20-F












	
 

	
 


	
 

	
Exhibit 4.12 


	
 

	
Agreement


	
 

	
 


	
 

	
relating to


	
 

	
the sale and purchase of the Business and Assets of Esphion Limited 


	
 

	
 


	
 

	
Allot Communications Limited


	
 

	
Purchaser


	
 

	
 


	
 

	
and


	
 

	
 


	
 

	
Esphion Limited


	
 

	
Vendor


	
 

	
 


	
 

	
and


	
 

	
 


	
 

	
The persons listed in Part A of Schedule 1


	
 

	
Covenantors


	
 

	
 


	
 

	
and 


	
 

	
 


	
 

	
The persons listed in Part B of Schedule 1


	
 

	
Key Shareholders


	
 

	
 


	
 

	
Date   1 January 2008








	
 

	
 


	
 

	
AUCKLAND VERO CENTRE, 48 SHORTLAND STREET

  PO BOX 4199, AUCKLAND 1140, DX CP20509, NEW ZEALAND

  TEL 64 9 916 8800 FAX 64 9 916 8801















	
 

	
 

	
 

	
 


	
Contents

	
 

	
 


	



	
 

	
 

	
 

	
 


	
1.

	
Interpretation

	
 

	
4


	
 

	
 

	
 

	
 


	
2.

	
Sale and Purchase

	
 

	
14


	
 

	
 

	
 

	
 


	
3.

	
Conditions

	
 

	
15


	
 

	
 

	
 

	
 


	
4.

	
Purchase Price and apportionments

	
 

	
16


	
 

	
 

	
 

	
 


	
5.

	
Earn Out

	
 

	
19


	
 

	
 

	
 

	
 


	
6.

	
Pending Completion

	
 

	
23


	
 

	
 

	
 

	
 


	
7.

	
Completion

	
 

	
25


	
 

	
 

	
 

	
 


	
8.

	
Default

	
 

	
28


	
 

	
 

	
 

	
 


	
9.

	
Vendor Earn Out Protection

	
 

	
29


	
 

	
 

	
 

	
 


	
10.

	
Assignment and related matters

	
 

	
29


	
 

	
 

	
 

	
 


	
11.

	
Employees

	
 

	
30


	
 

	
 

	
 

	
 


	
12.

	
Non-competition

	
 

	
33


	
 

	
 

	
 

	
 


	
13.

	
Business Names

	
 

	
35


	
 

	
 

	
 

	
 


	
14.

	
Goods and services tax

	
 

	
35


	
 

	
 

	
 

	
 


	
15.

	
Warranties

	
 

	
36


	
 

	
 

	
 

	
 


	
16.

	
Key Shareholders and Covenantors

	
 

	
41


	
 

	
 

	
 

	
 


	
17.

	
Liability of Key Shareholders

	
 

	
42


	
 

	
 

	
 

	
 


	
18.

	
Escrow Amount

	
 

	
43


	
 

	
 

	
 

	
 


	
19.

	
Expenses

	
 

	
45


	
 

	
 

	
 

	
 


	
20.

	
Delay

	
 

	
45


	
 

	
 

	
 

	
 


	
21.

	
Further assurances

	
 

	
45


	
 

	
 

	
 

	
 


	
22.

	
Non merger

	
 

	
46


	
 

	
 

	
 

	
 


	
23.

	
Confidentiality and announcements

	
 

	
46


	
 

	
 

	
 

	
 


	
24.

	
Entire agreement

	
 

	
47





Agreement relating to the
  sale and purchase of the Business and Assets of Esphion Limited


i











	
 

	
 

	
 

	
 


	
25.

	
Amendments

	
 

	
47


	
 

	
 

	
 

	
 


	
26.

	
Notices

	
 

	
47


	
 

	
 

	
 

	
 


	
27.

	
Assignment

	
 

	
48


	
 

	
 

	
 

	
 


	
28.

	
Counterparts

	
 

	
48


	
 

	
 

	
 

	
 


	
29.

	
Governing law

	
 

	
49


	
 

	
 

	
 

	
 


	
30.

	
No Set Off

	
 

	
49


	
 

	
 

	
 

	
 


	
31.

	
Purchaser Warranties

	
 

	
49


	
 

	
 

	
 

	
 


	
32.

	
Guarantee

	
 

	
50


	
 

	
 

	
 

	
 


	
Schedule 1: Covenantors and Key Shareholders

	
 

	
54


	
 

	
 

	
 

	
 


	
Schedule 2: Assets

	
 

	
55


	
 

	
 

	
 

	
 


	
Schedule 3: Warranties

	
 

	
56


	
 

	
 

	
 

	
 


	
1.

	
All information

	
 

	
56


	
 

	
 

	
 

	
 


	
2.

	
Material circumstances

	
 

	
56


	
 

	
 

	
 

	
 


	
3.

	
Financial matters

	
 

	
57


	
 

	
 

	
 

	
 


	
4.

	
Operation of the Business since Balance Date

	
 

	
58


	
 

	
 

	
 

	
 


	
5.

	
Assets

	
 

	
58


	
 

	
 

	
 

	
 


	
6.

	
Intellectual property and Information Technology

	
 

	
59


	
 

	
 

	
 

	
 


	
7.

	
Material commitments

	
 

	
63


	
 

	
 

	
 

	
 


	
8.

	
Property

	
 

	
64


	
 

	
 

	
 

	
 


	
9.

	
Compliance with laws

	
 

	
64


	
 

	
 

	
 

	
 


	
10.

	
Legal proceedings

	
 

	
64


	
 

	
 

	
 

	
 


	
11.

	
Statutory records

	
 

	
65


	
 

	
 

	
 

	
 


	
12.

	
Employees

	
 

	
65


	
 

	
 

	
 

	
 


	
13.

	
Superannuation

	
 

	
66


	
 

	
 

	
 

	
 


	
14.

	
Investments

	
 

	
66







Agreement relating to the
  sale and purchase of the Business and Assets of Esphion Limited


ii











	
 

	
 

	
 

	
 


	
15.

	
Due execution

	
 

	
66


	
 

	
 

	
 

	
 


	
Schedule 4: Conditions

	
 

	
67


	
 

	
 

	
 

	
 


	
Schedule 6: Registered Intellectual Property Rights

	
 

	
68


	
 

	
 

	
 

	
 


	
Schedule 8: Permitted Encumbrance

	
 

	
70


	
 

	
 

	
 

	
 


	
Appendix 1: Fixed Assets

	
 

	
71


	
 

	
 

	
 

	
 


	
Appendix 2: Leased Equipment

	
 

	
77


	
 

	
 

	
 

	
 


	
Appendix 3: Disclosure Material

	
 

	
78


	
 

	
 

	
 

	
 


	
Appendix 4: Existing Employees

	
 

	
79


	
 

	
 

	
 

	
 


	
Appendix 5: Vendor’s Software

	
 

	
80


	
 

	
 

	
 

	
 


	
Appendix 6: Open Source

	
 

	
81


	
 

	
 

	
 

	
 


	
Appendix 7: Confidentiality Agreement

	
 

	
82


	
 

	
 

	
 

	
 


	
Appendix 8: Business Agreements

	
 

	
83


	
 

	
 

	
 

	
 


	
Appendix 9: Escrow Deed

	
 

	
84





Agreement relating to the
  sale and purchase of the Business and Assets of Esphion Limited


iii










This Agreement is made
on 1 January 2008


	
 

	
 

	
 


	
between

	
(1)

	
Allot Communications Limited
  a company incorporated in Israel (company number 51-239477-6) and having its
  principal executive offices at 22 Hanagar Street, Neve Ne’eman Industrial
  Zone B, Hod-Hasharon 45240, Israel (Purchaser)


	
 

	
 

	
 


	
and

	
(2)

	
Esphion
  Limited a
  company incorporated in New Zealand (company number 1101813) and having its
  registered office at Level 8, Westpac Trust Tower, 120 Albert Street,
  Auckland, New Zealand (Vendor)


	
 

	
 

	
 


	
and

	
(3)

	
The persons
  listed in Part A of Schedule 1 (Covenantors)


	
 

	
 

	
 


	
and

	
(4)

	
The persons
  listed in Part B of Schedule 1 (Key
  Shareholders)





Introduction


	
 

	
 


	
A.

	
The Vendor owns the Assets and carries on the
  Business.


	
 

	
 


	
B.

	
The Vendor has agreed to sell and the Purchaser has
  agreed to purchase the Assets and the Business on the terms set out in this
  Agreement.


	
 

	
 


	
C.

	
The Key Shareholders have agreed to make certain
  representations and warranties to the Purchaser regarding the Assets and the
  Business.





It is agreed


	
 

	
 


	
 1.

	
Interpretation


	



	
 

	
 


	
1.1

	
Definitions


	
 

	
 


	
 

	
In this Agreement unless the context otherwise
  requires:


	
 

	
 


	
 

	
Adjusted Retention Amount means the amount determined in accordance with clause 5.6(b);


	
 

	
 


	
 

	
Agreed Form means in a form agreed to by the Vendor and Purchaser prior to
  execution of this Agreement and initialled on behalf of the Vendor and the
  Purchaser for the purposes of identification;


	
 

	
 


	
 

	
Agreement means this Agreement together with the schedules and appendices;


	
 

	
 


	
 

	
Agreement Date means the date of this Agreement;


	
 

	
 


	
 

	
Apportionment Statement means the statement prepared under clause 4.4;


	
 

	
 


	
 

	
Assets means all the assets of the Vendor, including the assets listed in
  Schedule 2, but excluding the Excluded Assets;





Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


4








	
 

	
 

	
 


	
 

	
Assigned Covenants means the benefit of any restrictive covenants or restraints of
  trade given to or granted in favour of the Vendor by a third party concerning
  the Business and Assets;


	
 

	
 

	
 


	
 

	
Assigned Rights means all contractual and statutory rights owing by law
  (including the benefit of all warranties and covenants) that the Vendor has
  against any person relating to the Business or the supply by that person of
  the Assets to the Vendor (but excluding rights under insurance policies);


	
 

	
 

	
 


	
 

	
Balance Date means 30 September 2007;


	
 

	
 

	
 


	
 

	
Bill Rate means the average rate per annum (expressed as a percentage) as
  quoted on Reuters page BKBM (or any successor page displaying substantially
  the same information) under the heading “FRA (New Zealand inter-bank)” for
  bank accepted bills having a term of three months as fixed at 10.45am on the
  first Business Day following the due date (and on the first Business Day next
  following the expiration of each succeeding three-month period after the due
  date thereafter);


	
 

	
 

	
 


	
 

	
Business means the business of providing solutions and products for
  network protection operated by the Vendor from New Zealand;


	
 

	
 

	
 


	
 

	
Business Agreements means those agreements as listed in Appendix 8 and any Assigned
  Rights and Assigned Covenants;


	
 

	
 

	
 


	
 

	
Business Day means a day on which registered banks are open for general
  banking business other than a Saturday or Sunday in Auckland, New Zealand and
  registered banks are open for general banking business (other than the
  Saturday) in Tel Aviv, Israel;


	
 

	
 

	
 


	
 

	
Business Names means “Esphion”, “NetDeflect” and “NetDetail”; 


	
 

	
 

	
 


	
 

	
Business Records means the records of and all information of the Vendor pertaining
  to the Business, including, without limitation: 


	
 

	
 

	
 


	
 

	
(a)

	
those dealing with all the transactions of the
  Business;


	
 

	
 

	
 


	
 

	
(b)

	
those dealing with the production and supply of
  goods and services of the Business;


	
 

	
 

	
 


	
 

	
(c)

	
lists of customers and suppliers of the Business;


	
 

	
 

	
 


	
 

	
(d)

	
records of the Business Agreements;


	
 

	
 

	
 


	
 

	
(e)

	
correspondence;


	
 

	
 

	
 


	
 

	
(f)

	
personnel records;


	
 

	
 

	
 


	
 

	
(g)

	
fixed assets registers;


	
 

	
 

	
 


	
 

	
(h)

	
records relating to the Intellectual Property;


	
 

	
 

	
 


	
 

	
(i)

	
stock registers; and


	
 

	
 

	
 


	
 

	
(j)

	
information technology documentation and manuals,


	
 

	
 

	
 


	
 

	
together with all media containing such records,
  excluding the original books, accounts, financial statements, financial
  records, corporate statutory registers, taxation returns of the Vendor and
  other records of the Vendor which the Vendor is required by law to retain,
  but including true copies of them;





Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


5








	
 

	
 

	
 


	
 

	
Companies Act means the Companies Act 1993;


	
 

	
 

	
 


	
 

	
Completion means the performance by the Vendor and Purchaser (or the
  Permitted Nominee) of their respective obligations under clause 7 or, as the
  context may require, the time at which such performance is completed;


	
 

	
 

	
 


	
 

	
Completion Date means 7 January 2008 or, as the case may require, the date on
  which Completion takes place;


	
 

	
 

	
 


	
 

	
Conditions means the conditions precedent to Completion set out in Schedule
  4;


	
 

	
 

	
 


	
 

	
Confidential Information means the know-how, trade secrets, technical processes,
  information relating to products, services, finances, contractual
  arrangements with customers or suppliers and other information relating to
  the Business or Assets which by its nature, or by the circumstances of its
  disclosure to the holder of the information, is or could reasonably be
  expected to be regarded as confidential;


	
 

	
 

	
 


	
 

	
Consent means: 


	
 

	
 


	
 

	
(a)

	
any authorisation, approval, consent, licence,
  permit, franchise, permission, order, notification, filing, registration,
  lodgement, agreement, waiver, declaration or exemption from, by or with a
  Public Authority; and


	
 

	
 

	
 


	
 

	
(b)

	
in relation to any thing which will be prohibited or
  restricted in whole or part by law if a Public Authority intervenes or acts
  in any way within a specified period after lodgement, filing, registration,
  or notification, the expiry of such period without such intervention or
  action;


	
 

	
 

	
 


	
 

	
Default Interest means interest calculated at the Bill Rate plus 4% per annum;


	
 

	
 

	
 


	
 

	
Disclosure Letter means the letter disclosing information against and qualifying
  the Warranties which is in Agreed Form;


	
 

	
 

	
 


	
 

	
Disclosure Material means the materials, responses or other information provided by
  the Vendor or its advisers to the Purchaser or its advisers or
  representatives, in writing or electronic form prior to signing of this
  Agreement, a complete list of which is set out in the Disclosure Letter;


	
 

	
 

	
 


	
 

	
Dispute has the meaning set out in clause 5.7(b);


	
 

	
 

	
 


	
 

	
Dispute Notice has the meaning set out in clause 5.7(a);


	
 

	
 

	
 


	
 

	
Dispute Process means the process set out in clause 5.7;


	
 

	
 

	
 


	
 

	
Earn Out Amount means the amount calculated under clause 5.2;


	
 

	
 

	
 


	
 

	
Earn Out Calculation Notice has the meaning set out in clause 5.3(b); 


	
 

	
 

	
 


	
 

	
Earn Out Payment means the payment, if any, required under clause 4.1(b);


	
 

	
 

	
 


	
 

	
Earn Out Payment Date means the date being 30 days after the public announcement by the
  Purchaser of its annual financial results of operation for the year ending 31
  December 2008 or 30 September 2009 (whichever is the earlier);


	
 

	
 

	
 


	
 

	
Earn Out Period means the period from the Completion Date until 31 December 2008;





Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


6








	
 

	
 

	
 


	
 

	
Encumbrance means an interest or power
  reserved in or over an interest in any Asset created or otherwise arising
  under a debenture, mortgage, charge, pledge, lien, hypothecation, title
  retention, deed of trust, right of pre-emption or any other security interest
  (including a present or future right or interest in personal property that is
  a security interest for the purposes of the Personal Property Securities Act
  1999) and includes any agreement to grant any of the foregoing in the
  future), but excludes:


	
 

	
 

	
 


	
 

	
(a)

	
reservation of title by any of supplier in the
  ordinary course of business; and


	
 

	
 

	
 


	
 

	
(b)

	
the encumbrances listed in Schedule 8;


	
 

	
 

	
 


	
 

	
Escrow
  Agent
  means Bell Gully Barristers and Solicitors;


	
 

	
 

	
 


	
 

	
Escrow
  Amount
  means US$1,500,000 and any additional amount as has the meaning set out in
  clause 17.4(c); 


	
 

	
 

	
 


	
 

	
Escrow Deed means the deed in the form set
  out in Appendix 9; 


	
 

	
 

	
 


	
 

	
Escrow
  Payment Date
  means the Completion Date;


	
 

	
 

	
 


	
 

	
Escrow
  Period
  means the period following the Escrow Payment Date and ending two years after
  the Completion Date;


	
 

	
 

	
 


	
 

	
Esphion Japan means Esphion Japan Kabushiki Kaisha, a Japanese incorporated
  company through which the joint venture established by the Vendor and LINC
  Media Inc. distributes the Vendor’s Products in Japan;


	
 

	
 

	
 


	
 

	
Excluded Assets means:


	
 

	
 

	
 


	
 

	
(a)

	
all the original books, accounts, financial
  statements, financial records, corporate statutory registers, taxation
  returns of the Vendor and other records of the Vendor which the Vendor is
  required by law to retain;


	
 

	
 

	
 


	
 

	
(b)

	
cash in hand, at the bank, in transit or on deposit;


	
 

	
 

	
 


	
 

	
(c)

	
the shares held by the Vendor in Esphion Japan; 


	
 

	
 

	
 


	
 

	
(d)

	
the shares held by the Vendor in Esphion Pty
  Limited;


	
 

	
 

	
 


	
 

	
(e)

	
any other Asset listed in Schedule 2 that the
  Purchaser elects not to purchase prior to the Completion Date;


	
 

	
 

	
 


	
 

	
(f)

	
any Tax receivable or ACC receivable whether or not
  due to the Vendor; and 


	
 

	
 

	
 


	
 

	
(g)

	
the benefit of any third party insurance policy of
  the Vendor;


	
 

	
 

	
 


	
 

	
Existing Employees means all of the employees of the Vendor in relation to the
  Business listed in Appendix 4 who have not given notice of resignation, or
  been given notice of termination expiring before Completion;


	
 

	
 

	
 


	
 

	
Event of Default means if a person suffers from all or any of the following:


	
 

	
 

	
 


	
 

	
(a)

	
an order or judgement is made, a resolution is
  passed, any legal proceeding is issued that is not contested by the person or
  any voluntary corporate action is taken for the winding up, liquidation,
  bankruptcy, administration dissolution or reorganisation of the person except
  for the purpose of and followed by a solvent reconstruction;




Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


7








	
 

	
 

	
 

	
 


	
 

	
(b)

	
an encumbrancer takes possession of the whole or any
  material part of the property of the person or a receiver, receiver and
  manager, administrator receiver, inspector, trustee, statutory manager,
  administrator, liquidator or other similar person or official is appointed in
  respect of the person or the whole or any material part of its property and
  such appointment is not dismissed within 90 days;


	
 

	
 

	
 

	
 


	
 

	
(c)

	
any distress, attachment, execution, judgment or
  other legal process is enforced or obtained on or against the whole or any
  material part of its property which is not dismissed within 90 days;


	
 

	
 

	
 

	
 


	
 

	
(d)

	
the person:


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
ceases or suspends generally
  payment of a material part of its indebtedness (or announces an intention to
  do so) or is unable to pay its indebtedness as it falls due (or is deemed or
  presumed to be so under any relevant law); 


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
makes, or proposes to make,
  any assignment, arrangement or composition for the benefit of its creditors
  generally or a moratorium is agreed or declared in respect of or affecting
  all or any material part of its indebtedness;


	
 

	
 

	
 

	
 


	
 

	
(e)

	
any event occurs which, under the law of any
  relevant jurisdiction, has an analogous or similar effect to any event
  mentioned in this clause.


	
 

	
 

	
 

	
 


	
 

	
Financial Statements means the audited financial statements according to NZ GAAP for
  the year ended 31 March 2007, which include a statement of financial
  performance, a statement of movements in equity for the year ended at this
  date and statement of financial position as of that date and notes to
  financials statements as of that date;


	
 

	
 

	
 

	
 


	
 

	
Fixed Assets means those items of plant, office equipment, machinery,
  software, computer equipment, fixtures, furniture, fittings, electrical and
  other installations and leasehold improvements (to the extent owned by the
  Vendor) which are used in the Business at the Completion Date, whether or not
  any of the foregoing appear in the Vendor’s books and records, including the
  items set out in Appendix 1;


	
 

	
 

	
 

	
 


	
 

	
Goodwill means the goodwill, trading reputation of the Business and
  customers’ relations;


	
 

	
 

	
 

	
 


	
 

	
Group Company means the Purchaser or any Related Company and the term “Group”
  shall mean the Purchaser and all its Related Companies including the
  Permitted Nominee;


	
 

	
 

	
 

	
 


	
 

	
GST means goods and services tax imposed under the GST Act;


	
 

	
 

	
 

	
 


	
 

	
GST Act means the Goods and Services Tax Act 1985;


	
 

	
 

	
 

	
 


	
 

	
Intangible Assets means all Assets excluding Tangible Assets; 


	
 

	
 

	
 

	
 


	
 

	
Intangible Assets Purchase Price means the amount specified in clause 4.1(b);


	
 

	
 

	
 

	
 


	
 

	
Intellectual Property Rights means all Intellectual Property owned by the Vendor in any
  jurisdiction worldwide, including the Trade Marks and the Patents;


	
 

	
 

	
 

	
 


	
 

	
Intellectual Property Licence In means any licence granted to the Vendor in respect of any
  Intellectual Property currently used in the Business; 


	
 

	
 

	
 

	
 


	
 

	
Intellectual
  Property
  means: 


	
 

	
 

	
 

	
 


	
 

	
(a)

	
software and related flow-charts, programmer notes,
  updates and data, whether in object or source code form;




Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


8








	
 

	
 

	
 


	
 

	
(b)

	
patents, whether in the form of utility patents or
  design patents and all pending applications for the patents; and 


	
 

	
 

	
 


	
 

	
(c)

	
trade marks, trade names, service marks, designs,
  logos and domain names, whether or not registered, and all pending
  applications for registration of the same;


	
 

	
 

	
 


	
 

	
(d)

	
copyrights, whether or not registered and all
  pending applications for registration of the same; 


	
 

	
 

	
 


	
 

	
(e)

	
inventions, know-how, information, trade secrets,
  confidential information, proprietary information, product designs,
  engineering specifications and drawings, technical information, processes,
  works of authorship, formulae, works-in-progress, research and development of
  information, databases, algorithms, business information such as customer
  lists, supplier lists and market analyses and other sensitive, discreet
  business information, all of the above whether patentable or non-patentable
  and whether or not registered or reduced to practice; and


	
 

	
 

	
 


	
 

	
(f)

	
all other intellectual property rights not mentioned
  above;


	
 

	
 

	
 


	
 

	
IP Assignment and Confidentiality
  Agreements has the meaning set out in
  clause 6.7(c) of Schedule 3;


	
 

	
 

	
 


	
 

	
Key Shareholders means each of No 8 Ventures Management Limited (the sole
  shareholder of No 8 Ventures Nominees Limited and manager of the No. 2/VIF
  Seed Fund) and LINC Media Inc. 


	
 

	
 

	
 


	
 

	
Key Shareholders’ IP Warranties means any of the Warranties contained in clause 6 of Schedule
3;


	
 

	
 

	
 


	
 

	
Key Shareholders’ Warranties means any of the Warranties contained in clauses 1, 2 and 6 of
  Schedule 3;


	
 

	
 

	
 


	
 

	
Leased Equipment means the items held by the Vendor for use in the Business on
  lease, hire or hire purchase, or conditional sale agreement, including those
  items of equipment listed in Appendix 2;


	
 

	
 

	
 


	
 

	
Leasehold Property means all the right, title and interest of the Vendor in the
  property leased at 8C Vega Place, Mairangi Bay, Auckland (being 152 square
  metres of the ground floor);


	
 

	
 

	
 


	
 

	
Leave Benefits means accrued entitlement to leave (including, without
  limitation, annual leave and long service leave but excluding sick leave) of
  the Employees who accept the Purchaser’s or the Permitted Nominee’s offer of
  employment pursuant to clause 11.1(b), in each case attributable to their
  service before the Completion Date;


	
 

	
 

	
 


	
 

	
Management Accounts means unaudited balance sheet and statements of operations for
  the following periods:


	
 

	
 

	
 


	
 

	
(a)

	
the calendar quarter ended 31 March 2006;


	
 

	
 

	
 


	
 

	
(b)

	
the calendar quarter ended 31 March 2007; 


	
 

	
 

	
 


	
 

	
(c)

	
the calendar quarter ended 30 June 2007;


	
 

	
 

	
 


	
 

	
(d)

	
the calendar quarter ended 30 September 2007;


	
 

	
 

	
 


	
 

	
(e)

	
the calendar quarter ended 30 December 2007; and




Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


9








	
 

	
 

	
 

	
 


	
 

	
(f)

	
for the period commencing on 1 October 2007 and
  ending on the Completion Date;


	
 

	
 

	
 

	
 


	
 

	
Material Adverse Event means any event or circumstance which has or is likely to have a
  material adverse effect on the financial condition, operations or commercial
  or financial prospects of the Business and the Assets or the Vendor which
  will or is likely to result in a loss, cost, expense or liability to the
  Business of USD50,000 or more;


	
 

	
 

	
 

	
 


	
 

	
Net Revenues means the total amount actually received from a customer under a
  firm purchaser order, net of:


	
 

	
 

	
 

	
 


	
 

	
(a)

	
returns, and


	
 

	
 

	
 

	
 


	
 

	
(b)

	
credits and refunds, including:


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
price protection refunds;


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
discounts;


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
duties and Taxes (other than based on the
  Purchaser’s net income) which are non refundable or which the Purchaser
  offset against any other tax liability;


	
 

	
 

	
 

	
 


	
 

	
 

	
(iv)

	
shipping and transportation;


	
 

	
 

	
 

	
 


	
 

	
 

	
(v)

	
third party charges or commission of any kind; and 


	
 

	
 

	
 

	
 


	
 

	
 

	
(vi)

	
any penalties borne directly by the Purchaser for
  the sale of products, 


	
 

	
 

	
 

	
 


	
 

	
provided, however, that such amount is recognised
  for the purposes of the audited consolidated financial statements of the
  Purchaser in accordance with US GAAP;


	
 

	
 

	
 

	
 


	
 

	
NZD means the lawful currency of New Zealand;


	
 

	
 

	
 

	
 


	
 

	
NZ GAAP means generally accepted accounting practice in New Zealand as
  defined in section 3 of the Financial Reporting Act 1993;


	
 

	
 

	
 

	
 


	
 

	
Open Source Component has the meaning set out in clause 6.10 of Schedule 3;


	
 

	
 

	
 

	
 


	
 

	
Patents means the patents listed in Part B of Schedule 6;


	
 

	
 

	
 

	
 


	
 

	
Permitted Nominee has the meaning set out in clause 2.2(a);


	
 

	
 

	
 

	
 


	
 

	
Prepayments means all amounts paid by the Vendor prior to Completion to
  creditors of the Business in respect of goods or services to be supplied or
  provided to the Vendor in respect of the Business after Completion in the
  ordinary course of conducting the Business;


	
 

	
 

	
 

	
 


	
 

	
Product Warranties means any actual claims in respect of warranties, guarantees or
  other assurances given by the Vendor, its Subsidiaries or Esphion Japan: 


	
 

	
 

	
 

	
 


	
 

	
(a)

	
in relation to the Business (including the Vendor’s
  Products); or 


	
 

	
 

	
 

	
 


	
 

	
(b)

	
which would ordinarily be liable for as a matter of
  law in relation to the Vendor’s Products which were sold by the Business
  before Completion;


	
 

	
 

	
 

	
 


	
 

	
Public Authority means:


	
 

	
 

	
 

	
 


	
 

	
(a)

	
any government in any jurisdiction whether national,
  federal, state, regional, territorial or local; and




Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


10








	
 

	
 

	
 


	
 

	
(b)

	
any minister, department, office, commission,
  delegate, instrumentality, agency, board, authority or organisation of any
  government or any state-owned enterprise;


	
 

	
 

	
 


	
 

	
Purchase Price means the purchase price for the Business and the Assets
  calculated under clause 4.1 and as may be subsequently adjusted under this Agreement;


	
 

	
 

	
 


	
 

	
Purchaser’s Products means any software and/or hardware generally made available for
  sale to the Purchaser’s customers (other than the Vendor’s Products or
  products copied from the Vendor’s Products or portion thereof);


	
 

	
 

	
 


	
 

	
Purchaser’s Offer has the meaning set out in clause 11.1(b);


	
 

	
 

	
 


	
 

	
Purchaser’s Solicitors means Bell Gully;


	
 

	
 

	
 


	
 

	
Qualified Net Revenues means Net Revenue from the sale of Vendor’s Products by the
  Purchaser or a Related Company as a stand alone solution or in combination
  with the Purchaser’s Products;


	
 

	
 

	
 


	
 

	
Recipient has the meaning set out in clause 14.2;


	
 

	
 

	
 


	
 

	
Registered Intellectual Property has the meaning set out in clause 6.4 of Schedule 3;


	
 

	
 

	
 


	
 

	
Related Company has the meaning given to that term in section 2(3) of the
  Companies Act (read as if the expression “company”, “holding company”, and
  “subsidiary” in that section included any body corporate or equivalent entity
  wherever incorporated or established);


	
 

	
 

	
 


	
 

	
Reseller Agreement means a reseller agreement between the Purchaser and Esphion
  Japan granting to Esphion Japan non-exclusive reselling rights of certain of
  the Purchaser’s Products in Japan;


	
 

	
 

	
 


	
 

	
Retention Amount means 25% of the Earn Out Amount;


	
 

	
 

	
 


	
 

	
Retention Payment Date means 1 October 2009; 


	
 

	
 

	
 


	
 

	
Retention Period means the period commencing on the Earn Out Payment Date and
  ending on the Retention Payment Date;


	
 

	
 

	
 


	
 

	
Stock means the hardware purchased for intended delivery to the
  customers of the Business;


	
 

	
 

	
 


	
 

	
Supplier has the meaning set out in clause 14.2;


	
 

	
 

	
 


	
 

	
Tangible Assets means:


	
 

	
 

	
 


	
 

	
(a)

	
the Fixed Assets;


	
 

	
 

	
 


	
 

	
(b)

	
the Leased Equipment;


	
 

	
 

	
 


	
 

	
(c)

	
the Stock; 


	
 

	
 

	
 


	
 

	
(d)

	
the Trade Debtors; 


	
 

	
 

	
 


	
 

	
(e)

	
the Business Agreements; and


	
 

	
 

	
 


	
 

	
(f)

	
the Business Records; 




Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


11








	
 

	
 

	
 


	
 

	
Taxation or Tax means all forms of taxation (including income tax, goods and
  services tax, value added tax, capital gains tax, capital tax, transfer tax,
  withholding tax and provisional tax) and all other statutory, governmental or
  local governmental impositions, charges, duties (including stamp, estate and
  gift duties), levies, tariffs and rates, whether imposed or payable in New
  Zealand, the United States of America, Israel or elsewhere, and includes any
  related reassessment, penalties, fines, interest, costs and expenses;


	
 

	
 

	
 


	
 

	
Tax Invoice has the meaning given in the GST Act;


	
 

	
 

	
 


	
 

	
Taxable Supply has the meaning given in the GST Act;


	
 

	
 

	
 


	
 

	
Third Party Claim has the meaning set out in clause 15.6;


	
 

	
 

	
 


	
 

	
Total Consideration means the total of the Purchase Price (which for the avoidance of
  doubt includes the Earn Out Amount) as adjusted pursuant to this Agreement
  (including by way of any payment received by the Purchaser under the
  Warranties);


	
 

	
 

	
 


	
 

	
Trade Debtors means all trade debts (other than any Excluded Asset) owed to the
  Vendor at the Completion Date listed in the schedule delivered by the Vendor
  to the Purchaser at Completion;


	
 

	
 

	
 


	
 

	
Trade Marks means the trade marks listed in Part A of Schedule 6;


	
 

	
 

	
 


	
 

	
Undertaking Parties has the meaning set out in
  clause 12.1;


	
 

	
 

	
 


	
 

	
US GAAP means United States of America generally accepted accounting
  principles and practices as in effect from time to time and applied
  consistently throughout the periods involved;


	
 

	
 

	
 


	
 

	
USD means the lawful currency of the United States of America;


	
 

	
 

	
 


	
 

	
Vendor’s Products means any software or other product that is currently being or at
  any time has been or will be:


	
 

	
 

	
 


	
 

	
(a)

	
conceived; and


	
 

	
 

	
 


	
 

	
(b)

	
written, developed,
  manufactured, marketed, distributed, licensed, sold or made available (as
  part of a service bureau, time-sharing, application service provider or
  similar arrangement or otherwise),


	
 

	
 

	
 


	
 

	
by any employee or
  contractor for the Vendor or after Completion, is copied or developed from
  any such software or other product or portion thereof;


	
 

	
 

	
 


	
 

	
Vendor’s
  Software
  has the meaning set out in clause 6.2 of Schedule 3;


	
 

	
 

	
 


	
 

	
Vendor’s
  Solicitors
  means Buddle Findlay;


	
 

	
 

	
 


	
 

	
Warranties means the warranties and representations given by the Vendor to
  the Purchaser pursuant to clause 15, as set out in Schedule 3;


	
 

	
 

	
 


	
 

	
Warranty Claim means any claim by the Purchaser against the Vendor under the
  Warranties; and


	
 

	
 

	
 


	
 

	
Websites means the websites listed in part C of Schedule 6.




Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


12








	
 

	
 

	
 


	
1.2

	
Construction
  of certain references


	
 

	
 

	
 


	
 

	
In this Agreement, unless the context otherwise
  requires:


	
 

	
 

	
 


	
 

	
(a)

	
agreement includes a contract, deed,
  licence, franchise, undertaking, arrangement or understanding (in each case
  whether oral or written) or other document recording obligations (whether
  mutual or otherwise);


	
 

	
 

	
 


	
 

	
(b)

	
disposal of an asset includes a sale, gift,
  transfer or any other disposition of, or the grant of an option over, a right
  or interest, whether legal or equitable, in that asset or an agreement for
  any of those acts (and references to dispose are to be construed
  accordingly);


	
 

	
 

	
 


	
 

	
(c)

	
event includes any act, omission,
  transaction or other occurrence (whether or not the Vendor is a party to it).
  References to the result of any event on or before the Completion Date
  include the combined result of two or more events, the first of which has
  taken place on or before that date.


	
 

	
 

	
 


	
1.3

	
General
  references


	
 

	
 

	
 


	
 

	
In this Agreement, unless the context otherwise
  requires:


	
 

	
 

	
 


	
 

	
(a)

	
Clause,
  schedule or appendix


	
 

	
 

	
 


	
 

	
 

	
a reference to a clause, schedule or appendix is a
  reference to a clause of, schedule to or appendix to, this Agreement;


	
 

	
 

	
 


	
 

	
(b)

	
Varied
  document


	
 

	
 

	
 


	
 

	
 

	
a reference to this Agreement or another instrument
  includes any variation or replacement of either of them;


	
 

	
 

	
 


	
 

	
(c)

	
Statutes


	
 

	
 

	
 


	
 

	
 

	
a reference to a statute or other law includes
  regulations and other instruments under it and consolidations, amendments,
  re-enactments or replacements of any of them (whether before or after the
  Agreement Date);


	
 

	
 

	
 


	
 

	
(d)

	
Financial
  references


	
 

	
 

	
 


	
 

	
 

	
references to and expressions used concerning
  financial calculations, valuations, accounting or financial reporting
  functions or their description in this Agreement bear the respective meanings
  ascribed to like expressions or expressions to similar intent under NZ GAAP
  unless reference is specifically made to US GAAP;


	
 

	
 

	
 


	
 

	
(e)

	
Singular
  includes plural


	
 

	
 

	
 


	
 

	
 

	
the singular includes the plural and vice versa;


	
 

	
 

	
 


	
 

	
(f)

	
Person
  includes groups


	
 

	
 

	
 


	
 

	
 

	
the word person includes an individual, a body
  corporate (whether incorporated or formed within or outside New Zealand), an
  association of persons (whether corporate or not), a trust, a state and an
  agency of state, in each case, whether or not having a separate legal
  personality;


	
 

	
 

	
 


	
 

	
(g)

	
Person
  includes successors


	
 

	
 

	
 


	
 

	
 

	
a reference to a person includes a reference to the
  person’s executors, administrators, successors, substitutes (including, but
  not limited to, persons taking by novation) and permitted assigns;




Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


13








	
 

	
 

	
 


	
 

	
(h)

	
Joint and
  several


	
 

	
 

	
 


	
 

	
 

	
an obligation or liability assumed by two or more
  persons shall be assumed by them severally unless otherwise stated;


	
 

	
 

	
 


	
 

	
(i)

	
Gender


	
 

	
 

	
 


	
 

	
 

	
words importing one gender include the other
  genders;


	
 

	
 

	
 


	
 

	
(j)

	
Knowledge


	
 

	
 

	
 


	
 

	
 

	
in this Agreement, the
  Disclosure Information and the Disclosure Letter, references to knowledge,
  awareness or belief of the Vendor (however expressed) are references to the
  actual knowledge only of Mark Edwards after making reasonable enquiry
  (whether or not that enquiry is actually made) and there shall be deemed to be
  included the knowledge of matters that he ought to be aware of by reason of
  his position and area of expertise, into the relevant matter. The parties
  acknowledge that reference to the knowledge, awareness and belief of the
  person named in this clause does not give rise to any personal liability of
  such person whatsoever to any party to this Agreement; and


	
 

	
 

	
 


	
 

	
(k)

	
Equivalent
  Terms


	
 

	
 

	
 


	
 

	
 

	
a reference to any New Zealand legal term for any
  action, remedy, method of judicial proceeding, legal document, legal status,
  court, official, or any legal concept or thing shall in respect of any
  jurisdiction other than New Zealand be deemed to include what most nearly
  approximates in that jurisdiction to the New Zealand legal term and to any
  New Zealand statute shall be construed as to include equivalent or analogous
  laws of any other jurisdiction.


	
 

	
 

	
 


	
1.4

	
Headings


	
 

	
 

	
 


	
 

	
Ignore headings in construing this Agreement.


	
 

	
 

	
 


	
1.5

	
Dispute
  as to GAAP


	
 

	
 

	
 


	
 

	
Any dispute as to the meaning of NZ GAAP or US GAAP
  is to be determined under the Dispute Process.


	
 

	
 

	
 


	
2.

	
Sale and
  Purchase


	



	
 

	
 

	
 


	
2.1

	
Agreement
  to sell and purchase


	
 

	
 

	
 


	
 

	
Subject to clause 2.2, on the Completion Date:


	
 

	
 

	
 


	
 

	
(a)

	
Sale and
  purchase 


	
 

	
 

	
 


	
 

	
 

	
the Vendor is to sell, convey, assign and transfer
  and the Purchaser is to purchase the Assets and the Business; and


	
 

	
 

	
 


	
 

	
(b)

	
No
  liabilities assumed


	
 

	
 

	
 


	
 

	
 

	
the Purchaser does not
  assume any liability of the Vendor, a Related Company or Esphion Japan other
  than as set out in this Agreement, with effect from the close of business on
  the Completion Date on the terms and conditions contained in this Agreement.




Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


14








	
 

	
 

	
 


	
2.2

	
Nomination


	
 

	
 

	
 


	
 

	
(a)

	
The Vendor acknowledges and
  agrees that the Purchaser may, simultaneously with signing this Agreement,
  nominate an alternate purchaser (the Permitted Nominee) which is a wholly
  owned and controlled New Zealand subsidiary of the Purchaser, to purchase the
  Tangible Assets or a portion thereof, in place of the Purchaser, pursuant to
  this Agreement on the terms set out in this clause 2.2.


	
 

	
 

	
 


	
 

	
(b)

	
Notwithstanding any such
  nomination the Purchaser shall remain responsible for all of the Purchaser’s
  obligations under this Agreement.


	
 

	
 

	
 


	
 

	
(c)

	
Such nomination shall only
  take effect upon the Purchaser delivering to the Vendor a signed deed of
  adherence in Agreed Form under which the Permitted Nominee agrees to be a
  party to and liable under this Agreement for the Purchaser’s obligations in
  relation to the acquisition of the Tangible Assets and the offer of
  employment to the Existing Employees under clause 11.


	
 

	
 

	
 


	
 

	
(d)

	
With effect from nomination
  in accordance with this clause 2.2, the Permitted Nominee may enforce this
  Agreement and exercise any rights of the Purchaser under this Agreement in
  relation to the Tangible Assets and the Existing Employees, as if it were a
  party to it in place of the Purchaser, provided that no claim may be made by
  the Permitted Nominee to the extent that the claim would not have been able
  to be made by the Purchaser if no nomination had occurred under this clause.
  For the avoidance of doubt, the Vendor agrees that if a clause in this
  Agreement provides that the Purchaser is able to claim against the Vendor for
  any claim made against, or liability incurred, by the Purchaser in relation
  to the Tangible Assets and the Existing Employees, then, on and from
  nomination in accordance with this clause 2.2, the Permitted Nominee is able
  to claim against the Vendor in accordance with that clause for any
  corresponding claim made against, or corresponding liability incurred, by the
  Permitted Nominee.


	
 

	
 

	
 


	
3.

	
Conditions


	



	
 

	
 

	
 


	
3.1

	
Completion
  is conditional


	
 

	
 

	
 


	
 

	
Completion of this Agreement is subject to the full
  and complete satisfaction of the Conditions.


	
 

	
 

	
 


	
3.2

	
Fulfilment
  of Conditions


	
 

	
 

	
 


	
 

	
The date for satisfaction of each Condition is the
  relevant condition satisfaction date for that Condition as set out alongside
  that Condition in Schedule 4 or such later date as the parties may agree in
  writing.


	
 

	
 

	
 


	
3.3

	
Reasonable
  endeavours


	
 

	
 

	
 


	
 

	
The Vendor and the Purchaser will each use
  reasonable endeavours to procure the satisfaction of the Conditions and each
  will from time to time upon request from the other keep the other fully
  informed as to progress in procuring satisfaction of the Conditions. The
  obligations under this clause 3 do not require any party to pay money, other
  than customary adviser and registration fees and charges, provide any other
  consideration or incur any liability, actual or contingent, in order to
  satisfy the Conditions.


	
 

	
 

	
 


	
3.4

	
Effect of failure to
  satisfy Conditions


	
 

	
 

	
 


	
 

	
If the Conditions are not satisfied or (to the
  extent that they are capable of waiver), waived by the party for whose
  benefit they are inserted (as set out alongside each Condition in Schedule 4)
  by the condition satisfaction date specified alongside each Condition in
  Schedule 4, then either the Vendor or the Purchaser may terminate this
  Agreement by notice in writing to the other.




Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


15








	
 

	
 

	
 

	
 


	
3.5

	
Consequences
  of Termination and Cancellation


	
 

	
 

	
 

	
 


	
 

	
If this Agreement is terminated or cancelled under
  clause 3.4 or clause 15.13:


	
 

	
 

	
 

	
 


	
 

	
(a)

	
except as set out in clause,
  19, 23 and 29, this Agreement will be of no further force and effect; and


	
 

	
 

	
 


	
 

	
(b)

	
the parties will be released
  from their obligations under this Agreement and no party will have any claim
  against the other parties arising under or in connection with such
  termination other than in respect of any breach of this Agreement occurring
  before such termination.


	
 

	
 

	
 

	
 


	
4.

	
Purchase
  Price and apportionments


	



	
 

	
 

	
 

	
 


	
4.1

	
Amount


	
 

	
 

	
 

	
 


	
 

	
The Purchase Price for the purchase of the Assets
  and the Business comprises:


	
 

	
 

	
 

	
 


	
 

	
(a)

	
USD3,500,000 plus GST (if
  any) being the:


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
Tangible Asset purchase
  price plus GST (if any) (the Tangible Asset
  Purchase Price); and


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
the Intangible Asset
  purchase price plus GST (if any) (the
  Intangible Asset Purchase Price),


	
 

	
 

	
 

	
 


	
 

	
 

	
each of which is payable at
  Completion by the Purchaser; and


	
 

	
 

	
 

	
 


	
 

	
(b)

	
subject to certain
  conditions being satisfied as described in clause 5.1, a contingent payment
  of up to USD2,000,000 plus GST (if any), which, if payable, will be satisfied
  by a payment to the Vendor in accordance with clause 5,


	
 

	
 

	
 

	
 


	
 

	
subject to any adjustment in
  accordance with any provision of this Agreement.


	
 

	
 


	
4.2

	
Payment of the Purchase Price


	
 

	
 

	
 

	
 


	
 

	
(a)

	
The Tangible Asset Purchase Price and the Intangible
  Asset Purchase Price are payable at Completion by the Purchaser in the
  following manner:


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
the Escrow Amount is payable
  by the Purchaser to the Escrow Agent in accordance with clause 18.1(a); and


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
the portion of the Purchase
  Price that exceeds the Escrow Amount is payable by the Purchaser to the
  Vendor.


	
 

	
 

	
 

	
 


	
 

	
(b)

	
The payment referred to in paragraph 4.1(b) is
  payable in accordance with clause 5.


	
 

	
 

	
 

	
 


	
4.3

	
Allocation of Purchase
  Price


	
 

	
 

	
 

	
 


	
 

	
(a)

	
The portion of the Purchase
  Price payable pursuant to clause 4.1(a)will be allocated between the Assets as
  follows:


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
for Fixed Assets – USD
  equivalent on Completion Date of NZD63,518; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
for the Leased Equipment –
  USD1.00; 




Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


16








	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
for the Trade Debtors – the
  lower of the USD equivalent book value or USD equivalent net realisable value
  as shown in the Business Records, determined at the Completion Date; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(iv)

	
for the Business Agreements
  – USD0.00; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(v)

	
for the Business Records –
  USD1.00; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(vi)

	
Stock – the lower of the USD
  equivalent cost or USD equivalent realisable market value as shown in the
  Business Records, determined at the Completion Date;


	
 

	
 

	
 

	
 


	
 

	
 

	
(vii)

	
for the Intellectual
  Property Rights – USD2,700,000; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(viii)

	
for Goodwill – the balance
  of the portion of the Purchase Price payable pursuant to clause 4.1(a); and


	
 

	
 

	
 

	
 


	
 

	
(b)

	
the portion of the Purchase
  Price comprising any Earn Out Payment payable as contemplated by clause
  4.1(b), the amount of that Earn Out Payment will be attributed to Goodwill.


	
 

	
 

	
 

	
 


	
4.4

	
Apportionments


	
 

	
 

	
 

	
 


	
 

	
(a)

	
All Prepayments and rent,
  rates, power, telephone, water, equipment rental payments and other outgoings
  of a periodic or recurring nature (but excluding insurance premiums, normal
  employee costs (including wages, salary, employee benefits, income tax
  deductible under the PAYE system, FBT, ACC or equivalent premiums)) must be
  apportioned between the Vendor and Purchaser (or the Permitted Nominee) as at
  5pm on the Completion Date.


	
 

	
 

	
 

	
 


	
 

	
(b)

	
All payments required by
  this clause 4.4 are to be calculated by the Purchaser (or the Permitted
  Nominee) and agreed by the Vendor and set out in a statement (Apportionment
  Statement). All figures in the Apportionment Statement and all calculations
  required pursuant to this clause 4.4 are to exclude GST. 


	
 

	
 

	
 

	
 


	
 

	
(c)

	
The Vendor will deliver the
  Apportionment Statement together with all supporting records, invoices and
  workings to the Purchaser on or before the date 15 Business Days after the
  Completion Date. All payments required to be made by the Apportionment
  Statement will be made by the Vendor or the Purchaser (or the Permitted
  Nominee) (as the case may be) on or before the date 30 Business Days after
  the Completion Date. The Purchaser will provide the Vendor and its agents
  with reasonable access to its records in order to enable the Vendor to
  prepare the Apportionment Statement.


	
 

	
 

	
 

	
 


	
 

	
(d)

	
Any late invoices received
  by the Vendor or the Purchaser following the payment under sub-clause (c)
  above will be treated pursuant to the provisions of this clause 4.4, mutatis mutandis. 


	
 

	
 

	
 

	
 


	
 

	
(e)

	
Any dispute in relation to
  the Apportionment Statement and any payment required under this clause 4.4
  will be resolved in accordance with clause 5.7.




Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


17







	
 

	
 

	
 

	
 


	
4.5

	
Cash
  Payments


	
 

	
 

	
 

	
 


	
 

	
All payments to be made by
  the parties under this Agreement will be made against the submission of a
  valid invoice on the due date in same day cleared funds and free of any
  deduction, withholding, set-off, counter-claim, restrictions or conditions
  except to the extent the deduction or withholding is required by law.







	
 

	
 

	
 


	
 

	
For the purposes hereof
  unless directed otherwise by the Vendor in writing and at least seven
  Business Days prior to the appointed time of payment, all payments to the
  Vendor will be made to:


	
 

	
 


	
 

	
Account number: 107599 USD
  374001

  Swift Code: WPACNZ2W 

  Westpac Trust 

  219 McKinnon Drive 

  Albany 

  New Zealand


	
 

	
 

	
 


	
 

	
For the purposes hereof, all
  payments to the Purchaser will be made to:


	
 

	
 


	
 

	
Account number: 008200/04

  Swift code: LUMIILITXXX

  Bank Leumi Le-Israel B.M.

  Branch No. 744

  Ra’anana

  Israel


	
 

	
 

	
 


	
4.6

	
Core
  acquisition price


	
 

	
 

	
 


	
 

	
For the purposes of the financial arrangements rules
  in the Income Tax Act 2004, the parties agree that:


	
 

	
 

	
 


	
 

	
(a)

	
they are independent parties
  dealing at arm’s length with each other in relation to the sale and purchase
  contemplated by this Agreement;


	
 

	
 

	
 


	
 

	
(b)

	
the extended settlement
  arrangements and payment of the Purchase Price arise solely because of the
  uncertainty of the parties in relation to the future earnings of the Business
  which necessitates the need for the earn out arrangements set out in clause
  5; and


	
 

	
 

	
 


	
 

	
(c)

	
the Total Consideration is
  the lowest price the parties would have agreed for the sale and purchase of
  the Business and Assets, on the Agreement Date, if payment would have been
  required in full at the time the first right in the contracted property
  (being the Assets and the Business) was transferred and does not include any
  capitalised interest; and


	
 

	
 

	
 


	
 

	
(d)

	
the Total Consideration is
  the value of the Assets and the Business; and


	
 

	
 

	
 


	
 

	
(e)

	
they will compute their
  taxable income for the relevant period on the basis that the Total
  Consideration includes no capitalised interest and will file their tax
  returns accordingly.


	
 

	
 

	
 


	
4.7

	
Purchase
  Price conversion rate


	
 

	
 


	
 

	
In relation to the Purchase
  Price referred to in clause 4.1, for the purpose of determining the GST
  payable on all or any part of the Purchase Price, the USD amounts will be
  converted into NZD at the buy rate quoted by the Bank of New Zealand as at 9 am
  on the Completion Date. 




Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


18








	
 

	
 

	
 

	
 


	
5.

	
Earn Out


	



	
 

	
 

	
 

	
 


	
5.1

	
Earn Out
  Conditions


	
 

	
 

	
 

	
 


	
 

	
The Purchaser may set off
  from payment of any Earn Out Payment, any amount that has either been settled
  or agreed or is otherwise an amount claimed in good faith by the Purchaser as
  damages for breach of any of the Vendor’s obligations under this Agreement,
  including the Warranties, or for breach of the Key Shareholders’ Warranties
  and the non-compete covenants contained in clause 12. 


	
 

	
 

	
 

	
 


	
5.2

	
Earn Out
  Amount Calculation


	
 

	
 

	
 

	
 


	
 

	
(a)

	
The Purchaser will pay to
  the Vendor an amount calculated in accordance with the following formula:


	
 

	
 

	
 

	
 


	
 

	
 

	
EOA = (USD 0.8 x A)


	
 

	
 

	
 

	
 


	
 

	
 

	
Where:


	
 

	
 

	
 

	
 


	
 

	
 

	
EOA

	
is the Earn Out Amount in USD.


	
 

	
 

	
 

	
 


	
 

	
 

	
A

	
is the amount of Qualified
  Net Revenues recognized by the Purchaser during the period commencing 1
  January 2008 and ending 31 December 2008.


	
 

	
 

	
 

	
 


	
 

	
 

	
If the Qualified Net
  Revenues are recognized from the sale of the Vendor’s Products in combination
  with the Purchaser’s Products, the related Earn Out Amount will be calculated
  based on the following formula:


	
 

	
 

	
 

	
 


	
 

	
 

	
QNRA = B x (C/(B + D))


	
 

	
 

	
 

	
 


	
 

	
 

	
Where


	
 

	
 

	
 

	
 


	
 

	
 

	
QNRA

	
is the Qualified Earn Out
  Amount in USD.


	
 

	
 

	
 

	
 


	
 

	
 

	
B

	
is the Vendor’s Product
  price as quoted in the Purchaser’s then current price list.


	
 

	
 

	
 

	
 


	
 

	
 

	
C

	
is the Net Revenues
  recognized by the Purchaser in consideration for the sale of the combined
  solution of the Vendor’s Product within the Purchaser’s Product.


	
 

	
 

	
 

	
 


	
 

	
 

	
D

	
is the Purchaser’s Product
  price as quoted in the Purchaser’s then current price list


	
 

	
 

	
 

	
 


	
 

	
(b)

	
The Purchaser will pay to
  the Vendor an additional amount of Purchase Price plus GST (if any)
  calculated in accordance with this clause 5.2(b). If the Purchaser
  recognizes, during the Earn Out Period, revenues according to US GAAP from
  the sale of the Vendor’s Products, and such revenues are collected within six
  months from the expiration of the Earn Out Period (the Additional Qualified
  Net Revenues), the Vendor shall be entitled, notwithstanding the definition
  of “Net Revenues”, to EOA (as defined in accordance with clause 5.2(a)) with
  respect to the Additional Qualified Net Revenues. Seventy-five percent (75%)
  of the Additional Qualified Net Revenues will be paid on a quarterly basis
  within 15 Business Days from the announcement by the Purchaser of its
  financial results of operations of that calendar quarter, and the remaining
  balance of twenty-five percent (25%) will be applied to the Retention Amount
  under clause 5.6 below.




Agreement relating to the sale and purchase
of the Business and Assets of Esphion Limited


19








	
 

	
 

	
 


	
 

	
(c)

	
The Earn Out Amount shall
  not exceed USD2,000,000 plus GST (if any).
  If the calculation of the Earn Out Amount under clause 5.2(a) produces
  an Earn Out Amount greater than USD2,000,000 plus GST (if any), the Purchaser
  is:








	
 

	
 

	
 


	
 

	
(i)

	
only obliged to pay to the
  Vendor the amount of USD2,000,000 plus GST (if any); and


	
 

	
 

	
 


	
 

	
(ii)

	
not obliged to pay the
  balance of the Earn Out Amount as calculated in accordance with clause
  5.2(a).








	
 

	
 

	
 

	
 


	
5.3

	
Calculation
  of the Earn Out Amount


	
 

	
 

	
 

	
 


	
 

	
(a)

	
The Purchaser will deliver
  to the Vendor:


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
a statement of Qualified Net
  Revenues for the Earn Out Amount;


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
the calculation of the Earn
  Out Amount and working papers (which must include details of the relevant
  calculation and the inputs into that calculation);


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
copies of all purchase
  orders and invoices of the Purchaser through the Earn Out Period which
  reflect the sale of the Vendor’s Products,


	
 

	
 

	
 

	
 


	
 

	
 

	
no later than 20 days
  prior to the Earn Out Payment Date.


