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Exhibit 10.12
AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
Duly made and entered into as of the ____ day of
_________________1999
by and between
GEOTECH JOINT STOCK COMPANY
a Russian joint stock company
(the "COMPANY")
and
1 ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
2 ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
3 ▇▇. ▇▇▇▇▇▇▇ ▇. SULITSKY
4 ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇
(jointly and severally, the "SHAREHOLDERS")
and
PARADIGM GEOPHYSICAL (U.K.) LTD
an English company
(the "▇.▇.▇▇▇▇▇▇▇")
PARADIGM GEOPHYSICAL EUROPE LTD
an English company
and
PARADIGM GEOPHYSICAL SERVICES LTD
an English company
(Collectively: the "PURCHASER")
and
PARADIGM GEOPHYSICAL LTD.
an Israeli company
("PARADIGM")
WHEREAS, the Company, the Shareholders, the U.K. Company and Paradigm entered
into an Asset Purchase Agreement dated June 30, 1998 (the June Agreement"); and
WHEREAS, the parties wish to replace the June Agreement by this
Agreement and the Purchaser will herein replace the U.K. Company as
the Purchaser; and
WHEREAS, the Company is a joint-stock company formed and existing under the laws
of Russia, engaged in developing, marketing and supporting geophysical
technologies, algorithms and software for seismic data interpretation for oil
and gas exploration; and
WHEREAS, the Shareholders are the holders of the entire issued share capital of
the Company; and
WHEREAS, the Purchaser is a wholly-owned subsidiary of Paradigm; and
WHEREAS, the Company agrees to sell the Selected Company's Assets, defined
below, to the Purchaser, which agrees to purchase same from the Company and to
assume the Selected Liabilities, as defined below, from the Company, on the
terms and conditions set forth in this Agreement; and
WHEREAS, the Shareholders agree to sell the Selected Shareholders' Assets,
defined below, to the Purchaser, which agrees to purchase same from the
Shareholders, on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the foregoing premises and the
mutual representations, warranties and covenants herein contained, and for other
good and valuable consideration, the parties hereto agree, in this Amended and
Restated Agreement, as follows:
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1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set
out below:
1.1. "ACQUISITION" shall mean the purchase, sale, transfer, assignment,
conveyance and delivery of the Selected Company's Assets and/or the
Selected Shareholders' Assets, as the case may be, and the
assumption of the Selected Assumed Liabilities pursuant to the terms
of this Agreement.
1.2. "AFFILIATE" shall mean, with respect to any Person, any other Person
that, directly or indirectly, controls or is controlled by or is
under common control with such Person. As used in this definition of
"Affiliate" the term "control" and any derivatives thereof mean the
possession, directly or indirectly, of more than 50% of the voting
rights or the rights to appoint directors whether through ownership
of voting securities, by contract, or otherwise.
1.3. "AGREEMENT" shall mean this Amended and Restated Asset Purchase
Agreement and the preamble and all appendices hereto.
1.4. "APPROVED MAINTENANCE AGREEMENTS" means those maintenance agreements
of the Company listed in APPENDIX 1.4 hereto. The Company warrants
that it has not entered into any maintenance agreements.
"ASSUMED LIABILITIES" shall mean only (a) those liabilities of the
Company expressly set forth in APPENDIX 4.13 attached hereto ,.
1.6. 1.6. "CLOSING" shall mean the consummation of the Acquisition
pursuant to this Agreement.
1.7. "CLOSING DATE" shall mean the date of consummation of the
Acquisition pursuant to this Agreement pursuant to Section 12 below.
1.8. "CONFIDENTIAL INFORMATION" shall mean all trade secrets and other
confidential information concerning the Company including, without
limitation, information regarding the operations, future plans,
projected and historical sales, marketing, costs, production, growth
and distribution, any customer lists, customer information,
information relating to governmental relations, technical
information, Intellectual Property and information relating to the
products or services, whether patentable, or able to be copyrighted,
or not. Confidential Information shall not include information that
is publicly available at the time of disclosure or subsequently
became publicly available information in the possession of the
receiving party prior to its disclosure by the disclosing party or
information that came to the knowledge of the receiving party
otherwise than through a breach by the receiving party of
obligations of confidentiality (but only from the time that such
information becomes publicly available). Confidential Information
shall also not include any information relating to Mercury
International Technology Inc. ("MIT") and/or Japex Geoscience
Institute, Inc. ("JGI").
1.9. Reserved.
1.10. "EXCLUDED LIABILITIES" shall mean all liabilities of the Company
which are not Selected Assumed Liabilities, including without
limitation. (a) all liabilities of the Company of any kind,
character or description, whether accrued, absolute contingent or
otherwise and whether arising or asserted before or after the date
of this Agreement, (b) all liabilities of the Company arising after
June 30, 1998 which were not incurred in the ordinary course of
business, consistent with past practice, (c) any and all taxes,
charges, fees, levies and duties of whatever kind whatsoever imposed
by the Russian government or any foreign government or any
subdivision or agency of them and any and all interest, penalties or
additions attributable thereto - unless and to the extent that such
items are reflected as a liability in APPENDIX 4.13 or accrued after
June 30, 1998 in the ordinary course of business, consistent with
past practice, (d) any liability, undertaking and/or obligation of
any kind whatsoever,
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known or unknown, contingent or otherwise, to present or former
directors, shareholders or employees of the Company incurred or
relating to the period prior to the Closing Date, including, without
limitation, salary, pension payments, severance pay, holiday pay,
sick payments, shares or options or commission arrangements unless
such undertakings or liabilities are expressly included in the
employment agreement between the Purchaser and any such person,
irrespective of whether or not such liability/ies or undertaking/s
was/were incurred in the ordinary course of business, consistent
with past practice; (e) any damage and/or expense relating to
product liability claims for products delivered or services provided
prior to the Closing Date, unless such product liability claim is of
the sort customarily associated with the Company's line of products
and services in the normal course of its business; (f) any liability
for transactional and advisory costs, including, without limitation,
attorney's and accountants' fees and expenses incurred in connection
with the transactions contemplated herein; (g) any liability for
brokerage, commission or similar payment in connection with the
transactions contemplated by this Agreement, (h) any and all
liabilities with respect to criminal and civil fines, penalties and
punitive damages arising out of or relating to events occurring or
actions taken prior to the date hereof; (i) any maintenance
agreements or undertakings other than the Approved Maintenance
Agreements, and (j) any and all liabilities (including liabilities
for bodily injury, death and property damage) arising out of or
relating to products manufactured or services performed by the
Company and sold or shipped prior to the Closing Date, unless such
liability is of the sort customarily associated with the Company's
line of products and services in the normal course of its business,
(k) any Excluded Receivables Related Costs, (l) any and all
liabilities or obligations arising under any action, suit or
proceeding commenced on or prior to the Closing Date against or
affecting the Purchaser or any of its shareholders, directors,
officers, employees, agents or affiliates, relating to the Company's
business or the Assets; (m) any debts, liabilities and claims
relating any understandings, undertakings, contracts, agreements,
commitments, letters of understanding, arrangements with MIT and JGI
and (n) any and all payments, liabilities for loss, damages,
out-of-pocket fees, expenses arising out of or incidental to any of
the foregoing Excluded Liabilities, or any and all indebtedness,
liabilities or obligations of, or guaranties of the same made by the
Purchaser that have been incurred to pay or repay any of the
aforegoing Excluded Liabilities.
1.11. "EXCLUDED RECEIVABLES" shall mean all receivables of the Company of
whatever kind (which are not Selected Receivables) including those
listed in APPENDIX 1.11 hereto.
