for an order for specific
__________
* Confidential Treatment Requested. Confidential
Portion has been filed separately with the Securities
and Exchange Commission.
performance and the breaching party shall not be entitled to and
shall not oppose
any such action in such circumstances.
3. Representations and Warranties of Sellers. Except
as otherwise set forth in the disclosure letter in the agreed
form ("Sonix Disclosure Schedule"), each of the Sellers jointly
and severally represents and warrants to Buyer at the date hereof
as set forth below (the "Warranties"). No fact or circumstance
disclosed to Buyer shall constitute an exception to these
representations and warranties unless such fact or circumstance
is fairly disclosed in the Sonix Disclosure Schedule. In this
Section 3, whenever the term "enforceable in accordance with its
terms" or like expression is used, it is understood that excepted
therefrom are any limitations on enforceability under applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
of general application affecting the enforcement of creditor's
rights and under general principles of equity (regardless or
whether enforcement is sought in a proceedings in equity or in
law). The liability of the Sellers in relation to the Warranties
shall be limited in accordance with the provisions of Schedule 2.
The parties hereto acknowledge that _______ * has at all times
been a passive shareholder in Sonix and save for the receipt of
annual audited financial statements it has not received any other
information regarding Sonix or its business. However, Buyer is
only prepared to proceed with the acquisition on the terms hereof
if all the Sellers accept an equal proportion of the risks to be
assumed pursuant to the Warranties. If this was not the case,
the Buyer would have offered a lower amount as the consideration
for all the Sonix Stock. Accordingly but on the basis of written
assurances received from the executive directors of Sonix,
______ * has agreed to give the Warranties on an equal basis with
the other Sellers.
3.1 Organization. Sonix is a limited liability company
duly incorporated under the laws of England and has the right,
power and authority to carry on its business as it is now being
conducted. The Sonix Disclosure Schedule contains a true and
complete listing of the locations of all sales offices,
manufacturing facilities, and any other offices or facilities
owned or occupied by Sonix.
3.2 Capitalization.
(a) The authorized capital of Sonix consists of:
300,001 "A" Ordinary Shares of 1p each, 240,000 "B" Ordinary
Shares of 1p each and 60,000 "C" Ordinary Shares of 1p each, all
of which are issued.
(b) All of the outstanding Sonix Stock has been
duly authorized and is validly issued and fully paid. All
outstanding Sonix Stock was issued in compliance
________
* Confidential Treatment Requested. Confidential
Portion has been filed separately with the Securities
and Exchange Commission.
Sonix Products or any proprietary rights incorporated therein or
otherwise related thereto. Sonix does not have any other shares
of its share capital issued or outstanding and there are no
outstanding subscriptions, options, warrants, rights or other
agreements or commitments obligating Sonix to issue shares of its
capital.
with applicable securities laws. None of the outstanding shares
was issued in consideration in whole or in part for any
contribution, transfer or assignment of the
(c) Save as set out in the Sonix Disclosure
Schedule, Sonix does not have in issue any loan capital There is
no outstanding right to call for the issue of any loan capital of
Sonix.
3.3 Power, Authority and Validity.
(a) None of the Sellers or Sonix is subject to or
obligated under any charter, bylaw or contract provision or any
license, franchise or permit, or subject to any order or decree,
which would be breached or violated by or in conflict with the
execution and carrying out of this Agreement and the transactions
contemplated hereunder and under the Transaction Documents. No
consent of any person who is a party to a contract which is
material to Sonix's business, nor consent of any governmental
authority, is required to be obtained on the part of Sonix or any
Seller to permit the transactions contemplated herein and
continue the business activities of Sonix as previously conducted
by Sonix without material adverse change.
(b) Each Seller is, and will at Closing be, the
lawful owner and registered holder of the number of shares of
Sonix Stock listed opposite the name of such Seller in Schedule
I, free and clear of all liens, encumbrances, restrictions and
claims of every kind. Each Seller has, and will at Closing have,
full and legal right, power, authority and capacity to sell,
assign, transfer and convey the shares of Sonix Stock so owned by
him pursuant to this Agreement and the delivery to Buyer of such
Sonix Stock held by the Seller pursuant to the provisions of this
Agreement will transfer to Buyer valid title thereto, free and
clear of all liens, encumbrances, restrictions and claims of
every kind.
(c) Each Seller has full and legal right, power,
authority and capacity to execute and deliver this Agreement and
the Transaction Documents and to carry out the sale of the Sonix
Stock held or to be held by him and carry out the other
transactions contemplated hereby without the need to obtain the
consent or approval of any other party. Following the execution
of this Agreement, this Agreement and each of the Transaction
Documents will constitute the legal, valid and binding
obligations of each Seller, enforceable against such Seller in
accordance with its terms.
3.4 Financial Statements.
(a) Attached to the Sonix Disclosure Schedule are
copies of Sonix' unaudited management accounts for the period
ending January 31, 1995 ("Sonix Unaudited Financials") and Sonix'
audited accounts for the year ended March 31, 1994 ("Sonix
Audited Financials") (the Sonix Unaudited Financials and the
Sonix Audited Financials together, the "Sonix Financial
Statements").
(b) The Sonix Audited Financial Statements have
been prepared and audited on a basis consistent with previous
audited accounts in respect of prior accounting periods and in
accordance with the law and applicable standards, principles and
practices generally accepted in the United Kingdom (GAAP). The
Sonix Audited Financial Statements show a true and fair view of
the assets, liabilities and state of affairs of Sonix at 31 March
1994 and of the loss of Sonix for the year then ended. The Sonix
Unaudited Financials have been prepared on a consistent basis
with previous management accounts.
(c) Sonix has no debt, liability, or obligation
of any nature, whether accrued, absolute, contingent, or
otherwise, and whether due or to become due, that is not
reflected or reserved against in the Sonix Financial Statements,
except for those (i) that may have been incurred after the date
of the Sonix Unaudited Financials or (ii) that are not required
by GAAP to be included in a balance sheet or the notes thereto,
except that Sonix has not established any reserves with respect
to the costs and fees associated with this Agreement and the
transactions contemplated hereby.
(d) No part of any debt or other amount shown or
reflected in the Sonix Financial Statements as being due to Sonix
has been written off, written down, waived or released for an
amount less than the book value thereof for the purposes of the
Sonix Financial Statements.
(e) Since the date of the Sonix Unaudited
Financials, Sonix's business has not been materially affected by
the loss of any customer, or of any source of supply in either
case which has been communicated to Sonix, or by the cancellation
or loss of any order or contract which has been communicated to
Sonix or by any other abnormal factor or event not affecting
business carrying on businesses in a similar field of Sonix nor,
so far as the Sellers are aware, are there any circumstances
likely to lead thereto.
(f) The net assets of Sonix at 31 March 1995
determined on a basis consistent with that applied in the
preparation of the balance sheet contained in the Sonix Unaudited
Financial Statements to the extent that such basis is consistent
with GAAP but otherwise determined in accordance with GAAP (save
that provision will be made for taxation and accruals for
interest accruing on the Loan Stock will be calculated on the
assumption that the Loan Stock is to be redeemed on 1 May 1995)
will not be less than the net assets shown in the balance sheet
contained in the Sonix Unaudited Financial Statements.
3.5 Tax Matters.
(a) Sonix has filed all tax returns required to
be filed by it. All such returns were prepared and filed in the
manner required by applicable law. All income, corporation or
other taxes ("Taxation") due from Sonix have been paid. There
are no pending assessments, or claims for additional taxes that
have not been paid. The provisions for Taxation, if any,
reflected on the Sonix Financial Statements are adequate and
there are no tax liens on any property or assets of Sonix. Since
incorporation of the Company there have been no audits or
examinations of any tax returns by any applicable governmental
agency. So far as the Sellers are aware, no state of facts
exists which would constitute grounds for the assessment of any
penalty or of any further Taxation liability beyond that shown on
the tax returns that have been filed. There are no outstanding
agreements or waivers extending the statutory period of
limitation applicable to any tax return for any period.
(b) All taxes which Sonix has been required to
collect or withhold have been duly withheld or collected and, to
the extent required, have been paid to the proper taxing
authority.
(c) Sonix is not a party to any tax-sharing
agreement or similar arrangement with any other party.
(d) Sonix is not currently under any contractual,
as opposed to legal through the due operation of law, obligation
to pay any tax obligations of, or with respect to any transaction
relating to, any other person or to indemnify any other person
with respect to any tax.
(e) The additional representations and warranties
set forth on Exhibit C ("Tax Warranty") are also true and
correct.
3.6 Absence of Certain Changes or Events. Since January
31, 1995, Sonix has not:
(a) suffered any material adverse change in its
financial condition or in the operations of its business or
suffered any inadequacy of working capital;
(b) suffered any damage, destruction or loss,
whether covered by insurance or not, materially and adversely
affecting its properties or business
(c) granted or agreed to make any increase in the
compensation or benefits payable or to become payable by Sonix to
its officers or employees, except those occurring in the ordinary
course of business;
(d) declared, or paid any dividend or made any
other distribution on or in respect of its shares or redeemed or
purchased any of such shares;
(e) issued any shares or any warrants, rights,
options or entered into any commitment relating to the shares of
Sonix except for the granting of options, details of which are
set out in the Sonix Disclosure Schedule (the "Options");
(f) made any change in the accounting methods or
practices it follows, whether for general financial or tax
purposes, or any change in depreciation or amortization policies
or rates adopted therein;
(g) sold, leased or otherwise disposed of any
real property or any material machinery, equipment or other
operating property other than in the ordinary course of business;
(h) sold, assigned, transferred, licensed or
otherwise disposed of any patent, trademark, trade name, brand
name, copyright, design right (or pending application for any
patent, trademark, design right or copyright) invention, work of
authorship, process, know-how, formula or trade secret or
interest thereunder or other intangible asset except in the
ordinary course of its business;
(i) engaged in any material activity or entered
into any material commitment or transaction (including without
limitation any borrowing or capital expenditure) other than in
the ordinary course of business;
(j) incurred any material liabilities except in
the ordinary course of business which would be required to be
disclosed in financial statements prepared in accordance with
GAAP;
(k) charged or otherwise encumbered any of its
property or assets except in the manner permitted under
Section 3.7 [Title and Related Matters] hereof, and other than in
relation to any purchase money security interests incurred in the
ordinary course of business;
(l) made any capital expenditure or commitment
for additions to property, plant or equipment individually in
excess of PS 6,500, or in the aggregate, in excess of PS 32,250;
(m) paid (other than salaries and other
remuneration payable under the employment contracts or directors'
fees payable under the Articles of Association of Sonix disclosed
in the Sonix Disclosure Schedule and expenses incurred in the
proper performance of the business of Sonix), loaned or advanced
any amount to, or sold, transferred or leased any properties or
assets to, or entered into any agreement or arrangement with any
of its Affiliates, officers, directors or shareholder or any
Affiliate or associate of any of the foregoing;
(n) agreed to take any action described in this
Section 3.6 or outside of its ordinary course of business or
which would constitute a breach of any of the Warranties;
(o) No order has been made nor has any resolution
been passed for the winding up of Sonix and nor is there
outstanding any petition for the administration or the winding up
of Sonix or any receivership of the whole or any part of the
undertaking or assets of Sonix. There are no circumstances which
would entitle any person to present a petition for the
administration or the winding up of Sonix or to appoint a
receiver or administrator of the whole or any part of its
undertaking or assets. Sonix is not insolvent as defined in
Section 123 of the Insolvency Act 1986 and has not entered into
any scheme of arrangement or voluntary or other arrangement with
any of its creditors.
3.7 Title and Related Matters.
(a) Other than in relation to leased assets
details of which are set out in the Disclosure Schedule and the
Property (as defined in Exhibit D hereto), each material asset
included in the Sonix Financial Statements (other than those,
including stock, disposed of since January 31 1995) and each
material asset acquired by the Company since that date:
(i) is legally and beneficially owned by
Sonix free from any charges or encumbrances; and
(ii) is, where capable of possession, in the
possession or under the control of Sonix.
(b) All real or personal property leases to which
Sonix is a party are valid, binding, enforceable and effective in
accordance with their respective terms. There is not under any
of such leases any existing material default of Sonix, or so far
as the Sellers are aware, any material default of the other
parties to such leases or, so far as the Sellers are aware, any
other event of default or event which, with notice or lapse of
time or both, would constitute a material default.
(c) The Sonix Disclosure Schedule contains a
description of all real property leased or owned by Sonix,
describing its interest in said property and with respect to the
leasehold property a description of each parcel and a summary
description of the buildings, structures and improvements
thereon. True and correct copies of Sonix's leases have been
provided to Buyer or its representatives.
(d) The additional representations and warranties
of Sellers set forth on Exhibit D are true and correct.
3.8 Proprietary Rights.
(a) Sonix owns all right, title and interest in
and to, or valid licenses for use of, all patents, copyrights,
design rights, technology, software, software tools, know-how,
processes, trade secrets, trademarks, service marks, trade names
and other proprietary rights used in the conduct of its business
as conducted to the date hereof including, without limitation,
the technology and all proprietary rights developed or discovered
or used in connection with or contained in the Sonix Products,
free and clear of all liens, encumbrances (including without
limitation distribution rights) or, so far as the Sellers are
aware, claims (all of which are referred to as "Proprietary
Rights"). The foregoing representation as it relates to Third
Party Technology (as hereinafter defined) is limited to Sonix's
interest pursuant to the Third Party Licenses (as hereinafter
defined), all of which are valid and enforceable and in full
force and effect and which grant Sonix such rights to Third Party
Technology as are employed in the business of Sonix as conducted
to the date of this Agreement. The Sonix Disclosure Schedule
contains an accurate description of (i) all patents, trademarks
(with separate listings of registered and unregistered
trademarks), trade names, and copyrights in or related to the
Sonix Products, all applications and registration statements
therefor, and a list of all licences and other agreements
relating thereto, and (ii) a list of all licenses and other
agreements with third parties (the "Third Party Licences")
relating to any software, inventions, technology, know-how, or
processes and all intellectual property rights in respect thereof
(a) that Sonix is licensed or otherwise authorized by such third
parties to use, market, distribute or incorporate into the Sonix
Products (such software, inventions, technology, know-how and
processes and all intellectual property rights in respect thereof
are collectively referred to as the "Third Party Technology") and
(b) that third parties are licensed or otherwise authorised by
Sonix to use, market, distribute or incorporate into products
distributed by those third parties. All of Sonix's trademark or
trade name registrations related to the Sonix Products and all of
Sonix's copyrights in any of the Sonix Products are valid and in
full force and effect; and consummation of the transactions
contemplated hereby will not alter or impair any such rights.
Sonix has not received notice of any claim which has been
asserted against Sonix (and the Sellers are not aware of any
claims which are likely to be asserted against Sonix or which
have been asserted against others) by any person challenging
Sonix's use, possession, manufacture, sale or distribution of
Sonix Products under any patents, trademarks, trade names,
copyrights, design rights, trade secrets, software, technology,
know-how or processes utilized by Sonix (including, without
limitation, the Third Party Technology) or challenging or
questioning the validity or effectiveness of any license or
agreement relating thereto (including, without limitation, the
Third Party Licences). So far as the Sellers are aware, there is
no valid basis for any claim of the type specified in the
immediately preceding sentence which is likely in any material
way to interfere with the continued enhancement and exploitation
by Sonix of any of the Sonix Products. So far as the Sellers are
aware, none of the Sonix Products nor the use or exploitation of
any patents, trademarks, trade names, copyrights, design rights,
software, technology, know-how or processes by Sonix in its
current business, infringes on the rights of, constitutes
misappropriation of any proprietary information or intangible
property right of any third person or entity, including without
limitation any patent, trade secret, copyright, design right,
trademark or trade name of any third person. So far as the
Sellers are aware none of Sonix Proprietary Rights is or has been
infringed by any third party and no third party has threatened
any such infringement.
(b) Sonix has not granted any third party any
right to manufacture, reproduce, distribute, market or exploit
any of the Sonix Products or any adaptations, translations, or
derivative works based on the Sonix Products or any portion
thereof.
(c) All designs, drawings, specifications, source
code, object code, documentation, flow charts and diagrams
incorporating, embodying or reflecting any of the Sonix Products
at any stage of their development (the "Sonix Components") were
written, developed and created solely and exclusively by
employees of Sonix without the assistance of any third party or
entity or were created by third parties who have assigned
ownership of their rights to Sonix by means of confidentiality
and invention assignment agreements or otherwise licenced the
same to Sonix pursuant to the Third Party Licences, copies of
which have been delivered to Buyer. Sonix has at all times
disclosed or otherwise dealt with trade secrets and other
confidential information relating to Sonix Products in a manner
which is generally consistent with the terms of the agreements
disclosed in the Sonix Disclosure Schedule which contain specific
provisions governing such matters. Sonix is not a party to any
agreement requiring Sonix to place in escrow, or otherwise to
permit any third party to use or have access to, the source code
to any software owned by Sonix.