	
 

	
 

	
 

	
 


	
 

	
(b)

	
In the event that the Vendor
  disagrees with the calculation of the Earn Out Amount, it must, within
  30 days of receipt of the information referred to in clause
  5.3(a), give notice to the Purchaser of such disagreement (Earn Out
  Calculation Notice).  An Earn Out
  Calculation Notice must include full details of the reasons for such
  disagreement (including working papers).
  The Purchaser shall ensure that the Vendor or the Vendor’s accountants
  are given access to all additional information that they may reasonably
  require to enable the Vendor to make its decision whether to agree or
  disagree with the calculation of the Earn Out Amount, subject to the Vendor
  and the Vendor’s accountants signing a confidentiality undertaking in the
  form set out in Appendix 7.


	
 

	
 

	
 

	
 


	
 

	
(c)

	
Upon receipt of an Earn Out
  Calculation Notice, the Purchaser and the Vendor will use their reasonable
  endeavours to agree on the Earn Out Amount.
  Failing agreement by the parties within 5 days of the date of the Earn
  Out Calculation Notice, the matter will be resolved in accordance with clause
  5.7.


	
 

	
 

	
 

	
 


	
 

	
(d)

	
The Vendor is entitled to disagree with the
  calculation of the Earn Out Amount if the Vendor reasonably believes that the
  Purchaser has in average discounted or offered rebates or similar incentives
  affecting the prices of the Vendor’s Products (by region), which are
  adversely disproportionate to the average discount, rebate or similar
  incentive offered in respect of the Purchaser’s Products (by region) and may
  include such matter within the Earn Out Calculation Notice.  If the expert appointed pursuant to clause
  5.7 determines that the average discount offered, rebate or similar incentive
  affecting the prices of the Vendor’s Products are disproportionate to the
  average discount, rebate or similar incentive offered in respect of the
  Purchaser’s Products (by region), the Earn Out Amount shall be increased or
  decreased by the expert to the extent the expert determines that the Vendor’s
  Products and the Purchaser’s Products had different average discounts,
  rebates or similar incentives according to listed prices (by region). 


	
 

	
 

	
 

	
 


	
5.4

	
Earn Out
  Payment


	
 

	
 

	
 

	
 


	
 

	
(a)

	
On the Earn Out Payment
  Date, the Purchaser must pay to the Vendor, against the submission in advance
  of a valid invoice, an amount equal to the Earn Out Amount, less the
  Retention Amount and any amount withheld or offset in accordance with clause
  5.1 (the Reduced Amount).





Agreement relating to the sale and purchase of the Business and Assets
of Esphion Limited


20








	
 

	
 

	
 


	
 

	
(b)

	
If an Earn Out Calculation
  Notice is issued after the Earn Out Payment, then:








	
 

	
 

	
 


	
 

	
(i)

	
to the extent the Purchaser
  and the Vendor agree, the difference between (1) the Reduced Amount paid
  pursuant to clause 5.4(a) and (2) the amount agreed under clause 5.3(c) less
  the Retention Amount and any amount withheld or offset in accordance with
  clause 5.1, shall be paid against the submission of a valid invoice within
  seven Business Days of such agreement by relevant party; or


	
 

	
 

	
 


	
 

	
(ii)

	
if there is a Dispute, the
  amount shall be paid against the submission of a valid invoice within seven
  Business Days following the decision made pursuant to clause 5.7. 








	
 

	
 


	
5.5

	
Recording
  Net Revenues


	
 

	
 


	
 

	
The Purchaser will maintain adequate accounting and
  revenue tracking processes and procedures so that the Purchaser can readily
  identify and record the Qualified Net Revenues during the Earn Out Period.


	
 

	
 


	
5.6

	
Payment
  of the Adjusted Retention Amount








	
 

	
 

	
 


	
 

	
(a)

	
On the Retention Payment Date, or if there is a
  Dispute, within seven Business Days of the expert issuing its decision under
  clause 5.7, the Purchaser must pay to the Vendor against the submission in
  advance of a valid invoice the Adjusted Retention Amount calculated in
  accordance with clause 5.6(b).


	
 

	
 

	
 


	
 

	
(b)

	
The amount payable by the Purchaser to the Vendor on
  the Retention Payment Date is an amount determined by the following formula
  (the Adjusted Retention Amount):


	
 

	
 

	
 


	
 

	
 

	
ARA = RA - X+ Y


	
 

	
 

	
 


	
 

	
 

	
Where:








	
 

	
 

	
 


	
 

	
ARA

	
is the Adjusted Retention Amount.


	
 

	
 

	
 


	
 

	
RA

	
is the Retention Amount.


	
 

	
 

	
 


	
 

	
X

	
is the amount of any Warranty Claim or other claim
  for damages made in good faith by the Purchaser in accordance with this
  Agreement.


	
 

	
 

	
 


	
 

	
Y

	
is the interest earned on amount equal to the
  Retention Amount less the interest earned on X as from the date of the
  notification of the Warranty Claim related to X.








	
 

	
 

	
 


	
 

	
(c)

	
If any Warranty Claim is not fully successful the
  Purchaser will pay the Vendor the amount of interest that would have been
  earned on such amount of Warranty Claim.


	
 

	
 

	
 


	
 

	
(d)

	
The interest will be calculated based on the regular
  interest rate the Purchaser earns for deposits in an interest bearing deposit
  in commercial banks, net of any withholding taxes. 


	
 

	
 

	
 


	
 

	
(e)

	
If as a result of adjustments to the Retention
  Amount pursuant to this clause 5.6, the Adjusted Retention Amount is nil or a
  negative number, the Purchaser is not required to make any payment to the
  Vendor on the Retention Payment Date.





Agreement relating to the sale and purchase of the Business and Assets
of Esphion Limited


21








	
 

	
 

	
 


	
 

	
(f)

	
Any dispute between the Vendor and the Purchaser
  regarding the Retention Amount or the Adjusted Retention Amount will be
  resolved in accordance with clause 5.7.








	
 

	
 


	
5.7

	
Disputes








	
 

	
 

	
 

	
 


	
 

	
(a)

	
If a difference or dispute arises between the Vendor
  and the Purchaser relating to the Earn Out Amount as calculated under clause
  5.2 or the Apportionment Statement, and the dispute is not resolved within 10
  days after arising, either of them may provide a written notice to the other
  setting out the basis of the dispute (Dispute Notice) and the matter in
  dispute shall be determined in accordance with this clause 5.7.


	
 

	
 

	
 


	
 

	
(b)

	
Upon the issue of a Dispute Notice, the dispute
  referred to in that notice (the Dispute) shall be immediately referred to,
  and finally resolved by, an expert who shall be appointed by the Vendor and
  the Purchaser.  In the event that
  those parties cannot agree on an expert within 10 days of the Dispute Notice,
  the expert (who shall be from an objective (disinterested) firm of Chartered
  Accountants) shall be appointed by the President for the time being of the
  New Zealand Institute of Chartered Accountants on the application of either
  the Vendor or the Purchaser.  The
  following provisions shall apply to the referral:


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
the Vendor and the Purchaser
  shall each bear their own costs and expenses in connection with the referral,
  and all costs and expenses of the expert in determining the Dispute shall be
  borne as the expert may determine;


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
in the absence of manifest
  error, a determination by the expert of any matter pursuant to this clause
  5.7 shall be final and binding on the parties;


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
the expert’s terms of
  reference shall be instructed to determine the matters in dispute within 30
  days of his appointment; and


	
 

	
 

	
 

	
 


	
 

	
 

	
(iv)

	
the parties shall each provide
  the expert with all information which the expert reasonably requires and the
  expert shall be entitled (to the extent he considers appropriate) to base his
  determination on such information and on the accounting and other records of
  each party.


	
 

	
 

	
 

	
 


	
 

	
(c)

	
Any monies referred to in the relevant decision of
  the expert shall be due and payable on the date falling seven Business Days
  after such notification of the expert’s decision.


	
 

	
 

	
 


	
5.8

	
Winding
  Up of Purchaser


	
 

	
 


	
 

	
If an Event of Default occurs in relation to the
  Purchaser prior to the Earn Out Payment Date then unless that Event of
  Default is remedied within 14 days to the reasonable satisfaction of the
  Vendor, the Purchaser will immediately pay to the Vendor the difference
  between USD 5,500,000 and any part of the Purchase Price already paid to
  the Vendor by the Purchaser.  


	
 

	
 


	
5.9

	
Access to information during Earn
  Out


	
 

	
 

	
 

	
 


	
 

	
During the Earn Out Period the Purchaser undertakes
  to the Vendor that, subject to the Vendor entering into the confidentiality
  agreement set out in Appendix 7, the Purchaser will deliver to the Vendor on
  a quarterly basis within 20 days following the announcement of its quarterly
  results of operations, an estimate of revenues related to the Vendor’s
  Products that were recognized during that quarter. For avoidance of doubt,
  the final calculation of the Earn Out Amount will be made pursuant to clause
  5.2 and the Vendor is restricted from using the aforementioned reports as
  supporting documents regarding the calculation of the Earn Out Amount.





Agreement relating to the sale and purchase of the Business and Assets
of Esphion Limited


22








	
 

	
 

	
 


	
6.

	
Pending Completion


	



	
 

	
 

	
 


	
6.1

	
Operation
  of Business


	
 

	
 

	
 


	
 

	
Pending Completion the Vendor must, unless it has
  the prior written consent of the Purchaser (which will not be unreasonably
  withheld or delayed) to act otherwise:


	
 

	
 

	
 


	
 

	
(a)

	
Operate Business 


	
 

	
 

	
 


	
 

	
 

	
operate and conduct the Business in the ordinary
  course as has been disclosed to the Purchaser and maintain the goodwill of
  the Business in accordance with good business practice;


	
 

	
 

	
 


	
 

	
(b)

	
Not acquire or dispose of Assets 


	
 

	
 

	
 


	
 

	
 

	
not acquire any Asset (whether by purchase or lease)
  (other than in the normal course of trading and on arms-length commercial
  terms for full value) or dispose of any Fixed Asset or Intellectual Property
  Rights other than licences of Intellectual Property Rights granted in the
  ordinary course of business;


	
 

	
 

	
 


	
 

	
(c)

	
Notify Purchaser


	
 

	
 

	
 


	
 

	
 

	
promptly notify the Purchaser of any events coming
  to the Vendor’s knowledge which may be a Material Adverse Event;


	
 

	
 

	
 


	
 

	
(d)

	
Agreements


	
 

	
 

	
 


	
 

	
 

	
not, in respect of the Business, enter into any
  agreement or other commitment except for agreements with customers and
  suppliers in the ordinary course of business;


	
 

	
 

	
 


	
 

	
(e)

	
Legal matters


	
 

	
 

	
 


	
 

	
 

	
promptly notify the Purchaser of any legal claims,
  proceedings or investigations which may occur, be threatened, brought,
  asserted or commenced against the Vendor or its directors in relation to the
  Business;


	
 

	
 

	
 


	
 

	
(f)

	
Employees


	
 

	
 

	
 


	
 

	
 

	
not employ any new employees or terminate the
  employment of any employee except for the termination of any employee’s
  employment for breach, and not to change the terms of employment of the
  Existing Employees;


	
 

	
 

	
 


	
 

	
(g)

	
Related party transactions 


	
 

	
 

	
 


	
 

	
 

	
not enter into any agreement or transaction with any
  of its shareholders or their Related Companies, other than the provision of
  loans by the Vendor’s shareholders to the Vendor or the issue of securities
  by the Vendor to its shareholders or as required under this Agreement;


	
 

	
 

	
 


	
 

	
(h)

	
Indebtedness


	
 

	
 

	
 


	
 

	
 

	
not, except in the ordinary course of business,
  enter into any agreement to borrow or increase the level of borrowings under
  any existing facility with any party other than the provision of loans by the
  Vendor’s shareholders to the Vendor; and





Agreement relating to the sale and purchase of the Business and Assets
of Esphion Limited


23








	
 

	
 

	
 

	
 

	
 


	
 

	
(i)

	
Insurance


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
keep in force (and not prejudice in any way) any
  existing policies of insurance covering the Business and Assets.


	
 

	
 

	
 

	
 

	
 


	
6.2

	
Risk and
  damage


	
 

	
 

	
 

	
 

	
 


	
 

	
(a)

	
Material Damage 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
The Assets shall be at the
  sole risk of the Vendor until Completion occurs at the close of business on
  the Completion Date and will then be at the sole risk of the Purchaser.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
If, before Completion any
  Fixed Asset is lost, destroyed or damaged and that loss, destruction or
  damage has not been repaired, replaced or otherwise compensated for by an
  insurance policy by Completion, and the loss, destruction or damage is sufficient
  to be, in the Purchaser’s reasonable opinion, a Material Adverse Event, the
  Purchaser may cancel this Agreement by notice in writing to the Vendor.  If the Agreement is cancelled
  under this clause 6.2:


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(A)

	
except as set out in clauses
  6.2(a)(ii), 19, 23, 29, this Agreement has no further effect; and


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(B)

	
the parties will be released
  from their obligations under it and no party will have any claim against the
  other parties arising under or in connection with such termination other than
  in respect of any breach of this Agreement occurring before such termination.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
This right of cancellation is in addition to, and
  not limited by, any other rights or remedies of the Purchaser against the
  Vendor.  If the Purchaser does not
  exercise its rights under this clause 6.2 (a), its other rights and remedies
  will not be prejudiced.


	
 

	
 

	
 

	
 

	
 


	
 

	
(b)

	
Immaterial damage 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
If, before Completion any Fixed Asset with a
  replacement value for assets with the same or similar functionality in excess
  of USD5,000 is lost (individually or in the aggregate), destroyed or damaged
  and the loss, destruction or damage is, in the Purchaser’s reasonable
  opinion, insufficient to be a Material Adverse Event, the Purchaser is to
  complete the purchase of the Business and Assets at the Purchase Price, less
  a sum equal to the amount of the diminution in value of the Fixed
  Assets.  If the Purchaser and the
  Vendor cannot agree on the amount of the reduction in value of the Fixed
  Assets before the Completion Date, the amount of the reduction is to be
  determined under the Dispute Process.


	
 

	
 

	
 

	
 

	
 


	
6.3

	
Access
  for transition


	
 

	
 

	
 

	
 

	
 


	
 

	
The Vendor must ensure that from the Agreement Date,
  the Purchaser and its representatives will have such access as they may
  reasonably request during normal business hours to the Business and to
  the Vendor’s employees, books of account, computerised records, agreements,
  Fixed Assets, Stock and all information relating to the Business.  The Vendor must cause its directors,
  officers, employees, contractors, accountants and lawyers and other advisers to
  co-operate with and make all information relating to the Vendor, the Business
  and the Assets available to the Purchaser and its advisers in a full and
  timely manner.





Agreement relating to the sale and purchase of the Business and Assets
of Esphion Limited


24








	
 

	
 

	
 


	
6.4

	
Breach of
  Warranty


	
 

	
 

	
 


	
 

	
The Vendor undertakes with the Purchaser that:


	
 

	
 


	
 

	
(a)

	
Disclosure


	
 

	
 

	
 


	
 

	
 

	
it will disclose immediately in writing to the
  Purchaser any matter or circumstance which may arise or become known to it
  after the Agreement Date and before Completion which does or may constitute a
  breach of any of the Warranties; and


	
 

	
 

	
 


	
 

	
(b)

	
No breach of Warranties


	
 

	
 

	
 


	
 

	
 

	
pending Completion it will not do, or omit to do, or
  allow anything to be done, as a result of which any Warranty is or may be
  breached as at Completion.


	
 

	
 

	
 


	
6.5

	
Dealings
  with third parties and exclusivity


	
 

	
 


	
 

	
(a)

	
The
  Vendor and the Covenantors must immediately terminate all discussions and
  negotiations with third parties in relation to the sale of the Business or
  any of the Assets and will procure that their agents also terminate any such
  discussions and negotiations.


	
 

	
 

	
 


	
 

	
(b)

	
The
  Vendor will obtain from any such third parties the return of all due diligence
  information about the Business and the Assets in the possession of such
  parties, or obtain appropriate written confirmation from such parties that
  such information has been destroyed.


	
 

	
 

	
 


	
 

	
(c)

	
Neither
  the Vendor nor the Covenantors (or anyone acting on their behalf) shall
  without the Purchaser’s prior written consent (such consent to be given at
  the Purchaser’s sole and absolute discretion) directly or indirectly,
  solicit, negotiate and/or accept offers for or enter into any transaction
  involving the sale of the Business or the Assets or the sale of the shares of
  the Vendor.


	
 

	
 

	
 


	
7.

	
Completion


	



	
 

	
 

	
 


	
7.1

	
Time and
  place


	
 

	
 

	
 


	
 

	
Completion is to take place at 2 pm on the
  Completion Date at the offices of the Purchaser’s Solicitors.


	
 

	
 

	
 


	
7.2

	
Possession
  and title


	
 

	
 

	
 


	
 

	
Possession of and title to the Assets and the
  Business is to be given and taken on the Completion Date.  On the Completion Date the Vendor will,
  subject to clause 2.2,sell, convey, transfer and assign the
  Assets and the Business to the Purchaser and the Purchaser will take over the
  Assets and the Business and the management of the Business.  On Completion, the sale, transfer,
  conveyance and assignment is to have effect as at the close of business on
  the Completion Date.


	
 

	
 


	
7.3

	
Delivery
  of Assets on Completion Date


	
 

	
 


	
 

	
On the Completion Date the
  Vendor must deliver and make available to the Purchaser (or the Permitted
  Nominee (as relevant)), at the Leasehold Property (or at such other place as
  any Asset may be), possession and control of the Business and the Assets
  (other than those to which the provisions of clause 7.4 relate) and the
  Business Records.  Where the Vendor is
  required to have access for its own accounting and tax purposes to any
  original Business Records following Completion which have been delivered to
  the Purchaser at Completion under this clause 7.3, the Purchaser is to allow
  the Vendor to have reasonable access to such Business Records and to take
  such copies of those Business Records, as reasonably required by the Vendor
  solely for that purpose.





Agreement relating to the sale and purchase of the Business and Assets
of Esphion Limited


25








	
 

	
 

	
 


	
7.4

	
Delivery
  of documents on Completion


	
 

	
 

	
 


	
 

	
At Completion the Vendor must deliver to the
  Purchaser:


	
 

	
 

	
 


	
 

	
(a)

	
Certificate


	
 

	
 

	
 


	
 

	
 

	
a certificate in Agreed Form signed on behalf of the
  Vendor by Mark Edwards, the Chief Executive Officer of the Vendor, confirming
  that so far as he is aware after making reasonable enquiry (whether or not
  that enquiry is actually made) and there shall  be deemed to be included the knowledge of matters that he ought
  to be aware of by reason of his position and area of expertise, into the
  relevant matter) the Warranties are and will not be breached as at Completion
  and that the Vendor is not in breach of any other provision of this Agreement
  as at Completion;


	
 

	
 

	
 


	
 

	
(b)

	
Releases 


	
 

	
 

	
 


	
 

	
 

	
releases of the general security agreement dated 7
  November 2007 in favour of the Key Shareholders and all registered
  Encumbrances over the Assets and the Business;


	
 

	
 

	
 


	
 

	
(c)

	
List of Assets


	
 

	
 

	
 


	
 

	
 

	
a list of the Fixed Assets and Intellectual
  Property, the book value of each such Asset (cost and accumulated
  depreciation) as at the Completion Date with, in the case of the Fixed
  Assets, a description of their location;


	
 

	
 

	
 


	
 

	
(d)

	
Leasehold Property


	
 

	
 

	
 


	
 

	
 

	
in respect of the Leasehold
  Property, a deed of assignment of lease between the Vendor, the Purchaser or
  the Permitted Nominee and the landlord of the Leasehold Property in Agreed
  Form duly executed by the Vendor and, if available at Completion, the
  landlord;


	
 

	
 

	
 


	
 

	
(e)

	
PABX Lease


	
 

	
 

	
 


	
 

	
 

	
if available from Technology
  Rentals Limited, necessary documentation to assign all of the rights and
  obligations of the Vendor under the Lease Agreement between Technology
  Rentals Limited and the Vendor for a PABX Alcatel telephone system to the
  Purchaser;


	
 

	
 

	
 


	
 

	
(f)

	
Intellectual Property


	
 

	
 

	
 


	
 

	
 

	
deeds of assignment of the
  Trade Marks, Patents and other Intellectual Property Rights to the Purchaser
  in Agreed Form and duly executed by the Vendor;


	
 

	
 

	
 


	
 

	
(g)

	
Websites


	
 

	
 

	
 


	
 

	
 

	
documentation necessary to
  transfer ownership of the Websites from the Vendor to the Purchaser or the
  Permitted Nominee in Agreed Form duly executed by the Vendor;


	
 

	
 

	
 


	
 

	
(h)

	
Original Agreements


	
 

	
 

	
 


	
 

	
 

	
copies  (and
  original copies if available) of the agreements leasing the Leased Equipment
  and the Business Agreements (if in writing) which may be delivered by leaving
  them at the Leasehold Property;





Agreement relating to the sale and purchase of the Business and Assets
of Esphion Limited


26








	
 

	
 

	
 


	
 

	
(i)

	
Termination of Distribution
  Agreement


	
 

	
 

	
 


	
 

	
 

	
documentation necessary to terminate both the
  International Reseller Agreement between the Vendor and LINC Media Inc. dated
  1 April 2005 and the Business Development Consultancy Agreement between the
  Vendor and Japan Inc. Communications dated 7 October 2004;  


	
 

	
 

	
 


	
 

	
(j)

	
Trade Debtors


	
 

	
 

	
 


	
 

	
 

	
a list of the Trade Debtors of the Business as at
  the Completion Date, including the full name and contact addresses of each
  trade debtor and the relevant amounts to or by such persons;


	
 

	
 

	
 


	
 

	
(k)

	
Stock


	
 

	
 

	
 


	
 

	
 

	
a list of the Stock as at the Completion Date;


	
 

	
 

	
 


	
 

	
(l)

	
Management Accounts


	
 

	
 

	
 


	
 

	
 

	
copies of the Management Accounts, except for the
  Management Accounts for the period commencing on 1 October 2007 and ending on
  the Completion Date, which will be delivered pursuant to clause 21;


	
 

	
 

	
 


	
 

	
(m)

	
Invoice


	
 

	
 

	
 


	
 

	
 

	
provide valid invoices for the portion of the
  Purchase Price to be paid on the Completion Date;


	
 

	
 

	
 


	
 

	
(n)

	
Conditions


	
 

	
 

	
 


	
 

	
 

	
evidence satisfactory to the
  Purchaser that the Conditions in paragraphs (a) and (b) of Schedule 4 has
  been satisfied; and


	
 

	
 

	
 


	
 

	
(o)

	
Escrow Deed


	
 

	
 

	
 


	
 

	
 

	
a copy of the Escrow Deed
  signed by the Vendor and No 8 Ventures Management Limited.


	
 

	
 

	
 


	
 

	
All documents required to be
  delivered by the Vendor as set out in this clause 7 must be in a form
  satisfactory to the Vendor and the Purchaser and their legal counsel, each
  acting reasonably.


	
 

	
 

	
 


	
7.5

	
Purchaser’s
  obligations


	
 

	
 

	
 


	
 

	
On Completion, after the Vendor has complied with
  clauses 7.3 and 7.4 the Purchaser must deliver to the Vendor:


	
 

	
 

	
 


	
 

	
(a)

	
Payment of Purchase Price 


	
 

	
 

	
 


	
 

	
 

	
pay or procure the payment of the Tangible Assets
  Purchase Price and the Intangible Assets Purchase Price to the Vendor and the
  Escrow Agent in the relevant proportions described in clause 4.2 in cleared
  funds;





Agreement relating to the sale and purchase of the Business and Assets
of Esphion Limited


27








	
 

	
 

	
 


	
 

	
(b)

	
Intellectual Property


	
 

	
 

	
 


	
 

	
 

	
deeds of assignment of the
  Trade Marks, Patents and other Intellectual Property Rights to the Purchaser
  in Agreed Form and duly executed by the Purchaser;


	
 

	
 

	
 


	
 

	
(c)

	
Websites


	
 

	
 

	
 


	
 

	
 

	
documentation necessary to transfer ownership of the
  Websites from the Vendor to the Purchaser or the Permitted Nominee duly
  executed by the Purchaser or the Permitted Nominee;


	
 

	
 

	
 


	
 

	
(d)

	
Leasehold Property


	
 

	
 

	
 


	
 

	
 

	
in respect of the Leasehold Property, a deed of
  assignment of lease between the Vendor, the Purchaser or the Permitted
  Nominee and the landlord of the Leasehold Property in Agreed Form duly
  executed by the Purchaser;


	
 

	
 

	
 


	
 

	
(e)

	
Conditions


	
 

	
 

	
 


	
 

	
 

	
evidence satisfactory to the
  Vendor that the Condition in paragraph (b) of Schedule 4 has been satisfied;
  and


	
 

	
 

	
 


	
 

	
(f)

	
Legal Opinion


	
 

	
 

	
 


	
 

	
 

	
a legal opinion in the Agreed Form signed by the
  Purchaser’s legal counsel in Israel; and


	
 

	
 

	
 


	
 

	
(g)

	
Escrow Deed


	
 

	
 

	
 


	
 

	
 

	
a copy of the Escrow Deed
  signed by the Purchaser and the Escrow Agent.


	
 

	
 

	
 


	
7.6

	
Reseller
  Agreement


	
 

	
 

	
 


	
 

	
After Completion, the Purchaser will use its
  reasonable endeavours to agree with Esphion Japan the form of and enter into
  the Reseller Agreement.


	
 

	
 

	
 


	
8.

	
Default


	



	
 

	
 

	
 


	
8.1

	
Vendor in
  default


	
 

	
 

	
 


	
 

	
If the Vendor does not fulfil the Vendor’s
  obligations under clause 7 then, without prejudice to any other rights or
  remedies available to the Purchaser, the Purchaser may:


	
 

	
 

	
 


	
 

	
(a)

	
Specific performance


	
 

	
 

	
 


	
 

	
 

	
sue the Vendor for specific performance; or


	
 

	
 

	
 


	
 

	
(b)

	
Cancel


	
 

	
 

	
 


	
 

	
 

	
cancel this Agreement and sue the Vendor for
  damages.





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8.2

	
Purchaser
  in default


	
 

	
 

	
 


	
 

	
If the Purchaser does not fulfil the Purchaser’s
  obligations under clause 7 then, without prejudice to any other rights or
  remedies available to the Vendor, the Vendor may:


	
 

	
 

	
 


	
 

	
(a)

	
Specific performance


	
 

	
 

	
 


	
 

	
 

	
sue the Purchaser for specific performance; or


	
 

	
 

	
 


	
 

	
(b)

	
Cancel


	
 

	
 

	
 


	
 

	
 

	
cancel this Agreement and sue the Purchaser for
  damages.


	
 

	
 

	
 


	
8.3

	
Default
  Interest


	
 

	
 

	
 


	
 

	
If any party does not pay any sum payable by it under
  this Agreement as and when due and in the manner provided in this Agreement,
  it must pay Default Interest on that unpaid sum.  Default Interest is to accrue on any unpaid sum from day to day
  from the due date up to the date of actual payment, before and after
  judgment.  Interest on overdue
  payments is to be capitalised monthly.
  The demand for or payment of Default Interest is not in substitution
  for, or to the exclusion of, any rights or remedies otherwise available to a
  party under this Agreement.


	
 

	
 

	
 


	
9.

	
Vendor Earn Out Protection 


	



	
 

	
 

	
 


	
9.1

	
Positive
  Covenants


	
 

	
 

	
 


	
 

	
From the Completion Date until the expiry of the
  Earn Out Period, the Purchaser will, and the Purchaser will procure each
  Group Company to, use best commercial endeavours to promote and enhance the
  Business to the extent the same does not conflict with the Purchaser’s then
  current business.  