1.12. "EXCLUDED RECEIVABLES RELATED COSTS" shall mean all costs and
expenses of whatever kind whatsoever relating to the performance of
the undertakings of the Company underlying the Excluded Receivables,
including those costs listed in APPENDIX 1.12.
1.13. "GOODWILL" shall mean the goodwill of the Company and/or of the
Shareholders, as the case may be, including without limitation, in
the reputation of the Company, the relationship with customers, high
scientific standards and experience and the exclusive use of the
name of the Company.
1.14. "KEY EMPLOYEES" shall mean those employees of the Company listed in
APPENDIX 1.14 hereto.
1.15. "LIABILITY" or LIABILITIES" shall mean any liability of the Company
(whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, (whether
liquidated or unliquidated) including, without limitation, future
claims brought against the Company relating to any cause of action
arising prior to the Closing Date, but shall not include any
liabilities approved by the Purchaser in writing.
1.16. "LIBOR" shall mean the London Interbank Offered Rate for six month
deposits as quoted by the Wall Street Journal from time to time
accruing quarterly.
1.17. "LIENS" shall mean liens, charges, claims,
pledges, security interests, third party rights of the Company, and
encumbrances of any nature whatsoever.
1.18. "NET REVENUES" shall mean total revenues of the Representative
Offices, less the cost of hardware, third party commissions and
royalties. An indication of the calculation of the third party
expenses is set out in the business plan of the Representative
Offices attached hereto as APPENDIX 1.18.
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1.19. "PERSON" shall mean an individual, partnership, corporation, limited
liability company, joint venture, unincorporated organization
cooperative or a government entity or agency thereof
1.20. "PURCHASER'S BUSINESS" shall mean the development, sale and
distribution of geophysical hardware and software and the processing
of geophysical data on computer or electronic data processing
equipment, and consulting related to geophysical data acquisition
and processing in Russia and the C.I.S. or any other territories in
which the Purchaser is active.
1.21. "REPRESENTATIVE OFFICES" shall mean the two representative offices
established by the two Purchaser companies in Russia .
1.22. "SELECTED COMPANY'S ASSETS" has the meaning set forth in Section
2.1.1 below.
1.23. "SELECTED COMPANY'S KNOW HOW" shall mean all technology and know how
owned by or of the Company at the Closing Date regardless of its
state of development, relating to the Company's business and/or the
Company, including without limitation, software, source codes,
object codes, inventions, methods, processes, techniques, know-how,
data and other information relating to or used for the Company's
business or for any other purpose and all intellectual property
rights associated with any of the foregoing, including, without
limitation, the Intellectual Property as well as all designs, plans,
diagrams, specifications, documents or other media containing or
embodying any of the aforegoing. However, the Company's Know-How
shall not include any understandings, undertakings, contracts,
agreements, commitments and letters of understanding and other
arrangements with MIT and JGI relating to technology and know-how of
the Company, or any products, know-how, software, source indexes,
object codes, inventions, methods, processes and techniques
developed by, for or together with MIT and/or JGI.
1.24. "SELECTED RECEIVABLES" shall mean those accounts receivable of the
Company listed in APPENDIX 1.24 hereto.
1.25. "SELECTED SHAREHOLDERS' ASSETS" has the meaning set forth in Section
2.1.2 below.
1.26. "SHAREHOLDERS' KNOW HOW" shall mean all technology and know how
owned by or of the Shareholders at the Closing Date regardless of
its state of development, relating to the Company's business and/or
the Company, and its clients and services, including without
limitation, software, source codes, object codes, inventions,
methods, processes, techniques, know-how, data and other information
relating to or used for the Company's business or for any other
purpose and all intellectual property rights associated with any of
the foregoing, including, without limitation, the Intellectual
Property as well as all designs, plans, diagrams, specifications,
documents or other media containing or embodying any of the
aforegoing, or any products, know-how, software, source codes,
object codes, inventions, methods, processes and techniques
developed by, for or together with, MIT and/or JGI.
1.27. "THIRD PARTY PAYMENTS" shall have the meaning specified in Section
10.2 below.
2. SALE AND PURCHASE OF ASSETS
2.1. PURCHASE AND SALE OF ASSETS. Upon the terms and subject to the
conditions set forth in this Agreement:
2.1.1 PURCHASE AND SALE OF ASSETS. The Purchaser agrees to purchase,
accept, and acquire from the Company, and the Company agrees
to sell, transfer, assign, convey and deliver to the Purchaser
at the Closing, all right, title, and interest of the Company
in and to the Selected Company's Assets (as defined below)
free and clear of all Liens. The Company's Assets shall be
divided between the Purchaser companies as determined by the
Purchaser companies at the Closing. The "Selected Company's
Assets" shall mean all right, title and/or interest owned or
held by the Company in the following:
2.1.1.1. AGREEMENTS. All rights and benefits accruing to the
Company pursuant to the contracts, agreements, and
other commitments and
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arrangements with any person or entity to which the
Company is a party as listed in APPENDIX 2.1.1.1
hereto (including all geophysical service contracts),
but excluding any contracts, agreements and other
commitments and arrangements relating to the
Company's Know-How and to any agreements, commitments
and letters of understanding and other arrangements
with MIT and/or JGI.
2.1.1.2. EQUIPMENT. All manufacturing, production, maintenance
and testing machinery, equipment and devices
including computers, computer hardware, supplies,
furniture, fixtures, vehicles and other tangible
property (the "Equipment"), including the Company's
rights under all related warranties, all as listed in
APPENDIX 2.1.1.2 hereto.
2.1.1.3. LEASES. The entire leasehold or rental interest,
rights and benefits accruing to the Company under
all leases of any property, including: (i) buildings,
and improvements located thereon, (ii) equipment,
including hardware and associated telecommunication
equipment, (iii) office furnishings and fixtures (iv)
vehicles and other tangible property, all as listed
in APPENDIX 2.1.1.3 hereto.
2.1.1.4. BUSINESS RECORDS. All business and marketing records
of the Company, including accounting and operating
records, asset ledgers, inventory records, budgets,
personnel records, payroll records, customer lists,
consagreements, supplier lists, information and data
respecting leased or owned equipment, files,
correspondence and mailing lists, advertising
materials and brochures, and other business records,
and including the Confidential Information, in so far
as such records relate to Selected Company's Assets,
Selected Assumed Liabilities, Selected Receivables
and Selected Receivable Related Costs.
2.1.1.5. AUTHORIZATIONS. All approvals, authorizations,
certifications, consents, variance, permissions,
licenses, and permits to or from, or filings,
notices, or recordings to or with, governmental
authorities and or bodies relating to the Selected
Company's Assets, and the activities of the Company
including as listed in APPENDIX 2.1.1.5 hereto (the
"Authorizations"), to the extent that such
Authorizations are capable of transfer or assignment
to the Representative Office.