(d) So far as the Sellers are aware, no employee
of Sonix is in violation of any term of any confidentiality and
invention assignment agreement referred to in (c) above.
(e) Each person presently or previously employed
or engaged by Sonix (including independent contractors, if any)
with access to confidential information has executed a
confidentiality and non-disclosure agreement pursuant to the form
of agreement previously provided to Buyer or its representatives.
Such confidentiality and non-disclosure agreements constitute
valid and binding obligations of Sonix and, so far as the Sellers
are aware, such person, enforceable in accordance with their
respective terms.
(f) No product liability or warranty claims which
individually or in the aggregate is likely to exceed PS 16,200 have
been communicated to or threatened against Sonix nor, so far as
the Sellers are aware, is there any specific situation, set of
facts or occurrence that provides a basis for such claim. The
Sonix Disclosure Schedule sets forth all critical bugs known to
Sonix in the Sonix Products. For the purposes of this Section
(f), critical bugs are bugs which would result in a material
corruption or loss of data or cause the device to malfunction in
a material manner.
(g) None of the Proprietary Rights are subject to
any restrictions of use or ownership which would require consent
of third parties to the Acquisition or which would give a
contractual or legal right to any third party to alter such right
as a result of the Acquisition.
(h) Any rights enjoyed by ______* under the
__________ * or any agreement entered into in
pursuance of such memorandum have been transferred to Sonix.
3.9 Bank Accounts. The Sonix Disclosure Schedule sets
forth the names and locations of all banks, trusts, companies,
savings and loan associations, and other financial institutions
at which Sonix maintains accounts of any nature and the names of
all persons authorized to draw thereon or make withdrawals
therefrom. No overdraft or other financial facilities available
to or drawn by Sonix are or will at the Closing be secured by, or
dependent on, any guarantee or security provided by any Seller or
any other third party, nor is there anything known to the Sellers
(not having made any specific enquiry) which would suggest that
any financial facility available to Sonix is likely to be
withdrawn or its terms adversely affected, whether as a result of
the Closing of this Agreement or otherwise. No loans have been
or will prior to the Closing be made by Sonix in breach of the
Consumer Credit Act 1974.
3.10 Contracts.
(a) Except as set forth in the Sonix Disclosure
Schedule, Sonix has no agreements, contracts or commitments that
provide for the sale, licensing or distribution by Sonix of any
of its products, inventions, technology, know-how, trademarks or
trade names except in the ordinary course of its business. True
and correct copies of each document or instrument described in
the Sonix Disclosure Schedule pursuant to this Section 3.10(a)
have been made available to Buyer or its representatives.
(b) Except as listed in the Sonix Disclosure
Schedule, Sonix has no agreements, contracts or commitments that
call for fixed and/or contingent payments or expenditures by or
to Sonix of more than PS 16,200. True and correct copies of each
document or instrument set forth in the Sonix Disclosure Schedule
pursuant to this Section 3.10(b) have been made available to
Buyer or its representatives.
(c) Sonix has no purchase agreement, contract or
commitment that calls for fixed and/or contingent payments by
Sonix that are in excess of the normal, ordinary and usual
requirements of business.
__________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
(d) There is no outstanding sales contract,
commitment or proposal (including, without limitation, porting
and development projects) of Sonix that is currently expected to
result in any material loss to Sonix (before allocation of
overhead and administrative costs) upon completion or performance
thereof.
(e) Sonix has no outstanding agreements,
contracts or commitments with officers, employees, agents,
consultants, advisors, salesmen, sales representatives,
distributors, dealers or other contractors that are not
terminable by Sonix at its option on notice of not longer than
thirty (30) days and without liability, penalty or premium.
(f) Sonix is not a party to any collective
bargaining or other agreements, contracts, arrangements or
commitments with any trade union or employees' organisation.
(g) Sonix is not restricted by agreement from
competing with any person or from carrying on its business
anywhere in the world.
(h) Sonix is under no liability or obligation,
and no such outstanding claim has been made, with respect to the
return to Sonix of inventory or merchandise in the possession of
wholesalers, distributors, retailers, or other customers, except
such liabilities, obligations and claims as, in the aggregate, do
not exceed PS 16,200.
(i) Sonix has not guaranteed any obligations of
other persons or made any agreements to acquire or guarantee any
obligations of other persons.
(j) Sonix has no outstanding loan or advance to
any person; nor is it party to any line of credit, standby
financing, revolving credit or other similar financing
arrangement of any sort which would permit the borrowing by Sonix
of any sum not reflected in the Sonix Financial Statements.
(k) All material contracts, agreements and
instruments to which Sonix is a party are valid, binding, in full
force and effect and enforceable by Sonix in accordance with
their respective terms. No such material contract, agreement or
instrument contains any material liquidated-damages, penalty or
similar provision. So far as the Sellers are aware, no party to
any such material contract, agreement or instrument intends to
cancel, withdraw, modify or amend such contract, agreement or
arrangement.
(l) The Sonix Disclosure Schedule lists all
material agreements pursuant to which Sonix has agreed to
manufacture for or supply to any third party any Sonix Products
or components thereto. True and correct copies of each document
or instrument listed on the Sonix Disclosure Schedule pursuant to
this Section 3.10(l) have been provided to Buyer or its
representatives. The Sonix Disclosure Schedule also lists each
person who manufactures for or supplies to Sonix any material
product or component included in the Sonix Products or is the
sole source for any product or component included in the Sonix
Products.
(m) Sonix is not in default under or in breach or
violation of, nor, to Sonix's knowledge, is there any valid basis
for any claim of default by Sonix under, or such breach or
violation by Sonix of, any contract, commitment or restriction to
which Sonix is a party in all such cases where such defaults,
breaches, or violations would, in the aggregate, have a material
adverse effect on the operations, assets, financial condition or
prospects of Sonix. To Sonix's knowledge, no other party is in
default under or in breach or violation of, nor is there any
valid basis for any claim of default by any other party under or
any breach or violation by any other party of, any material
contract, commitment, or restriction to which Sonix is bound in
all such cases where such defaults, breaches, or violations
would, in the aggregate, have a material adverse effect on the
operations, assets, financial condition or prospects of Sonix.
(n) All agreements, contracts and commitments
(the "Material Contracts") listed or described in the Sonix
Disclosure Schedule pursuant to this Section 3.10 do not contain
provisions which would require consent of third parties to the
Acquisition or which would give a contractual or legal right to
alter the current terms thereof as a result of the Acquisition.
(o) All payments due under the ______
* have been paid in full and there are no
circumstances which would entitle _______ * to rescind the
Agreement.
(p) All sums which have become due and payable
under _____________ * and the Disclosure Schedule sets out
details of sums which shall become due and payable thereunder
____________ *
(q) None of the _________ * has any liability
(actual or contingent) or has any continuing obligations under or
in respect of that agreement.
3.11 Orders, Commitments and Returns. All accepted and
unfilled orders entered into by Sonix for the sale or license of
any Sonix Products, and all agreements, contracts, or commitments
for the purchase of supplies by Sonix, were made in the ordinary
course of business. No outstanding purchase or outstanding lease
commitment of Sonix is in excess of the normal, ordinary and
usual requirements of its business.
_________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
3.12 Compliance With Law. Sonix is in compliance with
all applicable laws and regulations in all material respects
(meaning, for the purposes of this paragraph 3.12, there has been
no non-compliance the consequences of which would have a material
adverse effect on the operations, assets or financial condition
of Sonix. Neither Sonix nor, to Sonix's knowledge, any of its
employees has directly or indirectly paid or delivered any fee,
commission or other sum of money or item of property, however
characterized, to any finder, agent, government official or other
party in the United States or any other country, that was or is
in violation of any federal, state, or local statute or law or of
any statute or law of any other country having jurisdiction.
Sonix has not participated directly or indirectly in any boycotts
or other similar practices affecting any of its customers. Sonix
has complied at all times with any and all applicable laws and
regulations including, without limitation, those relating to the
importation or exportation of its products.
3.13 Controlled Foreign Corporation. Sonix has never
been and at no time prior to the Closing will ever be a
"controlled foreign corporation" within the meaning of Section
957(a) of the Internal Revenue Code of 1986, as amended.
3.14 Labor Difficulties; No Discrimination.
(a) Sonix is not in material violation of any
applicable laws respecting employment and employment practices,
terms and conditions of employment, and wages and hours.
(b) There is no strike, labor dispute, slowdown,
or stoppage actually pending or threatened against Sonix.
(c) Sonix has not experienced any material labour
disputes or industrial action.
(d) There is and has been no claim against Sonix
based on actual or alleged race, age, sex, disability, harassment
or discrimination, or similar tortious conduct, nor, so far as
the Sellers are aware, is there any basis for any such claim.
(e) There is no unfunded prior service cost with
respect to any bonus, deferred compensation, pension,
profit-sharing, retirement, stock purchase, stock option, or
other employee benefit or fringe benefit plans, whether formal or
informal, maintained by Sonix.
(f) No circumstances have arisen under which
Sonix is likely to be required to pay damages for wrongful
dismissal, to make any statutory redundancy payment or any
payment in respect of unfair dismissal, to make any other payment
under the Employment Protection (Consolidation) Act 1978 (as
amended) or to reinstate or re-engage any former employees. So
far as the Sellers are aware, there are no pending or threatened
claims of any type against Sonix by any existing or former
employees.
(g) Sonix has neither given notice of any
redundancies to the Secretary of State not started consultations
with any independent trade union within the period of one year
prior to the date hereof.
(h) The Sonix Disclosure Schedule contains
details of
(i) the total number of Sonix's employees
(including any such on maternity leave or absent because of
disability or other long-term leave of absence and who have or
may have a right to return to work with Sonix;
(ii) the name, date of start of employment,
period of continuous employment (if different), salary and other
benefits of each such employee; and
(iii) the terms of the contract of each
director, other officer and employee of Sonix.
(i) Other than as disclosed in relation to
paragraph (l) above, Sonix does not have and is not proposing to
introduce a share incentive, option, profit sharing, bonus or
other incentive scheme for or any unfunded obligations accruing
for the benefit of any of its directors, other officers or
employees.
3.15 Pension Warranties
(a) The Sonix Communications Limited Group
Retirement Benefit Scheme arranged with Equity & Law Life
Assurance Society ("the Sonix Scheme") is and has been since its
establishment an occupational money purchase pension scheme. The
Sonix Communications Limited Group Personal Pension Plan arranged
with the Norwich Union Life Insurance Society ("the Sonix Plan")
is and has been since its establishment a group personal pension
arrangement. Sonix is the principal employer of the Sonix Scheme
and the only employer which has participated or is currently
participating in the Sonix Scheme. Sonix is the only employer
which contributes to or has contributed to the Sonix Plan.
(b) Sonix has supplied to the Buyer all material
details relating to the Sonix Scheme and the Sonix Plan (together
"the Schemes") and has disclosed to the Buyer complete and
accurate details of all contributions payable or prospectively
payable to the Schemes.
(c) (i) The Sonix Scheme complies with and has
at all times complied with the provisions of the relevant
legislation and the requirements of the Pension Schemes Office
and, if applicable, of the Occupational Pensions Board, affecting
schemes approved or capable of approval under Chapter I of Part
XIV of the Income and Corporation Taxes Act 1988 ("ICTA") and, if
applicable, contracted-out under the Pension Schemes Act 1993.
There is no reason why such approval may be withdrawn or not
obtained. Sonix and the trustees (if any) of the Sonix Scheme
have duly complied with their respective obligations under the
trust deeds and the rules or other governing documentation
thereof and under the aforementioned legislation and
requirements.
(ii) So far as the Sellers are aware, the
Sonix Plan complies with and has at all times complied with the
provisions of the relevant legislation and the requirements of
the Pension Schemes Office and, if applicable, of the
Occupational Pensions Board, affecting schemes approved or
capable of approval under Chapter IV of Part XIV of ICTA and, if
applicable, contracted-out under the Pension Schemes Act 1993.
So far as the Sellers are aware, there is no reason why such
approval may be withdrawn or not obtained. So far as the Sellers
are aware, Sonix and the trustees (if any) of the Sonix Plan have
duly complied with their respective obligations under the trust
deeds and the rules or other governing documentation thereof and
under the aforementioned legislation and requirements.
(d) All amounts due to the trustees (if any) of
the Schemes or to any employee (including any director or other
officer) or to any insurance company in connection with the
Schemes have been paid. All contributions made to the Schemes
have been eligible for and have received tax relief. All
contributions paid to the Schemes since their respective
establishment have been paid in accordance with any guarantees,
promises, or undertakings given (either orally or in writing, and
whether or not legally binding) to the employees, directors or
other officers of Sonix.
(e) (i) Neither Sonix nor the trustees (if any)
of the Sonix Scheme are engaged in any litigation or arbitration
proceedings in respect of the Sonix Scheme or any retirement
benefits scheme (as defined in Section 611 of ICTA) or any
benefit provided thereunder in relation to any person who is now
or has been an employee, director or other officer of Sonix and
Sonix has not been notified of any current submissions or
referrals to the Pensions Ombudsman or to the Occupational
Pensions Advisory Service in respect of such retirement benefit
scheme.
(ii) So far as the Sellers are aware, neither
Sonix nor the trustees (if any) of the Sonix Plan are engaged in
any litigation or arbitration proceedings in respect of the Sonix
Plan or any benefit provided thereunder in relation to any person
who is now or has been an employee, director or other officer of
Sonix and so far as the Sellers are aware, there are no current
submissions or referrals to the Pensions Ombudsman or to the
Occupational Pensions Advisory Service in respect of the Sonix
Plan.
(f) There has been no infringement of any legal
requirements relating to equality of pay or the treatment of male
and female employees, directors or other officers of Sonix
(whether directly or indirectly) in relation to the Sonix Scheme
including, without prejudice to the generality of the foregoing,
Article 119 of Treaty of Rome and there is and always has been an
equal normal retirement date under the Sonix Scheme.
(g) Other than the Schemes, there are and have
been no pension, life assurance benefits, disability benefits or
similar schemes, arrangements or obligations for or in respect of
any of the employees, directors or other officers of Sonix and
Sonix has no obligation (whether legally binding or established
by custom) to pay any pension or make any other payment after
retirement or death or otherwise to provide "relevant benefits"
within the meaning of Section 612 of ICTA to or in respect of any
person who is now or has been an employee, director or other
officer of Sonix and Sonix is not a party to any scheme or
arrangement having as its purpose or one of its purposes the
making of payments or the provision of benefits as aforesaid.
Furthermore, without prejudice to the generality of the
foregoing, other than the Sonix Plan, Sonix has no obligation or
liability (whether legally binding or established by custom) to
contribute to any personal pension scheme approved under Chapter
IV of Part XIV of ICTA in respect of any person who is now or has
been an employee, director or other officer of Sonix.
3.16 Trade Regulation. In the last twelve months, Sonix
has not terminated its relationship with or refused to ship Sonix
Products to any dealer, distributor, OEM, third party marketing
entity or customer which had theretofore paid or been obligated
to pay Sonix in excess of PS 6,500 over any consecutive twelve (12)
month period. All of the prices charged by Sonix in connection
with the marketing or sale of any products or services have been
in compliance with all applicable laws and regulations. No
claims have been communicated or threatened against Sonix with
respect to wrongful termination of any dealer, distributor or any
other marketing entity, discriminatory pricing, price fixing,
unfair competition, false advertising, or any other violation of
any laws or regulations relating to anti-competitive practices or
unfair trade practices of any kind, and, so far as the Sellers
are aware, there are no specific facts likely to provide any
basis for any such claim.
3.17 Insider Transactions. No Affiliate of Sonix has any
interest in (i) any material equipment or other property, real or
personal, tangible or intangible, including, without limitation,
any item of intellectual property, used in connection with or
pertaining to the business of Sonix, or (ii) any creditor,
supplier, customer, manufacturer, agent, representative, or
distributor of products of Sonix; provided, however, that no such
Affiliate or other person shall be deemed to have such an
interest solely by virtue of the ownership of less than 1% of the
outstanding stock or debt securities of any publicly-held
company, the stock or debt securities of which are traded on a
recognized stock exchange or quoted on the National Association
of Securities Dealers Automated Quotation System.
3.18 Employees, Independent Contractors and Consultants.
The Sonix Disclosure Schedule lists and describes all currently
effective agreements concluded with independent contractors or
consultants to which Sonix is a party relating to Sonix Products.
True and correct copies of all such written agreements have been
provided to Buyer or its representatives.
3.19 Insurance. The Sonix Disclosure Schedule contains a
list of the principal policies of fire, liability and other forms
of insurance held by Sonix. Sonix has complied with all
recommendations and notices made in respect of the maintenance of
such policies. So far as the Sellers are aware, Sonix has not
done anything, either by way of action or inaction, that might
invalidate such policies in whole or in part.
3.20 Litigation. There are no existing suits, actions or
proceedings or, so far as the Sellers are aware, any pending or
threatened against or affecting Sonix or which questions or
challenges the validity of this Agreement or the Transaction
Documents. There is no judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against Sonix.