	
 

	
 

	
 


	
10.

	
Assignment and related matters


	



	
 

	
 

	
 


	
10.1

	
Assignment
  of Business Agreements


	
 

	
 

	
 


	
 

	
With effect from Completion,
  the Vendor assigns, to the extent permitted by law, the benefit of all
  Business Agreements.  Where for any
  reason the assignment evidenced by this clause 10.1 is void or
  unenforceable the Vendor is, to the extent permitted by law, to hold the
  benefit of any Business Agreements not assigned or novated on Completion for
  the Purchaser and the Purchaser must properly perform the obligations of the
  Vendor under those Business Agreements (to the extent that those obligations
  arise after the Completion Date) on the Vendor’s behalf.  Where for any reason the assignment
  evidenced by this clause 10.1 is void or unenforceable the Vendor is to
  on receipt of a written notice by the Purchaser and subject to being
  indemnified by the Purchaser take such reasonable steps as are necessary to
  enforce any Business Agreement in accordance with the Purchaser’s reasonable
  instructions.


	
 

	
 

	
 


	
10.2

	
Indemnity
  by Vendor


	
 

	
 

	
 


	
 

	
The Vendor indemnifies the Purchaser against any
  liability or loss arising directly from, and any costs, damages, losses,
  charges or expenses actually incurred by the Purchaser concerning, any
  failure by the Vendor to perform all obligations under, or comply with the
  terms of, the Business Agreements for the period before Completion.  The Vendor agrees to account to the
  Purchaser for all sums received by the Vendor in respect of Business
  Agreements which relate to the period following Completion.




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10.3

	
Indemnity
  by Purchaser


	
 

	
 

	
 


	
 

	
The Purchaser must assume, and fully and effectively
  perform, all obligations arising under the Business Agreements as and from
  Completion and must indemnify the Vendor against all liability or loss
  arising directly from, and any costs, damages, losses, charges or expenses
  actually incurred by the Vendor concerning, any failure by the Purchaser to
  perform all obligations under, or comply with the terms of, any of the
  Business Agreements following Completion and the lease of the Leasehold
  Property.


	
 

	
 

	
 


	
10.4

	
Transfer
  of communication numbers


	
 

	
 


	
 

	
The Vendor must use its reasonable endeavours to
  ensure that all of the fixed line telephone and facsimile numbers, mobile
  phone numbers of the Existing Employees and other communications owned by the
  Vendor and used by the Business are transferred to the Purchaser with effect
  from Completion.


	
 

	
 


	
10.5

	
Insurance


	
 

	
 


	
 

	
The Purchaser will not have any rights or obligations
  concerning any insurance policies held by the Vendor concerning the Business
  or the Assets.


	
 

	
 


	
10.6

	
Pre-Completion
  Assistance:


	
 

	
 


	
 

	
The Purchaser:


	
 

	
 

	
 


	
 

	
(a)

	
must, immediately after the Agreement Date, use all
  reasonable endeavours to assist the Vendor to secure in respect of the
  Leasehold Property, the consent of the landlord counter-party to the
  assignment of the lease of the Leasehold Property by providing such financial
  and operational information as the landlord counterparty may request; 


	
 

	
 

	
 


	
 

	
(b)

	
must, immediately after the Agreement Date, without
  limiting its obligations under clause 10.6(a), sign a deed of assignment of
  lease in the ADLS standard form and if making the nomination pursuant to
  clause 2.2 for the Permitted Nominee to be the assignee, have the Purchaser
  enter into a guarantee in the ADLS standard form.


	
 

	
 


	
11.

	
Employees


	



	
 

	
 


	
11.1

	
Offer of
  employment


	
 

	
 

	
 


	
 

	
(a)

	
As soon as practicable after the Agreement Date the
  Vendor will consult with each of the Existing Employees regarding the
  Vendor’s entry into this Agreement and assist the Purchaser with delivery of
  the Purchaser’s Offer (as defined below) to each of the Existing Employees.


	
 

	
 

	
 


	
 

	
(b)

	
The Purchaser or the Permitted Nominee will make a
  written offer to each Existing Employee, in a form approved by the Vendor,
  offering to employ each Existing Employee with effect from the close of
  business on the Completion Date (the Purchaser’s Offer) on terms that are no
  less favourable to them than their existing terms of employment although the
  Purchaser’s Offer will include equity based incentives under the Purchaser’s
  existing incentive plans and the Vendor acknowledges that these equity based
  incentives may not equate with the private company equity based incentives
  currently offered by the Vendor to the Existing Employees.


	
 

	
 


	
11.2

	
Reasonable
  endeavours


	
 

	
 

	
 


	
 

	
Each of the Vendor and the Purchaser are to use
  reasonable endeavours to persuade all of the Existing Employees receiving a
  Purchaser’s Offer to accept employment with the Purchaser on the terms
  specified in the Purchaser’s Offer.
  One Business Day before Completion, the Purchaser must give notice to
  the Vendor of all Employees who have accepted the Purchaser’s offer of
  employment.





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11.3

	
Benefits


	
 

	
 


	
 

	
The Vendor shall pay to each Existing Employee a sum
  equal to the value of the Leave Benefits and all due bonuses, wages and
  salaries (prorated) on or before the Completion Date.


	
 

	
 


	
11.4

	
Liability
  to Employees


	
 

	
 


	
 

	
If the Purchaser or the Permitted Nominee does not
  make the Purchaser’s Offer to the Existing Employees in accordance with
  clause 11.1, the Purchaser will, subject to receipt of evidence of the
  termination of the Existing Employees’ employment with the Vendor, indemnify
  the Vendor for an amount equal to all the total of all wages, salaries and
  benefits payable and any leave entitlements payable to the Existing Employees
  for the period of notice required to be given to each Existing Employee to
  terminate such employees’ employment with the Vendor or in lieu of such
  notice any other payment to which the Employee is lawfully entitled on
  termination of their employment.


	
 

	
 


	
11.5

	
No third
  party rights


	
 

	
 


	
 

	
Nothing in clause 11 creates any third party
  beneficiary rights (for the purposes of the Contracts (Privity) Act 1982) in
  any Existing Employee.


	
 

	
 


	
11.6

	
Immigration
  Assistance


	
 

	
 


	
 

	
The Vendor will provide the Purchaser with all
  reasonable assistance required to transfer the sponsorship of any Existing
  Employee for immigration purposes from the Vendor to the Purchaser.


	
 

	
 


	
11.7

	
Seconded Employee


	
 

	
 

	
 


	
 

	
(a)

	
Seconded Employee


	
 

	
 

	
 


	
 

	
 

	
For the period from the Completion Date until the
  date falling three months thereafter (the Transition Period) or any such
  longer period as agreed between the Vendor and the Purchaser, the Vendor will
  use reasonable endeavours to make Alexander Kharichev (the Seconded Employee)
  available to the Purchaser (for so long as he is an employee of the Vendor)
  for the provision of services to the Business.


	
 

	
 

	
 


	
 

	
(b)

	
Location


	
 

	
 

	
 


	
 

	
 

	
While providing the services, the Seconded Employee
  will continue to be based at the premises at which the relevant Seconded
  Employee was based at the Agreement Date.


	
 

	
 

	
 


	
 

	
(c)

	
Termination of employment


	
 

	
 

	
 


	
 

	
 

	
Subject to clause 11.7(d),
  the Vendor will not be required to make the Seconded Employee available to
  the Purchaser where the Seconded Employee is taking leave or where the
  employment of the Seconded Employee terminates.  The Purchaser shall continue to pay for the services where the
  Seconded Employee is on leave. Any such leave will be coordinated with and
  approved by the Purchaser.





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(d)

	
No termination


	
 

	
 

	
 


	
 

	
 

	
During the first two months of the Transition
  Period, the Vendor will not, without the prior consent of the Purchaser (such
  consent not to be unreasonably withheld), terminate the employment of the
  Seconded Employee, unless that termination is for breach.  The Purchaser may at any time after the
  first six weeks of the Transition Period terminate the provision of the
  Seconded Employee’s services by giving the Vendor five weeks notice in
  writing.  


	
 

	
 

	
 


	
 

	
(e)

	
No warranty


	
 

	
 

	
 


	
 

	
 

	
Neither the Vendor nor the Seconded Employee makes
  any warranty or representation regarding the skills or attributes of, or the
  quality of any services, information or documentation provided to the
  Purchaser by, the Seconded Employee.
  The Vendor excludes all liability to the Purchaser or (howsoever
  arising) for any actions or omissions of the Seconded Employee.


	
 

	
 

	
 


	
 

	
(f)

	
No personal liability


	
 

	
 

	
 


	
 

	
 

	
The Seconded Employee will not have any duty,
  responsibility or any other obligation whatsoever to the Purchaser in their
  personal capacity under this Agreement.


	
 

	
 

	
 


	
 

	
(g)

	
Indemnity


	
 

	
 

	
 


	
 

	
 

	
The Purchaser indemnifies the Vendor and the
  Seconded Employee against any and all claims or liabilities that may be
  incurred or sustained by, or made against, the Vendor or the Seconded
  Employee as a direct or indirect result of any actions or omissions of the
  Purchaser in respect of the Seconded Employee or the actions or omissions of
  the Vendor or the Seconded Employee at the request of the Purchaser in
  respect of the Seconded Employee.


	
 

	
 

	
 


	
 

	
(h)

	
Continued employment


	
 

	
 

	
 


	
 

	
 

	
Notwithstanding anything in this Agreement, the
  Vendor will continue to be the employer of the Seconded Employee until such
  time as his employment with the Vendor terminates.  


	
 

	
 

	
 


	
 

	
(i)

	
Charges


	
 

	
 

	
 


	
 

	
 

	
The Vendor will charge the Purchaser for providing
  services during the Transition Period, including any amount equal to the cost
  to the Vendor of employing the Seconded Employee, and any salary, wages,
  income tax deductible under the PAYE system, FBT, ACC or equivalent premiums
  and all employee leave benefits accruing during the Transition Period
  (including without limitation, annual leave or long service leave) and any
  payment in lieu of working notice period plus GST (if any).


	
 

	
 

	
 


	
 

	
(j)

	
Invoices


	
 

	
 

	
 


	
 

	
 

	
The Vendor will issue a Tax Invoice prior to the
  eighth day of the month during the Transition Period for services provided by
  the Seconded Employee in that month (such invoice being for service 2 weeks
  in arrears and 2 weeks in advance).
  The Vendor may also include in that invoice an amount to reimburse the
  Vendor for any reasonable out-of-pocket costs incurred by it in providing the
  services.





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(k)

	
Payment


	
 

	
 

	
 


	
 

	
 

	
The Purchaser will pay to the Vendor the amount
  specified in the Tax Invoice, together with the GST payable (if any) on or
  before the tenth day of the month (or the next Business Day if such day is
  not a Business Day) after the date of the Tax Invoice.


	
 

	
 

	
 


	
12.

	
Non-competition


	



	
 

	
 

	
 


	
12.1

	
Undertakings


	
 

	
 


	
 

	
Each of the Vendor and the Covenantors (in this
  clause 12 called the Undertaking Parties) acknowledges that it will be
  receiving a material and significant financial benefit as a result of the
  purchase of the Assets and the Business by the Purchaser.  Each of the Undertaking Parties
  acknowledges that the undertakings given by it in this clause 12 are an integral
  component of the purchase of the Business by the Purchaser and that the
  Purchaser would not be prepared to pay the Purchase Price for the Business
  unless those undertakings were given.
  As further consideration for the Purchaser agreeing to purchase the
  Assets from the Vendor on the terms contained in this Agreement:


	
 

	
 

	
 


	
 

	
(a)

	
Not compete


	
 

	
 

	
 


	
 

	
 

	
the Vendor undertakes with the Purchaser that it
  will not (except with the prior written consent of the Purchaser) for a
  period of four years from the Completion Date, either solely or jointly with
  any person directly or indirectly carry on or be engaged or concerned or
  interested or in any way assist in any place in the world in the development,
  manufacture, marketing or sale of solutions and products for network
  protection which compete with the Vendor’s Products manufactured, sold or
  supplied by the Business as at this Agreement;


	
 

	
 

	
 


	
 

	
(b)

	
Not solicit employees  


	
 

	
 

	
 


	
 

	
 

	
each Undertaking Party undertakes with the Purchaser
  that it will not for a period of four years from the Completion Date,
  directly or indirectly for itself or on behalf of or in conjunction with any
  other person solicit, induce or encourage any of the Existing Employees or
  consultants of the Vendor to leave their employment with the Purchaser or
  engage, retain or hire any of the Existing Employees;


	
 

	
 

	
 


	
 

	
(c)

	
Confidential Information








	
 

	
 

	
 

	
 


	
 

	
(i)

	
Each Undertaking Party
  undertakes with the Purchaser that it will not (except with the prior written
  consent of the Purchaser) at any time after Completion use or disclose to any
  person any Confidential Information provided that this clause 12.1(c) shall
  not apply to the extent that:


	
 

	
 

	
 

	
 


	
 

	
 

	
(A)

	
disclosure is required by
  law;


	
 

	
 

	
 

	
 


	
 

	
 

	
(B)

	
the information is already
  in the public domain;


	
 

	
 

	
 

	
 


	
 

	
 

	
(C)

	
the Vendor makes disclosure
  to its professional advisers for the purpose of seeking advice on this
  Agreement and the transactions contemplated by it;


	
 

	
 

	
 

	
 


	
 

	
 

	
(D)

	
the Vendor makes disclosure
  to its professional advisers for the purpose of performing its obligations
  under this Agreement.


	
 

	
 

	
 


	
 

	
(ii)

	
If a party is required to
  disclose any Confidential Information in accordance with 12.1(c)(i)(A), that
  party will immediately give notice of the proposed disclosure to the other
  parties before any such disclosure is made and will take all reasonable
  actions to limit the Confidential Information required to be disclosed.





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12.2

	
Exception


	
 

	
 


	
 

	
Nothing in clause 12.1 prohibits, following
  Completion, an Undertaking Party holding as an investor only up to five per
  cent of the issued share capital, or any debentures or other non-voting
  securities, of any company the securities of which are listed on any
  recognised stock exchange.


	
 

	
 


	
12.3

	
Undertakings
  independent


	
 

	
 


	
 

	
Each undertaking contained in clause12.1
  is to be read and construed independently of the other undertakings contained
  in clause 12.1 so that if one or more should be held to be invalid as an
  unreasonable restraint of trade or for any other reason whatsoever then the
  remaining undertakings are to be valid to the extent that they are not held
  to be so invalid.


	
 

	
 


	
12.4

	
Reasonable
  undertakings


	
 

	
 


	
 

	
Each Undertaking Party acknowledges that:


	
 

	
 

	
 


	
 

	
(a)

	
Value of Assets and Business


	
 

	
 

	
 


	
 

	
 

	
the value of the Assets and Business upon which the
  Purchase Price has been set and accepted by the Purchaser is dependent upon
  the Undertaking Parties each giving the undertakings contained in this clause
  12;


	
 

	
 

	
 


	
 

	
(b)

	
Reasonable undertakings


	
 

	
 

	
 


	
 

	
 

	
those undertakings are reasonable; and


	
 

	
 

	
 


	
 

	
(c)

	
Protection of Goodwill


	
 

	
 

	
 


	
 

	
 

	
those undertakings have been given for the
  protection of the Purchaser in respect of the Goodwill.


	
 

	
 

	
 


	
12.5

	
Modification


	
 

	
 

	
 


	
 

	
If any undertaking is held invalid as an
  unreasonable restraint of trade or for any other reason but would have been
  valid if part of the wording had been deleted or the period reduced or the
  range of activities or area dealt with reduced in scope, those undertakings are
  to apply with those modifications necessary to make them valid and effective.


	
 

	
 

	
 


	
12.6

	
Equitable
  relief


	
 

	
 

	
 


	
 

	
Each Undertaking Party acknowledges that, if there
  is an alleged breach of this clause 12, the Purchaser may seek equitable
  relief in addition to damages.  In any
  proceeding bought by the Purchaser against an Undertaking Party seeking
  equitable relief for a breach of this clause 12, the Undertaking Party may
  not claim that the breach is one which may not or ought not to be the subject
  of equitable relief.


	
 

	
 

	
 


	
12.7

	
Assignment


	
 

	
 

	
 


	
 

	
The Purchaser may assign the benefit of the
  undertakings contained in this clause 12, in whole or in part.





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13.

	
Business
  Names


	



	
 

	
 


	
13.1

	
Use of
  Business Name 


	
 

	
 


	
 

	
None of the Vendor or the Covenantors, their
  Subsidiaries, any person controlled by the Vendor, the Key Shareholders or
  any of their Subsidiaries, whether individually or jointly, may, and the
  Vendor and LINC Media Inc. will, for so long as they directly or indirectly
  hold shares in Esphion Japan, procure that Esphion Japan does not at any time
  nine months after the Completion Date:


	
 

	
 

	
 


	
 

	
(a)

	
Use Business Names


	
 

	
 

	
 


	
 

	
 

	
at any time after Completion (except with the prior
  written consent of the Purchaser) directly or indirectly use any Business
  Name or any other name utilised in the Business as part of its business name,
  or incorporated in any trade mark, brand, logo or other intellectual property
  or in any way hold themselves out as being associated with any business using
  such name except that Esphion Japan may continue to use the name “Esphion”
  for a period of up to nine months after Completion; or


	
 

	
 

	
 


	
 

	
(b)

	
Consent to others using Business
  Names


	
 

	
 

	
 


	
 

	
 

	
consent to the use or adoption of the Business Names
  by any person.


	
 

	
 


	
13.2

	
Change of
  Name


	
 

	
 

	
 


	
 

	
(a)

	
Within one Business Day after Completion, the Vendor
  will, and within ten Business Days after Completion the Vendor will procure
  that any subsidiary of the Vendor will, change their names to names that do
  not include any or a combination of the Business Names.


	
 

	
 

	
 


	
 

	
(b)

	
Within nine months after Completion, the Vendor and
  LINC Media Inc, provided that they directly or indirectly hold shares in
  Esphion Japan, will procure that Esphion Japan changes it name to a name that
  does not include any or a combination of the Business Names.


	
 

	
 


	
14.

	
Goods and
  services tax


	



	
 

	
 


	
14.1

	
Consideration
  exclusive of GST


	
 

	
 


	
 

	
Any consideration or payment obligation in this
  Agreement is exclusive of GST unless otherwise stated.


	
 

	
 


	
14.2

	
Recovery
  of GST payable


	
 

	
 


	
 

	
If under or in relation to this Agreement any supply
  of goods or services from one party (the Supplier) to another party (the
  Recipient) is a Taxable Supply and the consideration payable or to be
  provided for the supply is not expressed to be inclusive of GST, then the
  Recipient must pay to the Supplier, in addition to the consideration
  otherwise payable, an amount equal to the GST chargeable on that supply, provided
  that no payment will be required under this clause 14 until the Supplier has
  issued a Tax Invoice to the Recipient in respect of that supply. 





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14.3

	
Payment
  of GST


	
 

	
 


	
 

	
Except in respect of any GST payable on Completion
  in accordance with clause 7.5(a), any amount payable under clause 14.2 must
  be paid by the Recipient on the date that is five Business Days after the
  Supplier issues a Tax Invoice to the Recipient for that Supply.


	
 

	
 


	
15.

	
Warranties


	



	
 

	
 


	
15.1

	
Warranties


	
 

	
 


	
 

	
The Vendor represents and warrants to the Purchaser
  in the terms of the Warranties in the knowledge that the Purchaser is
  entitled to rely on the truth of the statements contained in the Warranties.


	
 

	
 


	
15.2

	
Warranties
  repeated


	
 

	
 


	
 

	
Each of the Warranties is to be repeated on the
  Completion Date by reference to the facts and circumstances or awareness of
  the Vendor then existing.


	
 

	
 


	
15.3

	
Notice of
  Warranty claims


	
 

	
 


	
 

	
All Warranty Claims made by the Purchaser under this
  Agreement must be in writing and delivered to the Vendor and any notice under
  this clause 15.3 is to specify in reasonable detail the matter which gives
  rise to the breach, the nature of the breach and the amount claimed.


	
 

	
 


	
15.4

	
Claim
  thresholds


	
 

	
 


	
 

	
If the Vendor becomes liable
  to the Purchaser for breach of any Warranty:


	
 

	
 

	
 


	
 

	
(a)

	
no amount shall be claimed by the Purchaser for
  breach of any Warranty unless the amount claimed exceeds USD50,000 in respect
  of an individual claim or series of related claims; or


	
 

	
 

	
 


	
 

	
(b)

	
no amount shall be claimed by the Purchaser for
  breach of Warranty unless the aggregate of the amount then claimed and of all
  other claims made, or which would but for the provision of this clause have
  previously been made, exceeds USD150,000 upon the basis that, once such
  threshold has been exceeded, any claim so made may be for and in respect of
  all amounts claimed and not just in excess of USD150,000.


	
 

	
 


	
15.5

	
Period
  for Warranty Claims


	
 

	
 


	
 

	
The Purchaser may not make any Warranty Claims in
  respect of any Warranty after the end of the period of 24 months following
  the Completion Date.


	
 

	
 


	
15.6

	
Third
  party claim procedures


	
 

	
 

	
 


	
 

	
(a)

	
If an event occurs or claim arises against the
  Purchaser (Third Party Claim) in relation to which the Purchaser will or is
  likely to make a Warranty Claim against the Vendor:


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
the Purchaser shall give
  notice within ten Business Days thereof (including reasonable details) to the
  Vendor and not make any payment or admission of liability in respect of the
  Third Party Claim, or take any other steps which may in any way prejudice the
  defence of the Third Party Claim, without the prior written consent of the
  Vendor (such consent not to be unreasonably withheld or delayed) and subject
  to clause 15.6(b) otherwise act in accordance with the Vendor’s reasonable directions
  regarding negotiations, prosecution or defence of any Third Party Claim;





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(ii)

	
the Vendor may, with the
  prior written consent of the Purchaser (not to be unreasonably withheld or
  delayed), in the name of the Purchaser, assume full control and conduct all
  negotiations and prosecute or defend any proceedings relating to the Third
  Party Claim. For this purpose the Purchaser shall make available to the
  Vendor all such information, books and records, and give such other
  co-operation (including making available employees as witnesses), as the
  Vendor may reasonably require for the purpose. If the written consent of the
  Purchaser is not provided within 15 Business Days of receipt of a written
  request from the Vendor, the Purchaser shall have no liability in connection
  with the Third Party Claim whether pursuant to the Warranties or otherwise;


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
in relation to any dispute
  that the Vendor has control over under this clause 15.6, the Vendor will,
  prior to taking any action relevant to any Third Party Claim, consult with
  the Purchaser and its professional advisers (provided that such consultation
  does not cause undue delay) in relation to the conduct and progress of all
  such disputes resolution procedures, challenges or court proceedings and any
  related correspondence and negotiations, to keep the Purchaser and its
  professional advisers fully informed on this progress and, to provide the
  Purchaser and its professional advisers with copies of all relevant
  documents, including drafts. The Vendor, following such consultation, shall
  take into account all reasonable concerns and issues raised by the Purchaser
  in all action that is taken by the Vendor;


	
 

	
 

	
 

	
 


	
 

	
 

	
(iv)

	
the costs of the
  negotiations and proceedings shall be borne by the Vendor.


	
 

	
 

	
 


	
 

	
(b)

	
the Vendor in exercising the rights granted to it by
  this clause shall take account of all reasonable requests, including requests
  regarding not taking actions which may materially adversely affect the
  reputation of the Business.


	
 

	
 


	
15.7

	
Warranties
  qualified


	
 

	
 


	
 

	
Each of the Warranties is given subject to the
  following which shall prevent the Purchaser being entitled to claim that any
  of the Warranties have been breached:


	
 

	
 

	
 


	
 

	
(a)

	
Agreement


	
 

	
 


	
 

	
 

	
any thing done, or omitted to be done, either under
  any express provision of this Agreement or after the Agreement Date at the
  request in writing of, or with the prior written approval of, the Purchaser;


	
 

	
 

	
 


	
 

	
(b)

	
Disclosure


	
 

	
 

	
 


	
 

	
 

	
any matter, event, circumstance or information to
  the extent that it is:


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
fairly disclosed in the
  Disclosure Material or the Disclosure Letter or in any document referred to
  in the Disclosure Materials or Disclosure Letter;


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
disclosed by public records
  at the New Zealand Companies Office or the New Zealand Personal Property
  Securities Register relating to the Vendor;





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(c)

	
Knowledge


	
 

	
 

	
 


	
 

	
 

	
any matter, event, circumstance or information known
  to the Purchaser or its advisers, 


	
 

	
 


	
 

	
but is subject to no other qualification unless
  specifically provided for under this Agreement.


	
 

	
 


	
15.8

	
Other
  Limitations


	
 

	
 


	
 

	
The Vendor shall not be liable for any Warranty
  Claim for loss arising from a breach of Warranty:


	
 

	
 

	
 


	
 

	
(a)

	
based on a contingent liability unless and until the
  contingent liability becomes an actual liability and is due and payable;


	
 

	
 

	
 


	
 

	
(b)

	
to the extent that the relevant event, circumstance,
  loss, liability, cost or expenses would not have arisen but for:


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
a breach of law or contract
  or wrongful act or omission by the Purchaser or any of its Related Companies
  after Completion; or


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
any obligation or commitment
  entered into or made after Completion by the Purchaser or any of its Related
  Companies 


	
 

	
 

	
 


	
 

	
(c)

	
if and to the extent that the relevant circumstance
  or amount has been or is made good, or recovered within 20 Business Days of
  the relevant circumstance arising by or paid to the Purchaser or its Related
  Companies;


	
 

	
 

	
 


	
 

	
(d)

	
if and to the extent that the Warranty claim is in
  respect of any budget, forecast, estimate, projection, model, or other
  statement which relates to the future and any statement of opinion or
  statement of intent, including the basis of preparation of, assumptions for
  or reasonableness of any such matter;


	
 

	
 

	
 


	
 

	
(e)

	
if and to the extent that such claim arises as a
  result of any legislation not in force at the Agreement Date which takes
  effect retrospectively;


	
 

	
 

	
 


	
 

	
(f)

	
if and to the extent that such a claim arises as a
  result of a change after the date of this Agreement in any law or
  interpretation of any law or NZ GAAP;


	
 

	
 

	
 


	
 

	
(g)

	
to the extent that the amount of such claim and the
  aggregate amount of all other Warranties Claims by the Purchaser would exceed
  an amount equal to the Purchase Price that has actually been paid by the
  Purchaser;


	
 

	
 

	
 


	
 

	
(h)

	
to the extent of any saving to the Purchaser and its
  Related Companies in Taxation as a result of the relevant event,
  circumstances, loss, liability, cost or expense to which the claim relates; 


	
 

	
 

	
 


	
 

	
(i)

	
unless the Purchaser has begun court proceedings
  relating to the claim or the Vendor admits to the claim or the claim is
  settled, in each case, within 6 months of notification pursuant to clause
  15.3; and


	
 

	
 

	
 


	
 

	
(j)

	
if and to the extent that the Purchaser has failed
  to take all reasonable action to mitigate any loss suffered by the Vendor in
  respect of which a claim could be made. 


	
 

	
 


	
15.9

	
Reduction
  of Purchase Price


	
 

	
 


	
 

	
Any monetary compensation received by the Purchaser
  as a result of any breach by the Vendor of any Warranty is to be in reduction
  and refund of the Purchase Price. 





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15.10

	
Indemnity


	
 

	
 

	
 


	
 

	
(a)

	
The Vendor must indemnify and keep indemnified the
  Purchaser against any loss, damage, cost, expense, taxation or liability
  (including legal or other costs associated with the enforcement of this
  Agreement) suffered or incurred by the Purchaser arising directly from the
  breach of any Warranty or any other term of this Agreement.