2.1.1.6. SELECTED ACCOUNTS RECEIVABLE. All the Selected
Receivables
2.1.1.7. CLAIMS. All claims, warranties, rights, causes of
action and other similar business rights
(collectively "Claims") relating to the business of
the Company, or which the Company may have against
any Person, including rights to recoveries for
damages or defective goods, and refunds, insurance
claims, and/or actions in so far as such Claims
relate to Selected Company's Assets and Selected
Receivables
2.1.2. SELECTED SHAREHOLDERS' ASSETS. The Purchaser agrees to
purchase, accept, and acquire from the Shareholders, and the
Shareholders agree to sell, transfer, assign, convey and
deliver to the Purchaser at the Closing, all right, title,
and interest of the Shareholders in and to the Shareholders'
Assets (as defined below) as determined by the Purchaser
companies at the Closing. The "Selected Shareholders' Assets"
shall mean all those, real, intellectual, personal, and
mixed, tangible or intangible assets and properties of the
Shareholders or owned, held by or due to the Shareholders in
any manner whatsoever relating to seismic data analysis in
Russia and the CIS Without in any way limiting the generality
of the foregoing, the Selected Shareholders' Assets shall
include, but not be limited to, all right, title and/or
interest owned or held by the shareholders in the following:
2.1.2.1. The Shareholders' Know-How.
2.1.2.2. The personal relationships of the Shareholders with
the clients in the
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oil and gas industry and the knowledge and ability
of the Shareholder with regard to geophysical
technologies, algorithms and software for seismic
data interpretation for oil and gas exploration in
Russia and the CIS.
2.1.2.3. All or any interest held or owned by the
Shareholders in work in progress or the development
of intangible assets owned by them for oil and gas
exploration in Russia and the CIS.
2.1.2.4. All or any interest held or owned by the
Shareholders in any goodwill appertaining thereto.
It is explicitly agreed that Selected Shareholder Assets do
not include any assets, whether tangible or intangible,
relating to MIT and JGI.
2.2. INTENT OF THE PARTIES. Although the Selected Company's Assets and
the Selected Shareholders' Assets identified in Sections 2.1.1 and
2.1.2. hereof are intended to be complete, to the extent that all
rights and/or assets of the Company or of the Shareholders are not
properly itemized or do not appear in this Agreement (including any
of its Schedules), then, unless this Agreement otherwise provides
directly for the Purchaser to provide for or obtain such rights or
assets in a different manner, the general language of Section 2.1
shall govern and such rights and assets shall nonetheless be
transferred to the Purchaser (or the Representative Office, if the
Purchaser so designates) at the Closing.
2.3. INSTRUMENTS OF CONVEYANCE AND TRANSFER OF BOOKS AND RECORDS. At the
Closing as provided in Section 11 hereof, and after the Closing, if
necessary, the Company shall deliver to the Purchaser such deeds,
bills of sale, endorsements, assignments and other instruments of
sale, conveyance, transfer and assignment, reasonably satisfactory
in form and substance to the Purchaser and its counsel, as may be
reasonably required by the Purchaser, in order to convey to the
Purchaser good and marketable title to the Selected Company's Assets
and the Selected Shareholders' Assets, free and clear of all Liens.
The Company and the Shareholders, jointly and severally, shall pay
all sales, capital, franchise, income, use, transfer, or other
taxes, payable by a seller by reason of the sale hereunder. The
Company and the Shareholders shall also provide the Purchaser with
irrevocable Powers of Attorney enabling the Purchaser to cede,
assign, transfer, convey or register to or in favor of the
Purchaser, all the Selected Company's Assets and the Selected
Shareholders' Assets.
3. ASSUMPTION OF SELECTED LIABILITIES
Upon the terms and subject to the conditions set forth in this Agreement,
the Purchaser agrees, at the Closing, to assume all the Assumed
Liabilities.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS AND THE COMPANY
The Shareholders and the Company hereby, as of the date hereof and as of
the Closing Date, jointly and severally, represent and warrant to the
Purchaser and Paradigm, and acknowledge that the Purchaser and Paradigm
are entering into this Agreement in reliance on the said warranties, as
follows:
4.1. STATUS OF THE COMPANY. The Company is duly incorporated and validly
existing under the laws of Russia and has all the corporate powers
and governmental licenses, authorizations, consents and approvals
required to carry on its business as is now conducted, and is in
good standing with and before all governmental authorities.
4.2. VALIDITY OF AGREEMENT. This Agreement and all documents and
instruments referred to or contemplated by this Agreement, have been
duly, authorized, executed and delivered by the Company, and all
documents and instruments referred to or contemplated by this
Agreement will be the valid and legally binding obligation of the
Company, enforceable in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors' rights generally.
Neither the execution and delivery of this Agreement by the Company
and the Shareholders, nor the compliance and performance by the
Company with the terms and provisions hereof, including the
execution and delivery of all documents, and instruments referred to
or
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contemplated by this Agreement will (a) conflict with or result in a
breach by the Shareholders or the Company of any of the terms and
provisions of (i) any law, rule, ordinance, regulation, permit,
order, judgment or decree of any court, arbitrator or governmental
instrumentality or (ii) any lien, lease, license, agreement, or
instrument to which the Shareholders or the Company are a party or
by which they or their properties may be bound, including any
agreement or undertaking towards customers of the Company or towards
MIT Inc. and JIG, Inc. or (b) create in any Person the right to
terminate, accelerate, modify, cancel or otherwise cause a material
adverse change with respect to any such lien, lease, agreement,
contract, instrument or assets or (c) result in the creation of any
lien, charge, or other encumbrance on any property right or asset of
the Company.
4.3. OWNERSHIP OF THE COMPANY. All of the issued shares of the Company
are owned by the Shareholders and duly authorized, validly issued,
fully paid and non-assessable and were not issued and are not owned
or held in violation of any preemptive or other rights of any person
to acquire securities of the Company. There are no outstanding
options, convertible securities, rights (preemptive, conversion or
other warrants, calls or agreements relating to the Company's
capital stock. The Company is not a party to any option, warrant,
purchase right or other contract or commitment that could require
the Company to sell, transfer, or otherwise dispose of any capital
stock of the Company.
4.4. SUBSIDIARIES. The Company has no Subsidiaries and does not hold
securities or investments in any company, organization (whether
incorporated or not) or any other entity.
4.5. BOARD OF DIRECTORS. The present members of the Board of Directors of
the Company are as set forth in APPENDIX 4.5.
4.6. COMPLIANCE. Except as specified in APPENDIX 4.6 hereto there are no
defaults by the Company, or another party to any contract,
agreement, license or similar document to which the Company is a
party. The Company is in compliance in all material respects with
all applicable laws, ordinances, permits, rules, regulations,
judgments, orders, decrees, rulings and governmental requirements.
The Company has not incurred any indebtedness for borrowed money as
to which a creditor has a claim against the Assets of the Company.
4.7. LITIGATION. There is no action, suit, arbitration, litigation
proceeding, investigation, claim or inquiry (formal or informal)
pending or threatened against the Shareholders or the Company, and
to the best knowledge of the Company and the Shareholders there are
no acts or matters which have occurred or may occur, to give rise to
the foregoing which (a) questions the validity of the Agreement or
the transactions contemplated hereby, (b) if adversely determined
would, materially and adversely affect the Company's performance
hereof or the Company's business, operations or assets, or (c) may
subject Paradigm and/or the Purchaser to any liability after the
Closing Date.
4.8. TITLE TO PROPERTY AND ASSETS. The Equipment is owned by the Company
free and clear of all Liens. The Equipment will be transferred only
with software for which the Company has purchased a fully licensed
copy and the Purchaser will have the right to utilize any residual
support for that software to be provided by the software producer.
With respect to the property and assets that are leased, the Company
is in compliance with all material provisions of such leases and
holds a valid leasehold interest free of any liens, claims, loans or
encumbrances. All properties and assets owned, leased or licensed by
the Company are free of material defects, maintained in good and
usable operating condition and are suitable for the purposes for
which they are used.