3.21 Governmental Authorizations and Regulations. All
licences, franchises, permits and other governmental
authorizations held by Sonix and material to its business are
valid and sufficient for the business presently carried on by
Sonix.
3.22 Subsidiaries. Sonix has no subsidiaries. Sonix has
never owned or controlled (directly or indirectly) any capital
stock, bonds or other securities of, and does not have any
proprietary interest in, any other corporation, general or
limited partnership, firm, association or business organisation,
and Sonix has never controlled (directly or indirectly) the
management or policies of any other corporation, partnership,
firm, association or business organisation.
3.23 Compliance with Environmental Requirements. Sonix
has obtained all material permits, licenses and other
authorizations which are required to be obtained by it under
applicable laws relating to pollution or protection of the
environment, including laws or provisions relating to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials, substances, or
wastes into air, surface water, groundwater, or land, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials,
substances, or wastes. Except as set forth in the Sonix
Disclosure Schedule, Sonix is in material compliance with all
terms and conditions of such permits, licenses and
authorizations. Except as set forth in the Sonix Disclosure
Schedule, Sonix is not aware of, nor has Sonix received notice
of, any conditions, circumstances, activities, practices,
incidents, or actions which may form the basis of any claim,
action, suit, proceeding, hearing, or investigation of, by,
against or relating to Sonix, based on or related to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge,
release or threatened release into the environment, of any
pollutant, contaminant, or hazardous or toxic substance, material
or waste.
3.24 Corporate Documents. Sonix has furnished to Buyer
for its examination: (i) copies of its Memorandum of Association
and Articles of Association (having attached thereto copies of
all resolutions and agreements referred to in Section 380(2) of
the Companies Act 1985); (ii) its Minute Book containing all
records required to be set forth of all proceedings, consents,
actions, and meetings of the shareholders, the board of directors
and any committees thereof; (iii) all material permits, orders,
and consents issued by any regulatory agency with respect to
Sonix, or any securities of Sonix, and all applications for such
permits, orders, and consents; and (iv) the register of members
and other statutory registers of Sonix setting forth inter alia
all transfers of its shares since incorporation. All such books
and registers and other corporate records of Sonix are complete
and accurate in all material respects, and the signatures
appearing on all documents contained therein are the true
signatures of the persons purporting to have signed the same.
All actions reflected in such books and records were duly and
validly taken in compliance with the laws of the applicable
jurisdiction.
3.25 Residence and Domicile of Sellers. The location set
forth next to each Seller's name in Schedule I is such Seller's
place of legal residence or domicile of each Seller.
3.26 No Brokers. Except for Alex Brown & Sons, neither
Sonix nor any Sonix shareholder is obligated for the payment of
fees or expenses of any broker or finder in connection with the
origin, negotiation or execution of this Agreement or in
connection with any transaction contemplated hereby or thereby.
3.27 Pooling of Interests.
(a) Sonix is autonomous and has not been a
subsidiary or division of another corporation within two years
before the plan of combination is initiated.
(b) All grants of options to Optionholders have
been made in the ordinary course as part of regular performance
and compensation reviews and not in contemplation of the
Acquisition.
(c) Sonix has not changed the equity interest of
its voting common stock in contemplation of effecting the
combination either within two years before the plan of
combination is initiated or between the date the combination is
initiated and consummated; changes in contemplation of effecting
the combination may include distributions to stockholders and
additional issuances, exchanges, and retirements of securities,
including stock option grants.
(d) Sonix has not reacquired any shares in its
capital in the last two years and nor is it under any current
obligation to do so.
(e) Sonix has not entered into any other
financial arrangements for the benefit of the former stockholders
of Sonix, such as a guaranty of loans secured by stock issued in
the combination.
4. Representations and Warranties of Buyer. Buyer
represents and warrants to Sellers that:
4.1 Organization and Good Standing. Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of the State of California and has the right,
power and authority to carry on its business as now conducted.
4.2 Power, Authorization and Validity. Buyer has the
right, power, legal capacity and authority to enter into and
perform its obligations under this Agreement and the other
Transaction Documents to which it is a party. The execution and
delivery of this Agreement and the other Transaction Documents
have been, or will have been prior to the Closing, duly and
validly approved and authorized by the Board of Directors of
Buyer. No authorization or approval, governmental or otherwise,
is necessary in order to enable Buyer to enter into and to
perform the terms of this Agreement or the other Transaction
Documents on its part to be performed. This Agreement is, and
the other Transaction Documents when executed and delivered by
Buyer shall be, the valid and binding obligations of Buyer
enforceable in accordance with their respective terms.
4.3 No Violation of Existing Agreements. Neither the
execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will conflict with, or
result in a material breach or violation of, any provision of
Buyer's Articles of Incorporation, or its Bylaws, as currently in
effect, any instrument or contract to which Buyer is a party or
by which it is bound, or any federal, state or local judgment,
writ, decree, order, statute, rule or regulation applicable to
it. Neither the execution and delivery of this Agreement, nor
any Agreement attached hereto as an Exhibit, nor the consummation
of the transactions contemplated hereby or thereby will directly
have a material adverse effect on the operations, assets,
financial condition or prospects of Buyer.
4.4 Compliance With Other Instruments and Laws. Buyer
is not in violation of any provisions of its Articles of
Incorporation or Bylaws as currently in effect or in effect at
the Closing, or any federal, state or local judgment, writ,
decree, or order applicable to Buyer.
4.5 Litigation. There is no suit, action, proceeding,
claim or investigation pending or, so far as Buyer is aware,
threatened against Buyer before any court or administrative
agency which could have a material adverse effect on the
operations, assets, financial condition or prospects of Buyer or
which questions or challenges the validity of this Agreement and
which is not set forth in the SEC Documents (as defined below).
4.6 SEC Documents. Buyer has delivered to Sonix true,
accurate and complete copies of Buyer's most recent reports on
Forms 10-K, 10-Q and any report on Form 8-K filed since Buyer's
most recent 10-Q (collectively, the "SEC Documents"). As of
their respective filing dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act or
the Securities Act, as applicable, and the rules and regulations
adopted thereunder, respectively and taken together, the SEC
Documents contain no untrue statement of a material fact and did
not omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading except to
the extent corrected by a subsequently filed SEC Document.
4.7 Securities Act. Buyer acknowledges that the
Securities have not been registered under the Securities Act and
are being acquired by it in a transaction exempt from the
registration requirements thereof. Buyer further acknowledges
that it has received all information it desires concerning Sonix,
the Securities and any other matter it deems relevant or material
to an investment in the Securities. Buyer is an "accredited
investor" within the meaning of Rule 501(a)(3) of Regulation D
under the Securities Act having such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Securities and is able
to bear the economic risk of investment in the Securities
indefinitely. Buyer is acquiring the Securities for its own
account for the purpose of investment and not with a view to any
distribution, or participation in any distribution, of the
Securities. Buyer will not offer, sell, transfer or otherwise
dispose of any Securities or any interest therein except in
accordance with the Securities Act and any applicable state
securities or "blue sky" laws. Buyer agrees that the
certificates representing the Securities may bear legends to the
effect that the Securities have not been registered under the
Securities Act and that neither the Securities not any interest
therein may be offered, sold, transferred or otherwise disposed
of except in accordance with the Securities Act and any
applicable state securities or "blue sky" laws.
4.8 No Brokers. Buyer is not obligated for the payment
of fees or expenses of any broker or finder in connection with
the origin, negotiation or execution of this Agreement or the
other Transaction Documents or in connection with any transaction
contemplated hereby or thereby.
4.9 Pooling of Interests. To its knowledge, neither
Buyer nor any of its Affiliates has, through the date of this
Agreement, taken or agreed to take any action which would prevent
Buyer from accounting for the business combination to be effected
by the Acquisition as a pooling of interests.
4.10 Buyer Common Stock. The Buyer Common Stock, when
issued to the Sellers at Closing in compliance with the
provisions of this Acquisition Agreement, will be duly
authorized, validly issued, fully paid and nonassessable and, to
Buyer's knowledge, will be free of any liens, encumbrances or
restrictions on transfer caused or created by Buyer, other than
as set forth in or contemplated by this Acquisition Agreement, or
the exhibits attached thereto and the Escrow Agreement.
5. Preclosing Covenants of Sellers.
5.1 The executive directors of Sonix agree that prior to
Closing and receipt of written notice from Buyer they will use
their reasonable endeavours to procure that Sonix shall obtain
any and all consents necessary for the continued use, commercial
exploitation, enjoyment and benefit of the Material Contracts and
the Proprietary Rights by Sonix to such extent as enjoyed by
Sonix prior to the date of this Agreement provided that the
executive directors of Sonix shall not be required to take any
such action prior to Closing if, in their reasonable opinion,
they consider that it may be prejudicial to the business of
Sonix.
5.2 Advice of Changes. Each of the Sellers will as soon
as reasonably practicable after becoming aware of the same advise
Buyer in writing of any event occurring subsequent to the date of
this Agreement which would render any representation or warranty
of the Sellers contained in this Agreement, untrue or inaccurate
in any material respect.
5.3 Conduct of Business. Until the Closing, (so far as
they are able as Shareholders) each of the Sellers shall cause
Sonix to, continue to conduct its business and maintain its
business relationships in the ordinary and usual course and will
not, without the prior written consent of Buyer such consent not
to be unreasonably withheld or delayed:
(a) borrow any money which borrowings exceed in
the aggregate PS 13,000 other than under the terms of the existing
agreement with Kellock;
(b) incur or commit to incur any capital
expenditures in excess of PS 9,700 in the aggregate;
(c) lease, license, sell, transfer or encumber or
permit to be encumbered any asset, intellectual property right or
other property associated with the business of Sonix (including
sales or transfers to Affiliates of Sonix), except for sales of
inventory in the usual and ordinary course of business and except
for cash applied in payment of Sonix's liabilities in the usual
and ordinary course of its business;
(d) dispose of any of its assets, except
inventory in the ordinary course of business;
(e) enter into any lease or contract for the
purchase or sale of any property, real or personal except in the
ordinary course of business;
(f) fail to maintain its equipment and other
assets in good working condition and repair according to the
standards it has maintained up to the date of this Agreement,
subject only to ordinary wear and tear;
(g) pay any bonus, increased salary, or special
remuneration to any officer or employee, save to the extent that
Sonix is contractually obliged to do so;
(h) change accounting methods;
(i) declare, set aside or pay any cash or stock
dividend or other distribution in respect of capital, or redeem
or otherwise acquire any of its capital stock;
(j) amend or terminate any contract, agreement or
license to which it is a party except in the ordinary course of
business or as a result of a material breach on the part of the
other party;
(k) loan any amount to any person or entity, or
guaranty or act as a surety for any obligation except in respect
of advances or expenses in the ordinary course;
(l) waive or release any right or claim, except
in the ordinary course of business;
(m) issue or sell any shares of its capital stock
of any class or any other of its securities, or issue or create
any warrants, obligations, subscriptions, options, convertible
securities, or other commitments to issue shares of capital
stock.
(n) split or combine the outstanding shares of
its capital stock of any class or enter into any recapitalization
affecting the number of outstanding shares of its capital stock
of any class or affecting any other of its securities;
(o) merge, consolidate or reorganize with any
entity;
(p) amend its Memorandum of Association, or
Articles of Association
(q) make or change any election, change any
annual accounting period, adopt or change any accounting method,
file any amended tax return, enter into any closing agreement,
settle any tax claim or assessment relating to Sonix, surrender
any right to claim refund of taxes, consent to any extension or
waiver of the limitation period applicable to any tax claim or
assessment relating to Sonix, or take any other action or omit to
take any action, if any such election, adoption, change,
amendment, agreement, settlement, surrender, consent or other
action or omission would have the effect of increasing the tax
liability of Sonix or Buyer;
(r) do anything that would cause there to be
material adverse changes in the Sonix Financial Statements or in
Sonix financial position or prospects of Sonix including but not
limited to cash distributions or material decreases in the net
assets of Sonix, except as would occur in the ordinary course of
Sonix's business, between the date of the Sonix Unaudited
Financials and the Closing Date; or
(s) enter into a planning agreement within the
meaning of Section 21 of the Industry Act 1975 or into any other
voluntary arrangement with a Minister of the Crown or
governmental agency concerning the future development of Sonix.
(t) agree to do any of the things described in
the preceding Section 5.3(a) through (t).
5.4 Access to Information. Until the Closing, the
Sellers shall, so far as they are able as shareholders and, if
relevant, directors of Sonix, procure that Sonix allows Buyer
and its agents free access upon reasonable notice and during
normal working hours to its files, books, records, and offices,
including, without limitation, any and all information relating
to taxes, commitments, contracts, leases, licenses, and personal
property and financial condition. Until the Closing, the Sellers
shall, so far as they are able as shareholders and, if relevant,
directors of Sonix, procure that Sonix causes its accountants to
cooperate with Buyer and its agents in making available all
financial information requested, including without limitation the
right to examine all working papers pertaining to all financial
statements prepared or audited by such accountants subject to the
agreement between such accountants of the basis upon which such
access will be given.
6. Preclosing Covenants of Buyer.
6.1 Advice of Changes. Buyer will promptly advise Sonix
in writing of any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of
Buyer contained in this Agreement, if made on or as of the date
of such event or the Closing Date, untrue or inaccurate in any
material respect.
6.2 Reservation of Buyer Common Stock. Buyer shall
reserve for issuance, out of its authorized but unissued capital
stock, the maximum number of shares of Buyer Common Stock as may
be issuable upon consummation of the Acquisition and shall do and
procure that any third party shall do all such acts and things as
are necessary in order to ensure that the Buyer is able to comply
with its obligation to issue Buyer Common Stock in accordance
with this Agreement.
7. Mutual Covenants.
7.1 Confidentiality. Each party acknowledges that in
the course of the performance of this Agreement, it may obtain
the Confidential Information of the other party. The Receiving
Party shall, at all times, both during the term of this Agreement
and thereafter, keep in confidence and trust all of the
Disclosing Party's Confidential Information received by it. The
Receiving Party shall not use the Confidential Information of the
Disclosing Party other than as expressly permitted under the
terms of this Agreement or by a separate written agreement
between the parties hereto. The Receiving Party shall take all
reasonable steps to prevent unauthorized disclosure or use of the
Disclosing Party's Confidential Information and to prevent it
from falling into the public domain or into the possession of
unauthorized persons. The Receiving Party shall not disclose
Confidential Information of the Disclosing Party to any person or
entity other than its officers or employees (or outside legal or
accounting advisors) who need access to such Confidential
Information in order to effect the intent of this Agreement and
who have entered into confidentiality agreements with such
person's employer or who are subject to ethical restrictions on
disclosure which protects the Confidential Information of the
Disclosing Party. The Receiving Party shall immediately give
notice to the Disclosing Party of any unauthorized use or
disclosure of the Disclosing Party's Confidential Information.
The Receiving Party agrees to assist the Disclosing Party to
remedy such unauthorized use or disclosure of its Confidential
Information. These obligations shall not apply to the extent
that Confidential Information includes information which:
(a) is already known to the Receiving Party at
the time of disclosure, which knowledge the Receiving Party shall
have the burden of proving;
(b) is, or, through no act or failure to act of
the Receiving Party, becomes publicly known;
(c) is received by the Receiving Party from a
third party without restriction on disclosure (although this
exception shall not apply if such third party is itself violating
a confidentially obligation by making such disclosure);
(d) is independently developed by the Receiving
Party without reference to the Confidential Information of the
Disclosing Party, which independent development the Receiving
Party will have the burden of proving;
(e) is approved for release by written
authorization of the Disclosing Party; or
(f) is required to be disclosed by a government
agency to further the objectives of this Agreement or by a proper
order of a court of competent jurisdiction; provided, however
that the Receiving Party will use its best efforts to minimize
such disclosure and will consult with and assist the Disclosing
Party in obtaining a protective order prior to such disclosure.
7.2 No Public Announcement. The parties shall make no
public announcement concerning this Agreement, their discussions
or any other memos, letters or agreements between the parties
relating to the Acquisition until such time as they agree to the
contents of a press release in the agreed form which they intend
to publicly-release on March 22, 1995. A party, but only after
reasonable consultation with the other, may make disclosure if
required under applicable law or regulation.
7.3 Other Negotiations. Between the date hereof and
Closing, or such earlier date as this Agreement is terminated or
rescinded in accordance with its terms (the "Expiration Date"),
each Seller will not and will procure that Sonix will not (and
will use its best efforts to assure that its and Sonix's
officers, directors, employees, agents and affiliates do not)
take any action to solicit, initiate, seek, encourage or support
any inquiry, proposal or offer from, furnish any information to,
or participate in any negotiations with, any corporation,
partnership, person or other entity or group (other than
discussions with Buyer) regarding any acquisition of Sonix,
purchase of the Seller's Sonix Stock, any merger or consolidation
with or involving Sonix, or any acquisition of any material
portion of the stock or assets of Sonix. Each Seller agrees, and
will procure that Sonix agrees, that any such negotiations in
progress as of the date hereof will be terminated or suspended
during such period. In no event will Sonix or any Seller solicit
or enter into an agreement concerning any such third party
transaction. Each Seller, represents and warrants that it and
Sonix has the legal right to terminate or suspend any such
pending negotiations and agrees to indemnify Buyer, its
representatives and agents from and against any claims by any
party to such negotiations based upon or arising out of the
discussion or any consummation of the Acquisition as contemplated
by this Agreement. Buyer agrees that from the date hereof until
the Expiration Date, it shall not initiate or continue any
discussions with any corporation, partnership, person or other
entity or group regarding any acquisition of, any merger or
consolidation with, or involving any acquisition of any material
portion of the stock or assets of any corporation, partnership,
person or other entity or group the acquisition of which would be
a substitute for the acquisition of Sonix.