	
 

	
 

	
 


	
 

	
(b)

	
The Purchaser must indemnify and keep indemnified
  the Vendor against any loss, damage, cost, expense, taxation or liability
  (including legal or other costs associated with the enforcement of this
  Agreement) suffered or incurred by the Vendor arising directly from the
  breach of any term of this Agreement. 


	
 

	
 


	
15.11

	
Gross-up


	
 

	
 


	
 

	
If any party is required by law to make any
  deduction or withholding from any sum payable by it to the other party under
  this Agreement and there is no equivalent corresponding Tax saving to the
  recipient, then the sum payable by the first party will be increased to the
  extent necessary to ensure that after the making of that deduction,
  withholding or payment the amount that person would have received and
  retained will be equal to the amount had no deduction, withholding or payment
  been made.


	
 

	
 


	
15.12

	
Truth of
  the Warranties


	
 

	
 


	
 

	
The Vendor acknowledges that the Vendor and the
  Purchaser have agreed that:


	
 

	
 

	
 


	
 

	
(a)

	
Truth of Warranties


	
 

	
 

	
 


	
 

	
 

	
the truth of the statements contained in the
  Warranties; and


	
 

	
 

	
 


	
 

	
(b)

	
Fulfilment of obligations


	
 

	
 

	
 


	
 

	
 

	
the fulfilment by the Vendor of all of its obligations
  under this Agreement,


	
 

	
 

	
 


	
 

	
are essential to the Purchaser.


	
 

	
 


	
15.13

	
Cancellation


	
 

	
 


	
 

	
If, pending Completion:


	
 

	
 

	
 


	
 

	
(a)

	
Breaches obligations 


	
 

	
 

	
 


	
 

	
 

	
the Vendor fails to perform any of the Vendor’s
  material obligations or other obligation not remedied within 5 days under
  this Agreement;


	
 

	
 

	
 


	
 

	
(b)

	
Breaches Warranties 


	
 

	
 

	
 


	
 

	
 

	
any circumstances exist or arise which have the
  effect of giving rise to a Warranty Claim; or


	
 

	
 

	
 


	
 

	
(c)

	
Adverse circumstances 


	
 

	
 

	
 


	
 

	
 

	
the Vendor or the Purchaser becomes aware of any event
  or circumstance which in the reasonable opinion of the Purchaser will or is
  likely to be a Material Adverse Event,





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the Purchaser may, at the Purchaser’s absolute
  discretion, give the Vendor notice cancelling this Agreement at any time prior
  to Completion. This right of cancellation is in addition to, and not limited
  by, any other rights or remedies of the Purchaser against the Vendor. If the
  Purchaser does not exercise its rights under this clause 15.13 its other
  rights and remedies under this Agreement or at law will not be prejudiced
  provided that once Completion has occurred the Purchaser may not cancel this
  Agreement. Any notice given under this clause 15.13 is to be effective as
  against the Vendor if given to the Vendor.


	
 

	
 


	
15.14

	
Acknowledgment
  by Purchaser


	
 

	
 


	
 

	
The Purchaser acknowledges that:


	
 

	
 

	
 


	
 

	
(a)

	
it has made its own independent enquiry and
  investigations in relation to the Assets and the Business and has entered
  into this Agreement in reliance on its own judgment and not in reliance on
  any warranties or representations of the Vendor (other than the Warranties
  and the Key Shareholders’ Warranties);


	
 

	
 

	
 


	
 

	
(b)

	
except for the Warranties and the Key Shareholders’
  Warranties and other obligations of the Vendor, the Key Shareholders and the
  Covenantors expressly provided in this Agreement, all express or (to the
  extent permitted by law) implied, or other representations or warranties of
  the Vendor, the Key Shareholders and the Covenantors in relation to the sale
  of the Business or Assets are expressly excluded;


	
 

	
 

	
 


	
 

	
(c)

	
except for the Warranties and the Key Shareholders’
  Warranties and the other obligations of the Vendor, the Key Shareholders and
  the Covenantors expressly provided in this Agreement, neither the Vendor, the
  Key Shareholders and the Covenantors, nor their directors, officers, advisers
  or agents have made or make any representation, or have given or give any
  warranty (express or implied), as to the accuracy, content, completeness,
  value or otherwise of, nor have or accept any liability in respect of, any
  information (written, oral or otherwise) directly or indirectly provided, or
  made available to, or used by the Purchaser in connection with, the
  transactions evidenced by this Agreement, and to the extent permitted by law the
  Purchaser unconditionally waives any claim (whether arising in tort, in
  contract, by operation of law or otherwise) it may have against any of them
  in respect of such information.


	
 

	
 


	
15.15

	
Updated
  disclosure


	
 

	
 


	
 

	
The Vendor shall have the right to submit to the
  Purchaser, at any time prior to Completion, an updated disclosure letter
  containing disclosure of any facts, matters of circumstances occurring or
  coming to the awareness of the Vendor after the Agreement Date and before
  Completion and such updated disclosure letter shall become the Disclosure
  Letter for the purposes of this Agreement and making disclosures against the
  Warranties to be repeated at Completion. If any fact, matter or circumstances
  included in such updated Disclosure Letter would have otherwise entitled the
  Purchaser to make a Warranty Claim had it not been disclosed in the updated
  Disclosure Letter, the Purchaser shall have the right to cancel this
  Agreement pursuant to clause 15.13 at any time prior to Completion, but if it
  proceeds with Completion shall not be entitled to make a Warranty Claim in
  respect of such fact, matter or circumstance so disclosed.





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16.

	
Key
  Shareholders and Covenantors


	



	
 

	
 


	
16.1

	
Key
  Shareholders’ Warranties


	
 

	
 


	
 

	
Subject to clause 17, in consideration of the
  Purchaser entering into this Agreement with the Vendor at the request of the
  Key Shareholders (as the Key Shareholders acknowledge by signing this
  Agreement), the Key Shareholders severally represent and warrant to the
  Purchaser in the terms of the Key Shareholders’ Warranties in the knowledge
  that the Purchaser is entitled to rely on the truth of the statements
  contained in the Key Shareholders’ Warranties.


	
 

	
 


	
16.2

	
Key
  Shareholders’ Warranties repeated


	
 

	
 


	
 

	
Each of the Key Shareholders’ Warranties is to be
  repeated on the Completion Date, by reference to the facts and circumstances
  and Vendor knowledge then existing.


	
 

	
 


	
16.3

	
Period
  for Key Shareholder’s Warranty Claim


	
 

	
 


	
 

	
The Purchaser may not make any claim for breach of
  any Key Shareholders’ Warranties after the end of the period twelve months
  following the Completion Date, except for the Key Shareholders’ IP Warranties
  which shall survive until the second anniversary of the Completion Date.


	
 

	
 


	
16.4

	
Limitations
  on claims


	
 

	
 


	
 

	
The provisions of clauses 15.3, 15.4, 15.6 to 15.11
  apply to the Key Shareholders’ Warranties as if a reference to a Warranty
  were a reference to a Key Shareholder’s Warranties and a reference to the
  Vendor was a reference to the Key Shareholders.


	
 

	
 


	
16.5

	
Void
  payment


	
 

	
 


	
 

	
If any payment made by or on behalf of the Vendor to
  the Purchaser is avoided by law, that payment will not be deemed to have
  discharged the liability of the Key Shareholders under this Agreement.


	
 

	
 


	
16.6

	
Warranty


	
 

	
 


	
 

	
Each Key Shareholder represents and warrants to the
  Purchaser that it has full power and authority to enter into and perform this
  Agreement, that this Agreement has been duly executed by that Key Shareholder
  and is a valid and binding document of that Key Shareholder.


	
 

	
 


	
16.7

	
Undertaking


	
 

	
 


	
 

	
Each of the Covenantors undertakes to:


	
 

	
 

	
 


	
 

	
(a)

	
vote in favour (or procure
  any nominee shareholder of the applicable Covenantor to vote in favour) of
  all shareholder resolutions of the Vendor, and to procure that directors of
  the Vendor who are appointed by them vote in favour of all board resolutions
  required to satisfy the condition contained in paragraph (a) of Schedule 4
  and any other approval required to implement the transaction evidenced in
  this Agreement; and


	
 

	
 

	
 


	
 

	
(b)

	
use their reasonable
  endeavours to ensure that all approvals referred to in clause 16.7(a) are
  obtained as expediently as possible. 


	
 

	
 

	
 


	
 

	
Each of the Covenantors
  hereby agrees and consents for the purposes of the Vendor’s constitution (and
  all other purposes) to the Vendor entering into and performing the
  transactions contemplated by this Agreement.





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16.8

	
Rights
  cumulative


	
 

	
 


	
 

	
The rights of the Purchaser under this clause 16 are
  cumulative and not exclusive of any rights provided by law and are to remain
  in full force until the discharge by the Covenantors of all of their
  respective obligations under this Agreement.


	
 

	
 


	
17.

	
Liability
  of Key Shareholders


	



	
 

	
 


	
17.1

	
Individual
  Liability of Key Shareholders 


	
 

	
 


	
 

	
Each of the Key Shareholders will, subject to clause
  17.2 and 17.3, be severally liable in respect of any claim or liability which
  arises under this Agreement in respect of the Key Shareholders’ Warranties or
  any other obligation of the Key Shareholders under this Agreement and
  notwithstanding any other provision of this Agreement the aggregate liability
  of each Key Shareholder for any and all claims and liabilities under this
  Agreement will not exceed an amount equal to the lesser of (i) the total
  amount of liability or damages settled or determined in respect of such
  claims multiplied by MPL for the relevant Key Shareholder as determined
  pursuant to clause 17.2 or (ii) the sum of all dividends and distributions
  (whether by way of share re-purchase or redemption or otherwise) paid or due
  by the Vendor to the relevant Key Shareholder (or to its nominee shareholder)
  after the Agreement Date and not otherwise repaid to the Vendor pursuant to
  any law and any then current Escrow Amount in respect of that relevant Key
  Shareholder, provided, however, that in the case of No8 Ventures Management
  Limited such aggregate liability shall be no less than US$1,500,000 and in
  the case of LINC Media, Inc. such aggregate liability shall be no less than
  US$900,000.


	
 

	
 


	
17.2

	
Key
  Shareholder’s Proportional Limitation of Liability


	
 

	
 


	
 

	
Subject to clause 17.3, the total liability of the
  Key Shareholders pursuant to clause 17.1(i) in respect of any and all claims
  and liabilities will be applied proportionally as between the Key
  Shareholders such that each Key Shareholder’s total maximum aggregate
  liability to the Purchaser in respect of any and all claims or liabilities
  arising under this Agreement will not exceed an amount determined by the
  following formula:


	
 

	
 

	
 

	
 

	
 


	
 

	
MPL   =   D/A


	
 

	
 

	
 

	
 


	
 

	
Where:

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
MPL =

	
being the relevant Key Shareholder’s proportion of
  liability to the Purchaser; 


	
 

	
 

	
 

	
 


	
 

	
D =

	
 

	
all dividends and distributions (whether by way of
  share re-purchase or redemption or otherwise) paid or due by the Vendor to
  the relevant Key Shareholder (or to its nominee shareholder) pursuant to the
  constitution of the Vendor as of the Agreement Date, which is attached to the
  Disclosure Material, after the Agreement Date;


	
 

	
 

	
 

	
 


	
 

	
A =

	
 

	
the aggregate of D calculated in respect of both Key
  Shareholders


	
 

	
 


	
17.3

	
Limitation
  on Purchaser’s action


	
 

	
 


	
 

	
(a)

	
Where the Purchaser makes a Warranty Claim which has
  not been either settled or determined by the Earn Out Payment Date then the
  Purchaser shall first exhaust its rights to withhold an amount of Earn Out
  Amount before making a Warranty Claim against the Key Shareholders for a
  breach of any of the Key Shareholders Warranties. 


	
 

	
 

	
 


	
 

	
(b)

	
Where the Purchaser makes a Warranty Claim after the
  Earn Out Payment Date the Purchaser shall first exhaust its rights to
  withhold an amount of the Retention Amount before making a Warranty Claim
  against the Key Shareholders for a breach of any of the Key Shareholders
  Warranties. For avoidance of doubt, nothing in this clause 17.3(b) will limit
  the Purchaser from filing a Warranty Claim directly against the Key Shareholders
  for any amount that is greater than the Retention Amount.





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(c)

	
Subject to clauses 17.3(a) and (b), where the
  Purchaser makes a Warranty Claim against No 8 Ventures Management Limited for
  a breach of any of the Key Shareholders’ Warranties, notwithstanding that the
  claim is brought against No 8 Ventures Management Limited, any damages
  settled or determined payable in relation to such claim are to be paid out of
  the Escrow Amount in accordance with clause 18 and the Escrow Deed. The Purchaser
  agrees that any Escrow Amount shall only be used to settle any liability of
  No 8 Ventures Management Limited to the Purchaser and it will not make a
  claim against the Vendor for release or payment of the Escrow Amount or a sum
  that was released from the Escrow Account to the Vendor and is due and
  payable to No 8 Ventures Nominees Limited as a dividend or distribution
  (whether by way of share re-purchase, redemption or otherwise).


	
 

	
 


	
17.4

	
Notification


	
 

	
 

	
 


	
 

	
(a)

	
The Vendor and the Key Shareholders shall determine
  and pay or otherwise allocate the amount of all dividends and distributions
  due to the Key Shareholders pursuant to the constitution of the Vendor within
  90 days of Completion. 


	
 

	
 

	
 


	
 

	
(b)

	
Within 90 days of Completion the Vendor and the Key
  Shareholders shall notify the Purchaser in writing of all dividends and
  distributions to be allocated, made or due by the Vendor to the Key
  Shareholders prior to the Earn Out Payment Date. 


	
 

	
 

	
 


	
 

	
(c)

	
Once an amount of dividend or distribution is
calculated and allocated in respect of shares held by No 8 Ventures
Management Limited the amount of that distribution or dividend to the extent
it exceeds the Escrow Amount (the Additional Escrow Amount) shall not be paid
to No 8 Ventures Management Limited but will instead be immediately paid by
the Vendor to the Escrow Agent to hold as an additional part of the Escrow
Amount in accordance with the Escrow Deed. Where any dividend or distribution
is paid by the Vendor to a Key Shareholder both the Vendor and the Key Shareholder
shall immediately give notice in writing to the Purchaser informing the
Purchaser of the amount so paid. 


	
 

	
 


	
18.

	
Escrow
  Amount


	



	
 


	
18.1

	
Amount
  and Payment to Escrow Agent


	
 

	
 

	
 


	
 

	
(a)

	
The Escrow Amount is to be paid by the Purchaser to
  the Escrow Agent on the Completion Date.


	
 

	
 

	
 


	
 

	
(b)

	
The Additional Escrow Amount (if any) will be paid
  by the Vendor to the Escrow Agent on the date being not later than 90 days
  after the Completion Date.


	
 

	
 

	
 


	
 

	
(c)

	
At Completion the Vendor, No 8 Ventures Management
  Limited, the Purchaser and the Escrow Agent shall enter into the Escrow Deed.


	
 

	
 


	
18.2

	
Release
  of Escrow Amount


	
 

	
 


	
 

	
The Escrow Amount or any
  proportion of the Escrow Amount (and any interest earned on that amount while
  it is held in escrow) will be released and paid by the Escrow Agent in the
  following manner:


	
 

	
 

	
 


	
 

	
(a)

	
in the event of the Purchaser making a Warranty
  Claim against No 8 Ventures Management Limited in respect of any of the Key
  Shareholders’ Warranties, and the amount of such Warranty Claim being agreed
  or settled by No 8 Ventures Management Limited and the Purchaser, the Escrow
  Agent shall, upon receiving written instructions from No 8 Ventures
  Management Limited and the Purchaser, pay to the Purchaser the lesser of:


	
 

	
 

	
 


	
 

	
 

	
(i)

	
the Escrow Amount or;


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
a portion of the Escrow
  Amount equal to the amount of the agreed or settled Warranty Claim;





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(b)

	
at the end of the Escrow Period provided that no
  Warranty Claim has been made by the Purchaser against No 8 Ventures
  Management Limited in relation to a breach of any of the Key Shareholders’
  Warranties which remains outstanding, and provided that the Escrow Agent has
  not received any notice from the Purchaser stating that a Warranty Claim
  remains outstanding, the Escrow Agent must pay the balance of the Escrow
  Amount to the Vendor.


	
 

	
 


	
18.3

	
Directions
  to Escrow Agent


	
 

	
 


	
 

	
No 8 Ventures Management Limited and the Purchaser
  (who are also parties to the Escrow Deed) agree that they will act in good
  faith in relation to the release and payment of the Escrow Amount and that,
  unless there is a genuine dispute between them on bona fide grounds as to
  whether the requirements for the release of the amount to either No 8
  Ventures Management Limited or the Purchaser have been met they will give directions
  to the Escrow Agent under the Escrow Deed to release and pay to No 8 Ventures
  Management Limited or the Purchaser (as applicable) the Escrow Amount, or the
  relevant proportion of the Escrow Amount in accordance with clause 18.2(a).
  Any dispute as to whether the requirements have been met shall be referred
  for determination in accordance with clause 18.4. 


	
 

	
 


	
18.4

	
Determination
  of Disputes


	
 

	
 


	
 

	
If a matter in dispute is required to be referred
  for determination pursuant to clause 18.3 then:


	
 

	
 

	
 


	
 

	
(a)

	
the matter in dispute must be referred to an
  appropriate independent expert agreed by No 8 Ventures Management Limited and
  the Purchaser or, in default of such agreement appointed by the President for
  the time being of the New Zealand Law Society which expert will be requested
  to deliver its determination on the matter in dispute within 10 Business Days
  of being instructed to do so. Either No 8 Ventures Management Limited or the
  Purchaser may make the referral;


	
 

	
 

	
 


	
 

	
(b)

	
that expert will review all relevant documents and
  information (including any submissions made by No 8 Ventures Management
  Limited or the Purchaser) and it will state in a signed decision its opinion
  regarding the matter in dispute;


	
 

	
 

	
 


	
 

	
(c)

	
that determination:


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
must be made by that person
  as an expert, and not as an arbitrator (and the Arbitration Act 1996 will not
  apply to the expert’s consideration of the matter);


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
must be delivered within 10
  Business Days of that expert receiving its instructions or as soon as
  practicable thereafter; and


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
will be final and binging on
  No 8 Ventures Management Limited and the Purchaser;





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(d)

	
No 8 Ventures Management Limited and the Purchaser
  will co-operate with each other to provide the expert with all information
  reasonably required by it to make its determination. 


	
 

	
 


	
19.

	
Expenses


	



	
 

	
 


	
 

	
Whether or not any of the transactions contemplated
  by this Agreement are completed, unless otherwise specified in this
  Agreement, each of the parties is to bear its own legal and accountancy costs
  and other expenses of and incidental to the preparation, execution and
  completion of this Agreement. 


	
 

	
 


	
20.

	
Delay


	



	
 

	
 


	
20.1

	
Time of
  essence


	
 

	
 


	
 

	
Time is of the essence in the performance by the
  parties of their obligations under this Agreement.


	
 

	
 


	
20.2

	
Exercise
  of rights and waivers


	
 

	
 


	
 

	
No delay, grant of time, release, compromise,
  forbearance (whether partial or otherwise) or other indulgence by one party
  in respect of any breach of any other party’s obligations under this
  Agreement is to:


	
 

	
 

	
 


	
 

	
(a)

	
Operate as waiver


	
 

	
 

	
 


	
 

	
 

	
operate as a waiver of or prevent the subsequent
  enforcement of that obligation; or


	
 

	
 

	
 


	
 

	
(b)

	
Not relevant for other breaches


	
 

	
 

	
 


	
 

	
 

	
be deemed a delay, grant of time, release,
  compromise, forbearance (whether partial or otherwise) or other indulgence in
  respect of, or a waiver of, any subsequent or other breach.


	
 

	
 


	
 

	
No waiver by the Vendor or the Purchaser of its
  rights under this Agreement will be effective unless it is in writing and
  signed by the Vendor or the Purchaser (as the case may be).


	
 

	
 


	
21.

	
Further
  assurances


	



	
 

	
 

	
 


	
 

	
(a)

	
Each party must sign, execute and do all deeds,
  schedules, acts, documents and things as may reasonably be required by any
  other party effectively to carry out and give effect to the terms and
  intentions of this Agreement, whether before or after Completion.


	
 

	
 

	
 


	
 

	
(b)

	
The Vendor will use reasonable endeavours to assist,
  following the Completion Date, the Purchaser in providing:


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
any information required by
  the United States Securities and Exchange Commission within a reasonable
  period of time; and


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
any information,
  documentation or records reasonably required by the Purchaser to meet its
  reporting obligations under US GAAP.


	
 

	
 

	
 


	
 

	
(c)

	
The Vendor will provide the Purchaser, within ten
  Business Days following the Completion Date:


	
 

	
 

	
 


	
 

	
 

	
(i)

	
the Financial Statements;
  and


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
Management Accounts for the
  period commencing on 1 October 2007 and ending on the Completion Date.





Agreement relating to the
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45








	
 

	
 

	
 

	
 

	
 


	
22.

	
Non
  merger


	



	
 

	
 


	
 

	
The obligations, warranties, undertakings and
  indemnities undertaken or given pursuant to this Agreement, to the extent not
  already performed at Completion, are not to merge on Completion, or on the
  execution or delivery of any document, pursuant to this Agreement, but are to
  remain enforceable to the fullest extent and notwithstanding any rule of law
  to the contrary.


	
 

	
 


	
23.

	
Confidentiality
  and announcements


	



	
 

	
 


	
23.1

	
Confidentiality


	
 

	
 


	
 

	
Subject to clauses 23.2, 23.3 and 23.4, each of the
  parties agree to keep the terms of the Agreement and all other information
  exchanged by the parties in relation to the negotiation of this Agreement
  confidential and will ensure that each person who is at any time a Subsidiary
  of that party, and in the case of the Vendor and the LINC Media Inc, that
  Esphion Japan, also complies with this clause 23.1.


	
 

	
 


	
23.2

	
Purchaser


	
 

	
 


	
 

	
The Purchaser is entitled to make a public
  disclosure or release in respect of this Agreement and the transaction
  contained in this Agreement as the Purchaser deems required by the applicable
  laws, including securities laws of the United States of America or the rules
  of any stock exchange on which its shares are listed. Purchaser may disclose
  confidential information to its directors, officers, employees, agents,
  affiliates and professional advisers on a need to know basis. 


	
 

	
 


	
23.3

	
Vendor
  and Covenantors


	
 

	
 

	
 


	
 

	
(a)

	
The Vendor and the Covenantors must not, and will
  procure that their respective employees, officers, agents, Subsidiaries and
  Esphion Japan do not, without the prior written consent of the Purchaser make
  any disclosure, release or announcement regarding the content of this
  Agreement or details of the transaction contained in this Agreement.


	
 

	
 

	
 


	
 

	
(b)

	
The Vendor and the Covenantors acknowledge that the
  Purchaser is a public company whose shares are traded on NASDAQ and any use
  or disclosure of non-public information relating to the Purchaser, this
  Agreement or the transaction contained in this Agreement is subject to the
  insider trading laws of the United States of America.


	
 

	
 


	
23.4

	
Exceptions


	
 

	
 


	
 

	
The obligations contained in clause 23.1 do not
  apply:


	
 

	
 

	
 


	
 

	
(a)

	
Fulfil the Conditions


	
 

	
 

	
 


	
 

	
 

	
to the extent reasonably required by a party to
  fulfil the Conditions; or





Agreement relating to the
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46








	
 

	
 

	
 

	
 

	
 


	
 

	
(b)

	
Public domain


	
 

	
 

	
 


	
 

	
 

	
to the extent that such information is already in
  the public domain; or


	
 

	
 

	
 


	
 

	
(c)

	
Related Companies


	
 

	
 

	
 


	
 

	
 

	
to any disclosure of
  information by the Purchaser to any of its Related Companies; or


	
 

	
 

	
 


	
 

	
(d)

	
Disclosure to the New Zealand
  Venture Investment Fund 


	
 

	
 

	
 


	
 

	
 

	
any disclosure of general information which is
  non-price sensitive and non-technical information by the Vendor or the
  Covenantors or Key Shareholders to the New Zealand Venture Investment Fund or
  any similar investor in the Covenantors or Key Shareholders or investment
  funds managed by any of them in accordance with any existing agreement.


	
 

	
 


	
24.

	
Entire
  agreement


	



	
 

	
 


	
 

	
This Agreement and any Agreed Form documents:


	
 

	
 

	
 


	
 

	
(a)

	
Entire understanding


	
 

	
 

	
 


	
 

	
 

	
constitutes the entire understanding and agreement
  of the parties relating to the sale and purchase of the Assets and Business;
  and


	
 

	
 

	
 


	
 

	
(b)

	
Supersedes prior agreements


	
 

	
 

	
 


	
 

	
 

	
supersedes and extinguishes all prior agreements and
  understandings between the parties relating to that sale and purchase
  including the term sheet for the purchase and acquisition of assets of
  Esphion Limited entered into by the Vendor, the Purchaser and the Covenantors
  dated 25 October 2007.


	
 

	
 


	
25.

	
Amendments


	



	
 

	
 


	
 

	
This Agreement may only be amended in writing and as
  agreed by the parties.


	
 

	
 


	
26.

	
Notices


	



	
 

	
 


	
26.1

	
Form of
  notice


	
 

	
 


	
 

	
Each notice or other communication under this Agreement
  is to be in writing, is to be made by facsimile, personal delivery or by post
  to the addressee at the facsimile number or address, and is to be marked for
  the attention of the person or office holder (if any), from time to time
  designated for the purpose by the addressee to the other parties. The initial
  facsimile number, address and relevant person or office holder of each party
  is set out under its name at the end of this Agreement.


	
 

	
 


	
26.2

	
Notice
  effective


	
 

	
 


	
 

	
No communication is to be effective until received.
  A communication is to, however, be deemed to be received by the addressee:


	
 

	
 

	
 


	
 

	
(a)

	
Facsimile

in the case of a facsimile, on the second Business
  Day after it is sent, or if sent on a non-Business Day, on the third Business
  Day after the date of sending;





Agreement relating to the
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(b)

	
Personal delivery


	
 

	
 

	
 


	
 

	
 

	
in the case of personal delivery, when delivered;
  and


	
 

	
 

	
 


	
 

	
(c)

	
Post


	
 

	
 

	
 


	
 

	
 

	
in the case of a letter, on the seventh Business Day
  after posting by fast post or by airmail.


	
 

	
 


	
27.

	
Assignment


	



	
 

	
 


	
27.1

	
Successors


	
 

	
 


	
 

	
This Agreement is to be binding on and will enure
  for the benefit of the parties and their respective successors and permitted
  assignees or transferees.


	
 

	
 


	
27.2

	
Vendor
  and Covenantors


	
 

	
 


	
 

	
Neither the Vendor nor a Covenantor may assign or
  transfer all or part of their respective obligations under this Agreement.
  The Vendor and the Covenantors acknowledge that the Purchaser may rely on the
  warranties and undertakings in this Agreement in giving warranties and
  undertakings to any subsequent purchaser of all or any of the Assets.


	
 

	
 


	
27.3

	
Purchaser


	
 

	
 

	
 


	
 

	
(a)

	
Subject to clause 27.3(b), the Purchaser may assign
  or transfer its rights and obligations under this Agreement. 


	
 

	
 

	
 


	
 

	
(b)

	
Under the terms of the assignment referred to in
  clause 27.3(a), the assignee must agree specifically to be bound by the terms
  of this Agreement and to agree that for the purposes of the Earn Out Amount
  calculation, the relevant Net Revenues of both the Purchaser and the assignee
  shall be included. If any assignment or transfer of the Purchaser’s rights or
  obligations under this Agreement is made during the Earn Out Period the
  Purchaser hereby guarantees the obligations of the assignee or transferee on
  the terms set out in clause 32. The Purchaser shall not be entitled to assign
  or transfer its obligations to hold or pay any monies to the Vendor under
  this Agreement after the Earn Out Period. 