4.9. ACCOUNTS RECEIVABLE. The Selected Receivables are and will be good
and collectable in a timely manner and in accordance with their
terms, in each case at the aggregate amounts thereof specified in
APPENDIX 1.24 without right of recourse, defense, deduction, return
of goods, counterclaim, offset, or set-off on the part of the
obligor. The inability and/or inaction of the Company or the
Shareholders in collecting the excluded Receivables will not subject
the Purchaser, Paradigm or the Representative Office to any claim
from any third party.
4.10. INTELLECTUAL PROPERTY. There are no communications alleging that the
Company has violated or would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets
or other proprietary rights of any other person or entity. Neither
the
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Shareholders nor any director, officer, or employee of the Company,
or any third party possesses any Intellectual Property which relates
to the business of the Company except for the Selected Shareholders
Assets. The Company, has not infringed or received notice of
infringement in respect of asserted intellectual property of others.
There is no infringement by others of intellectual property of the
Company.
4.11. TAXES. The Company has no liability to any domestic or foreign
taxing authority which would have the effect of restricting or
delaying the performance by the Company of all its obligations
pursuant to this Agreement.
4.12. AGREEMENTS. APPENDIX 4.12 attached hereto contains a complete
schedule of all outstanding contractual undertakings and quotations
of the Company and all other contracts, leases, licenses, debt
instruments, loan agreements, partnership or joint venture
agreements, confidentiality and non-competition agreements, lease
agreements, license agreements, merchandise commitments, and all
other material obligations of the Company to date relating to the
Selected Company's Assets or Selected Assumed Liabilities. With
respect to each such agreement: (a) the agreement is legal, valid,
binding, enforceable and in full force and effect without any
material default thereunder, (b) the agreement will continue to be
legal, valid, binding, enforceable and in full force and effect on
identical terms following the consummation of the transactions
contemplated hereby, except as disclosed in APPENDIX 4.12, (c) no
party is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default, or
permit termination, modification or acceleration under the agreement
except as set forth in APPENDIX 4.12, and (d) no party has
repudiated any provision of the agreement. There are no outstanding
powers of attorney executed on behalf of the Company.
4.13. Except as set forth in APPENDIX 4.13 attached hereto, , there are no
fixed or contingent liabilities, asserted or unasserted (and there
is no basis for any present or future action, suit, proceeding,
investigation, charge, claim, or demand giving rise to any such
liability), including without limitation such liabilities arising
out of any injury to individuals or property as a result of the
ownership, possession or use of any product manufactured, sold,
leased or delivered by the Company with respect to any claim for the
breach of any express or implied product warranty on any other
similar claim with respect to any of such products.
4.14. INTERIM OPERATIONS. Except as set forth in APPENDIX 4.14, since
December 31, 1997 (a) there have not been any material adverse
changes in the financial condition, material assets or results of
operations of the Company, (b) there has not been any increase in
the payment of compensation to any director or employee of the
Company.
4.15. BANKRUPTCY. Neither the Company nor the Shareholders have admitted
their inability to pay their debts generally as they become due, or
filed or consented to the filing of a petition in bankruptcy, nor
consented to the appointment of a receiver for itself or for any
substantial part of its property, or made any determination in
respect of the distribution thereof. No notice has been received of
the intent of any entity to request dissolution of the assets of the
Shareholders or the Company and, to the knowledge of the Company, no
event or condition exists which could give rise to any of such
events.
4.16. EMPLOYEES; LABOR CONTRACTS.
4.16.1. APPENDIX 4.16.1 contains a full list of all the employees of
the Company and an accurate statement of their current
salaries and all benefits. The Company is currently not
under any obligation to increase any such remuneration or
alter any other terms except other than in the ordinary
course of business.
4.16.2. There is no restriction on the hiring of certain employees
of the Company by the Representative Offices at the Closing
Date and after the Closing Date neither the Purchaser nor
the Representative Offices will have any obligations towards
such employees, except as specifically set forth in the
employment agreements between the Representative Offices and
each such employee entered into pursuant to Section 11.1.6
below.
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4.16.3 Upon hiring of certain of the employees of the Company by
the Representative Offices, neither the Purchaser nor the
Representative Offices will have any obligations or
liabilities towards such employees, including for part
salaries, pensions, holiday, sick pay or royalties, except
as specifically set forth in the employment agreements
between the Representative Offices and each such employee
pursuant to Section 11.1.6 below. The Company and the
Shareholders warrant that they have made all statutory and
contractual and other agreed payments due to the Company's
employees that will be hired by the Purchaser, and that the
Company and/or the Shareholders will be solely responsible
for any claims that may be made by, connected to or
involving those employees, and for any claims that may be
existing at date of hiring or that may arise in the future
if incurred prior to such date, and for which the Company
and the Shareholders hereby, jointly and severally,
indemnify the Purchaser.
4.16.4 Upon hiring of certain of the employees of the Company, the
Representative Offices agrees that those employees hired
will be entitled to ten working days paid vacation. This
vacation will be taken at a time to be agreed by each of the
hired employees of the Company with the Representative
Offices .
4.16.5 The Company and the Shareholders acknowledge that neither
the Purchaser nor the Representative Office undertake to
employ any of the Company's employees but that all employees
of the Company will have the right to become employees of
the Representative Office as of the Closing Date, if, at the
Representative Office's discretion, it wishes to employ any
or all of such employees.
4.17. BROKER'S OR FINDER'S FEE. No person acting on behalf of the Seller
or the Shareholders is or will be entitled to any broker's or
finder's fee or any other commission or similar fee, directly or
indirectly, from the Purchaser or Paradigm in connection with any of
the transactions contemplated in this Agreement.
4.18. DISCLOSURE. Neither this Agreement nor any statements or
certificates made or delivered in connection herewith contain any
untrue statements of a material fact or omit to state a material
fact necessary to make the statements herein or therein not
misleading. There is no fact material to the Selected Company's
Assets, Selected Assumed Liabilities and Selected Receivables that
has not been disclosed to the Purchaser and set forth in this
Agreement, including the exhibits hereto, or otherwise disclosed in
writing to the Purchaser and Paradigm.
4.19. MATERIALITY. Each reference to any material adverse effect upon the
financial condition, operation, or prospects of the Company or the
Assets, or any other reference to a material item or circumstance,
shall be construed to include any act, omission, event, or
circumstances that would entail loss, liability, damage, or expense
to the Purchaser or Paradigm (with respect to the rights and
benefits expected by the Purchaser to be obtained) exceeding $10,000
in any single instance, whether under one or more representations,
warranties, covenants, or agreements contained herein.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser and Paradigm hereby represent and warrant , as of the date
hereof and as of the Closing, to the Company and the Shareholders and
acknowledge that the Company and the Shareholders are entering into this
Agreement in reliance on said warranties as follows:
5.1. ORGANIZATION. Each of the Purchaser and Paradigm is a corporation
duly organized, validly existing and in good standing under the laws
of England and Israel respectively, with corporate power to carry on
its business as now being conducted.
5.2. POWER AND AUTHORITY; ENFORCEABILITY. Each of the Purchaser and
Paradigm has all requisite corporate power to enter into this
Agreement and to perform its obligations hereunder. This Agreement
has been duly authorized, executed and delivered on behalf of the
Purchaser and Paradigm, assuming due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding
obligation of the Purchaser and Paradigm, enforceable in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors' rights
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generally or by the availability of equitable remedies.
5.3. BROKER'S OR FINDER'S FEE. No person acting on behalf of the
Purchaser or Paradigm is or will be entitled to any broker's or
finder's fee or any other commission or similar fee, directly or
indirectly, from the Company in connection with any of the
transactions contemplated hereby.