7.4 Pooling Accounting. From the date hereof until the
earlier of the Closing of the Acquisition or the termination or
rescission in accordance with its terms of this Agreement, none
of the Sellers will sell, transfer or otherwise dispose of, or
reduce its interest in or risk relating to, any shares of Sonix
Stock owned by it. In addition, none of the Sellers will sell,
transfer or otherwise dispose of, or reduce its interest in or
risk relating to, any Buyer Common Stock issued to it pursuant to
the Acquisition, or any other shares of Buyer capital stock,
until after such time as Buyer has published (within the meaning
of Accounting Series Release No.130, as amended, of the
Securities and Exchange Commission) financial results covering at
least 30 days of combined operations of Buyer and Sonix. The
Buyer undertakes to the Seller that it will so publish such
financial results by no later than _______* unless prevented from
doing so by a force majeure event or circumstance outside the
Buyer's control. Notwithstanding anything to the contrary
contained herein, each Seller will be permitted to sell, transfer
or otherwise dispose of, or reduce its interest in or risk
relating to, beginning on the date of this
_________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
Agreement and ending at such time after the Closing of the
Acquisition as financial results covering at least (30) days of
combined operations of Buyer and Sonix have been published or
released as contemplated above, an amount of Sonix Stock or
equivalent post-Acquisition Buyer Common Stock equal to the
lesser of (i) ________ * of the Sonix Stock or equivalent post-
Acquisition Buyer Common Stock owned by it and (ii) on an
aggregated basis with all other shareholders of Sonix (the "Other
Holders"), the equivalent of ________ * of the total number of
outstanding shares of Sonix Stock prior to the Acquisition (in
each of case (i) and case (ii) as measured at the date of such
sale or transfer); provided, however, that any such sale or
transfer must be pre-approved in writing by all Other Holders.
7.5 Pooling Accounting. The Sellers undertake that they
will not take any action prior to Closing and will, so far as
they are able to exercise powers of control over Sonix as
shareholders and, if relevant, directors prior to Closing,
procure that Sonix will not prior to Closing take any action that
would make the Sellers in breach of the Warranties set out in
Section 3.27 if such Warranties had been repeated as at and for
the period up to Closing.
7.6 Legends.
(a) Each certificate or instrument representing
the shares of Buyer Common Stock issued in the Acquisition to a
Regulation S Shareholder may be endorsed with legends in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN ISSUED PURSUANT TO AND ARE SUBJECT TO
APPLICABLE RESTRICTIONS OF REGULATION S UNDER THE SECURITIES ACT
OF 1993, AS AMENDED (THE "ACT"), AND HAVE NOT BEEN REGISTERED
UNDER THE ACT AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED, EXCEPT (I) IN CONJUNCTION WITH AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER SUCH ACT, OR (II) IN
COMPLIANCE WITH AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
THESE SECURITIES ARE ALSO SUBJECT TO RESTRICTIONS ON TRANSFER
CONTAINED IN SECTION ____ OF THAT ACQUISITION AND EXCHANGE
AGREEMENT DATED MARCH ___, 1995 WHICH PROHIBITS TRANSFERS OF
THESE SECURITIES PRIOR TO THE DATE OF PUBLICATION OF THE
COMPANY'S FINANCIAL RESULTS FOR THE FISCAL YEAR ENDED MAY 31,
1995."
(b) Each certificate or instrument representing
the shares of Buyer Common Stock issued in the Acquisition to
U.S. residents may be endorsed with legends in substantially the
following form:
_________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES WHICH IS REASONABLY SATISFACTORY TO THE COMPANY, TO
THE EFFECT THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION
IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF SUCH ACT. THESE SECURITIES ARE ALSO SUBJECT TO RESTRICTIONS
ON TRANSFER CONTAINED IN SECTION 9.3 OF THAT CERTAIN ACQUISITION
AND EXCHANGE AGREEMENT DATED MARCH 22, 1995 WHICH PROHIBITS
TRANSFERS OF THESE SECURITIES PRIOR TO THE DATE OF PUBLICATION OF
THE COMPANY'S FINANCIAL RESULTS FOR THE YEAR ENDED MAY 31, 1995."
(c) Buyer need not register a transfer of any
such Buyer Common Stock issued in the Acquisition, and may also
instruct its transfer agent to register the transfer of the
Offered Shares, unless the conditions specified in the foregoing
legends are satisfied to the extent applicable. Buyer shall use
reasonable efforts to remove such legends upon request of a
Seller following the expiration of all restrictions imposed on
transfer of such Offered Shares under the Securities Act.
7.7 Further Assurances. Prior to and following the
Closing, each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be
reasonably requested by any other party at that other party's
cost to give effect to the transactions described herein and
contemplated hereby.
8. Closing.
8.1 Closing shall take place on the Closing Date when
all (but not some only unless waived by the parties entitled
thereto) of the events described in this Section 8 shall occur.
8.2 At Closing, the Sellers shall deliver to the
Purchaser:
(a) duly executed transfers of all of the Sonix
Stock in favour of the Buyer together with the relative share
certificates;
(b) the title deeds to the Property;
(c) all the statutory books of Sonix and its
certificate of incorporation and common seal;
(d) the Escrow Agreement duly executed by the
Sellers in the agreed form;
(e) certified copies of any powers of attorney
under which any of the documents referred to in this Section 8.2
is executed or evidence satisfactory to the Buyer of the
authority of any person signing on its behalf;
(f) letters of resignation in the agreed form
from such of the directors of Sonix as may be notified to the
Sellers, such resignations to take effect from close of the
meeting of the board referred to in Section 8.3 below;
(g) a release duly executed as a deed, in the
agreed form, releasing Sonix from any liability whatsoever
(whether actual or contingent) which may be owing to the Sellers
(other than the Optionholders) by Sonix at Closing;
(h) a release duly executed as a deed by the
parties to the Subscription and Shareholders Agreement dated 12
June 1992, in the agreed form, releasing each of the parties
thereto from any liability whatsoever (whether actual or
contingent) which may be owing by either of them to any person
under that agreement and terminating such agreement;
(i) opinions in the agreed form from Conyers Dill
and Pearman, Shaw, Pittman, Potts and Trowbridge and Wilson,
Sonsini, Goodrich and Rosati;
(j) employment agreements in the agreed form duly
executed by the persons listed in Schedule 3;
(k) Reg S representation letters in the agreed
form duly executed by the Sellers listed in part II of Schedule
1, ___________ * (to the extent that it is a non-US Person
8.3 At Closing, the Buyer and the Seller (so far as they
are respectively able) shall cause the directors to hold a
meeting of the board of Sonix at which the directors shall pass
resolutions in the approved terms (inter alia) to :-
(a) approve the registration of the Buyer as a
member of Sonix subject only to the production of duly stamped
and completed transfers in respect of the Sonix Stock;
(b) appoint such persons as the Buyer may
nominate as directors of Sonix;
_________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
(c) if required by five Business Days' prior
written notice to the Sellers' Solicitors, revoke all authorities
to the bankers of Sonix relating to bank accounts and to give
authority to such persons as the Buyer may nominate to operate
the same.
8.4 At Closing, Buyer shall
(a) deliver to the Sellers the Escrow Agreement
duly executed by Buyer in the agreed form;
(b) allot and issue to the Sellers the
Acquisition Consideration free from any claims, liens or
encumbrances (save for those expressly provided for in this
Agreement);
(c) take such action as is required by the Escrow
Agreement;
(d) deliver to the Sellers certificates
representing the balance of the Acquisition Consideration;
(e) deliver to the persons entitled thereto such
amount of cash as is payable pursuant to Section 2.3.
(f) procure that Sonix redeems the Loan Stock and
pays all interest accrued thereon to the holders thereof up to
and including the date of Closing;
(g) pay by company cheque or wire transfer the
fees and expenses set out in the letter in the agreed form;
(h) pay _______ * as reimbursement of fees or
expenses incurred not solely and directly related to the
Acquisition for investment or estate planning advice or for
legal, accounting or investment advice or counsel pertaining to
participation, or action with respect, to the Acquisition as an
individual shareholder;
(i) deliver to the Sellers' Solicitors the
opinion in the agreed form of Gay Carey Ware & Freidenrich.
8.5 At Closing, ________ * shall deliver to the Buyer
copies of an invoice or invoices in respect of fees or expenses
of an aggregate ammont of * or its sterling
equivalent in respect of advice referred to Section 8.4(h);
_________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
8.6 Without prejudice to any other rights which any of
the Sellers may have, if the Closing does not occur on or before
________* as a result of Buyer failing to comply with any of its
obligations under Section 8.4 and, at the discretion of the
Sellers, Closing occurs at any date thereafter, Buyer undertakes
to the Sellers promptly to publish (within the meaning of
Accounting Series Release No. 130, as amended of the Securities
and Exchange Commission) financial results covering at least 30
days of combined operations of Buyer and Sonix, such period to
end at the end of a calendar month, as soon as possible after
Closing provided that the obligation of Buyer under this Section
shall not apply if Buyer's failure to comply with its obligations
under Section 8.4 is for a reason outside the control of Buyer
and which did not arise as a result of any act or omission of
Buyer.
8.7 Without prejudice to any other remedies available to
any party, if in any respect the provisions of Section 8.2, 8.3
or 8.5 are not complied with by any of the Sellers at Closing,
the Buyer may or, if in any respect the provisions of Section 8.4
are not complied with by Buyer at Closing, the Sellers may:
(a) defer Closing to a date not more than 28 days
after the Closing Date (and so that the provisions of this
Section 8.7 shall apply to Closing as so deferred); or
(b) proceed to Closing so far as practicable
(without prejudice to its rights under this Agreement); or
(c) without liability of any kind, rescind this
Agreement by written notice to the other party whereupon this
Agreement shall terminate and, save in respect of any antecedent
breaches of this Agreement, no party shall be under any
continuing liability to any other under this Agreement.
8.8 In the event that the Buyer fails to comply with its
obligations under this Section 8, then (without prejudice to the
rights of the Sellers under Section 2.7) the Buyer agrees to
indemnify each of the Sellers (for themselves and as trustee for
Sonix) for and against all third party costs and expenses
incurred by each of the Sellers or Sonix in connection with the
negotiation and execution of this Agreement. Buyer further
undertakes that, in such event, at the request of the Sellers and
at its cost, it shall take all actions and provide such
assistance as the Sellers may require to be taken or provided to
reverse any actions which Buyer or its directors, officers or
nominees shall have taken after the date of this Agreement in
respect of Sonix in exercise of its rights hereunder including,
without limitation, procuring the resignation of any directors of
Sonix nominated by Buyer. In the event that the Buyer fails to
comply with its obligations under this Section 8 due to a reason
within
___________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
its control, then (without prejudice to the rights of the Sellers
under Section 2.7) the Buyer agrees to indemnify each of the
Sellers (for themselves and as trustee for Sonix) for and against
claims, losses, liabilities, costs or expenses incurred by each
of the Sellers or Sonix to which they would not have been subject
or which they would not have incurred (i) had the breach not
occurred provided, however, that (but without prejudice to any
other rights or remedies available against the Buyer whether in
equity or at law) (a) Buyer shall not be obliged to indemnify the
Sellers in respect of any consequential loss of profit which may
be suffered by the Sellers as a result of Buyer failing to comply
with its obligations under this Section 8, (b) the Sellers and
Sonix shall have an obligation to take reasonable steps to
mitigate any such claims, losses, liabilities, costs or expenses
and (c) the aggregate maximum liability of Buyer to the Sellers
and Sonix under this Section 8.8 shall be an amount equal to the
Aggregate Purchase Price. For the avoidance of doubt, but
without prejudice to any other rights or remedies available
against the Buyer, whether in equity or at law, in the event that
the Buyer fails to comply with its obligations under this Section
8 due to a reason outside its control, Buyer shall not have any
obligation to indemnify the Sellers or Sonix in respect of any
claims, losses, liabilities, costs or expenses incurred in
connection therewith.
9. Registration of Acquisition Consideration.
9.1 Registrable Shares. "Registrable Shares" shall mean
the shares of Acquisition Consideration, but excluding (i) shares
of Acquisition Consideration that have been issued to Sellers
pursuant to or in reliance on Regulation S of the Securities Act
and (ii) shares of Acquisition Consideration that have been sold
or otherwise transferred by the initial holders; provided
however, that a distribution of shares of Acquisition
Consideration, without additional consideration, to underlying
beneficial owners (such as the general and limited partners,
shareholders or trust beneficiaries of a Seller) shall not be
deemed such a sale or transfer for purposes of this subclause
(ii) and such underlying beneficial owners shall be entitled to
the same rights under this Section 9 as the Seller from which
Registrable Shares were received.
1
9.2 Required Registration. Buyer shall use its best
efforts to prepare and file with the Commission a registration
statement on Form S-3 (or such other appropriate form) with
respect to the Registrable Shares (the "Registration Statement")
and to effect all such registrations, qualifications and
compliances (including, without limitation, obtaining appropriate
qualifications under applicable state securities or "blue sky"
laws and compliance with any other applicable governmental
requirements or regulations) as any selling Holder may reasonably
request and that would permit or facilitate the sale of
Registrable Shares (provided however that Buyer shall not be
required in connection therewith to qualify to do business or to
file a general consent to service of process in any such state or
jurisdiction), in each case so that such registration statement
and all other such registrations, qualifications and compliances
may become effective as soon as practicable after the Buyer
publishes its financial results for the year ended May 31, 1995
and reflecting at least thirty days of combined operations of
Buyer and Sonix (the "Pooling Release Date").
9.3 Effectiveness; Trading Windows.
(a) Buyer will use best efforts to maintain the
effectiveness of the Registration Statement and other applicable
registrations, qualifications and compliances for up to two (2)
years from the Closing Date (the "Registration Effective
Period"), and from time to time will amend or supplement the
Registration Statement and the prospectus contained therein as
and to the extent necessary to comply with the Securities Act,
the Exchange Act and any applicable state securities statute or
regulation, subject to the following limitations and
qualifications.
(b) Following the Pooling Release Date, and
commencing upon such date as the Registration Statement is first
declared effective, the holders will be permitted (subject to the
Suspension Right) to offer and sell Registrable shares in the
manner described in the Registration Statement for the period
ending on ___________ * (the "Initial Window").
(c) After the Initial Window and throughout the
remainder of the Registration Effective Period, the Holders shall
suspend all open market offers and sales of Registrable Shares
during each period ___________ ___________ *
___________________ At other times during the Registration
Effective Period ("Window Periods"), Holders will be permitted
(subject to the Suspension Right) to offer and sell Registrable
Shares in the manner described in the Registration Statement
provided that (A) the Registration Statement remains effective
and has not been suspended and (B) the holder follows the trading
clearance procedure set forth below.
(d) Notwithstanding any other provision of this
Section 9, the Buyer shall have the right at any time to require
that all holders suspend further open market offers and sales of
Registrable Shares whenever, and for so long as, in the
reasonable judgement of Buyer there is or may be in existence
material undisclosed information or events with respect to Buyer
(the "Suspension Right"). In the event Buyer exercises the
Suspension Right, such suspension will continue for the period of
time reasonably necessary for disclosure to occur at a time that
is not detrimental to the Buyer and its shareholders or until
such time as the information or event is no longer material, each
as determined in good faith by Buyer.
9.4 Trading Clearance Procedure. During any Window
Period, a holder proposing to offer or sell Registrable Shares
pursuant to the Registration Statement shall contact Buyer by fax
__________ * addressed to the attention of
__________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
General Counsel, at least two (2) business days prior to the date
proposed for offering Registrable Shares by such holder. Buyer
shall reply to such holder by fax within two (2) business days
following receipt of the inquiry fax, and in the reply will
either confirm that the Window Period remains open or notify the
holder that trading is suspended (and indicating, if practicable,
the expected date when such suspension will end). If the reply
confirms an open Window Period, then the holder is permitted to
offer and sell Registrable Shares during the next five business
days. Any Registrable Shares to be sold by such holder
thereafter will again require clearance in accordance with this
section. Notwithstanding the foregoing, during the Initial
Window, holders are not required to contact Buyer or to request
clearance of their proposed sales of Registrable Shares.