	
 

	
 


	
27.4

	
Assignee


	
 

	
 


	
 

	
Each assignee or transferee of the Purchaser is to
  have the same rights against the other parties to this Agreement as if named
  in this Agreement as Purchaser.


	
 

	
 


	
28.

	
Counterparts


	



	
 

	
 


	
28.1

	
Number of
  counterparts


	
 

	
 


	
 

	
This Agreement may be executed in any number of
  counterparts each of which is to be deemed an original, but all of which
  together are to constitute one instrument.





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28.2

	
Any
  counterpart may be executed


	
 

	
 


	
 

	
A party may enter into this Agreement by executing
  any counterpart.


	
 

	
 


	
28.3

	
Facsimile
  or email exchange


	
 

	
 


	
 

	
The parties acknowledge that this Agreement may be
  executed by an exchange of facsimile or email copies and execution of this
  Agreement by that means is valid and sufficient execution.


	
 

	
 


	
29.

	
Governing
  law


	



	
 

	
 


	
29.1

	
New
  Zealand law


	
 

	
 


	
 

	
This Agreement is to be governed by and construed in
  accordance with the laws of New Zealand.


	
 

	
 


	
29.2

	
Submission
  to exclusive jurisdiction


	
 

	
 


	
 

	
Each of the parties irrevocably and unconditionally
  agrees that the New Zealand courts have the non-exclusive jurisdiction to
  hear and determine each suit, action or proceeding (Proceedings), and to
  settle disputes, which may arise out of or in connection with this Agreement
  and for those purposes irrevocably and unconditionally submits to the
  jurisdiction of the New Zealand courts.


	
 

	
 


	
29.3

	
Service
  of proceedings


	
 

	
 


	
 

	
The Purchaser hereby appoints Bell Gully (Attention:
  James Gibson, Partner) Solicitors at Level 22, Vero Centre, 48 Shortland
  Street, Auckland, New Zealand, facsimile +64 9 916 2201 to accept service or
  proceedings in New Zealand on its behalf.


	
 

	
 


	
30.

	
No Set
  Off


	



	
 

	
 


	
 

	
Subject to clause 5.1, all sums payable to pursuant
  to this Agreement shall be paid free and clear of any restriction or
  condition and (except to the extent required by law) without any deduction or
  withholding on account of any Tax and without any deduction or withholding
  (except to the extent required by law) on account of any other amount whether
  by way of set off or otherwise.


	
 

	
 


	
31.

	
Purchaser
  Warranties


	



	
 

	
 


	
31.1

	
The Purchaser warrants and represents:


	
 

	
 

	
 


	
 

	
(a)

	
it will not contravene any
  law by entering into or performing its obligations under this Agreement;


	
 

	
 

	
 


	
 

	
(b)

	
it has the power to enter
  into and perform its obligations under this Agreement and to carry out the
  transactions contemplated by this Agreement;


	
 

	
 

	
 

	
 

	
 


	
 

	
(c)

	
it has taken all necessary
  action to authorise its entry into and performance of this Agreement and to
  carry out the transactions contemplated by this Agreement; and


	
 

	
 

	
 


	
 

	
(d)

	
to the Purchaser’s knowledge
  it has obtained all requisite Consents from any Public Authorities as may be
  necessary to allow it lawfully to complete the transactions contemplated by
  this Agreement.





Agreement relating to the
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32. 

	
Guarantee


	



	
 

	
 


	
32.1

	
Guarantee


	
 

	
 


	
 

	
From
  Completion the Purchaser irrevocably and unconditionally guarantees to the
  Vendor and will procure the due and punctual performance of each obligation
  of the Permitted Nominee contained in this Agreement and any of the Agreed
  Form documents. The Purchaser shall pay to the Vendor from time to time on
  demand any sum of money which the Permitted Nominee is at any time liable to
  pay to the Vendor under or pursuant to this Agreement and any of the Agreed
  Form documents and which have not been paid at the time the demand is made.
  The Purchaser’s obligations under this clause are primary obligations and not
  those of a mere surety. If an obligation of the Permitted Nominee is void,
  voidable or unenforceable for any reason or if the Purchaser’s obligation of
  the Permitted Nominee is void, voidable or unenforceable for any reason, the
  Purchaser’s obligations under this clause are unaffected and the Purchaser
  shall perform the Permitted Nominee’s obligations as if it were primarily
  liable for the performance and shall indemnify the Vendor against all costs,
  liabilities and expenses suffered or incurred by the Vendor in connection
  therewith.


	
 

	
 


	
32.2

	
Continuing Obligations


	
 

	
 


	
 

	
The Purchaser’s obligations
  under clause 32.1 are continuing obligations and are not satisfied,
  discharged or affected by an intermediate payment or settlement of account
  by, or a change in the constitution or Control of, or the insolvency of, or
  bankruptcy, winding up or analogous proceedings relating to, the Permitted
  Nominee.


	
 

	
 


	
32.3

	
Liability
  unaffected


	
 

	
 


	
 

	
The Purchaser’s liability
  under clause 32.1 is not affected by an arrangement which the Vendor may make
  with the Permitted Nominee or with another person which (but for clause 32.4)
  might operate to diminish or discharge the liability of or otherwise provide
  a defence to a surety.


	
 

	
 


	
32.4

	
Actions of the Vendor


	
 

	
 


	
 

	
Without affecting the
  generality of clause 32.3, the Vendor may at any time it thinks fit and
  without reference to the Purchaser:








	
 

	
 

	
 


	
 

	
(a)

	
grant a time for payment or
  grant another indulgence or agree to an amendment, variation, waiver or
  release in respect of an obligation of the Permitted Nominee under this
  Agreement or any of the Agreed Form documents;


	
 

	
 

	
 


	
 

	
(b)

	
give up, deal with, vary,
  exchange or abstain from perfecting or enforcing other securities or
  guarantees held by the Vendor;


	
 

	
 

	
 


	
 

	
(c)

	
discharge a party to other
  securities or guarantees held by the Vendor and realise all or any of those
  securities or guarantees; and


	
 

	
 

	
 


	
 

	
(d)

	
compound with, accept
  compositions from and make other arrangements with the Permitted Nominee or a
  person or persons liable on other securities or guarantees held or to be held
  by the Permitted Nominee.








	
 

	
 


	
32.5

	
Bankruptcy


	
 

	
 


	
 

	
The Purchaser’s liability
  under clause 32.1 is not affected by the avoidance of an assurance, security
  or payment or a release, settlement or discharge which is given or made on
  the faith of an assurance, security or payment, in either case, under an
  enactment relating to bankruptcy or insolvency or other analogous event.





Agreement relating
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Execution


Allot Communications Limited by


	
/s/ Rami Hadar 

	
 

	
/s/ Doron Arazi

	
 


	


	
 

	


	
 


	
CEO & President 

	
 

	
CFO

	
 


	
 

	
 

	
 

	
 


	
Rami Hadar

	
 

	
Doron Arazi

	
 


	


	
 

	


	
 


	
Print Name

	
 

	
 Print Name

	
 





Notice details for Allot Communications Limited


	
 

	
 


	
Address:

	
22 Hanager Street


	
 

	
 


	
 

	
Neve Ne’eman Industrial Zone
  B


	
 

	
 


	
 

	
Hod Hasharon 45240


	
 

	
 


	
 

	
Israel


	
 

	
 


	
Facsimile No:

	
+972 9 7603626


	
 

	
 


	
Contact Name:

	
Doron Faibish





Esphion Limited by


	
/s/ Mark Edwards

	
 


	


	
 


	
Director

	
 


	

 Mark Edwards

	
 


	


	
 


	
Print Name

	
 





Notice details for Esphion Limited


	
 

	
 


	
Address:

	
Buddle Findlay


	
 

	
Level 18


	
 

	
PricewaterhouseCoopers Tower


	
 

	
188 Quay Street


	
 

	
Auckland 


	
 

	
New Zealand 


	
 

	
 


	
Facsimile No:

	
+64 9 358 2055


	
 

	
 


	
Contact Name:

	
Grant Dunn





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No. 8 Ventures Management

Limited as manager of the No 2 

Fund & No 2/VIF Seed Fund by:


	
/s/ Mark Edwards

	
 


	


	
 


	
Director

	
 


	

Mark Edwards

	
 


	


	
 


	
Print Name

	
 





Notice details for No 8 Ventures Management Limited


	
 

	
 


	
Address:

	
C/- PricewaterhouseCoopers


	
 

	
113-119 The Terrace


	
 

	
Wellington


	
 

	
 


	
Facsimile No:

	
+64 9 375 3041


	
 

	
 


	
Contact Name:

	
Mark Edwards





LINC Media Inc. by


	
/s/ Terrie Lloyd

	
 


	


	
 


	
Director

	
 


	

Terrie Lloyd

	
 


	


	
 


	
Print Name

	
 





Notice details for LINC Media Inc.


	
 

	
 


	
Address:

	
Odakyu Minami-Aoyama
  Building


	
 

	
10F, 7-8-1 Minami-Aoyama


	
 

	
Minato-ku


	
 

	
Tokyo 107-0062


	
 

	
Japan


	
 

	
 


	
Facsimile No:

	
+81 3 3499 3109


	
 

	
 


	
Contact Name:

	
Terrie Lloyd





TMT Ventures Limited by:


	
/s/ Ross George

	
 


	


	
 


	
Director

	
 


	

Ross George

	
 


	


	
 


	
Print Name

	
 




Agreement relating
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Notice details for TMT Ventures Limited


	
 

	
 


	
Address:

	
C/- Direct Capital


	
 

	
Private Equity Limited


	
 

	
Level 6


	
 

	
2 Kitchner Street


	
 

	
Auckland


	
 

	
 


	
Facsimile No:

	
+64 9 307 2349


	
 

	
 


	
Contact Name:

	
Kory Fagan





K One W One Limited by


	
 

	
 


	
/s/ Brian Mayo Smith


	
 


	
Director

	
 


	
 

	
 


	
Brian Mayo Smith


	
 


	
Print Name

	
 





Notice details for K One W One Limited


	
 

	
 


	
Address:

	
C/- BDO Spicers


	
 

	
Level 8


	
 

	
Westpac Tower


	
 

	
120 Albert Street


	
 

	
Auckland


	
 

	
 


	
Facsimile No:

	
+64 9 303 2830


	
 

	
 


	
Contact Name:

	
Damon Crowe





Agreement relating
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Schedule
  1: Covenantors and Key Shareholders


	






Part A: Covenantors 


No 8 Ventures Management Limited


LINC Media Inc.


TMT Ventures Limited


K One W One Limited


Part B: Key Shareholders


	
 

	
 


	
No 8 Ventures Management Limited as manager 
of the
  No 2 Fund & No 2/VIF Seed Fund

	
 


	
 

	
 


	
LINC Media Inc.

	
 





Agreement relating
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54








  


	
 

	
 


	
Schedule
  2: Assets


	



	
 

	
 


	
(a)

	
the Goodwill;


	
 

	
 


	
(b)

	
the Fixed Assets;


	
 

	
 


	
(c)

	
the Leased Equipment;


	
 

	
 


	
(d)

	
the Trade Debtors;


	
 

	
 


	
(e)

	
the Intellectual Property
  Rights;


	
 

	
 


	
(f)

	
the Business Records;


	
 

	
 


	
(g)

	
the Stock; and


	
 

	
 


	
(h)

	
the benefit of the Business
  Agreements (subject to the burden).






Agreement relating
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Schedule 3: Warranties


	
 

	
 


	
1.

	
All
  information


	



	
 

	
 


	
1.1

	
All
  information


	
 

	
 


	
 

	
To the Vendor’s knowledge, all information contained
  in the Introduction to this Agreement, the Disclosure Letter, and the
  Disclosure Material (excluding the Financial Statements) (together the
  Disclosure Information) is, taken as a whole so that all relevant information
  on the Disclosure Information is taken into account with respect to the
  particular subject matter, materially accurate and materially complete and is
  not materially misleading in its context, in each case as at the date of the
  relevant information, and subject to any limitations or qualifications
  contained in the relevant information. The warranty contained in this
  paragraph does not apply to any information that is:








	
 

	
 

	
 


	
 

	
(a)

	
a budget, forecast, estimate, projection, model,
  yield protection, price forecast or any other statement which relates to the
  future and any assumption, statement of opinion or statement of intent; or


	
 

	
 

	
 


	
 

	
(b)

	
publicly available. 








	
 

	
 

	
 

	
 


	
2.

	
Material
  circumstances


	



	
 

	
 


	
2.1

	
No
  insolvency action


	
 

	
 


	
 

	
None of the following has occurred and is
  continuing, or to the Vendor’s knowledge is threatened, in relation to the
  Vendor:


	
 

	
 

	
 


	
 

	
(a)

	
the appointment of a receiver of any Assets, liquidator
  or statutory manager;


	
 

	
 

	
 


	
 

	
(b)

	
an application or order made, proceedings commenced,
  a resolution passed or proposed in a notice of meeting or other steps taken
  for:








	
 

	
 

	
 


	
 

	
(i)

	
the liquidation, removal
  from the Companies Register, or statutory management of the Vendor; or


	
 

	
 

	
 


	
 

	
(ii)

	
the Vendor entering into an
  arrangement with or assignment for the benefit of its creditors or a class of
  them;








	
 

	
 

	
 

	
 


	
 

	
(c)

	
the Vendor:


	
 


	
 

	
 

	
(i)

	
being (or taken to be under
  applicable legislation) unable to pay its debts, other than as the result of
  a failure to pay a debt or claim the subject of a good faith dispute; or


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
stopping or suspending, or
  threatening to stop or suspend, payment of all or a class of its debt; or


	
 

	
 

	
 

	
 


	
 

	
(d)

	
the Vendor being unable to satisfy the solvency test
  set out in section 4 of the Companies Act 1993.






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2.2

	
No
  adverse effect


	
 

	
 


	
 

	
Neither the execution of this Agreement, nor the
  transfer of the Assets and Business to the Purchaser pursuant to this
  Agreement, nor any other provision of this Agreement will:


	
 

	
 


	
 

	
(a)

	
constitute a material breach of any obligation or
  any other breach which gives rise to termination of the Agreement to which
  the Vendor is a party; or


	
 

	
 

	
 


	
 

	
(b)

	
entitle any person to cancel, terminate earlier than
  would otherwise have been the case, or adversely modify any contract,
  agreement or arrangement to which the Vendor is a party or under which the
  Vendor is entitled to a material right or material benefit, or any material
  provision thereof; or


	
 

	
 

	
 


	
 

	
(c)

	
entitle any person to acquire, or to require the
  Vendor to dispose of, any material right or material benefit relating to the
  Business or any of the Assets to which the Vendor is entitled, or any
  material interest therein; or


	
 

	
 

	
 


	
 

	
(d)

	
to the Vendor’s knowledge, be likely to cause any
  supplier or customer of the Business to discontinue or substantially reduce
  its trade with or patronage of the Business; or


	
 

	
 

	
 


	
 

	
(e)

	
to the Vendor’s knowledge, otherwise cause or be
  likely to cause any material right or material benefit of or pertaining to
  any Asset to be cancelled, terminated or lost or adversely qualified or
  impaired, except as a result of any unlawful act or omission by any third
  party,


	
 

	
 


	
2.3

	
Authority


	
 

	
 

	
 


	
 

	
The Vendor has full power and authority to enter
  into and, subject to approval by the shareholders of the Vendor pursuant to
  section 129 of the Companies Act 1993 and compliance with various class
  rights set out in the Constitution, perform this Agreement.


	
 

	
 


	
2.4

	
Product
  Warranties


	
 

	
 

	
 


	
 

	
As at the Completion Date, there will be or are no
  Product Warranties. 


	
 

	
 


	
3.

	
Financial
  matters


	



	
 

	
 


	
3.1

	
Accuracy
  of the Financial Statements


	
 

	
 

	
 


	
 

	
The Financial Statements:


	
 

	
 

	
 


	
 

	
(a)

	
have been prepared under NZ GAAP, and contain no
  qualifications made by the independent auditors; 


	
 

	
 

	
 


	
 

	
(b)

	
show a true and fair view of the assets and
  liabilities and the state of affairs, financial position and results of the
  Vendor as at the balance dates shown in the Financial Statements and the
  financial performance of the Vendor for the periods ending on the balance
  date.


	
 

	
 


	
3.2

	
Financial
  books and records


	
 

	
 

	
 


	
 

	
The books and records of the
  Business accurately set out and disclose in all material respects the
  financial condition of the Business. All financial transactions of the Vendor
  concerning the Business have been accurately recorded in all material
  respects in such books and records. 






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3.3

	
Management
  Accounts


	
 

	
 


	
 

	
The Management Accounts accurately disclose in all
  material respects the financial condition of the Business. Such Management
  Accounts:


	
 

	
 


	
 

	
(a)

	
accurately reflect in all
  material respects the basis for the financial condition and the revenues,
  expenses and results of operations of the Business shown therein; and


	
 

	
 

	
 


	
 

	
(b)

	
present fairly in all
  material respects the financial condition and the revenues, expenses, results
  of the operations and financial performance of the Business.


	
 

	
 

	
 


	
3.4

	
No
  revaluation


	
 

	
 

	
 


	
 

	
Since the Balance Date there has been no revaluation
  of any Asset.


	
 

	
 

	
 


	
4.

	
Operation
  of the Business since Balance Date


	



	
 

	
 

	
 


	
4.1

	
Operations


	
 

	
 

	
 


	
 

	
From the Balance Date the Vendor has:


	
 

	
 

	
 


	
 

	
(a)

	
operated and conducted the Business in the ordinary
  course;


	
 

	
 

	
 


	
 

	
(b)

	
not acquired or disposed of any of the Assets other
  than in the ordinary course of business;


	
 

	
 

	
 


	
 

	
(c)

	
not entered into any agreement except for agreements
  in the ordinary course of business;


	
 

	
 

	
 


	
 

	
(d)

	
not incurred any liabilities other than in the
  ordinary course of business. 


	
 

	
 

	
 


	
4.2

	
State of
  the Business


	
 

	
 

	
 


	
 

	
To the Vendor’s knowledge and in the Vendor’s
  opinion, since the Balance Date there has not been a Material Adverse Event.


	
 

	
 

	
 


	
5.

	
Assets


	



	
 

	
 

	
 


	
5.1

	
No
  Encumbrances


	
 

	
 

	
 


	
 

	
The Vendor has legal and beneficial title to all of
  the Assets, free and clear from Encumbrances. The Vendor has not created, or
  agreed to create, any Encumbrance in respect of any of its Assets.


	
 

	
 

	
 


	
5.2

	
No other
  assets required


	
 

	
 

	
 


	
 

	
The Assets comprise all the assets, both tangible
  and intangible, owned by and used by the Vendor in or concerning the
  Business.


	
 

	
 

	
 


	
5.3

	
No other
  interest


	
 

	
 

	
 


	
 

	
No person other than the Vendor is entitled to
  possession of, or any interest in, any of the Assets of the Business.


	
 

	
 

	
 


	
5.4

	
Condition


	
 

	
 

	
 


	
 

	
To the Vendor’s knowledge, all material tangible
  assets of the Business are in a state of operation condition and repair and
  condition suitable for the purposes for which they are being used at the
  Agreement Date, fair wear and tear excepted.






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6.

	
Intellectual
  property and Information Technology


	



	
 

	
 

	
 


	
6.1

	
Ownership
  of Intellectual Property Rights


	
 

	
 

	
 


	
 

	
(a)

	
The Vendor solely owns and has good, valid,
  subsisting and enforceable title to, free and clear of any Encumbrances, all
  Intellectual Property Rights.


	
 

	
 

	
 


	
 

	
(b)

	
The Business does not require (as currently
  conducted) any Intellectual Property Rights or Intellectual Property licence
  other than the Intellectual Property Rights and the Intellectual Property
  Licence In. 


	
 

	
 

	
 


	
6.2

	
Software


	
 

	
 

	
 


	
 

	
Appendix 5 contains a complete list of all computer
  software owned (including computer software currently being developed) by the
  Vendor (the Vendor’s Software). There is no one other than the Vendor that
  has any Encumbrance on any of the Vendor’s Software other than third party
  rights in respect of any Open Source Component. 


	
 

	
 

	
 


	
6.3

	
Registered
  Intellectual Property Rights


	
 

	
 

	
 


	
 

	
Schedule 6 contains a complete list of all
  registered (or applications for registration) Intellectual Property Rights
  owned by the Vendor or in which the Vendor has any interest (Registered
  Intellectual Property). The Vendor is recorded on the relevant register as
  the sole registered proprietor or applicant (as the case may be) of the
  Registered Intellectual Property. 


	
 

	
 

	
 


	
6.4

	
Patents


	
 

	
 

	
 


	
 

	
(a)

	
To the Vendor’s knowledge (without making any
  independent patent search), there is no prior art or any other possible claim
  which renders the inventions of the Vendor referred to in the patents or
  patent applications listed in Schedule 6 invalid in any manner. 


	
 

	
 

	
 


	
 

	
(b)

	
The Vendor is not aware of any misrepresentation to,
  and has not intentionally or wilfully concealed any relevant or material fact
  from, any patent office or registry agency, during prosecution of any of the
  patents or patent applications listed in Schedule 6. 


	
 

	
 

	
 


	
 

	
(c)

	
The Vendor is not aware of any fact which would
  preclude the grant of issued patent registrations based on its patent
  applications.


	
 

	
 

	
 


	
6.5

	
Trade
  Marks


	
 

	
 

	
 


	
 

	
(a)

	
The Vendor is the sole owner of the Trade Marks. 


	
 

	
 

	
 


	
 

	
(b)

	
To the Vendor’s knowledge, the Vendor has complied
  in all material respects with the requirements of, and has filed all material
  documentation required in dealing with, the US Patent and Trademark Office
  and any other trademarks and domain name registry agencies in which its
  Trademarks were filed.






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(c)

	
All of the Trademarks are in effect, and to the
  Vendor’s knowledge, the Vendor has taken such steps as are required,
  including payment of the necessary maintenance fees, to maintain the
  enforceability of the Trade Marks and trade marks applications. 


	
 

	
 

	
 


	
6.6

	
Infringement
  and third party rights


	
 

	
 

	
 


	
 

	
(a)

	
To the Vendor’s knowledge no Intellectual Property
  Rights have infringed or infringe upon, or are a misuse of any intellectual
  property rights of any third party.


	
 

	
 

	
 


	
 

	
(b)

	
No Intellectual Property Rights are subject to any
  outstanding injunction, judgment, order, decree, or charge. No action, suit,
  claim or governmental proceeding, hearing, investigation (to the Vendor’s
  knowledge), complaint, or demand has been made or to the Vendor’s knowledge
  is pending or threatened, which challenges the legality, validity, scope,
  enforceability, use, or ownership of any of the Intellectual Property Rights
  (whether registered or unregistered), and the Vendor was not served with any
  notice relating to the intention of any party to commence such actions. 


	
 

	
 

	
 


	
 

	
(c)

	
The Vendor has not received:








	
 

	
 

	
 


	
 

	
(i)

	
correspondence indicating
  any challenge, assertion or claim regarding the use of, or challenging or
  questioning the Vendor’s right or title in, any of the Intellectual Property
  Rights; and/or 


	
 

	
 

	
 


	
 

	
(ii)

	
communications alleging that
  the Vendor has violated, would violate, any of the patents, trade marks,
  service marks, trade names, copyrights or trade secrets or other proprietary
  rights of any other person or entity, nor, to the Vendor’s knowledge, is
  there any basis for any such communication.








	
 

	
 

	
 


	
 

	
(d)

	
To the Vendor’s knowledge, no person has the right
  to assert any claim regarding the use of, or challenging or questioning the
  Vendor’s right or title in, any of the Intellectual Property Rights and the
  Vendor is not aware of any potential basis for such an allegation or of any specific
  reason to believe that such an allegation may be forthcoming. 


	
 

	
 

	
 


	
6.7

	
Employees
  and Consultants


	
 

	
 

	
 


	
 

	
(a)

	
Any and all of the Intellectual Property Rights have
  been developed or is currently being developed, by employees, consultants or
  other agents of the Vendor. All of the Intellectual Property Rights have been
  properly assigned conveyed and transferred in their entirety to the Vendor by
  its inventors. 


	
 

	
 

	
 


	
 

	
(b)

	
No founder, employee, director, consultant or
  shareholder of the Vendor or former employer of any such founder, employee,
  director, consultant or shareholder has any rights to any Intellectual
  Property Rights. 


	
 

	
 

	
 


	
 

	
(c)

	
Each of Vendor’s employees, and to the Vendor’s knowledge, each of the consultants
  or other agents have entered into written agreements with the Vendor
  assigning to the Vendor all rights in the Intellectual Property
  Rights developed in the course of their employment by, or provision of
  services to, the Vendor and each of the Vendor’s employees and other persons
  who, either alone or in concert with others, developed, invented, discovered,
  derived, programmed or designed the Intellectual Property Rights, have
  entered into a written agreement with the Vendor (the IP Assignment and
  Non-Confidentiality Agreements). To the Vendor’s knowledge, the IP Assignment
  and Non Confidentiality Agreements are valid and
  binding agreements of the parties thereto, enforceable in accordance with its
  terms; and the Vendor thereby has obtained ownership of, and is the exclusive
  owner of such work, material or invention by operation of law or by valid
  assignment, to the fullest extent legally possible.






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(d)

	
To the Vendor’s knowledge, it is not and will not be
  necessary to utilize any inventions, trade secrets or proprietary information
  of any of its employees made prior to their employment by the Vendor, except
  for inventions, trade secrets or proprietary information that have been duly
  and properly assigned to the Vendor.


	
 

	
 

	
 


	
 

	
(e)

	
To the Vendor’s knowledge no employee of the Vendor
  breached any third party contract with respect to any item of the
  Intellectual Property Rights.


	
 

	
 

	
 


	
6.8

	
Licences


	
 

	
 

	
 


	
 

	
(a)

	
The Disclosure Material identifies each material
  item of Intellectual Property Licence In that the Business uses. The
  Disclosure Material contains correct and complete copies of all such
  Intellectual Property Licences In. To the Vendor’s knowledge, the material
  Intellectual Property Licences In are legal, valid, and enforceable and the
  Vendor is not aware of any reason why they should not remain on identical
  terms following Completion. 


	
 

	
 

	
 


	
 

	
(b)

	
The Vendor has taken all reasonable security
  measures, including measures against unauthorized disclosure, to protect the
  secrecy, confidentiality and value of its trade secrets and other
  Intellectual Property Rights, which measures are reasonable and customary in
  the industry in which the Vendor operates. 


	
 

	
 

	
 


	
 

	
(c)

	
Other than as part of a licence granted to the
  Vendor’s customers and/or distributors which is required in order to utilise
  the Vendor’s Products, the Vendor has not transferred ownership of, or
  granted any licence with respect to, any Intellectual Property Rights to any
  third party. The Disclosure Material contains a true, correct and complete
  list of all licences or agreements that grant to a third party the right to
  use the Intellectual Property Rights, other than licences or agreements
  relating to off-the-shelf software products.


	
 

	
 

	
 


	
 

	
(d)

	
To the Vendor’s knowledge, the Vendor has not agreed
  to indemnify other than in the ordinary course of business, any person for or
  against any interference, infringement, misappropriation, or other conflict
  with respect to any of the Intellectual Property Rights. The Vendor is not
  under any obligation to pay any royalty or other compensation to any third
  party or to obtain any approval or consent from any third party for the use
  of any Intellectual Property Rights.