6. CONSIDERATION
6.1 In full and final consideration for the performance by the Company
and the Shareholders of their obligations pursuant to this
Agreement, including the sale, transfer and assignment of the
Selected Company's Assets and the Shareholders' Assets to the
Purchaser, the Purchaser or Paradigm will pay to the Company a
purchase consideration of US $175,000 (one hundred and seventy five
thousand US dollars) and to the Shareholders, in equal shares, an
aggregate purchase consideration of up to US $1,625,000 (one million
six hundred and twenty five thousand US dollars) (subject to
adjustment as set out in this Section 6) as follows :
6.1.1 LUMP SUM PAYMENTS: At the Closing, the amount of US$100,000
(one hundred thousand US dollars) will be paid by the
Purchaser to the Company. Furthermore, an aggregate amount of
US $150,000 (one hundred and fifty thousand US dollars) will
be paid by the Purchaser to the Shareholders the amount
payable to the Shareholders to be divided between the
Shareholders in equal shares. On each of April 30th, 1999 and
July 31, 1999, the Purchaser shall also pay to Company $
37,500( thirty seven thousand five hundred US dollars) and to
the Shareholders $ 37,500( thirty seven thousand five hundred
US dollars) , to be divided between the Shareholders in equal
shares.
6.1.2 ADDITIONAL PAYMENTS :
6.1.2.1 The Purchaser shall pay to the Shareholders, to be
divided between the Shareholders in equal shares, the
aggregate amount of US $400,000 (four hundred thousand
US dollars) (less any Third Party Payments and less
any other amounts for which the Shareholders or the
Company may be or become liable to the Purchaser in
terms of this Agreement) on condition that the Net
Revenues (as defined below) of the Representative
Office for the period October, 1, 1998 to June 30,
1999 equals at least US $1,600,000. In the event that
such Net Revenues target is less than US $1,600,000
but is equal to or greater than US $1,400,000, the
payment will be reduced to US $250,000 (two hundred
and fifty thousand US dollars), which will be paid as
follows: US $150,000 within fourteen (14) days after
calculation of the Net Revenues for the relevant
period and US $100,000 twelve (12) months after such
date. However, in the event that such Net Revenues
target is less than US $1,400,000, the total payment
of US $250,000 will be reduced to US $100,000 (one
hundred thousand US dollars), which will be paid in
one payment within fourteen (14) days after
calculation of the Net Revenues for the relevant
period.
6.1.2.2 The Purchaser shall pay to the Shareholders, to be
divided between the Shareholders in equal shares, an
additional aggregate payment of up to an additional
$200,000 according to the Net Revenues of the
Representative Office for the period October, 1, 1998
to June 30, 1999 as follows:
NET REVENUES (US$) PAYMENT (US$)
------------------ -------------
Less than 1,600,000 No payment
1,600,001 - 1,750,000 50,000
1,750,001 - 1,800,000 60,000
1,800,001 - 1,850,000 70,000
1,850,001 - 1,900,000 80,000
1,900,001 - 1,950,000 90,000
1,950,001 - 2,050,000 100,000
2,050,001 - ,2,150,000 150,000
Greater than 2,150,001 200,000
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In the event that none of these Net Revenues targets is
achieved, the Purchaser will not be obliged to make any
additional payments to the Company and/or to the
Shareholders.
6.1.2.3 In the event that a Net Revenues target of at least
$1,650,000 is achieved for the period October 1, 1998
to June 30,, 1999, the Purchaser shall pay the
Shareholders, to be divided between the Shareholders
in equal shares, an additional aggregate payment of up
to US $400,000, according to the Net Revenues of the
Representative Office for the period July 1, 1999 to
March 31, 2000, as follows:
NET REVENUES (US$) PAYMENT (US$)
------------------ -------------
Less than 1,800,000 No payment
1,800,001 - 2,000,000 75,000
2,000,001 - 2,200,000 150,000
2,200,001 - 2,400,000 225,000
2,400,001 - 2,500,000 300,000
Greater than 2,500,001 400,000
In the event that the Net Revenues are between
$1,400,000 and $1,650,000 for the period October 1,
1998 to June 30 , 1999,the amount by which the Net
Revenues fall short of $1,650,000 for this period will
be added to the Net Revenue target for the period July
1, 1999 to March 31, 2000 in order to determine
eligibility for the additional aggregate payment in
this Section 6.1.2.3.
6.1.2.4 The Purchaser shall pay the Shareholders, to be
divided between the Shareholders in equal shares an
additional aggregate payment of up to an additional
$400,000 according to the Net Revenues of the
Representative Office for the period April 1, 2000 to
March 31, 2001 as follows:
NET REVENUES (US$) PAYMENT (US$)
------------------ -------------
Less than 2,500,000 No payment
2,500,001 - 2,700,000 100,000
2,700,001 - 2,900,000 150,000
2,900,001 - 3,100,000 200,000
3,100,001 - 3,300,000 250,000
3,300,001 - 3,500,000 300,000
3,500,001 - 3,800,000 350,000
Greater than 3,800,001 400,000
6.1.2.5 The payments in 6.1.2.2, 6.1.2.3 and 6.1.2. above will
be made within fourteen (14) days after calculation of
the Net Revenues for the relevant period if the Net
Revenues target for that period is achieved. It is
clarified that if the Net Revenue Targets target for
the period October 1, 1998 to June 30, 1999, as
detailed in 6.1.2.3 above is not achieved, the
Purchaser will not make any additional payments to the
Company and/or the Shareholders even if the Net
Revenue targets for the period April 1, 2000 to March
31, 2001 is achieved.
6.1.2.6 The Company and the Shareholders acknowledge that, as
the primary asset of the Company is the goodwill
established by the Company and the Shareholders in
Russia and other territories in the CIS, largely due
to the efforts of the Shareholders, it is of the
utmost importance that the Shareholders will continue
to contribute to the Purchaser's Business and to
preserve its goodwill. Consequently, it is agreed that
the Purchaser will have the right to withhold payments
due according to Sections 2.2 and
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6.1.2., if, at any payment date, the Company or any of
the Shareholders are in breach of the provisions of
Section 9 below or if any of the Shareholders are not
in material compliance with their respective
employment agreements with the Purchaser, except to
the extent that any non-compliance is due to forces
beyond the control of the parties, such as illness,
death or act of God.
6.1.2.7 In the event that the amount of the Excluded
Receivables plus the Excluded Receivables Related
exceeds $200,000 (two hundred thousand US dollars)
such amounts will be deducted from the payments due to
the Shareholders pursuant to Sections 6.1.2.2 and
6.1.2.3 above. Any Excluded Receivables received by
the Company will belong to the Company and will not
constitute a Company Asset assumed by the Purchaser.
6.2 GROSS PAYMENTS. All payments by the Purchaser to the Company and/or
the Shareholders are in gross terms and if the Purchaser is required
to deduct at source or to pay any taxes (including VAT), levies or
fees in Russia on or in respect of such payments, any amounts of any
taxes, levies or fees paid by the Purchaser will be deducted from
the consideration.
6.3 THIRD PARTY PAYMENTS:
Any Third Party Payments or any other amount which under the terms
of this Agreement should have been made by the Company or the
Shareholders but which Paradigm and/or the Purchaser are forced by
circumstances to make will be deducted from the next payment due
pursuant to Section 6.1.2 above. In the event that the amount of the
next payment due is not sufficient to cover the Third Party Payments
or any other amounts made by Paradigm and/or by the Purchaser, such
amount will be deducted from subsequent payments. In the event that
the payments due are insufficient to cover the Third Party Payments,
the indemnification provisions of Section 10 will apply. In the
event that a Third Party Payment has been claimed but not paid by
Paradigm or the Purchaser, Paradigm or the Purchaser may withhold a
portion of the payment due the Company up to, but not in excess of,
the disputed or unpaid amount claimed by or owed to the third party,
until the claim is resolved.