9.5 Administration. Prior to the Pooling Release Date,
Buyer will provide to each Seller who receives Registrable Shares
an information sheet summarizing the registration rights set
forth herein, outlining the anticipated time frame of the Initial
Window and the subsequent Window Periods, and providing forms for
use in requesting clearance of trades in accordance with Section
9.4. In the event that a Seller who receives Registrable Shares
proposes to distribute such shares to underlying beneficial
owners thereof, such Seller will so notify Buyer a reasonable
number of days in advance and deliver to Buyer such lists of the
distributees, their holdings, telecopy numbers and contact
persons, as Buyer may reasonably request, and will otherwise
cooperate with Buyer to permit Buyer to administer requests for
trading clearance and to contact holders of Registrable Shares
when necessary to exercise the Suspension Right.
9.6 Expenses. The costs and expenses to be borne by
Buyer for purposes of this Section 9 shall include, without
limitation, printing expenses (including a reasonable number of
prospectuses for circulation by the selling shareholders), legal
fees and disbursements of counsel for Buyer, "blue sky" expenses,
accounting fees and filing fees, but shall not include
underwriting commissions or similar charges, legal fees and
disbursements of counsel for the selling shareholders.
9.7 Indemnification.
(a) To the fullest extent permitted by law, Buyer
will indemnify and hold harmless each selling Holder, each
underwriter of Buyer Common Stock being sold by such Holders
pursuant to this Section 9 and each person, if any, who controls
any such Holder or underwriter within the meaning of the
Securities Act or the Exchange Act against all actions, claims,
losses, damages, liabilities and expenses to which they or any of
them become subject under the Securities Act, the Exchange Act or
under any other statute or at common law or otherwise and, except
as hereinafter provided, will promptly reimburse each such
Holder, each such underwriter and each such controlling person,
if any, for any legal or other expenses reasonably incurred by
them or any of them in connection with investigating or defending
any actions whether or not resulting in any liability, insofar as
such losses, claims, damages, expenses, liabilities or actions
arise out of or are based upon any untrue statement or alleged
untrue statement of material fact in any registration statement
and any prospectus filed pursuant to Section or any
post-effective amendment thereto or arise out of or are based
upon any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading or any violation by Buyer of any rule or
regulation promulgated under the Securities Act or the Exchange
Act applicable to Buyer and relating to action or inaction
required of Buyer in connection with such registration; provided,
however, that Buyer shall not be liable to any such Holder,
underwriter or controlling person in respect of any claims,
losses, damages, liabilities and expenses resulting from any
untrue statement or alleged untrue statement, or omission or
alleged omission made in reliance upon and in conformity with
information furnished in writing to Buyer by such Holder or
underwriter specifically for use in connection with such
registration statement and prospectus or post-effective
amendment. To the fullest extent permitted by law, each selling
Holder of Registrable Shares registered in accordance with
Section will indemnify Buyer, each person, if any, who controls
Buyer within the meaning of the Securities Act or the Exchange
Act, each director of Buyer and each officer of Buyer who signs
the registration statement and each underwriter of Buyer Common
Stock against any actions, claims, losses, damages, liabilities
and expenses to which they or any of them may become subject
under the Securities Act, the Exchange Act or under any other
statute or at common law or otherwise, and, except as hereinafter
provided, will promptly reimburse Buyer and each such director,
officer, underwriter or controlling person for any legal or other
expenses reasonably incurred by them or any of them in connection
with investigating or defending any actions whether or not
resulting in any liability, insofar as such losses, claims,
damages, expenses, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in
conformity with information furnished in writing to Buyer by such
Holder or underwriter specifically for use in connection with
such registration statement, prospectus or post-effective
amendment; provided however, that the obligations of each such
selling Holder hereunder shall be limited to an amount equal to
the proceeds to such Holder from the sale of such Holder's
Registrable Shares as contemplated herein.
(b) Each person entitled to indemnification under
this section 9.7 (the "Indemnified Party") shall give notice to
the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought and
shall permit the Indemnifying Party to assume the defense of any
such claim and any litigation resulting therefrom, provided that
counsel for the Indemnifying Party who conducts the defense of
such claim or any litigation resulting therefrom shall be
approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may
participate in such defense at such party's expense (unless the
Indemnified Party has reasonably concluded that there may be a
conflict of interest between the Indemnifying Party and the
Indemnified Party in such action, in which case the fees and
expenses of counsel shall be at the expense of the Indemnifying
Party), and provided further that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 9 unless
the Indemnifying Party is materially prejudiced thereby. No
Indemnifying Party, in the defense of any such claim or
litigation, shall (except with the consent of each Indemnified
Party) consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such a claim or
litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall
be reasonably required in connection with the defense of such
claim and litigation resulting therefrom.
(c) To the extent that the indemnification
provided for in this Section 9.7 is held by a court of competent
jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred
to herein, then the Indemnifying Party, in lieu of indemnifying
such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such
loss, liability, claim, damage or expense in such proportion as
is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other
in connection with the statements or omissions which resulted in
such loss, liability, claim, damage or expense, as well as any
other relevant equitable considerations. The relative fault of
the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Indemnifying Party or by the
Indemnified Party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission.
10. Termination of Agreement.
10.1 Termination. This Agreement may be terminated at
any time prior to the Closing by the mutual written consent of
each of the parties hereto.
10.2 Certain Effects of Termination. In the event of the
termination of this Agreement each party, if so requested by the
other party, will (i) return promptly every document (other than
documents publicly available) furnished to it by the other party
(or any subsidiary, division, associate or affiliate of such
other party) in connection with the transactions contemplated
hereby, whether so obtained before or after the execution of this
Agreement, and any copies thereof which may have been made, and
will cause its representatives and any representatives of
financial institutions and investors and others to whom such
documents were furnished promptly to return such documents and
any copies thereof any of them may have made, or (ii) destroy
such documents and cause its representatives and such other
representatives to destroy such documents, and such party shall
deliver a certificate executed by its president or vice president
stating to such effect.
11. Agreement to Indemnify. Subject to the limitations
set forth in Schedule 2, each of the Sellers will indemnify and
hold harmless Buyer from and against (i) any and all claims,
demands, actions, causes of actions, losses, costs, damages,
liabilities and expenses arising out of any breach of the
Warranties contained in Sections 3.4 (f) and 3.5 and Exhibit C
provided that in respect of any breach of the warranty contained
in Section 3.4(f) the indemnity under this Section 11 shall be
limited to the amount by which there is a shortfall in the net
assets of Sonix as at 31 March 1995 below the net assets as set
out in the Sonix Unaudited Financial Statements and (b) all
reasonable costs which Buyer may properly incur (whether before
or after the commencement of an action) in connection with the
settlement of any claim in respect of a breach of any of the
Warranties, legal proceedings against the Sellers in respect of
such a claim in which judgment is given for Buyer or the
enforcement of any such judgment.
12. Restriction of certain Sellers.
12.1 Each of the Sellers referred to in Section 12.4(d)
hereby agrees that he shall not (without the prior consent in
writing of Buyer) for the Specified Period following the date of
this Agreement within the UK and whether on his own account or in
conjunction with or on behalf of any other person, firm, company
or other organisation, and whether as an employee, director,
principal, agent, consultant or in any other capacity whatsoever
in competition with Sonix be directly or indirectly employed or
engaged in or perform services in respect of or be concerned
with:
(a) the research into, development, manufacture,
supply or marketing of any product which is of the same or
similar type to any product researched, or developed, or
manufactured, or supplied, or marketed by Sonix during the twelve
months immediately preceding the date of this Agreement;
(b) the development or provision of any services
(including but not limited to technical and product support, or
consultancy or customer services) which are of the same or
similar type to any services provided by Sonix during the twelve
months preceding the date of this Agreement;
PROVIDED ALWAYS that the provisions of this
Section 12.1 shall apply only in respect of products or services
with which the relevant Seller was either personally concerned or
for which the relevant Seller was responsible whilst employed by
Sonix during the twelve months immediately preceding the date of
this Agreement.
12.2 Each of the Seller referred to in Section 12.4(d)
hereby agrees that he will not for a period of 12 months
immediately following the date of this Agreement, whether on his
own behalf or in conjunction with any person, company, business
entity or other organisation whatsoever directly or indirectly:
(a) solicit or assist in soliciting in
competition with Sonix, the custom or business of any Customer or
Prospective Customer:
(i) with whom the relevant Seller has had
personal contact or dealings on behalf of Sonix during the 12
months immediately preceding the date of this Agreement;
(ii) with whom employees reporting to the
relevant Seller have had personal contact or dealings on behalf
of Sonix during the 12 months immediately preceding the date of
this Agreement;
(iii) for whom the relevant Seller was
directly or indirectly responsible during the 12 months
immediately preceding the date of this Agreement;
(b) accept, or facilitate the acceptance of, or
deal with, in competition with Sonix the custom or business of
any Customer or Prospective Customer within categories (i) to
(iii) above.
12.3 Each of the Sellers referred to in Section 12.4(d)
hereby agrees that he will not for a period of 12 months
immediately following the date of this Agreement, either on his
own account or in conjunction with or on behalf of any other
person, company, business entity or other organisation whatsoever
directly or indirectly:
(a) induce, solicit, entice or procure, any
person who is a Company Employee to leave such employment, where
that person is:
(i) a Company Employee on the date of this
Agreement; or
(ii) had been a Company Employee in any part
of the three months immediately preceding the date of this
Agreement;
(b) accept into employment or otherwise engage or
use the services or any person who:-
(i) is a Company Employee on the date of
this Agreement; or
(ii) had been a Company Employee in any part
of the three months immediately preceding the date of this
Agreement.
12.4 The following words and expressions referred to
above shall have the meanings set out below:
(a) "Customer" shall mean any person, firm,
company or other organisation whatsoever to whom Sonix has
supplied goods or services.
(b) "Prospective Customer" shall mean any person,
firm, company or other organisation whatsoever to whom Sonix has
offered to supply goods or services, or to whom Sonix has
provided details of the terms on which it would or might be
willing to supply goods or services, or with whom Sonix has had
any negotiations or discussions regarding the possible supply of
goods or services.
(c) "Company Employee" means any person who was
employed by Sonix, and
(i) with whom the Executive has had personal
contact or dealings in performing his duties of employment; or
(ii) who reported to the relevant Seller; or
(iii) who had material contact with
customers or suppliers of Sonix in performing his or her duties
of employment with Sonix or any Associated Company (as
applicable); or
(iv) who was a member of the management team
of the Company or any Associated Company.
(d) "Specified Period" in relation to ________*
shall be the period of _________ * in relation to _________*
shall be the period of 2 years and in relation to the following
Sellers shall be the period of ________ *
______* ______ * ______ *
______ * ______* ______ *
______* ______ * ______ *
______ * ______* ______ *
__________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
12.5 While the restrictions contained in this Section
12 are considered by the parties to be reasonable in all the
circumstances, it is recognised that restrictions of the nature
in question may fail for technical reasons and accordingly it is
hereby agreed and declared that if any of such restrictions shall
be adjudged to be void as going beyond what is reasonable in all
the circumstances for the protection of the interests of Sonix
but would be valid if part of the wording thereof were deleted or
the periods thereof reduced or the range of activities or area
dealt with thereby reduced in scope the said restriction shall
apply with such modifications as may be necessary to make it
valid and effective.
12.6 The restrictions contained in Section 12.1 shall
be without prejudice to performance by and shall not limit the
restrictions on those of the Sellers who are listed in Schedule 3
under the terms of agreements entered into pursuant hereto.
13. Miscellaneous.
13.1 Governing Law.
(a) This Agreement is governed by English law.
(b) The courts of England have exclusive
jurisdiction to hear and decide any suit, action or proceedings,
and to settle any disputes, which may arise out of or in
connection with this Agreement (respectively "Proceedings" and
"Disputes") and, for these purposes, the Buyer irrevocably
submits for the benefit of the Sellers, and the Sellers
irrevocably submit for the benefit of the Buyer, to the
jurisdiction of the courts of England.
(c) The Buyer and the Sellers irrevocably waive
any objection which they might at any time have to the courts of
England being nominated as the forum to hear and decide any
Proceedings and to settle Disputes and agrees not to claim that
the courts of England are not a convenient or appropriate forum.
(d) Proceeds by which any Proceedings are begun
in England may be served on the Buyer by being delivered to Baker
& McKenzie, marked for the attention of the Partner in charge of
the Litigation Department/Service of Process (Ref: TEDG/AH/SJB),
at 100 New Bridge Street, London EC4V 6JA and on the Sellers by
being delivered to the persons and addresses set out below.
Nothing contained in this paragraph (d) affects the right to
serve process in another manner permitted by law.
_________ * _________ *
_________ * _________ *
_________ * _________ *
_________ * _________ *
_________ * __________ *
_________ * __________ *
_________ * __________ *
_________ * __________ *
13.2 Binding upon Successors. Subject to, and unless
otherwise provided in, this Agreement each and all of the
covenants, terms, provisions and agreements contained herein
shall be binding upon, and inure to the benefit of, the
successors, executors and heirs of the parties. None of the
parties may assign the benefit of any of its rights under this
Agreement to any other person, save that Buyer shall be entitled
to assign to any purchaser of more than 75 per cent of the Sonix
Stock or of the whole or substantially the whole of Sonix's
business the benefit of the covenants contained in Section 12.
13.3 Severability. If any provision of this Agreement,
or the application thereof, shall for any reason and to any
extent be invalid or unenforceable, the remainder of this
Agreement and application of such provision to other persons or
circumstances shall be interpreted so as best to reasonably
effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this
Agreement with a valid and enforceable provision which will
achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provision.
13.4 Entire Agreement. This Agreement, the exhibits
hereto, the documents referenced herein, and the exhibits
thereto, constitute the entire understanding and agreement of the
parties hereto with respect to the subject matter hereof and
thereof and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied,
written or oral, between the parties with respect hereto and
thereto. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any
of the terms hereof.
13.5 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original as
against any party whose
__________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
signature appears thereon and all of which together shall
constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually
or taken together, shall bear the signatures of all of the
parties reflected hereon as signatories.
13.6 Expenses. Except as provided to the contrary
herein, each party shall pay all of its own costs and expenses
incurred in connection with the Acquisition, including all legal
and accounting fees and expenses, with respect to the
negotiation, execution and delivery of this Agreement and the
exhibits hereto whether or not the Acquisition is consummated.
In the event the Acquisition is consummated, all legal,
accounting, investment banking, broker's and finder's fees
incurred by Sonix and/or the Sellers in connection with the
Acquisition shall be deemed to be expenses of the Shareholders,
shall be borne by the Sellers and shall not become obligations of
Sonix except as to the agreed amounts to be paid by Buyer in
accordance with Section 8.4.
13.7 Amendment and Waivers. Any term or provision of
this Agreement may be amended, and the observance of any term of
this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only by a
writing signed by the party to be bound thereby. The waiver by a
party of any breach hereof for default in payment of any amount
due hereunder or default in the performance hereof shall not be
deemed to constitute a waiver of any other default or any
succeeding breach or default.
13.8 Survival of Agreements. All covenants,
agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby
notwithstanding any investigation of the parties hereto.
13.9 No Waiver. The failure of any party to enforce
any of the provisions hereof shall not be construed to be a
waiver of the right of such party thereafter to enforce such
provisions.
13.10 Notices. Any notice provided for or
permitted under this Agreement will be treated as having been
given when (a) delivered personally, (b) sent by confirmed telex
or telecopy, (c) sent by commercial overnight courier with
written verification of receipt, or (d) mailed postage prepaid by
certified or registered mail, return receipt requested, to the
party to be notified, at the address set forth below, or at such
other place of which the other party has been notified in
accordance with the provisions of this Section 13.10.
_________ * _________ *
_________ *
_________ *
__________*
__________* _________ *
_________ *
__________*
_________ *
__________* _________ *
__________*
__________*
_________ *
_________ * _________ *
_________ *
__________*
_________ *
_________* _________ *
__________*
__________*
_________ *
Buyer: 3Com Corporation
5400 Bayfront Plaza M/S 1410
Santa Clara
California 95052-8145
Fax (408 764 6434)
Attention: Mark D Michael
____________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
With copy to: Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, CA 94301
Attention: J. Howard Clowes
Such notice will be treated as having been received upon actual
receipt.
13.11 Time. Time is of the essence of this
Agreement.
13.12 Construction of Agreement. The titles and
headings herein are for reference purposes only and shall not in
any manner limit the construction of this Agreement which shall
be considered as a whole.
13.13 No Joint Venture. Nothing contained in this
Agreement shall be deemed or construed as creating a joint
venture or partnership between any of the parties hereto. No
party is by virtue of this Agreement authorized as an agent,
employee or legal representative of any other party. No party
shall have the power to control the activities and operations of
any other and their status is, and at all times, will continue to
be, that of independent contractors with respect to each other.
No party shall have any power or authority to bind or commit any
other. No party shall hold itself out as having any authority or
relationship in contravention of this Section 13.13.
13.14 Pronouns. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as the identity of the person,
persons, entity or entities may require.