	
 

	
 

	
 


	
6.9

	
Disclosure


	
 

	
 

	
 


	
 

	
(a)

	
To the Vendor’s knowledge, there is no unauthorised
  use, disclosure, infringement or misappropriation of any Intellectual
  Property Rights (including source code) by any third party, including,
  without limitation, any employee, consultant, or former employee or
  consultant of the Vendor. 


	
 

	
 

	
 


	
 

	
(b)

	
To the Vendor’s knowledge, the Vendor has not
  incorporated in its products or services, has not based them upon or derived
  them from or adapted them from, any proprietary information of any other
  person in violation of any statutory or other legal obligation or any
  agreement to which the Vendor is a party or by which it is bound.


	
 

	
 

	
 


	
6.10

	
Open
  Source


	
 

	
 

	
 


	
 

	
Other than as set out in Appendix 6, the
  Intellectual Property Rights do not include any open source, shareware,
  freeware code or other freely available software (Open Source Component) that
  is subject to restrictions on use. The Disclosure Material includes a list of
  all software or other material that is or is required to be distributed as
  “freeware,” “free software,” “open source software” or under a similar
  licensing or distribution model that the Vendor uses or licenses, and
  identifies that which is incorporated into, combined with, or distributed.
  The Vendor’s use and distribution of each such component, and the
  contemplated use thereof in conjunction with the Vendor’s Products, complies
  with all material provisions of the applicable license agreement, and in no
  case does such use or distribution give rise under such license agreement to
  any material obligations of the Vendor with respect to any Intellectual
  Property Rights, including without limitation any obligation to disclose or
  distribute any such Intellectual Property Rights in source code form, to
  license any such Intellectual Property Rights for the purpose of making
  derivative works, or to distribute any such Intellectual Property Rights
  without charge. 






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6.11

	
Bugs and
  Viruses


	
 

	
 

	
 


	
 

	
(a)

	
None of the Vendor’s Software and any other software
  used, marketed, distributed, licensed, or sold by the Vendor (including any
  software that is part of, is distributed with, or is used in the design,
  development, manufacturing, production, distribution, testing, maintenance,
  or support of any Vendor Software, but excluding any third-party software
  that is generally available on standard commercial terms and is licensed to
  the Vendor solely for internal use on a non-exclusive basis):








	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
To the Vendor’s knowledge,
  contains any bug, defect, or error (including any bug, defect, or error
  relating to or resulting from the display, manipulation, processing, storage,
  transmission, or use of date data) that materially and adversely affects the
  use, functionality, or performance of such Vendor Software or any product or
  system containing or used in conjunction with such Vendor Software; or


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
To the Vendor’s knowledge,
  fails to comply with any applicable warranty or other contractual commitment
  relating to the use, functionality, or performance of such Vendor Software or
  the Disclosure Material contains a complete and accurate list of all known
  bugs, defects, and errors in each version of the Vendor Software.


	
 

	
 

	
 

	
 


	
 

	
(b)

	
To the Vendor’s knowledge, no Vendor Software
  contains any “back door,” “drop dead device,” “time bomb,” “Trojan horse,”
  “virus,” or “worm” (as such terms are commonly understood in the software
  industry) or any other code designed or intended to have, or capable of
  performing, any of the following functions: 


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
disrupting, disabling, harming,
  or otherwise impeding in any manner the operation of, or providing
  unauthorized access to, a computer system or network or other device on which
  such code is stored or installed; or 


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
damaging or destroying any
  data or file without the user’s consent.


	
 

	
 

	
 

	
 


	
6.12

	
Deposit
  in Escrow 


	
 

	
 

	
 

	
 


	
 

	
No source code for any Vendor Software has been for
  the 3 years prior to the Completion Date delivered, licensed, or made
  available to any escrow agent or other person who is not, as of the date of
  this Agreement, an employee of the Vendor. The Vendor has no duty or
  obligation (whether present, contingent, or otherwise) to deliver, license,
  or make available the source code for any Vendor Software to any escrow agent
  or other person.


	
 

	
 

	
 

	
 


	
6.13

	
Esphion
  Japan Intellectual Property


	
 

	
 

	
 

	
 


	
 

	
No intellectual property has been created through
  the activities, operations or existence of Esphion Japan in respect of which
  the Vendor has any interest. 


	
 

	
 

	
 

	
 


	
6.14

	
FRST
  Grant 


	
 

	
 

	
 

	
 


	
 

	
The New Zealand Government acting through the
  Foundation for Research, Science and Technology (FRST) has no claims, nor any
  right to make any claims, in relation to any royalties or payments resulting
  from the sale of the product developed by the Vendor in connection with the
  grant provided by FRST under the Technology New Zealand Contract for
  Technology for Business Growth dated 27 February 2004 between FRST and the
  Vendor. 






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6.15

	
Name
  protection


	
 

	
 

	
 


	
 

	
The Vendor has not consented to the adoption of a
  similar name by another person, nor granted any licence of or any right to
  use (other than in respect of Esphion Japan and a Group Company), the name of
  the Vendor or any word or words forming part of the name of the Vendor.


	
 

	
 

	
 


	
7.

	
Material
  commitments


	



	
 

	
 

	
 


	
7.1

	
Warranties
  and defective products


	
 

	
 

	
 


	
 

	
(a)

	
To the Vendor’s knowledge, the Vendor has not sold
  or supplied products or provided services which are faulty or defective and
  which may result in claims against the Vendor after the Completion Date.
  There are no current claims against the Vendor for faulty or defective
  products or services provided by the Vendor.


	
 

	
 

	
 


	
 

	
(b)

	
To the Vendor’s knowledge, there are no
  representatives or warranties which have been given by the Vendor in respect
  of any products supplied or services provided by the Vendor under which a
  claim may be made against the Vendor after the Completion Date.


	
 

	
 

	
 


	
7.2

	
Trading
  agreements and outstanding offers


	
 

	
 

	
 


	
 

	
(a)

	
To the Vendor’s knowledge, the Vendor, in respect of
  the Business, has observed and performed all the material terms and
  conditions on its part to be observed and performed under its contractual
  agreements, and similar obligations and is not in material default under or
  material breach of any such agreement or obligation; and


	
 

	
 

	
 


	
 

	
(b)

	
The Vendor acknowledges, that except as disclosed in
  the Disclosure Materials, it has not made any promises, guarantees, warranties
  or representations, written or oral, to provide customers with any services,
  products, including, updates, upgrades and/or customizations to such
  products, where such obligation is, or will become through the passage of
  time, enforceable following the Completion Date on the Vendor. 


	
 

	
 

	
 


	
7.3

	
Material
  commitments


	
 

	
 

	
 


	
 

	
To the Vendor’s knowledge, the Vendor is not a
  party, in respect of the Business, to any material agreement which:


	
 

	
 

	
 


	
 

	
(a)

	
is outside the ordinary course of business; 


	
 

	
 

	
 


	
 

	
(b)

	
is incapable of performance under its terms within a
  reasonable time; 


	
 

	
 

	
 


	
 

	
(c)

	
involves the supply of goods or services, the
  aggregate sales value of which will represent in excess of 30 per cent of the
  turnover expected for the current financial year of the Business; 


	
 

	
 

	
 


	
 

	
(d)

	
involves the Vendor giving a guarantee or indemnity
  in respect of, or to be otherwise contingently liable for, the obligations
  of, any other person; 


	
 

	
 

	
 


	
 

	
(e)

	
is with any Related Company of the Vendor (other
  than with LINC Media Inc. or Esphion Japan); 






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(f)

	
restricts or prevents the Vendor from carrying on or
  its ability to engage in any activity or business in any area; or


	
 

	
 

	
 


	
 

	
(g)

	
confers on any person any material rights as a
  consequence of a change in ownership of the Business.


	
 

	
 

	
 


	
8.

	
Property


	



	
 

	
 

	
 


	
8.1

	
Only
  property


	
 

	
 

	
 


	
 

	
The Leasehold Property comprises the only land and
  buildings occupied by the Business.


	
 

	
 

	
 


	
8.2

	
No breach


	
 

	
 

	
 


	
 

	
To the Vendor’s knowledge, the Vendor is not in
  breach of any material agreement concerning, or of any material obligation
  affecting, the Leasehold Property.


	
 

	
 

	
 


	
8.3

	
No third
  party right


	
 

	
 

	
 


	
 

	
To the Vendor’s knowledge no material rights,
  easements, quasi-easements or privileges exist in favour of any person in
  respect of the part Leasehold Property.


	
 

	
 

	
 


	
8.4

	
Enforcement
  action


	
 

	
 

	
 


	
 

	
To the Vendor’s knowledge, there are no outstanding
  enforcement or other notices, requisitions, requirements or proceedings
  issued or to the Vendor’s knowledge threatened, in respect of the Leasehold
  Property by any Public Authority, landlord, tenant or other person which are
  materially adverse to the Business.


	
 

	
 

	
 


	
9.

	
Compliance
  with laws


	



	
 

	
 

	
 


	
9.1

	
Compliance


	
 

	
 

	
 


	
 

	
To the Vendor’s knowledge, there are no applicable
  material requirements of any statute, regulation, regulatory authority or
  territorial authority with which the Vendor has not complied fully and in a
  timely manner for the last 24 months.


	
 

	
 

	
 


	
9.2

	
All
  Consents held


	
 

	
 

	
 


	
 

	
To the Vendor’s knowledge, the Vendor has all
  Consents which are required or are necessary for the carrying on of the
  Business. 


	
 

	
 

	
 


	
10.

	
Legal
  proceedings


	



	
 

	
 

	
 


	
10.1

	
No cause
  of action


	
 

	
 

	
 


	
 

	
To the Vendor’s knowledge, there is not any cause of
  action relating to the Business or the Assets which could or might be used to
  commence legal proceedings, either civil or criminal.






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10.2

	
No
  proceedings


	
 

	
 

	
 


	
 

	
The Vendor is not and has not in the last two years
  been:


	
 

	
 

	
 


	
 

	
(a)

	
a party to any legal action or proceedings or other
  form of formal mediation or formal dispute resolution (other than as
  plaintiff in normal debt collection matters or as a party to a personal
  grievance bought by an employee); or


	
 

	
 

	
 


	
 

	
(b)

	
to the Vendor’s knowledge, subject to any
  investigation by any Public Authority.


	
 

	
 

	
 


	
10.3

	
No
  unsatisfied judgments


	
 

	
 

	
 


	
 

	
There are no unsatisfied judgments, court orders or
  awards outstanding against the Vendor.


	
 

	
 

	
 


	
10.4

	
Product
  or service claims


	
 

	
 

	
 


	
 

	
To the Vendor’s knowledge, there are no product or
  service warranty claims against the Vendor in respect of products supplied by
  the Vendor and to the Vendor’s knowledge, no circumstances exist that will
  give rise to any such claims. 


	
 

	
 

	
 


	
11.

	
Statutory
  records


	



	
 

	
 

	
 


	
11.1

	
All
  records kept


	
 

	
 

	
 


	
 

	
The Vendor holds all accounting and other records
  relating to the Business which are required to operate the Business and such
  records are properly and fully maintained in all material respects.


	
 

	
 

	
 


	
11.2

	
Documents
  of title


	
 

	
 

	
 


	
 

	
All documents of title, or documents which otherwise
  evidence title, to the Assets are in the Vendor’s possession or under the
  control of the Vendor.


	
 

	
 

	
 


	
12.

	
Employees


	



	
 

	
 

	
 


	
12.1

	
Full
  disclosure


	
 

	
 

	
 


	
 

	
The Vendor has provided to the Purchaser the
  following details of the Existing Employees:


	
 

	
 

	
 


	
 

	
(a)

	
all of the terms and conditions of the employment;


	
 

	
 

	
 


	
 

	
(b)

	
all benefits provided (including discretionary
  benefits);


	
 

	
 

	
 


	
 

	
(c)

	
details of all applicable redundancy policies;


	
 

	
 

	
 


	
 

	
(d)

	
details of length of service; and 


	
 

	
 

	
 


	
 

	
(e)

	
accrued entitlements to leave (including, without
  limitation, annual leave, sick leave and long service leave).


	
 

	
 

	
 


	
12.2

	
No union
  agreements


	
 

	
 

	
 


	
 

	
The Vendor is not a party to any agreement with any
  union, collective bargaining agent or industrial organisation in respect of
  any Existing Employee.


	
 

	
 

	
 


	
12.3

	
No
  termination benefits


	
 

	
 

	
 


	
 

	
There is no agreement or liability to pay a
  termination benefit to any Existing Employee of the Business other than
  accrued leave entitlements. 






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12.4

	
No
  disputes with employees


	
 

	
 

	
 


	
 

	
The Vendor is not involved in any personal
  grievance, wrongful dismissal claim, dispute or any other claim with any
  Existing Employee, or former employees or any person or organisation
  representing any such employee. To the Vendor’s knowledge, no event has
  occurred which might give rise to such a claim.


	
 

	
 

	
 


	
12.5

	
Health
  and safety


	
 

	
 

	
 


	
 

	
To the Vendor’s knowledge, the Vendor is not subject
  to any health and safety investigation by any Public Authority and no event
  has occurred which might give rise to any audit, prosecution, investigation
  or claim related to health or safety.


	
 

	
 

	
 


	
13.

	
Superannuation


	



	
 

	
 

	
 


	
 

	
There is no claim for, nor is the Vendor under any
  legal liability to pay, any pension, retirement, death, disability, or
  medical aid payment, employee insurance premium or any other similar payment
  to any past or present director, employee or contractor of the Vendor or any
  of their families or dependants and no such pension or payment is now being
  paid voluntarily.


	
 

	
 

	
 


	
14.

	
Investments


	



	
 

	
 

	
 


	
 

	
The Vendor is not a party to any joint venture,
  partnership, syndicate, consortium, or other body or association, whether
  incorporated or not (other than a recognised trade association and in respect
  of Esphion Japan).


	
 

	
 

	
 


	
15.

	
Due
  execution


	



	
 

	
 

	
 


	
 

	
The Vendor:


	
 

	
 

	
 


	
 

	
(a)

	
if a company, is validly existing under the laws of
  its place of incorporation;


	
 

	
 

	
 


	
 

	
(b)

	
subject to obtaining the necessary shareholder
  consents has the power to enter into and perform its obligations under this
  Agreement and to carry out the transactions contemplated by this Agreement;


	
 

	
 

	
 


	
 

	
(c)

	
subject to obtaining the necessary shareholder
  consents has taken all necessary action to authorise its entry into and
  performance of this Agreement and to carry out the transactions contemplated
  by this Agreement;


	
 

	
 

	
 


	
 

	
(d)

	
subject to obtaining the necessary shareholder
  consents, obligations under this Agreement are valid and binding and
  enforceable against it in accordance with their terms; and


	
 

	
 

	
 


	
 

	
(e)

	
has, to the Vendor’s knowledge, obtained all
  requisite Consents from any Public Authorities as may be necessary to allow
  it lawfully to complete the transactions contemplated by this Agreement.





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Schedule
  4: Conditions


	





Completion of this Agreement is subject to
the satisfaction of the following conditions precedent:


	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Condition Precedent

	
 

	
Condition
 Satisfaction
 Date

	
 

	
Party for 

  whose benefit 

  Condition has
 been inserted


	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
(a)

	
 

	
Vendor’s Approvals

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
The Vendor securing the approval of its shareholders
  to the transactions contemplated by or otherwise arising as a consequence of
  this Agreement, including all approvals required under the Vendor’s
  constitution and all approvals required by law including under section 129 of
  the Companies Act).

	
 

	
Completion Date

	
 

	
Vendor and Purchaser


	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
(b)

	
 

	
Existing Employees Retention

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Each Existing Employee entering into a new
  employment agreement with the Purchaser on terms no less favourable than
  their existing employment contract with the Vendor.

	
 

	
Completion Date

	
 

	
Purchaser


	
 

	
 

	
 

	
 

	
 

	
 

	
 





Agreement relating
to the sale and purchase of the Business and Assets of Esphion Limited


67








	
 


	
Appendix
  7: Confidentiality Agreement


	






Agreement relating
to the sale and purchase of the Business and Assets of Esphion Limited


68








	
 

	
 


	
 

	
C o n f i d e n t i a l i t y   D e e d


	
 

	
 


	
 

	
Allot
  Communications Limited


	
 

	
 


	
 

	
Provider


	
 

	
 


	
 

	
and


	
 

	
 


	
 

	
Esphion
  Limited


	
 

	
 


	
 

	
Recipient


	
 

	
 


	
 

	
Date


	
 

	
 













This Confidentiality Deed is made on


	
 

	
 

	
 


	
between

	
(1)

	
Allot
  Communications Limited (Provider)


	
 

	
 

	
 


	
and

	
(2)

	
Esphion
  Limited (Recipient)





 



1








	
 

	
 


	
Introduction


	
 

	
 


	
A.

	
The Recipient and the Purchaser have entered into a
  sale and purchase agreement for the business and the assets of Esphion
  Limited dated 1 January 2008 (Sale and
  Purchase Agreement). The Sale and Purchase Agreement provides that
  on the date specified in the agreement an earn out payment is to be made from
  the Provider to the Recipient (subject to certain conditions). The amount of
  the earn out payment (the Earn Out Amount)
  is to be calculated by the Provider and delivered to the Recipient. The
  Recipient can then either agree or disagree with this calculation. The
  Purchaser is to give the Recipient access to all additional information it
  may require to enable the Recipient to make its decision to agree or disagree
  with the calculation of the Earn Out Amount.


	
 

	
 


	
B.

	
The Recipient wishes to receive the additional
  information referred to above for the purpose of deciding whether to agree or
  disagree with the calculation of the Earn Out Amount. The Provider has agreed
  to provide information to the Recipient for the sole purpose of enabling the
  Recipient to make its decision whether to agree or disagree with the
  calculation of the Earn Out Amount. 


	
 

	
 


	
C.

	
The information to be provided is of a confidential
  nature and is of commercial value to the Provider. In order to protect and
  maintain the confidentiality and value of such information, the Recipient has
  agreed to enter into this Deed.





It is agreed


	
 

	
 

	
 


	
1.

	
Interpretation


	


	



	
 

	
 


	
1.1

	
Definitions


	
 

	
 

	
 


	
 

	
In this Deed, unless the context otherwise requires:


	
 

	
 

	
 


	
 

	
Information means: 


	
 

	
 

	
 


	
 

	
(a)

	
all oral and written information (including, without
  limitation, all business and financial information, opinions, projections and
  other statements which relate to the calculation of the Earn Out Amount) and
  records (in whatever form) relating to the business or affairs of the
  Provider or any of its Related Companies made available to or for the benefit
  of the Recipient (including to any of the Recipient’s advisers) by or on
  behalf of the Provider or any of its Related Companies (including by any of
  the Provider’s advisers);


	
 

	
 

	
 


	
 

	
(b)

	
all notes, memoranda and records (in whatever form)
  of the Recipient or any of its officers, employees or advisers containing,
  referring to or based upon any information supplied to the Recipient
  (including to any of the Recipient’s advisers) by or on behalf of the
  Provider; and


	
 

	
 

	
 


	
 

	
(c)

	
all rights relating to any of the information set
  out in paragraphs (a) and (b) above.


	
 

	
 

	
 


	
 

	
Related Company in relation to a company has the meaning given to that expression
  in section 2(3) of the Companies Act 1993 provided that, for this purpose,
  references to “company” in that section shall extend to any body corporate
  wherever incorporated or registered.









2








	
 

	
 

	
 


	
 

	
Sale and Purchase Agreement means the agreement relating to the sale and purchase of the
  Business and Assets of Esphion Limited between the Provider, the Recipient,
  the Covenantors and the Key Shareholders (as defined in that agreement) dated
  1 January 2008.


	
 

	
 

	
 


	
1.2

	
General references


	
 

	
 

	
 


	
 

	
In this Deed, unless the context otherwise requires:


	
 

	
 

	
 


	
 

	
(a)

	
a reference to a clause or schedule is a reference
  to a clause or schedule of this Deed;


	
 

	
 

	
 


	
 

	
(b)

	
a reference to this Deed or another instrument
  includes any variation, novation or replacement of either of them;


	
 

	
 

	
 


	
 

	
(c)

	
the singular includes the plural and vice versa;


	
 

	
 

	
 


	
 

	
(d)

	
the word person includes an individual, a body
  corporate, an association of persons (whether corporate or not), a trust, a
  state or an agency of state, government departments and local and municipal
  authorities in each case, whether or not having a separate legal personality;
  and


	
 

	
 

	
 


	
 

	
(e)

	
words importing one gender include the other
  genders.


	
 

	
 

	
 


	
1.3

	
Headings


	
 

	
 

	
 


	
 

	
Headings are to be ignored in construing this Deed.


	
 

	
 

	
 


	
2.

	
Information
  property of the Provider


	



	
 

	
 

	
 


	
2.1

	
The Information is, as
  between the Provider and the Recipient, the absolute property of the Provider
  and its Related Companies. Subject to the provisions of this Deed, all
  Information remains the absolute property of the Provider and its Related Companies.
  


	
 

	
 


	
2.2

	
The Information contains
  information of a confidential nature which is of commercial value to the
  Provider and its Related Companies. Loss or damage would be sustained by the
  Provider and its Related Companies if the Information should:


	
 

	
 

	
 


	
 

	
(a)

	
come into the possession of an unauthorised person;
  or 


	
 

	
 

	
 


	
 

	
(b)

	
be used in any way by any person in competition with
  the Provider or any of its Related Companies.






	
 







3








	
 

	
 

	
 


	
3.

	
Confidentiality
  undertakings


	



	
 

	
 

	
 


	
3.1

	
Maintain confidential


	
 

	
 

	
 


	
 

	
The Recipient:


	
 

	
 

	
 


	
 

	
(a)

	
must receive the Information in the strictest
  confidence and in good faith; and 


	
 

	
 

	
 


	
 

	
(b)

	
must maintain the confidentiality of the Information
  by the Recipient and the persons referred to in clause 5.


	
 

	
 

	
 


	
3.2

	
Prohibitions


	
 

	
 

	
 


	
 

	
Except in accordance with this Deed, or with the
  prior written consent of the Provider, the Recipient must not:


	
 

	
 

	
 


	
 

	
(f)

	
No disclosure 


	
 

	
 

	
 


	
 

	
 

	
directly or indirectly disclose or distribute the
  Information or permit the Information to be disclosed or distributed to any
  unauthorised person (including any agent, adviser or shareholder of or to the
  Recipient or any of its Related Companies) except as provided in clause 5; or


	
 

	
 

	
 


	
 

	
(g)

	
No use


	
 

	
 

	
 


	
 

	
 

	
use the Information or any knowledge which it may
  acquire as a result of receiving the Information in any way which furthers
  competition with the Provider or any of its Related Companies or which is
  otherwise directly or indirectly detrimental to the interests of the Provider
  or any of its Related Companies or for any purpose other than deciding
  whether to agree with the calculation of the Earn Out Amount; or


	
 

	
 

	
 


	
 

	
(h)

	
No assertion of ownership


	
 

	
 

	
 


	
 

	
 

	
assert rights of any nature in respect of, or
  contest the Provider’s or the Provider’s Related Companies’ ownership of, the
  Information; or


	
 

	
 

	
 


	
 

	
(i)

	
Reproduce


	
 

	
 

	
 


	
 

	
 

	
reproduce in any way, or permit to be reproduced in
  any way, the Information, for any purpose other than deciding whether to
  agree with the calculation of the Earn Out Amount; or


	
 

	
 

	
 


	
 

	
(j)

	
Competitors


	
 

	
 

	
 


	
 

	
 

	
in particular, and without limiting any of the other
  obligations of the Recipient set out in this clause 3.2, give, disclose or distribute
  the Information or permit the Information to be given, disclosed or
  distributed to any person who competes with the Provider or any Related
  Company of the Provider.









4








	
 

	
 

	
 


	
3.3

	
Excluded Information


	
 

	
 

	
 


	
 

	
The following Information is not subject to the
  restrictions of this Deed:


	
 

	
 

	
 


	
 

	
(a)

	
Information which is clearly and demonstrably
  approved in writing by the Provider for disclosure (other than on a
  restricted basis) by the Recipient prior to such disclosure;


	
 

	
 

	
 


	
 

	
(b)

	
Information independently acquired or developed by
  the Recipient without the benefit or use of any of the Information and the
  same can be evidenced in writing;


	
 

	
 

	
 


	
 

	
(c)

	
Information publicly known or which becomes publicly
  known after the date of this Deed other than through breach or
  non-performance by the Recipient (or any of the persons referred to in clause
  5) of any of its or their obligations under this Deed or as a result of any
  of the persons referred to in clause 5 failing to observe the confidentiality
  obligations set out in this Deed; and


	
 

	
 

	
 


	
 

	
(d)

	
Information lawfully received by the Recipient from
  a third party not owing (directly or indirectly) any obligation of
  confidentiality to the Provider or any of its Related Companies.


	
 

	
 

	
 


	
4.

	
No
  reliance on Information


	



	
 

	
 

	
 


	
 

	
The Information is provided to the Recipient for its
  benefit solely for the purpose of assisting the Recipient to decide whether
  to agree with the calculation of the Earn Out Amount on the following terms:


	
 

	
 

	
 


	
 

	
(a)

	
the Recipient is solely responsible for its own
  assessment and evaluation of the Information;


	
 

	
 

	
 


	
 

	
(b)

	
no responsibility is accepted for, and no person is
  authorised to make, any other representations or warranties on behalf of the
  Provider or any of its Related Companies.


	
 

	
 

	
 


	
5.

	
Disclosure
  of information to third parties


	



	
 

	
 

	
 


	
5.1

	
Recipient’s officers, employees and advisers


	
 

	
 

	
 


	
 

	
Notwithstanding the provisions of this Deed, the
  Recipient may disclose the Information to such of its advisers and
  shareholders only to the extent necessary to enable such persons to evaluate
  the Information for the sole purpose of deciding whether to agree with the
  calculation of the Earn Out Amount. Prior to and as a condition of the
  Recipient disclosing the Information to any such persons, the Recipient must
  provide to the Provider a signed confidentiality undertaking from each such
  person in the form attached as a Schedule to this Deed.


	
 

	
 

	
 


	
5.2

	
Recipient must ensure compliance by third parties 


	
 

	
 

	
 


	
 

	
The Recipient must ensure that all persons to whom
  the Information is disclosed under clause 5.1 are aware of the
  confidentiality of the Information, the existence and terms of this Deed, and
  consider themselves bound by the provisions of this Deed as if they were
  parties to it. The Recipient must take all such steps as are reasonably
  necessary to prevent any unauthorised use or disclosure of the Information by
  any such person. The Recipient agrees to be responsible for any act or
  omission of such person constituting a breach of this Deed or which would
  constitute a breach of this Deed if done or omitted by the Recipient and to
  bear all damages caused to the Provider as a result of a breach by such
  persons, in accordance with clause 7.1.










5








	
 

	
 

	
 


	
6.

	
Return,
  destruction and erasure of information


	



	
 

	
 

	
 


	
6.1

	
The Recipient must, on
  receipt of a written request by the Provider:


	
 

	
 

	
 


	
 

	
(a)

	
return to the Provider; and/or 


	
 

	
 

	
 


	
 

	
(b)

	
destroy or if technically practicable, erase,


	
 

	
 

	
 


	
 

	
all the Information (including all reproductions of
  Information) in the possession or control of the Recipient or its officers,
  employees and advisers to whom the Information has been disclosed, together
  with all information and documentation containing, comprising or relating in
  any way to the Information and procure that each person who has received
  Information under clause 5 does the same provided that any adviser who is
  compelled by law or regulation or the terms of any professional indemnity
  insurance policy may retain a copy of all such Information and documentation.


	
 

	
 

	
 


	
6.2

	
Upon the return, destruction
  or erasure of all Information in accordance with clause 6.1, the Recipient
  must provide a certificate to this effect signed by a director or other
  authorised senior officer of the Recipient.


	
 

	
 

	
 


	
6.3

	
The return, destruction or
  erasure of the Information in accordance with clause 6.1 does not release the
  Recipient or its officers, employees and advisers from their obligations under
  this Deed.