6.4 PAYMENT IN SHARES:
Paradigm shall, at its sole and absolute option, make any or all of
the payments pursuant to Section 6.1.2, in duly issued and fully
paid-up Ordinary shares of Paradigm, provided that no more than
thirty five percent (35%) of the aggregate amount of such payments
shall be made in shares. Paradigm shall give notice to the Company
and the Shareholders of its election at least thirty (30) days
before each payment date.
Paradigm's Ordinary Shares, to be delivered pursuant to this Section
6.4, shall be valued at the market price per share on the date of
delivery, which shall be deemed to be the average of the mean
between the high bid and low asked quotations per share in the
over-the-counter market as reported by the National Quotation
Bureau, Inc. on the ten trading days immediately preceding the third
trading day prior to the date of delivery.
6.5 LATE PAYMENT.
In the event that Paradigm or the Purchaser fails to make any
payment on the due date, the unpaid amount shall accrue annual
interest of LIBOR plus 3%, commencing fourteen (14) days following
the due date of payment.
6.6 METHOD OF PAYMENT
All payments according to Sections 6.1.1 and 6.1.2 will be made to
the Company or a company designated by it, by wire transfer of
immediately available funds to the bank account(s) specified in
APPENDIX 6.6 hereto, unless the Purchaser received a written notice
signed by the Company or all the Shareholders, as the case may be,
specifying otherwise, at least ten (10) days before the scheduled
payment date.
7. LEASE OF PREMISES
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The Company undertakes, on the Closing Date, at the Purchaser's request,
to enter into an agreement of lease or sub-lease in favor of the Purchaser
in respect of the premises where the Company's business is being carried
on, at ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, for a period of 6 (six)
months from the Closing Date and at a rental equivalent to the rental
being paid by the Company to VNII Geofizika. The Purchaser shall not be
responsible for any costs involved in any termination of the Company's
lease with VNII Geofizika, or for any costs arising out of any lease or
tenancy by the Company of the premises for any period previous to the
Closing Date.
8. COVENANTS OF PARTIES.
The parties hereby covenant and agree as follows with respect to the
period between the execution of this Agreement and the Closing:
8.1 GENERAL. Each of the parties will use his, or its best efforts to
take all action and to do all things necessary, proper or advisable
in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not
waiver, of the Closing conditions set forth in Section 10 below).
8.2 NOTICES AND CONSENTS. The Company will provide any notices to third
parties and will obtain any third party consents in connection with
the transactions contemplated in this Agreement. The Company will
provide any notices to and will make any filings with, and use its
best efforts to obtain any authorizations, consents and approvals of
governments and governmental agencies in connection with the matters
referred to in this Agreement.
8.3 FULL ACCESS SUPERVISOR
8.3.1 The Company will permit the Purchaser and Paradigm and their
authorized employees, agents, accountants, legal counsel and
representatives to have full access to the books, records,
facilities, properties, customers, personnel and officers of
the Company.
8.3.2 The Purchaser shall be permitted to nominate a supervisor who
will have the right to supervise the activities of the Company
and to ensure compliance with Section 8.4 below. The Company
and the Shareholders will provide the supervisor with any
assistance and documents requested by the supervisor.
8.4 OPERATION OF BUSINESS.
8.4.1 Prior to the Closing, the Company will not take and the
shareholders will not cause the Company to take any of the
following actions, without the prior written consent of the
Purchaser:
1) increase the rate or form of compensation payable to any
employee or increase any employees benefits, except
increases in compensation and benefit changes made in
the ordinary course of business in accordance with
established policies and past practice;
2) sell, dispose of, license, mortgage or encumber any
properties, rights or assets, relating to the Selected
Company's Assets except in the ordinary course of
business consistent with past practice.
3) create, incur, assume, guarantee or otherwise become
liable or obligated with respect to any indebtedness, or
make any loan or advance to, or investment in, any
person or entity, except in each case in the ordinary
course of business or, even if in the ordinary course of
business, involving a liability in excess of US$5,000 or
US$20,000 in the aggregate for the period prior to the
Closing;
4) issue any securities relating to the capital stock of
the Company or grant or enter into any agreement to
grant any options, convertibility rights, other rights,
warrants, calls or agreements relating to the capital
stock of the Company or redeem, repurchase or otherwise
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acquire any of the capital stock of the Company.
5) consolidate or merge with any other person, entity or
business.
8.4.2 CONTINUED OPERATION OF BUSINESS. Prior to the Closing, the
Company will, to the extent required for the continued
operation of the business of the Company, use commercially
reasonable efforts to, (a) keep available the services of the
employees of the Company and (b) preserve the present
relationships of the Company with persons having significant
business relations therewith, including licensers, suppliers
and customers.
8.4.3 PRESS RELEASES. Neither the Shareholders nor the Company shall
issue or cause publication of any press release or other
announcement or public communication with respect to this
Agreement or the transactions contemplated herein without the
consent of the other, which consent shall not be unreasonably
withheld; provided that nothing herein shall prohibit either
party from issuing or causing publication of any such press
release, or public communication to the extent that such
action is required by law.
8.4.4 PENDING OR THREATENED LITIGATION; UNDISCLOSED DISCOVERIES.
Between the date of this Agreement and the Closing Date, the
Company and the Purchaser shall each inform the other promptly
upon receiving knowledge of any pending or threatened
litigation which could reasonably be anticipated to prohibit
or restrain the consummation of the transactions contemplated
herein including those involving the Company.
9. COVENANTS
9.1 GENERAL. If at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement,
each of the parties will take such further action, including the
execution and delivery of such further instruments and documents as
the other party reasonably may request, all at the sole cost and
expense of the requesting party. The Sellers acknowledge and agree
that from and after the Closing the Purchaser will be entitled to
possession of all documents, books, records, including tax records,
agreements and financial data of any sort relating to the Selected
Company's Assets, Selected Assumed Liabilities, and the Selected
Receivables.
9.2 COVENANT NOT TO COMPETE. For a period of thirty (30) months
following the Closing Date, the Company and each Shareholder shall
not compete or engage directly or indirectly in the Purchaser's
Business as defined by this Agreement, within the territory of
Russia, the CIS, China, Mongolia and India.
9.3 NO SOLICITATION OF EMPLOYEES. For a period of thirty-six (36) months
following the Closing Date, the Shareholders shall not directly or
indirectly (a) solicit, entice, persuade or induce any current or
future employee of the Company or of the Purchaser or any client
then under contract with the Purchaser or the Representative Office
to terminate his employment by or contractual relationship with the
Purchaser or the Representative Office or to become employed by or
to enter into contractual relations with a competitor of the
Purchaser or the Representative Office, or directly or indirectly
authorize or assist in the taking of any such actions by any third
party, or (b) employ any of the current or future employees of the
Purchaser or the Representative Office, or be a director or hold any
senior management or consulting position with a company in which any
current or future employee of the Purchaser holds a ten percent
(10%) or more equity interest or options to purchase such equity
interest.
9.4 INVALIDITY OR UNENFORCEABILITY. If the final judgment of a court of
competent jurisdiction declares that any term or provision of
Sections 9.3 and 9.4 is invalid or unenforceable, the parties agree
that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration
or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
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9.5 CONFIDENTIALITY. The Shareholders shall maintain in confidence all
Confidential Information and all confidential information relating
to Paradigm, the Purchaser or the Representative Office.