13.15 Absence of Third Party Beneficiary Rights.
No provisions of this Agreement are intended, nor shall be
interpreted, to provide or create any third party beneficiary
rights or any other rights of any kind in any client, customer,
affiliate, shareholder, partner of any party hereto or any other
person or entity unless specifically provided otherwise herein,
and, except as so provided, all provisions hereof shall be
personal solely between the parties to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
3COM CORPORATION
/s/ Mark D. Michael
By: Mark D Michael
Title: Vice President, General Counsel & Secretary
COUNTERPART SIGNATURE PAGE TO
ACQUISITION AND EXCHANGE AGREEMENT
DATED , 1995
The foregoing Acquisition and Exchange Agreement is hereby
agreed to and accepted.
____________ *
__________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
COUNTERPART SIGNATURE PAGE TO
ACQUISITION AND EXCHANGE AGREEMENT
DATED , 1995
The foregoing Acquisition and Exchange Agreement is hereby
agreed to and accepted.
__________ *
___________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
COUNTERPART SIGNATURE PAGE TO
ACQUISITION AND EXCHANGE AGREEMENT
DATED , 1995
The foregoing Acquisition and Exchange Agreement is hereby
agreed to and accepted.
__________ *
__________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
COUNTERPART SIGNATURE PAGE TO
ACQUISITION AND EXCHANGE AGREEMENT
DATED , 1995
The foregoing Acquisition and Exchange Agreement is hereby
agreed to and accepted.
___________ *
_____________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
COUNTERPART SIGNATURE PAGE TO
ACQUISITION AND EXCHANGE AGREEMENT
DATED , 1995
The foregoing Acquisition and Exchange Agreement is hereby
agreed to and accepted.
__________ *
__________
* Confidential Treatment Requested. Confidential Portion has
been filed separately with the Securities and Exchange
Commission.
LIST OF EXHIBITS AND SCHEDULES:
SCHEDULE 1: LIST OF SHAREHOLDERS
SCHEDULE 2: LIMITATION OF LIABILITY
SCHEDULE 3: LIST OF EMPLOYEES ENTERING INTO AMENDED EMPLOYMENT
AGREEMENTS
EXHIBIT A: PRIOR FINANCIAL STATEMENTS
EXHIBIT B: ESCROW AGREEMENT
EXHIBIT C: TAX WARRANTIES
EXHIBIT D: PROPERTY WARRANTIES
SCHEDULE 1
LIST OF SHAREHOLDERS
(a) (b) (c) (d) (e)
Name of Sonix Stock Sonix Stock Capacity in Buyer Common Cash in lieu
Seller held at to be sold which Sonix Stock to be fractional
Today's date at Closing Stock sold issued entitlements
Part I
______ * 64,884 "B" 64,884 "B" Trustee 130,663 3.38
______ * 63,409 "B" 63,409 "B" Custodian 127,692 26.89
______ * 31,707 "B" 31,707 "B" Custodian 63,581 14.69
______ * 80,000 "B" 80,000 "B" Custodian 161,103 22.48
______ * 60,000 "C" 60,000 "C" LBO 12,827 25.88
______ * 300,001 "A" 195,001 "A" LBO 392,692 3.45
105,000 "A" Trustee (1)
__________
* Confidential Treatment Requested. Confidential Portion has been filed
separately with the Securities and Exchange Commission.
Part II
(All United Kingdom)
______ * 1,000 "A" BO 2,013 28.68
______ * 1,000 "A" BO 2,013 28.68
______ * 12,000 "A" BO 24,165 19.60
______ * 1,000 "A" BO 2,013 28.68
______ * 12,000 "A" BO 24,165 19.60
______ * 1,000 "A" BO 2,013 28.68
______ * 500 "A" BO 1,006 32.37
________ * 300 "A" BO 604 5.00
_________ * 200 "A" BO 402 27.38
______* 1,500 "A" BO 3,020 24.99
_____ * 500 "A" BO 1,006 32.37
______ * 3,000 "A" BO 6,041 31.92
______ * 3,000 "A" BO 6,041 31.92
_______ * 1,500 "A" BO 3,020 24.99
_______ * 500 "A" BO 1,006 32.37
_______ * 300 "A" BO 604 5.00
______ * 500 "A" BO 1,006 32.37
_______ * 500 "A" BO 1,006 32.37
_______ * 9,000 "A" BO 18,124 5.68
_______ * 9,000 "A" BO 18,124 5.68
_______ * 500 "A" BO 1,006 32.37
________* 1,500 "A" BO 3,020 24.99
___________
* Confidential Treatment Requested. Confidential Portion has been filed
separately with the Securities and Exchange Commission.
________* 12,000 "A" BO 24,165 19.60
_______ * 500 "A" BO 1,006 32.37
________* 500 "A" BO 1,006 32.37
_______* 1,500 "A" BO 3,020 24.99
_______* 500 "A" BO 1,006 32.37
________ * 3,000 "A" BO 6,04 113.92
_______ *
________ * 1,500 "A" BO 3,020 24.99
_________ * 500 "A" BO 1,006 32.37
________* 300 "A" BO 604 5.00
________* 300 "A" BO 604 5.00
_______* 3,000 "A" BO 6,041 13.92
_________* 1,500 "A" BO 3,020 24.99
_________* 500 "A" BO 1,006 32.37
_________ *
_________* 200 "A" BO 402 27.38
_________* 1,000 "A" BO 2,013 28.68
________* 4,000 "A" BO 8,055 6.53
________* 300 "A" BO 604 5.00
________* 1,500 "A" BO 3,020 24.99
________* 300 "A" BO 604 5.00
________* 500 "A" BO 1,006 32.37
_________* 3,000 "A" BO 6,041 13.92
_________ * 1,000 "A" BO 2,013 28.62
________* 1,500 "A" BO 3,020 24.99
_______* 1,000 "A" BO 2,013 28.68
_________* 300 "A" BO 604 5.00
___________* 1,000 "A" BO 2,013 28.68
__________ * 3,000 "A" BO 6,041 13.92
_________* 500 "A" BO 1,006 32.37
Notes
LBO = Registered holder and beneficial owner
Trustee (1) = Registered holder holding as bare nominee in favour
of the persons
listed in part II
BO = Beneficial owner
Custodian = Custodian on behalf of the limited partners who hold
beneficially
____________
* Confidential Treatment Requested. Confidential Portion has been filed
separately with the Securities and Exchange Commission.
SCHEDULE 2
LIMITATION OF LIABILITY
In this Schedule the following terms and expressions shall have
the following meanings:
"Buyers Group Undertaking" means the Buyer, a subsidiary
undertaking or parent undertaking for the time being of the Buyer
or a subsidiary undertaking for the time being of a parent
undertaking of the Buyer and includes, for the avoidance of
doubt, Sonix;
"Deferred Relief" means a Relief (other than a right to repayment
of Taxation) which is taken into account in:
(a) computing (and so reducing) a provision for deferred tax in
the Sonix Financial Statements or in eliminating that
provision; or
(b) the Sonix Financial Statements as an asset;
"Event" means an event, act, transaction or omission, including,
without limitation, a receipt or accrual of income or gains,
distribution, failure to distribute, acquisition, disposal,
transfer, payment, loan or advance;
"Relevant Claim" means a claim by the Buyer involving or relating
(i) to a breach of a Warranty (as defined in Section 3 of the
Agreement) or (ii) to a claim for indemnification under Section
11; and
"Relief" means any loss, relief, allowance, exemption, set-off,
deduction, right to repayment or credit or other relief of a
similar nature granted by or available in relation to Taxation
pursuant to any legislation or otherwise.
1. The Sellers are not liable in respect of a Relevant
Claim unless the amount that would otherwise be
recoverable from the Sellers (but for this paragraph 1)
in respect of that Relevant Claim exceeds
*.
____________
* Confidential Treatment Requested. Confidential Portion
has been filed separately with the Securities and
Exchange Commission.
2. The Sellers are not liable in respect of a Relevant
Claim unless and until the amount that would otherwise
be recoverable from the Sellers (but for this paragraph
2) in respect of that Relevant Claim, when aggregated
with any other amount or amounts recoverable in respect
of other Relevant Claims (excluding any amounts in
respect of a Relevant Claim for which the Sellers have
no liability because of paragraph 1), exceeds ________ *
provided that, if such claims exceed __________ * the
Sellers shall be liable in respect of the entire amount
of such claims.
3. A Seller's total liability in respect of all Relevant
Claims is limited to its or his respective entitlement
to the Escrow Shares (as defined in Section 2.4(a) of
this Agreement).
4. The Seller is not liable in respect of a Relevant Claim
unless the Buyer has given the Representatives and the
Escrow Agent (as those terms are defined in the Escrow
Agreement) written notice of the Relevant Claim (stating
in reasonable detail the nature of the Relevant Claim
and, if practicable, a reasonable estimate of the amount
claimed) on or before the earlier of __________*.
5. The Sellers shall not be liable in respect of a Relevant
Claim:
5.1. to the extent that the matter giving rise to the
Relevant Claim would not have arisen but for:
5.1.1. an act after the date of this Agreement otherwise than
in the ordinary course of business by or involving a
Buyer's Group Undertaking or a director, employee or
agent of a Buyer's Group Undertaking which it might
reasonably have been foreseen would give rise to such
Relevant Claim, other than acts carried out in pursuance
of a legally binding arrangement entered into before the
date of this Agreement.
5.1.2. the passing of, or a change in, after the date of this
Agreement a law, rule, regulation, interpretation of the
law or administrative practice of a government,
governmental department, agency or regulatory body or an
increase in the Taxation rates or an imposition of
Taxation, in each case not actually or prospectively in
force at the date of this Agreement;
____________
* Confidential Treatment Requested. Confidential Portion
has been filed separately with the Securities and
Exchange Commission.
5.2. to the extent that the matter giving rise to the
Relevant Claim is an amount for which Sonix has
recovered against a person other than a Seller whether
under a provision of applicable law, insurance policy or
otherwise howsoever;
5.3. if a Buyer's Group Undertaking fails in a
material respect to act in accordance with paragraph 7
in connection with the matter giving rise to the
Relevant Claim;
5.4. to the extent that the matter giving rise to
the Relevant Claim was taken into account in computing
the amount of an allowance, provision or reserve in the
Sonix Financial Statements;
5.5.to the extent that the matter giving rise to the
Relevant Claim is a Taxation liability which arises in
respect of income or profits arising since January 31,
1995;
5.6.to the extent that the matter giving rise to the
Relevant Claim would not have arisen but for:
5.6.1. a claim, election, surrender or
disclaimer made, or notice or consent given for tax
purposes after Closing (other than one the making,
giving or doing of which was taken into account in
computing a provision for Taxation in the Sonix
Financial Statements under, or in connection with, a
provision of an enactment or regulation relating to
Taxation by a Buyer's Group Undertaking); or
5.6.2. Sonix's failure or omission to make a claim,
election, surrender or disclaimer, or give a notice,
or consent, under, or in connection with, a provision
of an enactment or regulation to Taxation after
Closing, the anticipated making, giving or doing of
which was both taken into account in computing the
provision for Taxation in the Sonix Financial
Statements and drawn to the Buyer's attention in the
Sonix Disclosure Schedule:
provided in either case that the relevant Buyer's Group
Undertaking ought reasonably to have foreseen that the
making, or failure or omission to make (as the case may
be) of such claim, election, surrender, or disclaimer,
or the giving, or failure to give, such notice or
consent or the other action or omission would give rise
to a Relevant Claim.
6. The Buyer is not entitled to recover more than once in
respect of any one matter giving rise to a Relevant
Claim.
7. If a Buyer's Group Undertaking becomes aware of a matter
which might give rise to a Relevant Claim:
7.1. the Buyer shall as soon as is reasonably practicable
give written notice to the Sellers of the matter and shall
consult with the Sellers with respect to the matter;
7.2. the Buyer shall, and shall ensure that each Buyer's Group
Undertaking will, provide to the Sellers and their advisers
reasonable access to premises and personnel and to relevant
assets, documents and records within each Buyer's Group
Undertaking's power or control for the purposes of investigating
the matter and enabling the Sellers to take the action referred
to in paragraph 7.4(a);
7.3. the Sellers (at their cost) may take copies of the
documents or records, and photograph the premises or assets,
referred to in paragraph 7.2;
7.4. the Buyer shall and shall ensure that each Buyer's Group
Undertaking will take any action and institute any proceedings,
and give any information and assistance, as the Sellers may
reasonably request to:
(a) dispute, resist, appeal, compromise, defend,
remedy or mitigate the matter; or
(b) enforce against a person (other than the
Sellers) a Buyer's Group Undertaking's rights in
relation to the matter;
and in each case on the basis that the Sellers shall
fully indemnify the Buyer for all reasonable costs
incurred as a result of a request or nomination by the
Sellers.
7.5. the Buyer shall not, and shall not ensure that no
Buyer's Group Undertaking will, admit liability in respect of, or
compromise or settle, the matter without prior written consent of
the Sellers (not to be unreasonably withheld or delayed).
8. In assessing any damages or other amounts recoverable
for a Relevant Claim there shall be taken into account any
corresponding savings by, or net benefit to, a Buyer's Group
Undertaking.
9.1 If the Sellers pay to a Buyer's Group Undertaking an
amount in respect of a Relevant Claim and a Buyer's Group
Undertaking subsequently recovers from another person an amount
which is referable to the matter giving rise to the Relevant
Claim:
9.1.1 if the amount paid by the Sellers in respect of
the Relevant Claim is more than the Sum Recovered,
the Buyer shall immediately pay to the Sellers an
amount equal to the Sum Recovered in respect of the
Relevant Claim.
9.1.2 if the amount paid by the Sellers in respect of
the Relevant Claim is less than or equal to the Sum
Recovered, the Buyer shall immediately pay to the
Sellers an amount equal to the amount paid by the
Sellers.
9.2 For the purposes of paragraph 9.1, "Sum Recovered" means
an amount equal to the total of the amount recovered from the
other person plus any repayment supplement in respect of the
amount recovered from the person under Section 825 of the Income
and Corporation Taxes Act 1988 plus any interest in respect of
the amount recovered from the person less any Taxation computed
by reference to the amount recovered from the person payable by a
Buyer's Group Undertaking and less all reasonable costs incurred
by a Buyer's Group Undertaking in recovering the amount from the
person.
10. Nothing in this Schedule 2 restricts or limits the
Buyer's general obligation at law to mitigate any loss or damage
which it may incur in consequence of a matter giving rise to a
Relevant Claim.
11. The Buyer shall, and shall ensure that Sonix will,
preserve all documents, records, correspondence, accounts and
other information whatsoever which Buyer ought reasonably to
think may be materially relevant to a matter which may give rise
to a Relevant Claim.
11.1. Where:
11.1.1. an amount of Taxation paid by Sonix has resulted in a
Relief (the "Relevant Relief"); and
11.1.2. the Sellers have made a payment to the Buyer in respect
of the Taxation in satisfaction of a Relevant Claim,
the Buyer shall ensure that Sonix, so far as possible,
uses the Relevant Relief before other Relief and pays to
the Sellers an amount equal to the amount by which
Sonix' Taxation liability is to be reduced as a result
of the use of the Relevant Relief within five days
before the date on which Sonix' liability to make a
payment of Taxation is to be reduced as a result of the
Relevant Relief.
11.2. If and to the extent that:
11.2.1. an expenditure by Sonix or provision or reserve for or
on account of a matter, has been treated as deductible or
allowable for Taxation purposes in the Sonix Financial
Statements; and
11.2.2. a Relevant Claim arises because the expenditure,
provision or reserve, or a part of it, is not deductible or
allowable in respect of the accounting period in which it was
treated as deductible or allowable, but it is deductible or
allowable in another accounting period,
the value to Sonix of the deduction or allowance
obtained in the relevant accounting period in respect of
the expenditure, provision or reserve whether by way of
reduced Taxation liability, an amount payable for group
relief surrender or otherwise is to be treated as a
"Benefit" for the purpose of paragraph 11.4.
11.3. If and to the extent that:
11.3.1. any income, profit or gain of Sonix not
received by Sonix is found to be subject to Taxation;
11.3.2. the Taxation gives rise to a Relevant
Claim; and
11.3.3. Sonix subsequently receives the income,
profit or gain and it is not subject to Taxation,
the amount of tax which would otherwise have been
payable in respect of the income, profit or gain is to
be treated as a "Benefit" for the purposes of paragraph
11.4.
11.4. If the Seller has made a payment to the Buyer in
satisfaction of a Relevant Claim of a type mentioned in paragraph
11.2 or 11.3, the Buyer shall pay the Seller an amount equal to
any Benefit but not so as to exceed the corresponding payment
made by the Seller to the Buyer in satisfaction of such Relevant
Claim.
11.5. As soon as reasonably practicable following a written
request from the Sellers, the Buyer shall ensure that Sonix'
auditors certify the amount of any payment due to the Seller's
under paragraph 11.4.