	
 

	
 

	
 


	
7.

	
Indemnity


	



	
 

	
 

	
 


	
7.1

	
Indemnity for unauthorised disclosure or use 


	
 

	
 

	
 


	
 

	
The Recipient indemnifies the Provider and each of
  its Related Companies from and against all actions, claims, costs, demands,
  expenses, liabilities, losses, payments and proceedings actually and
  reasonably incurred or suffered by them (other than in respect of any action,
  claim or proceedings by the Vendor or its shareholders against the Purchaser
  for breach of the Sale and Purchase Agreement) which arise, directly or
  indirectly, from the unauthorised disclosure or use (whether intentional or
  unintentional) of the Information by the Recipient or by any of its Related
  Companies or any of its or their respective officers, employees or advisers
  or which arise from any of such persons being in breach of any of the
  provisions of this Deed. The Provider will take all reasonable steps to
  mitigate any such claims, costs, expenses, liabilities or losses.


	
 

	
 

	
 


	
7.2

	
Ability to seek equitable relief 


	
 

	
 

	
 


	
 

	
If there is a breach of the terms of this Deed by
  the Recipient or by any person to whom the Recipient has made any of the
  Information available, the Provider and each of its Related Companies are
  entitled to seek equitable relief in addition to damages. In any proceeding
  bought by the Provider or its Related Companies against the Recipient seeking
  equitable relief for a breach of this Deed, neither the Recipient nor any
  person directly or indirectly under its direction or control may claim that
  the breach is one which may not be the subject of equitable relief.









6








	
 

	
 


	
8.

	
Compulsory
  disclosure


	



	
 

	
 


	
 

	
If the Recipient is required or requested by any
  court, governmental or regulatory agency to disclose any Information, the
  Recipient will immediately advise the Provider of that requirement or request
  and will co-operate with the Provider in opposing the requirement or request,
  if the Provider so requires and if feasible under the laws and regulations of
  the jurisdiction in which the Recipient operates. In any event, the Recipient
  agrees to comply with all reasonable directions of the Provider to disclose
  only that part of the Information which the Recipient is legally required to
  disclose, and to use reasonable efforts to obtain an assurance that the
  Information disclosed will be treated confidentially. The Provider will pay
  any costs reasonably and properly incurred by the Recipient in complying with
  its obligations under this clause.


	
 

	
 


	
9.

	
Dealing
  in securities and price sensitive information


	



	
 

	
 


	
 

	
The Recipient
  acknowledges that Provider’s ordinary shares are publicly traded in the
  United States and understands that the Information may constitute material non-public
  information under applicable United States securities laws. The Recipient
  agrees to take reasonable steps to inform its representatives who receive
  Information of the Provider of this fact and to prevent them from trading in
  the Provider’s ordinary shares for so long as any Information includes
  material non-public information regarding the Provider.


	
 

	
 


	
10.

	
General


	



	
 

	
 


	
10.1

	
Obligations to continue


	
 

	
 


	
 

	
The obligations in this Deed continue to apply for a
  period of five years from the date hereof.


	
 

	
 


	
10.2

	
Execution of further documents 


	
 

	
 


	
 

	
The Recipient must take such actions and execute, or
  procure the execution of, such documents as the Provider may reasonably
  request to give full effect to this Deed.


	
 

	
 


	
10.3

	
Waivers in writing


	
 

	
 


	
 

	
No waiver by either party or any of its Related
  Companies of any provision of or right, remedy or power of such party or any
  of its Related Companies under this Deed, and no amendment to this Deed, is
  to be effective unless it is in writing signed by the parties and any such
  waiver is to be effective only in the specific instance and for the specific
  purpose for which it is given. No failure or delay by either party or any of
  its Related Companies to exercise any right, remedy or power under this Deed
  or to insist on strict compliance by the other party with any obligation
  under this Deed, and no custom or practice of the parties at variance with
  the terms of this Deed, will constitute a waiver of the right of such party or
  any of its related companies to demand exact compliance with this Deed.


	
 

	
 


	
10.4

	
Contracts (Privity) Act


	
 

	
 


	
 

	
For the purposes of the Contracts (Privity) Act
  1982, where the covenants of either party contained in this Deed are given
  for the benefit of any third party such covenants are intended to be
  enforceable against the other party by such third party.


	
 

	
 








7








	
 

	
 


	
10.5

	
Severability


	
 

	
 


	
 

	
If any provision of this Deed is, or becomes,
  unenforceable, illegal or invalid for any reason, the relevant provision is
  to be deemed to be modified to the extent necessary to remedy such
  unenforceability, illegality or invalidity or if this is not possible then
  such provision must be severed from this Deed, without affecting the
  enforceability, legality or validity of any other provision of this Deed.


	
 

	
 


	
10.6

	
Governing law and jurisdiction


	
 

	
 


	
 

	
This Deed is to be construed in accordance with the
  laws of New Zealand and the parties submit to the non-exclusive jurisdiction
  of the courts of New Zealand in relation to this Deed.


	
 

	
 


	
10.7

	
Counterparts


	
 

	
 


	
 

	
This Deed may be signed and delivered (including by
  way of electronic transmission) in any number of counterparts all of which,
  when taken together, shall constitute one and the same instrument. A party
  may enter into this Deed by executing any counterpart.





Execution


Executed as a Deed.


	
 

	
 

	
 


	
Recipient
  by

	
 

	
 


	
 

	
 

	
 


	


	
 

	



	
Director

	
 

	
Director


	
 

	
 

	
 


	


	
 

	



	
Print Name

	
 

	
Print Name









8








	
 


	
SCHEDULE


	
Form of Undertaking


	






DEED dated


Full Name, Address and Occupation of Recipient


________________________________________________________________

_______________________________________________________ (Recipient)


Introduction


	
 

	
 


	
A.

	
Allot Communications Limited (Provider) and Esphion Limited (Principal Recipient) have entered into a
  Confidentiality Deed dated
                                   (Confidentiality Deed) relating to the
  provision of certain Information (as that term is defined in the Confidentiality
  Deed) by the Provider to the Principal Recipient.


	
 

	
 


	
B.

	
The Provider has agreed that the Principal Recipient
  may provide the Information to the Recipient on the condition that the
  Recipient enters into this Deed so as to ensure that the confidential nature
  and commercial value of the Information is preserved. 





Covenants 


	
 

	
 


	
1.

	
The Recipient acknowledges that the Recipient has read the
  Confidentiality Deed and has been informed by the Principal Recipient of the
  confidential nature of the Information to be provided by the Provider.


	
 

	
 


	
2.

	
In consideration of the Provider agreeing to provide the Information
  to the Recipient, the Recipient covenants and agrees to observe the
  provisions of the Confidentiality Deed in all respects as if the Recipient
  was named in place of the Principal Recipient in the Confidentiality Deed and
  to that end all applicable terms of the Confidentiality Deed are deemed to be
  included as terms and conditions of this Deed.


	
 

	
 


	
3.

	
The Recipient shall indemnify and hold free and harmless the Principal
  Recipient from and against any and all claims, damages, losses, liabilities,
  costs and expenses, which may be incurred by or awarded against the Principal
  Recipient, resulting from or arising out of the Recipient’s failure to comply
  with its obligations under the Confidentiality Deed.





Execution


Executed as a Deed.


	
 

	
 

	
 


	
Signed by the Recipient in the presence
  of:

	
 

	
 


	
 

	
 

	
 


	


	
 

	



	
Signature of Witness

	
 

	
Recipient


	
 

	
 

	
 


	


	
 

	
 


	
Occupation

	
 

	
 


	
 

	
 

	
 


	


	
 

	
 


	
Address

	
 

	
 









9








	
 


	
Appendix
  9: Escrow Deed


	











10








	
 

	
 


	
 

	
E s c r o w   D e e d


	
 

	
 


	
 

	
Esphion
  Limited


	
 

	
 


	
 

	
Vendor


	
 

	
 


	
 

	
and


	
 

	
 


	
 

	
No 8
  Ventures Management Limited


	
 

	
 


	
 

	
No 8 Ventures


	
 

	
 


	
 

	
and


	
 

	
 


	
 

	
Allot
  Communications Limited


	
 

	
 


	
 

	
Purchaser


	
 

	
 


	
 

	
and


	
 

	
 


	
 

	
Bell Gully


	
 

	
 


	
 

	
Escrow Agent


	
 

	
 


	
 

	
Date  7 January  2008







	
 

	
 


	
 

	


	
 


	
 

	
AUCKLAND
  VERO CENTRE, 48 SHORTLAND STREET

  PO BOX 4199, AUCKLAND 1140, DX CP20509, NEW ZEALAND


	
 


	
 

	
TEL 64
  9 916 8800  FAX 64
  9 916  8801





11








	
 

	
 

	
 


	
This Escrow Deed is made
  on 7 January 2008


	
 

	
 

	
 


	
between

	
(1)

	
Esphion
  Limited (Vendor)


	
 

	
 

	
 


	
and

	
(2)

	
No 8
  Ventures Management Limited (No 8 Ventures)


	
 

	
 

	
 


	
and

	
(3)

	
Allot
  Communications Limited (Purchaser)


	
 

	
 

	
 


	
and

	
(4)

	
Bell Gully
  (Escrow Agent)





Background


	
 

	
 


	
A.

	
The Vendor has agreed to
  sell and the Purchaser has agreed to purchase the Assets and the Business of
  the Vendor in accordance with the provisions of an agreement for sale and
  purchase dated 1 January 2008 (the Agreement).


	
 

	
 


	
B.

	
Under the terms of the
  Agreement an amount is to be paid to the Escrow Agent and is to be released
  and paid to No 8 Ventures or the Purchaser in accordance with the provisions
  of clause 18 of the Agreement.





Agreement


	
 

	
 

	
 

	
 


	
1.

	
Interpretation


	



	
 

	
 

	
 

	
 


	
1.1

	
Definitions


	
 

	
 


	
 

	
In this deed, unless the contrary
  intention appears:


	
 

	
 


	
 

	
Business
  Day means
  a day (other than a Saturday or Sunday) on which registered banks are open
  for general banking business in Auckland;


	
 

	
 


	
 

	
Completion has the meaning given to that
  term in the Agreement;


	
 

	
 


	
 

	
Completion
  Date has
  the meaning given to that term in the Agreement;


	
 

	
 


	
 

	
Escrow
  Amount has
  the meaning given to that term in the Agreement;


	
 

	
 


	
 

	
Escrow
  Payment Date
  has the meaning given to that term in the Agreement; and


	
 

	
 


	
 

	
Escrow
  Period has
  the meaning given to that term of the Agreement.


	
 

	
 


	
1.2

	
Interpretation


	
 

	
 


	
 

	
In this deed, unless the contrary
  intention appears:


	
 

	
 


	
 

	
(a)

	
words importing one gender include the other
  genders;


	
 

	
 

	
 


	
 

	
(b)

	
the singular includes the plural and vice versa;


	
 

	
 

	
 


	
 

	
(c)

	
a reference to the Vendor or Purchaser is a
  reference also to their respective executors, administrators, permitted
  assigns and successors (as the context may require);


	
 

	
 

	
 


	
 

	
(d)

	
headings are for convenience only and shall not
  affect interpretation;





12








	
 

	
 

	
 

	
 


	
 

	
(e)

	
references to clauses and schedules are references
  to clauses and schedules of this deed unless specifically stated otherwise;


	
 

	
 

	
 


	
 

	
(f)

	
references to any legislation or to any provision of
  any legislation (including regulations and orders) includes:


	
 

	
 

	
 


	
 

	
 

	
(i)

	
that legislation or
  provision as from time to time amended, re-enacted or substituted and, unless
  otherwise specifically stated, refers to New Zealand legislation and
  provisions; and


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
any statutory instruments,
  regulations and orders issued under any such legislation or provision; and


	
 

	
 

	
 

	
 


	
 

	
(g)

	
any action required pursuant to this deed to be
  undertaken on any day which is not a Business Day, shall be undertaken on the
  next Business Day.  


	
 

	
 

	
 

	
 


	
2.

	
Escrow


	



	
 

	
 

	
 

	
 


	
2.1

	
Payment


	
 

	
 

	
 

	
 


	
 

	
On the Escrow Payment Date,
  the Purchaser shall pay, or cause to be paid, the Escrow Amount to the Escrow
  Agent.


	
 

	
 

	
 

	
 


	
2.2

	
Escrow Account


	
 

	
 

	
 

	
 


	
 

	
The Escrow Agent shall hold
  the Escrow Amount in New Zealand in an interest bearing bank account in the
  joint names of the Vendor and the Purchaser until the Escrow Amount is to be
  released in accordance with clause 18.2 of the Agreement.


	
 

	
 

	
 

	
 


	
3.

	
Interest


	



	
 

	
 

	
 

	
 


	
3.1

	
Credit of
  Interest


	
 

	
 

	
 

	
 


	
 

	
Interest earned on the
  Escrow Amount shall be for the credit of the person to which the Escrow
  Amount is paid and if part of the Escrow Amount is paid to the Purchaser and
  the Vendor proportionately, interest shall be paid in the same proportion.


	
 

	
 

	
 

	
 


	
3.2

	
Non-resident
  Withholding Tax


	
 

	
 

	
 

	
 


	
 

	
The Escrow Agent shall be
  entitled to deduct non-resident withholding tax or approved issuer levy and
  administration charges on the interest earned on the Escrow Amount.  Any applicable tax deduction certificates
  will be provided to the Vendor as required by law.


	
 

	
 

	
 

	
 


	
3.3

	
Calculation
  of Interest


	
 

	
 

	
 

	
 


	
 

	
The Escrow Agent shall
  calculate accrued interest monthly and interest earned shall be reinvested
  until paid out.  Except for any
  manifest error these calculations shall be deemed final and binding on the
  parties.


	
 

	
 

	
 

	
 


	
3.4

	
Payment of
  Interest


	
 

	
 

	
 

	
 


	
 

	
When a payment on account of
  the Escrow Amount is made from the Escrow Account that payment will be
  accompanied by a payment of accrued interest earned on the relevant part of
  the Escrow Amount.





13








	
 

	
 

	
 

	
 


	
4.

	
Release
  of Escrow Amount


	



	
 

	
 

	
 

	
 


	
4.1

	
Release


	
 

	
 

	
 

	
 


	
 

	
The Escrow Agent shall only pay and
  apply the Escrow Amount in accordance with:


	
 

	
 


	
 

	
a notice signed on behalf of both of the (1) the
  Purchaser and (2) the Vendor and No 8 Ventures so directing the Escrow Agent
  in substantially the same form as set out in Schedule 1;


	
 

	
 


	
 

	
clause 18.2(b) of the Agreement, where the end of
  the Escrow Period has been reached and no Warranty Claims by the Purchaser
  against No 8 Ventures in relation to the breach of any of the Key
  Shareholders’ Warranties remain outstanding and the Escrow Agent has not
  received any notice from the Purchaser stating that a Warranty Claim remains
  outstanding; 


	
 

	
 


	
 

	
a notice signed by or on behalf of an independent
  expert appointed under clause 18.4 of the Agreement so directing the Escrow
  Agent in substantially the same form as set out in Schedule 2; or


	
 

	
 


	
 

	
the terms of a certified copy of any written:


	
 

	
 


	
 

	
 

	
final judgment, order,
  declaration, award or finding of a New Zealand court; or


	
 

	
 

	
 


	
 

	
 

	
arbitral award entered as a
  judgment of the High Court of New Zealand; 


	
 

	
 

	
 


	
 

	
 

	
delivered to it by No 8
  Ventures, the Vendor or the Purchaser and accompanied by a certificate by the
  party delivering it that:


	
 

	
 

	
 


	
 

	
 

	
any appeal or application
  for review in respect of such judgment, order, declaration, award or finding
  has been determined in favour of that party; or


	
 

	
 

	
 


	
 

	
 

	
the period for filing of any
  appeal or application for review of such judgment, order, declaration, award
  or finding (and any period during which an application for extension of such
  period may be made) has expired without an appeal or application having been
  filed.


	
 

	
 

	
 


	
4.2

	
Directions to Escrow Agent


	
 

	
 


	
 

	
Written directions provided to the
  Escrow Agent by the parties must be signed by at least one authorised
  signatory of (1) the Purchaser and (2) the Vendor and No 8 Ventures.  The initial authorised signatories of the
  Purchaser shall be Ovadia Doron Arazi and/or Abraham Zeev Rami Hadar and the
  initial authorised signatory of the Vendor and No 8 Ventures shall be Mark
  Edwards.. 


	
 

	
 


	
5.

	
Escrow
  Agent’s Obligations


	



	
 

	
 


	
5.1

	
Compliance
  with Directions


	
 

	
 


	
 

	
The Escrow Agent shall
  promptly comply in relation to the Escrow Amount with any notice, direction
  or order given to the Escrow Agent in accordance with clause 4.





14








	
 

	
 

	
 

	
 


	
5.2

	
Payment by
  Direct Transfer


	
 

	
 


	
 

	
The Escrow Agent shall make
  any payment that is due to be made from the Escrow Amount by direct transfer of
  cleared funds into such bank account as the relevant party  may nominate by written notice to the
  Escrow Agent.


	
 

	
 


	
5.3

	
Reliance on
  Notice


	
 

	
 


	
 

	
The Escrow Agent shall be
  entitled to rely on the authenticity of any notice purporting to be signed by
  a party or parties in accordance with clause 4, including without limitation,
  any signatures on any notices received by facsimile.


	
 

	
 


	
5.4

	
No other Obligations


	
 

	
 

	
 

	
 


	
 

	
The Escrow Agent shall have
  no other obligations to any of the other parties in respect of the escrow
  except as set out in this deed.


	
 

	
 

	
 

	
 


	
6.

	
Escrow
  Agent Indemnity


	



	
 

	
 

	
 

	
 


	
 

	
The Purchaser and the Vendor
  and No 8 Ventures shall at all times jointly and in equal shares fully and
  effectively indemnify the Escrow Agent against all claims, damages or costs
  (excluding consequential loss or damage) suffered or incurred by the Escrow
  Agent (including the Escrow Agent’s legal fees on a solicitor and client
  basis) by reason of:


	
 

	
 

	
 

	
 


	
 

	
(a)

	
the Escrow Agent entering
  into this deed; or


	
 

	
 

	
 

	
 


	
 

	
(b)

	
the Escrow Amount being in
  the Escrow Agent’s possession, or


	
 

	
 

	
 

	
 


	
 

	
(c)

	
any action taken or
  proceedings initiated by the Escrow Agent at its sole discretion for the
  purpose of determining any dispute in relation to the Escrow Amount whether
  between the parties to this deed or involving any other persons claiming a
  right to the Escrow Amount,


	
 

	
 

	
 

	
 


	
 

	
(other than claims, damages
  or costs arising from the Escrow Agent’s wilful breach, gross negligence or
  fraud) and the Escrow Agent shall have a lien on the Escrow Amount for any
  such costs and shall not be obliged to undertake any action or initiate any
  defence to proceedings whatsoever until and unless they have received payment
  or satisfactory security in advance from the Purchaser and the Vendor for
  this indemnity.


	
 

	
 

	
 

	
 


	
7.

	
Announcements


	



	
 

	
 

	
 

	
 


	
 

	
Except as may be required by
  law or by the listing rules of any relevant stock exchange, no party shall
  make any announcements or disclosures as to the subject matter or any of the
  terms of this deed except in such form and manner, and at such time, as the
  Escrow Agent may consent to.


	
 

	
 

	
 

	
 


	
8.

	
Confidentiality


	



	
 

	
 

	
 

	
 


	
 

	
Each party shall at all
  times keep confidential, treat as privileged, and not directly or indirectly
  make or allow any disclosure or use to be made, of any provision of this deed
  or of any information relating to any provision, or the subject matter, of
  this deed, or any information directly or indirectly obtained from another
  party to this deed under or in connection with this agreement, except to the
  extent:


	
 

	
 

	
 

	
 


	
 

	
(a)

	
required by law or by the
  listing rules of any relevant stock exchange; or





15








	
 

	
 

	
 

	
 


	
 

	
(b)

	
that the parties otherwise
  agree in writing; or


	
 

	
 

	
 

	
 


	
 

	
(c)

	
necessary to obtain the
  benefit of, or to carry out obligations under, this deed; or


	
 

	
 

	
 

	
 


	
 

	
(d)

	
that the information is or
  becomes available in the public domain without breach by a party of its
  confidentiality obligations under this clause or at law.


	
 

	
 

	
 

	
 


	
9.

	
Notices


	



	
 

	
 

	
 

	
 


	
 

	
If any party wishes to give
  any other party any notice, claim, demand or other communication (“Notice”) under or in connection with this
  deed, the Notice shall be sufficiently given or served (but without prejudice
  to any other mode of service) if addressed to that party and delivered to the
  address of that party stated below.


	
 

	
 

	
 

	
 


	
 

	
The Vendor
  and No 8 Ventures:

  

  C/- PricewaterhouseCoopers

  113-119 The Terrace

  Wellington

  

  The Purchaser:

22 Hanager Street

  Neve Ne’eman Industrial Zone B

  Hod Hasharon 45240

  Israel 

  

  The Escrow Agent:

  

  Bell Gully

  PO Box 4199

  Level 22, Vero Centre

  Shortland Street

  Auckland


	
 

	
 

	
 

	
 


	
10.

	
Non-merger


	



	
 

	
 


	
 

	
The obligations, warranties,
  undertakings and indemnities undertaken or given under or pursuant to this
  deed, to the extent not already performed at Completion, shall not merge on
  Completion, or on the execution and delivery of any document pursuant to this
  deed, but shall remain enforceable to the fullest extent and notwithstanding
  any rule of law to the contrary.


	
 

	
 


	
11.

	
No waiver


	



	
 

	
 


	
 

	
No waiver of any breach, or
  failure to enforce any provision, of this deed at any time by any party shall
  in any way affect, limit or waive the right of such party thereafter to
  enforce and compel strict compliance with the provisions of this deed.


	
 

	
 


	
12.

	
Escrow
  Agent Lien


	



	
 

	
 


	
 

	
Nothing in this deed shall
  be construed to in any way affect any lien or claim which the Escrow Agent
  may have in respect of any moneys received by any of the parties including,
  without limitation, the Escrow Amount.





16








	
 

	
 


	
13.

	
Costs


	



	
 

	
 


	
 

	
Each party shall bear its
  own costs and expenses incurred in connection with the preparation and
  implementation of this deed.


	
 

	
 


	
14.

	
Severability


	



	
 

	
 


	
 

	
If at any time it is held by
  a competent authority that any provision of this deed is illegal or
  unenforceable for any reason (“Offending Provision”) and that finding is not
  overturned or reversed in any appeal process, the Offending Provision shall
  be deemed to be deleted from this deed, or shall be modified in accordance
  with the ruling of any competent authority, and thereafter this deed shall
  continue in full force and effect subject to such deletion or modification.


	
 

	
 


	
15.

	
Entire
  Agreement


	



	
 

	
 


	
15.1

	
This deed together with the
  relevant provisions of the Agreement constitutes the entire agreement between
  the parties with respect to the matters contemplated by this deed and
  supersedes all prior agreements.


	
 

	
 


	
15.2

	
This deed may only be
  amended by written agreement signed by all parties.


	
 

	
 


	
16.

	
Counterparts


	



	
 

	
 


	
 

	
This deed may be signed and
  delivered in counterparts (including by way of electronic transmission) which
  together shall constitute one deed binding on the parties, notwithstanding
  that all parties are not signatories to the original or same counterpart.


	
 

	
 


	
17.

	
Facsimile
  Signature


	



	
 

	
 


	
 

	
The parties may sign a
  counterpart copy of this deed by photocopying a facsimile of this deed and
  signing that photocopy.  The transmission
  by facsimile by a party of a signed counterpart copy of this deed shall be
  deemed proof of signature of the original and the signed facsimile so
  transmitted shall be deemed an original.


	
 

	
 


	
18.

	
Governing
  Law


	



	
 

	
 


	
 

	
This deed shall be governed
  by, and construed in accordance with, the laws of New Zealand.  The parties irrevocably submit to the
  exclusive jurisdiction of the courts of New Zealand in relation to all
  disputes arising out of or in connection with this deed.





17








Execution


Executed as a deed.


	
 

	
 

	
 


	
SIGNED by Allot

  Communications Limited by:

	
 

	
 


	
 

	
 

	
 


	
/s/ Rami Hadar


	
 

	
/s/ Doron Arazi



	
Chief Executive Officer

	
 

	
Chief Financial Officer


	
 

	
 

	
 


	


	
 

	



	
Print Name

	
 

	
Print Name


	
 

	
 

	
 


	
SIGNED by No
  8 Ventures

  Management Limited  by:

	
 

	
 


	
 

	
 

	
 


	
/s/ Mark Edwards


	
 

	
/s/ Kory Fagan



	
Director/Authorised Signatory

	
 

	
Director/Authorised Signatory


	
 

	
 

	
 


	
Mark Edwards


	
 

	
Kory Fagan



	
Print Name

	
 

	
Print Name


	
 

	
 

	
 


	
SIGNED by Esphion
  Limited  by:

	
 

	
 


	
 

	
 

	
 


	
/s/ Mark Edwards 
 Director/Authorised Signatory

	
 

	
Director/Authorised Signatory


	
 

	
 

	
 


	
Mark Edwards 
Print Name

	
 

	
Print Name 


	
 

	
 

	
 


	
SIGNED by Bell
  Gully as Escrow

  Agent in the presence of:

	
 

	
 


	

/s/ David McPherson

	
 

	
 


	


	


	



	
Authorised Signatory

	
Partner

	
 


	
 
David McPherson

	
 

	
 


	


	
 

	
 


	
Print Name

	
 

	
 





18








	
 


	
Schedule 1:
  Form of directions to Escrow Agent


	






[Date]


	
 

	
 


	
To:

	
Bell Gully


	
 

	
Level 22, Vero Centre


	
 

	
48 Shortland Street


	
 

	
Attention: Anna Buchly





Escrow Deed dated [                    ] 2008 between Esphion Limited, No 8 Ventures
Management Limited, Allot Communications Limited and Bell Gully (as Escrow
Agent) (Escrow Deed)


Pursuant to clause
4.1(a) of the Escrow Deed, we direct you to make the following payment from the
Escrow Amount.


Amount of payment:
[                    ]


Payee: [                    ]


Bank: [                    ]


Branch address: [                    ]


Bank account number: [                    ]



Thank you for your
assistance.  Please contact [name,
telephone number] with any questions about this transaction.


Yours faithfully


	
 

	
 

	
 


	


	
 

	



	
Name:

	
 

	
Name:


	
 

	
 

	
 


	
Title:

	
 

	
Title:


	
 

	
 

	
 


	
on behalf of Allot Communications Limited

	
 

	
on behalf of Esphion Limited and No 8 Ventures
  Management Limited





19








	
 


	
Schedule 2:
  Independent Expert – Form of Directions to Escrow Agent


	






[Date]


	
 

	
 


	
To:

	
Bell Gully
Level 22, Vero Centre


	
 

	
48 Shortland Street


	
 

	
Attention: Anna Buchly





Escrow Deed dated [                    ] 2008 between Esphion Limited, No 8 Ventures
Management Limited, Allot Communications Limited and Bell Gully (as Escrow
Agent) (Escrow Deed)


Pursuant to clause
4.1(b) of the Escrow Deed, we direct you to make the following payment from the
Escrow Amount.


Amount of payment:
[                    ]
  

Payee: [                    ]


Bank: [                    ]


Branch address: [                    ]


Bank account number: [                    ]



Attached is a copy
of our appointment as Independent Expert signed by both the Vendor and the
Purchaser in accordance with clause 18.4 of the Agreement.


Thank you for your
assistance.  Please contact [name,
telephone number] with any questions about this transaction.


Yours faithfully


	
 


	
 


	



	
Name:


	
 


	
Title:


	
 


	
on behalf of [Independent Expert]





20