9.6 CESSATION OF OPERATIONS. After the Closing, the Company shall cease
all operations in the field of the Purchaser's Business.
10. INDEMNITY
10.1 SURVIVAL OF REPRESENTATIONS. All of the representations and
warranties of the Shareholders, the Company, the Purchaser and
Paradigm contained in this Agreement shall survive the Closing
hereunder and continue in full force and effect forever thereafter,
subject to any applicable statutes of limitations.
10.2 INDEMNIFICATION. The Shareholders and the Company hereby, jointly
and severally, agree to indemnify and hold harmless the Purchaser
and its directors, officers, shareholders and Affiliates against any
losses, liabilities, damages and expenses including but not limited
to counsel fees and litigation expenses ("Third Party Payments"), ,
as and when incurred arising out of, based upon, or in connection
with (i) any breach of any representation, warranty, covenant or
agreement of Shareholders or the Company contained in this
Agreement; and (ii) any Excluded Liability provided that the
Shareholders shall not be required to indemnify the Purchaser for
any Third Party Payments unless and until the amount of the Third
Party Pay exceeds $50,000 (Fifty thousand US dollars) in the
aggregate (the "Cushion"). However, if the amount of the Third Party
Payments exceed the Cushion, the Purchaser will have the right to
indemnification for those amounts exceeding the Cushion. To the
extent sufficient to cover all Third Party Payments, indemnification
will be made by way of set-off deduction from the payments due to
the Company according to this Agreement, (iii) any taxes payable to
the Russian authorities up to the Closing Date, through any cause
whatsoever.
10.3 NOTICE OF CLAIM. The Purchaser shall provide the Shareholders and
the Company with prompt notice of any claim asserted or threatened
against the Purchaser on the basis of which the Purchaser intends to
seek indemnification as provided for in this Section 10. However,
the obligations of the Purchaser under this Section 10 shall not be
conditional upon receipt of any such notice and no delay on the part
of the Purchaser in providing notice shall relieve the Shareholders
or the Company from any obligation hereunder.
10.4 OTHER REMEDIES. The foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory, equitable, or
common law remedy the Purchaser may have with respect to the
Shareholders or the Company.
10.5 LIMITATION OF LIABILITY. Notwithstanding anything to the contrary in
this Agreement, the liability of the Shareholders and the Company
pursuant to this Section 10 shall not exceed US $2,000,000 plus
interest at the LIBOR rate accruing from the Date of the Closing,
provided further that no Shareholder shall in any event be liable
for more than his pro rata share of any such liability based on his
shareholding in the Company at the Closing.
11. CONDITIONS TO THE CLOSING
11.1 OBLIGATIONS OF PURCHASER The obligations of the Purchaser to
consummate the transactions contemplated hereby are subject to the
fulfillment prior to or at the Closing of each of the following
conditions:
11.1.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 3 hereof,
shall be true and correct as of the date when made and as
of the Closing as though such representations and
warranties were made at and as of such date.
11.1.2 PERFORMANCE OF UNDERTAKINGS. The Shareholders and the
Company shall have
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performed and complied with all agreements, obligations and
conditions required by this Agreement to be performed or
complied with by the Shareholders, and the Company on or
prior to the Closing. No suit, action, investigation,
inquiry or other proceeding by any governmental body or
other person or legal or administrative proceeding shall
have been instituted or threatened which questions the
validity or legality of the transactions contemplated
hereby, or wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (a) prevent
consummation of any of the transactions contemplated by
this Agreement, (b) cause any of the transactions
contemplated by this Agreement to be rescinded following
consummation, (c) affect adversely the right of the
Purchaser to own the Shares and to control the Company or
(d) affect adversely the right of the Company to own the
Assets and to operate its businesses.
11.1.3 CONSENTS. The Shareholders and the Company shall have
procured all of the third party consents, as specified in
APPENDIX 11.1.3, if and to the extent required to enter
into this Agreement and to consummate the transactions
hereunder.
11.1.4 CERTIFICATES. The Shareholders shall have furnished the
Purchaser with certificates, including without limitation,
certificates of officers of the Company, to evidence
compliance in all respects with the conditions set forth in
this Section in the form attached as APPENDIX 11.1.4.
11.1.5 OPINION OF COUNSEL. The Company and the Shareholders shall
have furnished the Purchaser with an opinion of counsel to
the Company, and the Shareholders dated the Closing Date,
substantially in the form of APPENDIX 11.1.5 hereto.
11.1.6 EMPLOYMENT AGREEMENTS. In order to facilitate the ongoing
business of the Representative Office and to preserve the
goodwill established by the Company over the years, the Key
Employees and all other employees of the Company listed in
APPENDIX 11.1.6(a) shall have entered into employment
agreements with the Representative Office in the form
acceptable to the Purchaser.
11.1.7 ALL ACTION. All actions to be taken by the Shareholders and
the Company in connection with consummation of the
transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be
satisfactory in form and substance to the Purchaser.
11.1.8 NO ADVERSE CHANGE. Since the date hereof, no material
adverse change in the financial condition, assets, business
or prospects of the Company taken as a whole, shall have
occurred. The Purchaser shall have completed a review on
the Company in respect of its financial, business and legal
due diligence, to its complete satisfaction.
11.1.9 INTELLECTUAL PROPERTY OF MIT AND JGI: The Company shall
have provided the Purchaser with proof as reasonably
required by the Purchaser, that as of the Closing Date, the
Company has physically removed all confidential information
and software, including source codes, object codes, and all
documents and computer discs, diskettes and other computer
readable form containing any know-how, software,
inventions, methods, processes and techniques belonging to,
developed by, for or together with MIT and/or JGI have been
from the premises to be used by the Representative Office
and from all equipment used or to be used by the Purchase
and/or the Representative Office.
11.1.10 AGREEMENT WITH JGI: The Company will deliver to the
Purchaser written confirmation, in the form reasonably
acceptable to the Purchaser, that the Sales Representative
Agreement between the Company and JGI dated July, 1997 has
either (i) been terminated and JGI will have no claims
against Paradigm, Purchaser or the Representative Office
with respect to such termination, or (ii)
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been unconditionally assigned to the Representative Office
To the representative Office as of the Closing Date.
11.1.11 TERMINATION OF MIT AGREEMENT: The Company will provide the
Purchaser with written confirmation reasonably acceptable
to the Purchaser, to the effect that the International
Sales Representative Agreement dated April 1, 1995 between
the Company and MIT has been terminated with effect as of
the Closing Date.
11.1.12 APPENDICES: All the Appendices to be attached to this
Agreement shall be completed and shall be to Purchaser's
satisfaction.
11.2 OBLIGATIONS OF THE COMPANY AND SHAREHOLDERS. The obligations of
the Company and the Shareholders to consummate the transactions
hereby contemplated are subject to the fulfillment at the Closing
of each of the following conditions:
11.2.1 PURCHASE PRICE. The Purchaser shall have paid to the
Company the first installment of the purchase price as
specified in Section 6.1 above.
11.2.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser contained in Section 4 hereof,
shall be in all material respects true and correct as of
the date when made and as of the Closing as though such
representations and warranties were made at and as of such
date.