SCHEDULE 3
LIST OF EMPLOYEES ENTERING INTO AMENDED EMPLOYMENT AGREEMENTS
____________ * _________ * ___________ *
____________ * __________ * ___________ *
____________ * ____________ * ____________*
____________ * ____________* ____________ *
____________ * _________ * ___________ *
____________ * __________ * ___________ *
____________ * ____________ * ____________*
____________ * ____________* ____________ *
____________ * _________ * ___________ *
____________ * __________ * ___________ *
____________ * ____________ * ____________*
____________ * ____________* ____________ *
____________ * _________ * ___________ *
____________ * __________ *
____________
* Confidential Treatment Requested. Confidential Portion
has been filed separately with the Securities and
Exchange Commission.
EXHIBIT C - Taxation Warranties
Sellers hereby jointly and severally warrant and
undertake to Buyer as follows:
1. The Sonix Financial Statements reserve or provide in
full for all Taxation (as defined in Section 3.5) for which Sonix
was liable at the date of Sonix Financial Statements whether or
not Sonix has or may have any right or reimbursement against any
other person and the Sonix Financial Statements reserve or
provide in full for any contingent or deferred liability for
Taxation.
2. Sonix has duly complied with its obligations in
relation to pay as you earn and earnings-related contributions
and its reporting obligations to the Inland Revenue in connection
with any benefits provided to employees and directors of Sonix.
3. Sonix has sufficient records to calculate the
liability to Taxation which would arise on any disposal or
realization of any asset owned by Sonix at the date of Sonix
Financial Statements or acquired since that date but before the
Closing.
4. Sonix has duly submitted all claims and disclaimers
which have been assumed to have been made for the purposes of the
Sonix Financial Statements.
5. Sonix is duly registered in accordance with the Value
Added Tax Act 1983 ("VATA") and has made, given, obtained and
kept, complete, correct and up-to-date records, invoices and
other documents appropriate or required for the purposes thereof
and is not in arrears with any payment or returns due thereunder
and has not been required by H.M. Customs & Excise to give
security under paragraph 5 of Schedule 7 VATA.
6. Sonix has never been a member of a group for the
purposes of Section 29 VATA.
7. Sonix has not been in default in respect of any
accounting period for the purposes of Section 19(l) Finance Act
1985.
8. Full details of any claim for bad debt relief under
Section 22 VATA made by Sonix are set out or annexed to the Sonix
Disclosure Schedule Letter.
9. All value added tax payable upon the importation of
goods and all customs or excise duties payable in respect of any
assets (including trading stock) imported or owned by Sonix have
been paid in full.
10. Sonix is not and does not expect to be involved
in any dispute in relation to Taxation and neither the Inland
Revenue, Customs and Excise or other fiscal authority concerned
has investigated or indicated that it intends to investigate
Sonix.
11. In the Sonix Financial Statements the value
attributed to each asset of Sonix at the date of Sonix Financial
Statements is such that on any disposal of any asset for a
consideration equal to such value (and disregarding any statutory
right to claim any allowance or relief): (i) no liability to
Taxation will arise; and (ii) no balancing charge will be made on
Sonix.
12. No liability to Taxation will arise on the
disposal by Sonix of any asset acquired since the date of Sonix
Financial Statements but prior to the Closing for a consideration
equal to the consideration actually given for the acquisition.
13. Since the date of Sonix Financial Statements
Sonix has not entered into or been a party to any transaction,
otherwise than in the ordinary course of business, which will or
may give rise to a liability to Taxation, and no accounting
period of Sonix has terminated.
14. Sonix will not incur any liability to Taxation
under Section 347 Income and Corporation Taxes Act 1988 ("Taxes
Act"), Section 132 Finance Act 1988 or Section 134 Finance Act
1989.
15. Full details of all assets currently owned by
Sonix on or after the date of Sonix Financial Statements in
respect of which a charge to Taxation might arise under Section
278 Taxes Act 1970 have been disclosed in writing to the Buyer.
16. Full particulars of each claim under Sections
115 to 117 CGTA made prior to the date hereof which affects any
asset owned by Sonix on or after the date of Sonix Financial
Statements have been disclosed in writing to the Buyer.
17. Sonix has not made any repayment of share
capital to which Section 210 Taxes Act applies or issued any
share capital as paid up otherwise than by the receipt of new
consideration within the meaning of Part IV Taxes Act.
18. Sonix is not liable to make any payment of
interest or any annual payment for which no relief will be
received by reason of Section 125 Taxes Act or Section 787 Taxes
Act or by reason of it being a distribution.
19. Sonix has made all deductions in respect, or on
account, of any Taxation from any payments which it is required
or entitled to make and has accounted in full to the appropriate
authority for all amounts so deducted in accordance with
statutory requirements.
20. Sonix has never been resident outside the UK,
nor has it ever carried on any trade, business or other
activities outside the UK.
21. Sonix has not without prior consent caused,
permitted or entered into any of the transactions specified in
Section 765 Taxes Act.
22. Sonix has not in the six years preceding the
Closing been a party to any transaction in respect of which Sonix
would be liable to Taxation under the provisions of Part XVII
Taxes Act or as a result of the principle in Furniss v. Dawson 55
TC 324.
23. Sonix does not hold any shares as trading
stock.
24. Except as provided in the Sonix Financial
Statements, no event, transaction, act or omission has occurred
which would result in Sonix becoming liable to pay or to bear any
Taxation which is primarily or directly chargeable against or
attributable to any person, firm or company other than Sonix.
25. The Disclosure Letter sets out full details of
all claims for group relief under Chapter IV of Part X Taxes Act
and full details of all claims for the surrender of advance
corporation tax under Section 240 Taxes Act for the six years
preceding the date of Sonix Financial Statements and Sonix is not
liable to make any payment for any group relief or advance
corporation tax surrendered to it.
26. Group income elections under Section 247 Taxes
Act have been made and remain in force.
27. Sonix has never been a close company.
28. There is no unsatisfied liability to
inheritance tax attached or attributable to the assets of Sonix
or the shares of Sonix and neither the assets nor the shares are
subject to an Inland Revenue charge as mentioned in Section 237
IHTA.
29. No person has the power under Section 212 IHTA
to raise any inheritance tax by sale or mortgage of or by a
terminable charge on any of Sonix's assets.
30. Sonix does not have any outstanding liability
to pay development land tax by instalments.
31. All documents which are requested to be stamped
and are in the possession of Sonix or by virtue of which Sonix
has any right have been duly stamped.
32. Sonix has not incurred a liability to stamp
duly reserve tax since the date of Sonix Financial Statements.
33. Sonix has not entered into any transaction in
respect of which any clearance or consent was required in
circumstances where such consent or clearance was not first
properly obtained, all material facts, circumstances and
information first having been supplied to the relevant tax or
other authority. Any transaction for which such consent or
clearance was obtained has been carried out in strict accordance
with the terms of such consent or clearance.
34. There has been no change in the ownership of
Sonix nor any major change in the nature or conduct of any trade
or business carried on by Sonix.
35. No payment or series of payments has been made
nor expense or series of expenses claimed in computing the
profits of Sonix which will not be deductible for the purposes of
computing the corporation tax liability of Sonix.
36. Sonix has no pre-entry loss as defined in
Schedule 7A to the TCGA, nor would the amount of any allowable
loss which might accrue to Sonix be liable to be reduced or
eliminated nor the amount of chargeable gain be liable to be
created or increased by virtue of any depreciatory transaction or
reduction in value of that or any related asset for the purposes
of corporation tax on chargeable gains.
37. Sonix has received no notice of the making of
any direction of a direction under Section 747 Taxes Act and no
circumstances exist which would entitle the Inland Revenue to
make such a direction.
EXHIBIT D - Property Warranties
Sonix and Sellers hereby jointly and severally warrant
that, other than as disclosed to the Buyer:
1 Sonix has a good and marketable title to all
leasehold property (the "Property") for the estate or interest
set out in Sonix Disclosure Schedule free from all options,
liens, charges, mortgages, disputes, encumbrances, tenancies
(including tenancies protected by statute or otherwise), adverse
rights, informal adverse arrangements and overriding interests as
defined by Section 70(l) (as amended) of the Land Registration
Action 1925.
2 The Property comprises all the land and buildings
owned, leased or occupied by Sonix since the date of its
incorporation and its has and will at the Closing have exclusive,
undisputed and unrestricted possession of the Property.
3 Sonix has complied in any material respect with all
covenants and obligations including statutory obligations
relating to the Property.
4 All development of the Property for the purposes of
the business of Sonix has been and is in accordance with
unconditional and valid consents unlimited in time under the
Planning Acts, the current use of the Property is the permitted
use under the Planning Acts and accords with any zoning
stipulations or requirements, does not contravene any laws or
regulations, and all necessary consents including planning
consents, industrial development certificates, office development
permits and Building Regulations and bye-law approvals have been
obtained and are in force and not such consents, permits or use
of the Property in the event of its demolition or destruction.
5 All necessary consents, including planning consents,
industrial development certificates, office development permits
and Building Regulations and bye-law approvals have been obtained
and are in force for any proposed development or use of all or
any part of the Property required for the purpose of the business
of Sonix or in respect of which Sonix has incurred any expense or
entered into any commitment.
6 The Property is not affected by any resolutions,
directions or proposals for any demolition, clearance, closing,
road building or widening or compulsory acquisition, nor is it
subject to any outstanding fiscal claim, liability or contingent
liability.
7 The Property is not, save as disclosed in the leases,
subject to any restriction against charging, letting,
underletting or assignment.
8 There are no subsisting material entries registered
against the Property or Sonix or under the relevant title numbers
at H.M. Land Registry, H.M. Land Charges Registry or at the Local
Land Charges Registry or elsewhere affecting the Property or
Sonix.
9 There are no notices, charges, restrictions, or
requirements of or agreements with any local, planning or other
authority or covenants (restrictive or otherwise) exceptions,
restrictions or reservations detrimentally affecting the Property
or adversely affecting its value or any existing or proposed use
of the Property and there are no circumstances known or which
would on reasonable enquiry be known to Sonix, its officers, or
the Sellers, which are likely to result in any such notice,
charge, restriction or requirement being given or made.
10 Sonix has not granted any option or right over the
Property or dispose of, lease, charge, or part with possession of
the Property or any part thereof nor will it agree to do so.
11 There are adequate facilities and all necessary
consents for the supply of water, power and all necessary or
usual services to the Property and the discharge of effluent
therefrom and the Property has the benefit of all easements or
wayleaves necessary for the Property and the existing and any
proposed use of the Property.
12 The Property is not subject to any outgoings other
than rent, service charges and the usual general and water rates.
13 The roadways abutting the Property are maintained at
the public expense.
14 Sonix has not made any application for any planning
consents.
15 The existing use of the Property is not dependent on
any event which would require Sonix to make any such application
as is mentioned in the preceding paragraph thereof.
16 There is no indication, formal or otherwise, which
has been communicated to Sonix that any Local Authority or other
governmental authority or agency intends to acquire the Property.
17 The Replies to property and environmental enquiries
raised by Baker & McKenzie on behalf of the Buyer are true and
accurate in all material respects.
Exhibit 7.2
* Confidential treatment requested. Confidential portion has been filed
separately with the Securities and Exchange Commission.
ESCROW AGREEMENT
This Escrow Agreement (the "Agreement") is entered into as
of 1995, by and among 3Com Corporation, a
California corporation ("Buyer"), the shareholders of Sonix
Communications Limited, a company registered in England under No.
2711561 ("Sonix"), whose names are listed at the end of this
Escrow Agreement (collectively, the "Holders"), and the Escrow
Agent named herein.
A. Buyer and Holders have entered into an Acquisition and
Exchange Agreement dated as of March 22, 1995, (the "Acquisition
Agreement") pursuant to which Buyer will on the date hereof
purchase from the Holders, and each of the Holders will sell to
the Buyer, all of the shares of Sonix capital stock in exchange
for shares of Buyer Common Stock. Capitalized terms used in this
Agreement and not otherwise defined herein will have the meanings
given them in the Acquisition Agreement.
B. Pursuant to the Acquisition Agreement, an aggregate of
1,208,279 shares of Buyer Common Stock are to be issued to the
Holders (the "Consideration Stock").
C. The Acquisition Agreement provides for _____* of the
Consideration Stock (the "Escrow Shares") to be placed in an
escrow account (the "Escrow Account") to secure contingent
obligations to Buyer in respect of certain indemnification rights
arising on and other breaches of the Warranties under the
Acquisition Agreement on the terms and conditions set forth
herein. The Escrow Shares required to be deposited in the Escrow
Account pursuant to this Agreement are shown on Exhibit A
attached hereto.
D. The parties hereto desire to establish the terms and
conditions pursuant to which the Escrow Shares of each Holder
will be deposited, held in, and disbursed from the Escrow
Account.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Escrow
(a) Escrow of Shares. The Escrow Shares will be held
in escrow by Bank of Boston (the "Escrow Agent"), as collateral
for the Holders' said contingent obligations under the
Acquisition Agreement until such Escrow Shares are required to be
released to the Holders pursuant to the terms of this Agreement.
The Escrow Shares will include "Additional Escrow Shares" as that
term is defined in Section 2(b) of this Agreement. The Escrow
Agent agrees to accept delivery of the Escrow Shares and to hold
such Escrow Shares in escrow subject to the terms and conditions
of this Agreement.
(b) Warranty and Indemnification. The Holders have
made the Warranties to Buyer and have agreed under the terms of
Section 11 of the Acquisition Agreement to indemnify and hold
harmless Buyer from certain such breaches, subject to the
limitations set forth therein. The Holders agree that the Escrow
Shares will be held as security, in the manner provided in the
Acquisition Agreement and this Agreement, for any damages, costs
or expenses ("Damages") arising from any breach of the Warranties
and any indemnification rights in relation thereto. Promptly
after the receipt by Buyer of notice or discovery of any claim,
Damage or legal action or proceeding giving rise to a possible
action for breach of Warranty or an indemnification right, Buyer
will give the Representation and the Escrow Agent written notice,
in accordance with Section 3 hereof, of such claim, Damage, legal
action or proceeding (a "Claim"). Notification and conduct of
Claims shall be in accordance with the provisions of Schedule 2
of the Acquisition Agreement.
(c) Limitation on Liability.
In accordance with the terms of the Acquisition Agreement, the maximum
liability of each Holder for any matter set forth in this Agreement shall
be such Holder's pro rata share of such liability based on the respective
interests of each Holder in the Escrow Shares as set forth next
to such Holder's name on Exhibit A, and shall not exceed the
forfeiture of the entire number of shares of Buyer Common Stock
received by such Holder in the Acquisition that are held in
escrow. Payments for Claims shall be deducted from the Escrow
Shares of each Holder in proportion to the number of shares of
Buyer Common Stock received by each Holder in the Acquisition as
set forth on Exhibit A.
2. Deposit of Escrow Shares: Release from Escrow.
(a) Delivery of Escrow Shares. On the date hereof
being the Closing of the Acquisition Agreement, the Escrow Shares
will be delivered by Buyer to the Escrow Agent in the form of a
duly authorised stock certificate issued in the name of the
Escrow Agent or its nominee. In the event Buyer issues any
Additional Escrow Shares (as defined below) during the
continuance of this Agreement, such shares will be issued in the
name of the Escrow Agent and delivered to the Escrow Agent in the
same manner as the Escrow Shares delivered on the Closing Date.
(b) Dividends Voting and Rights of Ownership. Except
for tax-free dividends paid in stock declared with respect to the
Escrow Shares pursuant to Section 305(a) of the Code ("Additional
Escrow Shares"), any cash dividends, dividends payable in
securities or other distributions of any kind made in respect of
the Escrow Shares will be distributed currently to the Holders.
Each Holder will have voting rights with respect to the Escrow
Shares deposited in the Escrow Account with respect to such
Holder so long as such Escrow Shares are held in escrow, and
Buyer shall take all reasonable steps necessary to allow the
exercise of such rights. While the Escrow Shares remain in the
Escrow Agent's possession pursuant to this Agreement, the Holders
will retain and will be able to exercise all other incidents of
ownership of said Escrow Shares which are not consistent with the
terms and conditions hereof.
(c) Distribution to Holders. _________________,* the
Escrow Agent shall release from escrow to the Holders their
respective Escrow Shares plus all Additional Escrow Shares less
with respect to each such Holder (A) such Holder's pro rata
portion of any Escrow Shares delivered to Buyer in accordance
with Section 3 hereof in satisfaction of Claims by Buyer and (B)
such Holder's pro rata portion of any Escrow Shares subject to
delivery to Buyer in accordance with Section 3 hereof with
respect to any pending but unresolved Claims of Buyer as of the
such date. Any Escrow Shares held as result of subclause (B)
above shall be released to the Holders or released to Buyer (as
appropriate) promptly upon resolution of each specific Claim
involved.
(d) Release of Shares. The Escrow Shares will be held
by Escrow Agent until required to be released pursuant to Section
2(c) above. Upon the applicable release condition being met,
Escrow Agent will deliver to each Holder the requisite number of
Escrow Shares to be released on such date as identified by Buyer
and the Representatives to the Escrow Agent in writing, in the
form of stock certificate(s) issued in the name of such Holder.
Buyer and Representatives undertake to deliver a notice to Escrow
Agent identifying the number of Escrow Shares to be released
_________.* Escrow Shares shall be released to the respective
Holders in proportion to their respective interests as set forth
in Exhibit A. Buyer will take such action as may be necessary to
cause such certificates to be issued in the names of the
appropriate Holders on the appropriate date as set forth above.
Certificates representing Escrow Shares so issued that are
subject to resale restrictions under applicable securities laws
will bear a legend to that effect as provided for in the
Acquisition Agreement. Cash will be paid in lieu of fractions of
Escrow Shares in an amount equal to the product determined by
multiplying such fraction by the Determined Price of Buyer Common
Stock. _______,* Buyer will deposit with Escrow Agent sufficient
funds to pay such cash amounts for fractional shares. The
"Determined Price" shall mean $56.99375 per share of Buyer Common
Stock.
(e) No Encumbrance. Save for the obligations
hereunder, no Escrow Shares or any beneficial interest therein
may be pledged, sold, assigned or transferred, including by
operation of law, by a Holder or be taken or reached by any legal
or equitable process in satisfaction of any debt or other
liability of a Holder, prior to the delivery to such Holder of
the Escrow Shares by the Escrow Agent.
(f) Power to Transfer Escrow Shares. Escrow Agent is
hereby granted the power to effect any transfer of Escrow Shares
contemplated by this Agreement. Buyer will cooperate with Escrow
Agent in promptly issuing stock certificates to effect such
transfers.
3. Resolution of Notice of Claim and Transfer of Escrow
Shares. Any notice of Claim (a "Notice of Claim") received by
Representatives and the Escrow Agent pursuant to Schedule 2 of
the Acquisition Agreement will be resolved as follows:
(a) Uncontested Claims. In the event that the
Representatives do not contest the Claim in writing to the Escrow
Agent and Buyer or pay the amount demanded within 45 calendar
days after such Notice of Claim is deemed delivered pursuant to
Section 13 of the Acquisition Agreement, the Escrow Agent will
immediately transfer to Buyer for cancellation that number of
Escrow Shares having a value (determined pursuant to Section 3(c)
hereof) equal to the amount specified in the Notice of Claim and
notify the Representatives of such transfer.
(b) Contested Claims. In the event that the
Representatives give written notice contesting all, or a portion
of, a Notice of Claim to Buyer and the Escrow Agent (a "Contested
Claim") within the 45-day period provided above, no transfer of
Escrow Shares up to the aggregate amount equal to the value of
such Claim (determined pursuant to Section 3(c) hereof) shall be
made until the amount of the Claim is settled as between the
Representatives and Buyer or determined by a court of competent
jurisdiction as set out in the Acquisition Agreement, and the
Escrow Agent will continue to hold in the Escrow Account such
number of the Escrow Shares having a value sufficient to cover
such Claim (notwithstanding the expiration of the Release Date)
until (i) execution of a settlement agreement by Buyer and the
Representatives setting forth a resolution of the Notice of
Claim, or (ii) receipt of a copy of the final judgment of a court
of competent jurisdiction.
(c) Determination of Amount of Claims. Any amount
owned to Buyer hereunder determined pursuant to Section 3(a) or
3(b) above, will be immediately payable to Buyer out of the
Escrow Shares then held by the Escrow Agent at a per share value
equal to the Determined Price per share of Buyer Common Stock.
(d) No Exhaustion of Remedies. Buyer need not exhaust
any other remedies that may be available to it but may proceed
directly in accordance with the provisions of this Agreement and
the Acquisition Agreement. Buyer may institute Claims against
the Escrow Shares and in satisfaction thereof may recover Escrow
Shares, in accordance with the terms of this Agreement, without
making any other Claims directly against Holders and without
rescinding or attempting to rescind the transactions consummated
pursuant to the Acquisition Agreement. The assertion of any
single Claim hereunder will not bar Buyer from asserting other
claims hereunder.
4. Escrow Agent. The provisions of Exhibit B hereof
setting forth the provisions concerning the Escrow Agent are
hereby expressly incorporated herein and made a part hereof.
5. Holders' Representatives. For purposes of this Agreement the
Holders, without any further action on the part of any
such holders, shall be deemed to have consented to the
appointment of the following persons:
1. _____________________
_____________________
_____________________*
2. _____________________
_____________________
_____________________
_____________________
_____________________*
3. _____________________
_____________________
_____________________
_____________________
_____________________*
4. _____________________
_____________________
_____________________
_____________________
_____________________*
as the representatives of the Holders (the "Representatives"), as
the attorneys-in-fact for and on behalf of each Holder, and the
taking by the Representatives of any and all actions and the
making of any decisions required or permitted to be taken by them
under this Agreement, including, without limitation, the exercise
of the power to (i) authorise delivery to Buyer of the Escrow
Shares, or any portion thereof in satisfaction of Claims, (ii)
agree to, negotiate, enter into settlements and compromises of,
and comply with orders of courts with respect to such Claims,
(iii) resolve any Claims and (iv) take all actions necessary in
the judgment of the Representatives for the accomplishment of the
foregoing and all of the other terms, conditions and limitations
of this Agreement. Accordingly, the Representatives have
unlimited authority and power to act on behalf of each Holder
with respect to this Agreement and the disposition, settlement or
other handling of all Claims, rights or obligations arising under
this Agreement. The Holders will be bound by all actions taken
by the Representatives in connection with this Agreement and
Buyer shall be entitled to rely on any action or decision of the
Representatives. In performing their functions hereunder, the
Representatives will not be liable to the Holders in the absence
of gross negligence or wilful misconduct. All actions and
decisions taken by the Representatives on behalf of the Holders
under this Agreement shall be by unanimous consent of all of the
Representatives.
5. Notices. All notices, instructions and other
communications required or permitted to be given hereunder or
necessary or convenient in connection herewith must be in writing
in accordance with the provisions of Section 13.11 of the
Acquisition Agreement and notices to the Escrow Agent shall be
pursuant to paragraph VI of Exhibit B hereof.
6. General.
(a) Governing Law. This Agreement will be governed by
and construed in accordance with the laws of England and each of
the parties admits to the exclusive jurisdiction of the English
courts; provided however, English courts shall not be an
appropriate jurisdiction for any actions involving only non-U.K.
parties. The Buyer, Holders and Escrow Agent hereby waive any
objection which they might at any time have to the courts of
England being nominated as the forum to hear and decide any
proceedings and to settle disputes and agree not to claim that
the courts of England are not a convenient forum.
(b) Counterparts. This Agreement may be executed in
two or more counterparts, each of which will be deemed an
original, but all of which together will constitute one and the
same instrument.
(c) Entire Agreement. Except as set forth in the
Acquisition Agreement, this Agreement constitutes the entire
understanding and agreement of the parties with respect to the
subject matter of this Agreement and supersedes all prior
agreements or understandings, written or oral, between the
parties with respect to the subject matter hereof.
(d) Waivers. No waiver by any party hereto of any
condition or of any breach of any provision of this Agreement
shall be effective unless in writing. No waiver by any party of
any such condition or breach, in any one instance, shall be
deemed to be a further or continuing waiver of any such condition
or breach or a waiver of any other condition or breach of any
other provision contained herein.
7. Expenses of Representatives. The Representatives shall
not be entitled to receive any compensation from Buyer or the
Holders in connection with this Agreement. Any fees and expenses
incurred by the Representatives in connection with actions taken
pursuant to the terms of this Agreement shall be paid by the
Holders to the Representatives in proportion to their percentage
interests set forth on Exhibit A. Any fees and expenses incurred
by the Escrow Agent in connection with actions taken pursuant to
the terms of this Agreement shall be paid one-half by the Buyer
and the remaining one-half by the Holders in proportion to their
percentage interests set forth on Exhibit A.
8. Limitation of Responsibility: Notices. The Escrow
Agent's duties are limited to those set forth in this Agreement
and the Escrow Agent may rely upon the written notices delivered
to the Escrow Agent hereunder.
9. Amendment. This Agreement may be amended with the
written consent of Buyer, the Escrow Agent and the
Representatives.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written and shall be
effective as to all the Holders when executed by Buyer, the
Escrow Agent and Holders holding all of the Escrow Shares.
3COM: ESCROW AGENT:
/s/ Mark D. Michael /s/ Kelly Caldwell
- ------------------- ---------------------
By: Mark D. Michael Name: Kelly Caldwell
Title: V.P., General Counsel
and Secretary
COUNTERPART SIGNATURE PAGE TO
ESCROW AGREEMENT
DATED May 1, 1995
The foregoing Escrow Agreement is hereby agreed to and
accepted.
______________________________*
COUNTERPART SIGNATURE PAGE TO
ESCROW AGREEMENT
DATED May 1, 1995
The foregoing Escrow Agreement is hereby agreed to and
accepted.
______________________________*
COUNTERPART SIGNATURE PAGE TO
ESCROW AGREEMENT
DATED May 1, 1995
The foregoing Escrow Agreement is hereby agreed to and
accepted.
______________________________*
COUNTERPART SIGNATURE PAGE TO
ESCROW AGREEMENT
DATED May 1, 1995
The foregoing Escrow Agreement is hereby agreed to and
accepted.
______________________________*
COUNTERPART SIGNATURE PAGE TO
ESCROW AGREEMENT
DATED May 1, 1995
The foregoing Escrow Agreement is hereby agreed to and
accepted.
______________________________*
EXHIBIT A
Name of Seller (a) (b) (c) (d) (e)
Sonix Stock Buyer Buyer Buyer Percentage
to be sold Common Common Common of
at Closing Stock to be Stock to be Stock to be Escrow
issued issued to issued to
shareholder Escrow Agent
- ----------- ------------ -------- ------- ------ ------
___________* 64,884 "B" 130,663 117,597 13,066 10.82
___________* 63,409 "B" 127,692 114,923 12,769 10.57
___________* 31,707 "B" 63,851 57,466 6,385 5.29
___________* 80,000 "B" 161,103 144,993 16,110 13.34
___________* 60,000 "C" 120,827 108,745 12,082 10.00
___________* 195,001 "A"
105,000 "A" 392,692 353,423 39,269 32.51
___________* 1,000 "A" 2,013 1,812 201 0.17
___________* 1,000 "A" 2,013 1,812 201 0.17
___________* 12,000 "A" 24,165 21,749 2,416 2.00
___________* 1,000 "A" 2,013 1,812 201 0.17
___________* 12,000 "A" 24,165 21,749 2,416 2.00
___________* 1,000 "A" 2,013 1,812 201 0.17
___________* 500 "A" 1,006 906 100 0.08
___________* 300 "A" 604 544 60 0.05
___________* 200 "A" 402 362 40 0.03
___________* 1,500 "A" 3,020 2,718 302 0.25
___________* 500 "A" 1,006 906 100 0.08
___________* 3,000 "A" 6,041 5,437 604 0.50
___________* 3,000 "A" 6,041 5,437 604 0.50
___________* 1,500 "A" 3,020 2,718 302 0.25
___________* 500 "A" 1,006 906 100 0.08
___________* 300 "A" 604 544 60 0.05
___________* 500 "A" 1,006 906 100 0.08
___________* 500 "A" 1,006 906 100 0.08
___________* 9,000 "A" 18,124 16,312 1,812 1.50
___________* 9,000 "A" 18,124 16,312 1,812 1.50
___________* 500 "A" 1,006 906 100 0.08
___________* 1,500 "A" 3,020 2,718 302 0.25
___________* 12,000 "A" 24,165 21,750 2,415 2.00
___________* 500 "A" 1,006 906 100 0.08
___________* 500 "A" 1,006 906 100 0.08
___________* 1,500 "A" 3,020 2,718 302 0.25
___________* 500 "A" 1,006 906 100 0.08
___________* 3,000 "A" 6,041 5,437 604 0.50
___________* 1,500 "A" 3,020 2,718 302 0.25
___________* 500 "A" 1,006 906 100 0.08
___________* 300 "A" 604 544 60 0.05
___________* 300 "A" 604 544 60 0.05
___________* 3,000 "A" 6,041 5,437 604 0.50
___________* 1,500 "A" 3,020 2,718 302 0.25
___________* 500 "A" 1,006 906 100 0.08
___________* 200 "A" 402 362 40 0.03
___________* 1,000 "A" 2,013 1,812 201 0.17
___________* 4,000 "A" 8,055 7,250 805 0.67
___________* 300 "A" 604 544 60 0.05
___________* 1,500 "A" 3,020 2,718 302 0.25
___________* 300 "A" 604 544 60 0.05
___________* 500 "A" 1,006 906 100 0.08
___________* 3,000 "A" 6,041 5,437 604 0.50
___________* 1,000 "A" 2,013 1,812 201 0.17
___________* 1,500 "A" 3,020 2,718 302 0.25
___________* 1,000 "A" 2,013 1,812 201 0.17
___________* 300 "A" 604 544 60 0.05
___________* 1,000 "A" 2,013 1,812 201 0.17
___________* 3,000 "A" 6,041 5,437 604 0.50
___________* 500 "A" 1,006 906 100 0.08
EXHIBIT B
CONCERNING THE ESCROW AGREEMENT
I. Escrow Agent's Duties and Responsibilities. Escrow
Agent may act upon any instrument or other writing believed by it
in good faith to be genuine and to have been signed or presented
by the proper person and shall not be liable to any party hereto
in connection with the performance of its duties hereunder,
except for its own gross negligence or wilful misconduct. Escrow
Agent's duties shall be determined only with reference to this
Escrow Agreement and applicable laws and Escrow Agent is not
charged with knowledge of or any duties or responsibilities in
connection with any other document or agreement. If in doubt as
to its duties and responsibilities hereunder, Escrow Agent may
consult with counsel of its choice and shall be protected in any
action taken or omitted in connection with the advice or opinion
of such counsel.
II. Indemnification. In consideration of its acceptance of
the appointment as Escrow Agent, the other parties hereto,
jointly and severally, agree to indemnify and hold Escrow Agent
harmless as to any liability incurred by it to any person, firm
or corporation by reason of its having accepted the same or in
carrying out any of the terms hereof, and to reimburse Escrow
Agent for all its reasonable costs and expenses, including, among
other things, counsel fees and expenses, incurred by reason of
any matter as to which an indemnity is payable; provided however,
that no indemnity need be paid in the event Escrow Agent is
grossly negligent or engages in wilful misconduct. To secure the
obligations of the parties other than Escrow Agent under this
clause II, Escrow Agent shall have a lien on the funds and
property held in escrow.
III. Escrow Agent Fees and Expenses. The initial fee of the
Escrow Agent is $1,500 and the annual fee of Escrow Agent
hereunder is $2,000 which fees shall be non-refundable and paid
in advance by 3Com Corporation. Said party also agrees to pay on
demand Escrow Agent's costs and expenses, including the
reasonable fees and expenses of counsel to Escrow Agent, other
than costs and expenses reimbursed pursuant to clause II,
incurred in connection with its duties hereunder. Escrow Agent
shall have a lien or right of set-off on all funds held hereunder
to pay all of its costs and expenses under this Escrow Agreement.
IV. Resignation. Escrow Agent shall have the right at any
time to resign hereunder by giving written notice of its
resignation to the other parties hereto at the address set forth
herein or at such other address as the parties shall provide, at
least 10 business days prior to the date specified for such
resignation to take effect; and upon the effective date of such
resignation, all cash and other payments and all other property
then held by the Escrow Agent hereunder shall be delivered by it
to such successor escrow agent or as otherwise shall be
designated in writing by the parties hereto. If no successor is
appointed, Escrow Agent may apply to a court of competent
jurisdiction for such appoint.
V. Inconsistent Claims. In the event that Escrow Agent
should at any time be confronted with inconsistent claims or
demands by the parties hereto, Escrow Agent shall have the right
to interplead said parties in any court of competent jurisdiction
and request that such court determine the respective rights of
the parties with respect to this Escrow Agreement, and upon doing
so, Escrow Agent automatically shall be released from any
obligations or liability as a consequence of any such claims or
demands.
VI. Notices. All notices required to be given hereunder
shall be in writing and shall be deemed given when received at
the following addresses:
To Escrow Agent: The First National Bank of Boston
Corporate Trust Division
150 Royall St., Mail Stop 45-02-15
Canton, MA 02021
Attn: Manager, Corporate Trust Administration
Ref: 3Com/Sonix Escrow
VII. Miscellaneous. Escrow Agent may execute any of its
powers or responsibilities hereunder and exercise any rights
hereunder either directly or by or through its agents or
attorneys. Nothing in this Escrow Agreement shall be deemed to
impose upon Escrow Agent any duty to qualify to do business or to
act as fiduciary or otherwise in any jurisdiction other than The
Commonwealth of Massachusetts. Escrow Agent shall not be
responsible for and shall not be under a duty to examine into or
pass upon the validity, binding effect, execution or sufficiency
of this Escrow Agreement or of any agreement amendatory or
supplemental hereto.
* Confidential treatment requested. Confidential portion has been filed
separately with the Securities and Exchange Commission.