11.2.3 PERFORMANCE OF UNDERTAKINGS. the Purchaser shall have
performed and complied with all agreements, obligations and
conditions required by this agreement to be performed or
complied with by the purchaser on or prior to the Closing.
no suit, action, investigation, inquiry or other proceeding
by any governmental body or other person or legal or
administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the
transactions contemplated hereby, or wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge
would (a) prevent consummation of any of the transactions
contemplated by this Agreement or(b) cause any of the
transactions contemplated by this Agreement to be rescinded
following consummation.
12. THE CLOSING
12.1 The Closing shall take place on February 3, 1999 at the offices of
Paradigm Geophysical Limited in Herzlia at 1.00 p.m. or any other
date or place agreed by the parties (the "Closing"). In the event
that the Closing shall not have occurred by February 28, 1999, for
whatever reason, then any party may notify the other parties that
this Agreement has been terminated and none of the parties will
have any claims against any of the other parties.
12.2 All Closing documents shall be in English, except for those
documents which are required to be in Russian, owing to the
requirements of The Government of the Russian Federation, and such
latter documents shall be translated into English unless agreed
otherwise by the parties.
12.3 If copies of this Contract or the Closing documents are executed
in multiple languages, the English language version shall be the
official version.
13. POST CLOSING MANAGEMENT
In order to remove doubt the parties agree that after the Closing
the management of the representative office and all matters
relating to the representative office including budgets will be
directed entirely by the Purchaser.
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14. MISCELLANEOUS
14.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter
hereof and, subject to the effectiveness of the Closing,
supersedes all prior agreements between the parties thereto.
14.2 WAIVER. Omission or delay on the part of any party in requiring
due and punctual fulfillment of any of the obligations of the
other parties hereunder shall not be deemed a waiver of such
obligation, or any other obligations, present or future, or of any
resulting remedy for the breach thereof.
14.3 COSTS AND EXPENSES. Any tax (except income tax) or taxes payable
upon the transfer of the Shares and required by Russian law shall
be payable by the Company. Save as otherwise expressly provided
herein, all costs, taxes, levies, fees and charges of any kind
whatsoever incurred pursuant to this Agreement will be borne by
the party incurring same.
14.4 LAW AND JURISDICTION. This Agreement shall be governed by and
construed in accordance with the laws of Israel (without
consideration to conflict of laws). The parties hereto submit to
the exclusive jurisdiction of the courts of Tel Aviv Israel for
the resolution of any dispute arising in connection with this
Agreement.
The parties agree that it would be difficult, if not impossible,
to calculate damages in the event of any breach of this Agreement.
Accordingly, the parties desire to make this Agreement
specifically enforceable by equitable remedies including, but not
limited to, injunction. Such right to equitable remedies shall be
in addition to any remedy at law for damages that either party may
have.
14.5 HEADINGS. The headings of the sections of this Agreement are not a
part of and are not intended to govern, limit or aid in the
construction of any term or provision hereof.
14.6 ASSIGNMENT. No party may assign or delegate any of its rights or
obligations hereunder to a third person without the prior written
consent of the other party (which shall not be unreasonably
withheld); provided, however, that the Purchaser may assign or
delegate its rights and obligations hereunder to a subsidiary or
Affiliate of The Purchaser. An "Affiliate" of the Purchaser shall
mean an entity controlled by, controlling or under common control
with the Purchase.
14.7 AMENDMENTS AND WAIVERS. No waiver by a party or failure to enforce
any of its rights thereunder shall be construed as a waiver to
enforce other rights or the same right on future occasions. No
amendment, modification, or waiver of any of the provisions of
this Agreement shall be effective unless in writing and signed by
the party against whom such amendment, modification or waiver is
sought to be enforced.
14.8 NOTICES. Notices to be served thereunder shall be in writing as
hereinafter provided and shall be serve upon the parties at the
asset forth below. Notices served by registered airmail shall be
deemed served on the day of actual delivery by the addressee's
receipt, or at the expiration of the 7 (seven) days after the date
of mailing, whichever is earlier. Notices served by telex,
telegram, telecopier or cable shall be deemed to be in writing and
to have been served within 12 (twelve) hours (in the case of telex
or telecopier) and within 24 (twenty-four) hours (in the case of
telegrams or cables) or dispatch.
ADDRESSES OF THE PARTIES. The addresses of the parties for the purposes of this
agreement are as follows:
GEOTECH JOINT STOCK COMPANY
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇. ▇▇▇ ▇▇▇▇▇▇ ▇, ▇, ▇▇▇. ▇▇▇, 2 Serafimovicha Street
Kashirskoe schosse Moscow
19
19
Moscow
--------------------------------- -------------------------------
▇▇. ▇▇▇▇▇▇▇ ▇. SULITSKY ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇
Apt. 40, 12 7431, ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Circle
Alabyana Street Littleton, Colorado
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
--------------------------------- -------------------------------
PARADIGM GEOPHYSICAL SERVICES LTD. PARADIGM GEOPHYSICAL LTD.
Regal Court Bet Mercazim
▇▇-▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ Herzlia B, Israel
United Kingdom
PARADIGM GEOPHYSICAL EUROPE LTD. PARADIGM GEOPHYSICAL (UK) LTD.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇-▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇-▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
14.9 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held
to be prohibited by or invalid under applicable law, such provisions
will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement.
14.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first written above:
PARADIGM GEOPHYSICAL (U.K.) LTD. GEOTECH JOINT STOCK COMPANY
/s/ ▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
________________________________ ____________________________
By: _________________________ By: _____________________
Title: _________________________ Title: _____________________
PARADIGM GEOPHYSICAL LTD.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇
_____________________________
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: ______________________
/s/ ▇▇▇▇▇▇▇ ▇. Sulitsky
________________________________ Title: ______________________
▇▇▇▇▇▇▇ ▇. SULITSKY
________________________________
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20
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇
_________________________________
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇
PARADIGM GEOPHYSICAL SERVICES LTD. PARADIGM GEOPHYSICAL EUROPE LTD.
/s/ ▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇
_________________________________ _______________________________
By: __________________________ By: ________________________
Title: __________________________ Title: ________________________
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LIST OF APPENDICES
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APPENDIX NO. DESCRIPTION SECTION NO.
------------ ----------- -----------
1.4 List of Company's maintenance agreements 1.4
NONE
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1.11 Excluded Receivables 1.11
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1.12 Excluded Receivables Related Costs 1.12
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1.14 List of Key Employees 1.44, 4.9
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1.18 Business Plan for Representative Offices 1.18
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1.24 Selected Receivables 1.24, 4.9
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2.1.1.1 List of contracts, agreements, commitments and arrangements 2.1.1.1
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2.1.1.2 List of equipment, office furnishings, and fixtures, vehicles, 2.1.1.2
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2.1.1.3 List of Rental Agreements 2.1.1.3
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2.1.1.5 List of Approvals, Authorisations, Consents, etc. 2.1.1.5
NONE
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4.5 Present Members of the Board of Directors of the Company. 4.5
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4.6 Defaults of Company NONE 4.6
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4.8 Equipment owned by Company free and clear of liens 4.8
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4.12 Schedule of all outstanding undertakings of the Company NONE 4.12
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4.13 Liabilities 4.13
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4.14 Material Adverse Changes NONE 4.14
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4.16.1 Full list of employees of Company including Salaries, benefits,etc 4.16.1
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6.6 Bank Accounts for Payment 6.6
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11.1.3 Third party consents NONE REQUIRED 11.1.3
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11.1.4 Shareholders' and officers' certificates evidencing compliance 11.1.4
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11.1.5 Opinion of Counsel to the Company 11.1.5
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11.1.6 (a) List of Key Employees who must sign agreements with the Representative Offices 11.1.6
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